ANNUAL REPORT
2017
Opsens focuses on the measure
of Fractional Flow Reserve (“FFR”) in
interventional cardiology. Opsens offers an
advanced optical-based pressure guidewire
(OptoWire) that aims at improving the
clinical outcome of patients with coronary
artery disease. Opsens is also involved in
industrial activities.
Mission - Opsens delivers forward thinking technologies
and products to support cardiologists and other
physicians to improve outcomes for patients. By doing
so, we deliver value to our shareholders, our employees,
and our community.
FFR – Cornerstone for Opsens’ growth
Product performance recognized
by key opinion leaders
»
» Product approved for sale in key markets
»
Growing markets: United States,
Europe, Japan and Canada
» Sales channels in more than 30 countries
» Building of clinical data
» 30,000 cases performed
»
Continuous improvement of
production processes
Opsens - Creating value
Opsens FFR products are gaining recognition in
interventional cardiology. In the coming years, Opsens
aims to create value for its shareholders by gaining
market share and accumulating clinical data, while
capitalizing on its innovation capabilities.
OPSENS REVENUES
IN MILLIONS $
20
15
10
5
0
2015
2016
2017
Medical - non FFR
FFR
Medical Total
Consolidated
FFR Market
Since 2009, the FFR market has been driven by studies
that demonstrate the benefits of basing diagnostic
and treatment of coronary artery disease on reliable
FFR measurement. Cardiologists, cardiology medical
societies, insurance companies and hospitals increasingly
recognize the benefits of performing FFR, as it:
»
»
Facilitates decision making
before invasive procedures;
Improves patient outcomes; and,
» Avoids unnecessary medical procedures.
In 2017, new Appropriate Use Criteria, issued by
the American College of Cardiology, provided FFR
even more importance by extending its applications,
especially for patients with STEMI-type myocardial
infarction, who benefit from treatment guided by FFR,
as it reduces the incidence of major cardiovascular
and cerebrovascular events.
Evidence continues to accumulate in favor of FFR.
Growing confidence in this procedure generates
demand for easy-to-use, reliable products that can be
easily integrated into the workflow.
With better products and other growth factors, industry
experts estimate that penetration of the procedure
could rise from 15% * to 45% **.
* R. Scott Huennekens, “Volcano NASDAQ Analyst Day” POWERPOINT
PRESENTATION p.44 (2013-03-07).
** D. Starks, “St Jude Medical 2013 Investor Conference” p.105 (2013-02-01).
FFR MARKET
IN MILLIONS $US
1 billion
520
456
400
350
300
250
207
167
124
75
2009
2010 2011 2012 2013 2014 2015 2016 2017 2018
Beyond
St. Jude Medical 2015 - Investor Conference, February 6, 2015
Based on 14 % growth projected in Global FFR Market 2016-2020
For Your Information
Since October 31, 2017, the Musée de la civilisation of
Quebec City, presents Opsens’ OptoWire, in a section
on life sciences, in the exhibition: From trappers to
entrepreneurs. Four centuries of commercial history
in Quebec City.
Opsens was invited to present a short movie at the
Quebec International Medical Film Festival.
You can see this movie on Opsens’ website.
Letter to Shareholders
In 2017, Opsens continued its transformation from a product development company to a
company that aggressively markets its products. In this transition, Opsens intends to contribute
to the Fractional Flow Reserve («FFR») procedure to improve the quality of diagnostics for
patients with coronary artery disease. Opsens’ strategic plan aims to position the company as a
leader in FFR in interventional cardiology to ultimately create value for its shareholders.
Improved Confidence in the FFR Procedure
Optimization of Production Activities
Starting up a large-scale medical production is a
challenge. In 2017, Opsens made significant progress
in terms of efficiency and effectiveness. With a
more experienced production team and the launch
of a new version of the OptoWire, Opsens should
continue to reduce its production costs to improve
its competitiveness and gross margin.
Industrial Sector
High-potential opportunities are identified for our
high-precision optical measurement solutions.
Despite delays in the development of the industrial
sector, we are confident that we will show growth in
this operational unit in 2018.
Perspectives
In 2018, with more than 30,000 utilizations of the
OptoWire, we are making progress in the FFR market
from a commercial, clinical and financial performance
perspective to create shareholder value.
I thank shareholders for their patience in the
deployment of our strategy. I also thank the customers,
employees, administrators, suppliers and partners for
their support in the development of Opsens.
In closing, we hope to meet with you at the
shareholders’ annual meeting, which will be held at
the company’s head office in January 2018.
Louis Laflamme
President and Chief Executive Officer
In the United States, Appropriate Use Criteria are
intended to guide the actions of cardiologists in the
treatment of patients. Recently, a new version of these
criteria was published where FFR is recommended
in broader applications for the diagnosis of patients
with coronary artery disease. This enhancement
of the criteria should favor and even accelerate the
growth of the FFR market in the United States and
elsewhere in the world.
Positioning the OptoWire
The performance of the OptoWire in catheterization
laboratories continued to impress this year. Among
other things, clinical data on the accuracy of the
OptoWire over
lengthy procedures has been
published in Japan. The OptoWire is positioned in the
market as a workhorse-type guidewire to perform
FFR from start to finish using a single guidewire,
while retaining reliable measurement.
In 2018, Opsens intends to continue research and
development efforts, including the launch of new
product versions and the production of additional
clinical data on the use of the OptoWire.
Financial Performance and Marketing
Expansion of the sales team and distribution network
in more than 30 countries resulted in a 138% revenue
growth in FFR sales, to $12.4 million in 2017. This
growth was generated by gains of market shares for
the territories of Japan, Europe and Canada. In the
United States, the contribution to revenue growth
will be more pronounced in 2018 and beyond.
With great expectations in future years and an equity
financing of $15 million, the Company registered its
shares on the TSX, the largest market for securities
trading in Canada.
These commercial and corporate advances provide a
solid foundation for the execution of the company’s
business plan.
1 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2017
The following comments are intended to provide a review and analysis of the results of operations, financial condition
and cash flows of Opsens Inc. for the fourth quarter and year ended August 31, 2017 in comparison with the
corresponding periods ended August 31, 2016. In this Management’s Discussion and Analysis (“MD&A”), “Opsens”,
“the Company”, “we”, “us” and “our” mean Opsens Inc. and its subsidiary. This discussion should be read and
interpreted in conjunction with the information contained in our annual consolidated financial statements for the years
ended August 31, 2017 and 2016, which have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board. This document was prepared on
November 14, 2017. All amounts are in Canadian dollars unless otherwise indicated.
This MD&A contains forward-looking statements with respect to the Company. These forward-looking statements, by
their nature, require the Company to make certain assumptions and necessarily involve known and unknown risks and
uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-
looking statements. Forward-looking statements are not guarantees of performance. These forward-looking statements,
including financial outlooks, may involve, but are not limited to, comments with respect to the Company’s business or
financial objectives, its strategies or future actions, its targets, expectations for financial condition or outlook for
operations and future contingent payments. Words such as “may”, “will”, “would”, “could”, “expect”, “believe”,
“plan”, “anticipate”, “intend”, “estimate”, “continue”, or the negative or comparable terminology, as well as terms
usually used in the future and conditional, are intended to identify forward-looking statements.
Information contained in forward-looking statements is based upon certain material assumptions that were applied in
drawing a conclusion or making a forecast or projection, including management’s perceptions of historical trends,
current conditions and expected future developments, as well as other considerations that are believed to be appropriate
in the circumstances. The Company considers these assumptions to be reasonable based on information currently
available to it, but cautions the reader that these assumptions regarding future events, many of which are beyond its
control, may ultimately prove to be incorrect since they are subject to risks and uncertainties that affect the Company
and its business. The forward-looking information set forth therein reflects the Company’s expectations as of
November 14, 2017 and is subject to change after such date. The Company disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of new information, future events or otherwise,
other than as required by law.
OVERVIEW
Opsens focuses mainly on the measure of Fractional Flow Reserve ("FFR") in interventional cardiology. Opsens offers
an advanced optical-based pressure guidewire (OptoWire) that aims at improving the clinical outcome of patients with
coronary artery disease. Opsens is also involved in industrial activities through its wholly-owned subsidiary Opsens
Solutions Inc. (“Solutions”). Solutions develops, manufactures and installs innovative fibre optic sensing solutions for
critical applications such as the monitoring of oil wells and other demanding industrial applications.
In the interventional cardiology field, during fiscal 2015, Opsens initiated a limited market release of its OptoWire
and OptoMonitor. OptoWire provides cardiologists with a guidewire that offers optimal performance to navigate in
coronary arteries and cross blockages with ease, while measuring intracoronary blood pressure. This procedure is
called measurement of FFR. According to management and industry sources(1), the FFR market is estimated at
approximately US$450 million in 2017 and should exceed US$1 billion annually in the medium term.
During fiscal 2015, Opsens received approval to commercialize the OptoWire I and OptoMonitor in the U.S., Europe,
Japan and Canada. These combined markets represent approximately 85% of the total market worldwide for FFR
products.
(1)
Opsens FFR Market Calculations based on R. Scott Huennekens, “Volcano’s CEO Hosts NASDAQ Analyst Day” TRANSCRIPT p.5 (2013-03-7), JOHN T. DAHLDORF, “Volcano’s Annual Report
2012” and St. Jude Medical 2015 – Investors Conference , February 6, 2015.
3
On March 16, 2016, Opsens announced receipt of the 510(k) clearance from the U.S. Food and Drug Administration
(FDA) for the OptoWire II. This major regulatory milestone allows the Company to commercialize its optical
guidewire in the U.S., the largest market in the world for these types of products and expanded regulatory clearance
for the OptoWire II to the U.S. from previous clearances in Europe and Japan. On June 22, 2016, the Company
announced the receipt of Health Canada’s approval to sell the OptoWire II in Canada.
The OptoWire continues to draw positive comments from cardiology experts around the world. An article published
in August 2016 from the «Circulation Journal» highlighted the performance of the OptoWire. More specifically, the
article highlighted the fact that traditional FFR guidewires showed measurement drift, despite major efforts to
minimize it. The occurrence of drift is a significant problem that can occur and often goes unnoticed before the wire is
removed from the patient. If drift is present, it may invalidate the measurement. The authors stated they used
approximately 100 OptoWire in the past year and they have not observed any drift in any of the OptoWire up to now.
Subsequent to approvals received to commercialize the OptoWire II, the number of orders have increased. In addition,
many account conversions in Canada, in Europe and in Japan have materialized recently. Opsens also began its limited
market release in the U.S. These recent developments enable Opsens to compete in the growing FFR market.
In Canada, Opsens has been executing its market release with its direct sales force following the successful completion
of a clinical registry involving 60 patients. The objective of the registry was to evaluate the ease of use, functionality
and security of Opsens’ OptoWire and OptoMonitor in patients with ischemic coronary artery disease who were
referred for diagnostic angiography.
Opsens continued to expand its sales channels during the year ended August 31, 2017. Opsens is currently present,
with its sales channels in the U.S., in more than 30 countries in Europe, in Middle East, in Canada and in Japan. To
support revenue growth with increased production capacity, Opsens moved its medical devices business into a new
location in Quebec City (Canada).
In March 2017, the Appropriate Use Criteria ("AUC") for stable ischemic heart disease was updated to emphasize
FFR’s growing use and importance. The intent of AUC is to provide a framework to evaluate overall clinical practice
patterns and improve quality of care. The conclusions of the updated AUC is that there is a significant increase in the
recognition of the role and value of FFR in classification, which should be helpful for the usage of FFR. Payers,
including Medicare, have used the AUC’s to help formulate their criteria of reimbursement.
The OptoWire’ performance was highlighted in several occasions throughout the year and more recently in
Cardiovascular Intervention and Therapeutics. According to the results obtained with 90 OptoWire units, it may be
reasonable to use Opsens’ guidewire as a workhorse-type guidewire in percutaneous coronary interventions.
In the industrial sector, Opsens’ technology, expertise and products can serve several markets including aerospace,
geotechnical, infrastructures, oil and gas, mining, laboratories and others. For example, for the monitoring of the
integrity of structures (“SHM” for Structural Health Monitoring), qualitative and non-continuous methods have long
been used to assess the structures and their ability to perform their function. In the past 10 to 15 years, SHM
technologies have emerged, creating new exciting fields within the different branches of engineering. SHM is widely
applied to various types of infrastructures and represents solid growth opportunities considering that many countries
are entering periods of pent up demand for the construction of various infrastructures ranging from bridges to
skyscrapers.
As for the oil and gas market, Opsens, through a distributor, provides fiber optic sensor systems that provide reliable
real-time pressure and temperature measurements at the bottom of the wells. This information is critical during
operations such as Steam Assisted Gravity Drainage ("SAGD"), a process that recovers bitumen from oil sands.
Opsens’ broad portfolio of products and technologies can be adapted to measure various parameters in the most harsh
conditions and provide significant advantages in terms of production optimization and reduced risk to the environment
and health.
Opsens holds 10 patents and 3 pending patents to protect its medical and industrial businesses.
4
FFR MARKET OPPORTUNITY
For the FFR market, Opsens has developed the OptoWire and OptoMonitor, instruments that assess the significance
of arterial narrowing (stenosis) resulting from coronary heart disease. Coronary artery disease is a leading cause of
death in the developed world and the cost related to the management and treatment of this disease is a significant
burden to society. In recent years, the prevalence of coronary heart disease has increased at a rapid pace. According to
the American Heart Association ("AHA"), the number of Americans who undergo surgery or cardiovascular operations
or procedures has increased to about 7.6 million patients in 2010. Based on health data compiled from over 190
countries, heart disease remains the No. 1 global cause of death with 17.3 million deaths annually based on a report
from the AHA “Heart Disease and Stroke Statistics – 2015 Update”. That number is expected to rise to more than 23.6
million by 2030.
The benefits of FFR were demonstrated in various clinical studies such as FAME I and FAME II published respectively
in 2009 and 2012 in the New England Journal of Medicine. The FAME I study showed that FFR-guided treatment
rather than standard angiography alone led to a reduction in mortality, myocardial infarction, readmission for
percutaneous coronary intervention and coronary bypass by about 30% after a year. In 2011, the American College of
Cardiology Foundation and the AHA established a class IIA recommendation for the use of FFR during angiography,
meaning that the proposed procedure or treatment is beneficial, useful and effective. These developments have
contributed to the growth of the market. According to management and industry sources’ estimates, the global FFR
market reaches approximately US$450 million in 2017 and should exceed US$1 billion annually in the medium term.
INDUSTRIAL MARKET OPPORTUNITY
Structural Health Monitoring market: the opportunities in this market are related principally to strain, load and
displacement measurements. The applications are found in geotechnical, civil engineering, energy, aerospace and
O&G sectors. New industrial versions of the strain sensor like the optical foil gauge and the CoreSens system are the
main flagship products for these applications.
Pressure Monitoring Solution market: the opportunities in this market are principally related to absolute and
differential pressure measurements. The measure of the pressure is found in many industrial applications of the energy,
geotechnical, oil and gas and aerospace sectors. New industrial versions of the pressure sensor and the recent addition
of a differential pressure sensor are the main flagship products for these applications.
Traditional Niche Applications market: include niche applications in which Opsens is currently involved like the
electro explosive device (EED) application. It also includes applications such as SAGD in Western Canada and
laboratories applications (special projects and custom products).
5
BUSINESS STRATEGY
Opsens’ growth strategy is to become a key player in the interventional cardiology market by focusing on the FFR
procedure where its products and technologies have competitive advantages. The Company also aims to capitalize on
its technologies and products in industrial markets.
The Company’s FFR growth strategy will be executed by:
• Gaining market shares in the fast-growing FFR market. In fiscal 2015, for the first time, Opsens has generated
revenues from its FFR offering in the limited market release phase. In the last two years, Opsens expanded
its sales activities in several markets, which translated in solid revenue growth. Management believes that
FFR is used in over 15% of PCI, but industry analysts suggest that up to 45% of PCI could advantageously
be combined with FFR(2). Management is pursuing a comprehensive market development strategy that
highlights the features and distinctive capabilities of the OptoWire and exceed marketing requirements to gain
market share from competitors and contribute to the expansion of the FFR market. Initially, marketing efforts
are focused on the Japanese, U.S., European and Canadian markets.
•
Investing in innovation to enhance the existing applications of the Company’s technology. The Company’s
commitment to innovation has been a major driving force behind its success. Opsens is constantly working
to improve its intellectual property portfolio and customer value proposition. In the FFR market, OptoWire is
designed to provide:
o
o
o
Improved mechanical performance from key design attributes and product specifications such as
torquability and steerability;
Improved measurement reliability and fidelity from OptoWire’s no drift(3) sensing technology, which
is essential to the decision-making process of cardiologists; competing FFR sensing technologies
have higher drift levels;
Improved connectivity, as OptoWire’s connection and measurement accuracy is unaffected by blood
contamination and the guidewire can be reconnected easily without compromising measurement
accuracy.
• Developing new applications for the Company’s medical technology. Opsens plans to leverage its
technologies and knowledge in the medical devices field to expand into new markets and increase clinical
applications. As the Company pursues opportunities in these new markets, it plans to develop new FFR or
other measurement methods products and explore product development and marketing partnerships with other
leading companies in the sector.
• Expanding and investing in FFR-focused sales force and distribution channels.
o Distribution agreements: Opsens has signed distribution agreements in more than thirty countries
in Europe and Asia. These agreements enable Opsens to expand its market penetration worldwide.
Although the distribution agreements in place cover the most important potential markets.
o Sales force: Opsens plans on expanding its sales force through hiring additional sales personnel for
FFR product commercialization. Sales force expansion will aim to increase Opsens’ marketing and
sales market penetration in the United States and in Canada.
(2)
(3)
D. STARKS, “St Jude Medical 2013 Investor Conference” p.105 (2013-02-01); R. Scott Huennekens, “Volcano NASDAQ Analyst Day” POWERPOINT PRESENTATION p.44 (2013-03-07).
Per 60601-2-34 ed3
6
The Company’s growth strategy in the Industrial sector will be achieved by:
•
Investing in innovation to enhance applications for the Company's technologies. The Company’s industrial
line of fiber optic sensors offers unique advantages over traditional sensors in many industries. For example,
traditional sensors need to be shielded and grounded for their safe operation in aircrafts and spaceships. The
use of composite materials in the newly developed versions of these flying structures have seriously reduced
the natural shielding and grounding capacity provided by the older metallic version of these structures. The
Company’s fiber optic strain and pressure sensors received attention from major players in the aerospace
industry because they do not require any shielding or grounding and also because of their ease of deployment.
NON-IFRS FINANCIAL MEASURE - EBITDACO
The Company quarterly reviews net loss and Earnings Before Interest, Taxes, Depreciation, Amortization, Change in
fair value of embedded derivative and Stock-based compensation costs ("EBITDACO"). EBITDACO has no
normalized sense prescribed by IFRS. It is not very probable that this measure is comparable with measures of the
same type presented by other issuers. EBITDACO is defined by the Company as the addition of net loss, financial
expenses, depreciation and amortization, change in fair value of embedded derivative and stock-based compensation
costs. The Company uses EBITDACO for the purposes of evaluating its historical and prospective financial
performance. This measure also helps the Company to plan and forecast for future periods as well as to make
operational and strategic decisions. The Company believes that providing this information to investors, in addition to
IFRS measures, allows them to see the Company’s results through the eyes of management, and to better understand
its historical and future financial performance.
Reconciliation of EBITDACO to net loss
(In thousands of Canadian dollars)
Year Ended
August 31, 2017
$
Year Ended
August 31, 2016
$
Year Ended
August 31, 2015
$
Net loss
Current income tax expense
Financial expenses (revenues)
Depreciation of property, plant and equipment
Amortization of intangible assets
Change in fair value of embedded derivative
Impairment of assets
EBITDAC
(6,537)
-
(7)
699
90
164
-
(5,591)
(9,282)
-
57
549
73
732
-
(7,871)
Stock-based compensation costs
864
451
EBITDACO
(4,727)
(7,420)
(2,884)
340
(1)
385
62
73
796
(1,229)
317
(912)
The positive variance of EBITDACO for fiscal 2017 when compared with last year is explained by increase revenues
in the medical sector and by licensing revenue of $1,007,750 (US$750,000) for a technical milestone payment related
to Abiomed agreement. This was partly offset by lower sales in the industrial sector and by higher sales and marketing
and research and development expenses as explained further below. Also, allowance for doubtful account recorded in
the industrial sector negatively impacted EBITDACO.
7
SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands of Canadian dollars, except for
information per share)
Year Ended
August 31, 2017
$
Year Ended
August 31, 2016
$
Year Ended
August 31, 2015
$
Revenues
Sales
Distribution rights
Licensing
Cost of sales
Gross margin
Gross margin percentage
Expenses (incomes)
Administrative expenses
Sales and marketing expenses
R&D expenses
Financial expenses (revenues)
Change in fair value of embedded derivative
Impairment of assets
16,378
-
1,374
17,752
10,252
7,500
42%
3,774
6,975
3,131
(7)
164
-
14,037
9,234
-
367
9,601
7,970
1,631
17%
3,685
3,694
2,744
57
733
-
10,913
4,841
3,458
366
8,665
3,921
4,744
55%
2,616
1,501
2,303
(1)
73
796
7,288
Loss before income taxes
Current income tax expense
Net loss and comprehensive loss
Net loss per share - Basic and diluted
(6,537)
(9,282)
(2,544)
-
(6,537)
(0.08)
-
(9,282)
(0.14)
340
(2,884)
(0.05)
Revenues
The Company reported revenues of $17,752,000 for the year ended August 31, 2017 compared with revenues of
$9,601,000 for the comparative period in 2016, an increase of $8,151,000 or 85%.
Revenues in the medical sector totalled $16,269,000 for the year ended August 31, 2017 compared with revenues of
$6,429,000 for the same period in 2016. The increase in medical sector revenues is explained by a higher number of
OptoWire shipped when compared to the same period last year. FFR revenues totalled $12,351,000 for the year ended
August 31, 2017, an increase of $7,109,000 over the $5,242,000 reported for the same period last year. The increase
in revenues in the medical sector is also explained by higher other medical revenues of $1,723,000 mainly related by
Abiomed agreement. The increase in revenues in the medical sector is also explained by the recognition of non-
recurring revenues of $1,007,750 (US$750,000) for the achievement of a technical milestone of the Abiomed
agreement.
Revenues in the industrial sector totalled $1,483,000 for the year ended August 31, 2017 compared with revenues of
$3,172,000 for the same period in 2016. This decrease is mostly explained by lower revenues related to the oil and gas
product line.
Market acceptance of FFR and of industrial fiber optic sensors is increasing in the Company’s potential markets.
However, some industries, such as oil and gas, are experiencing challenging economic conditions. On September 22,
2016, the Company announced a partnership with Precise Downhole Services Ltd. (“Precise”) for the
commercialization of its product line dedicated to the Canadian oil and gas market. As part of the agreement, Opsens
appointed Precise as exclusive distributors for the OPP-W sensor product line in the Canadian territory.
8
For the year ended August 31, 2017 and August 31, 2016, pricing fluctuations did not have a significant impact on
revenues.
Given that a proportion of the Company's revenues is generated in U.S. dollars, Euros and British Pounds, fluctuations
in the exchange rate affect revenues and net loss. For the year ended August 31, 2017, sales were negatively affected
by $143,000.
As of August 31, 2017, Opsens’ total backlog of orders amounted to $5,608,000 ($1,295,000 as at August 31, 2016).
Significant efforts are being made to increase the backlog and expand the customer base. In addition, the Company
will benefit from increase revenues in the medical sector.
Gross margin
Information and analysis in this section do not take into consideration licensing revenues arising from the Abiomed
agreement ($1,374,000 for the year ended August 31, 2017 and 367,000 for the year ended 2016, respectively).
Gross margin was $6,126,000 for the year ended August 31, 2017 compared with $1,263,000 for the same period last
year. The gross margin percentage increased from 14% for the year ended August 31, 2016 to 37% for the year ended
August 31, 2017. The increase in gross margin is mainly explained by higher revenues from our FFR and other medical
products line as explained previously. The increase in gross margin percentage reflects higher sales volume and the
related benefits of scale combined with enhanced productivity. This was partly offset by the recognition of an
allowance for obsolete inventory of $157,000.
Administrative expenses
Administrative expenses were $3,774,000 and $3,685,000, respectively, for the year ended August 31, 2017 and 2016.
The increase is mainly explained by higher professional fees related to the graduation of the Company on the TSX.
This was partly offset by lower rental fees because last year the Company had to assume two rental facilities for its
medical activities.
Sales and marketing expenses
Sales and marketing expenses totalled $6,975,000 for the year ended August 31, 2017, an increase of $3,281,000 over
the $3,694,000 reported during the same period in 2016. The increase is largely explained by higher headcount,
commissions, tradeshows, travelling, subcontractors and stock-based compensation expenses when compared with last
year due to the expansion of Opsens’ sales channel for its FFR products.
Research and development expenses
Research and development expenses totalled $3,131,000 for the year ended August 31, 2017, an increase of $387,000
over the $2,744,000 reported during the same period in 2016. The variation is mainly explained by higher salaries and
fringe benefits for our FFR activities, by higher supplies expenses and by higher stock-based compensation expenses.
Financial expenses (revenues)
Financial revenues reached $7,000 for the year ended August 31, 2017 compared with financial expenses of $57,000
for the same period in 2016. The increase in financial revenues is explained by higher interest revenues of $73,000.
This was partly offset by an increase in interest on long-term debt of $21,000.
Change in fair value of embedded derivative
The change in fair value of embedded derivative comes from the variance of the fair market value of the conversion
option component of the convertible debenture. The convertible debenture contains a cash settlement feature, which
under IAS 32, “Financial Instruments: Presentation”, is accounted for as a compound instrument with a debt component
and a separate embedded derivative representing the conversion option. Both the debt and embedded derivative
9
components of this compound financial instrument are measured at fair value on initial recognition. The debt
component is subsequently accounted for at amortized cost using the effective interest rate method. The embedded
derivative is subsequently measured at fair value at each reporting date with gains and losses in fair value recognized
through profit or loss. During the year ended August 31, 2017, an expense of $164,000 ($733,000 for the year ended
August 31, 2016) was recorded in the consolidated statements of loss and comprehensive loss.
Net loss
As a result of the foregoing, net loss for the year ended August 31, 2017 was $6,537,000 compared with $9,282,000
for the same period in 2016.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION DATA
(In thousands of Canadian dollars)
Current assets
Total assets
Current liabilities
Long-term liabilities
Shareholders' equity
As at
August 31,
2017
$
As at
August 31,
2016
$
As at
August 31,
2015
$
23,607
27,610
7,698
1,947
17,965
12,570
16,861
3,067
6,482
7,312
11,077
12,763
2,584
4,286
5,893
Total assets as at August 31, 2017 were $27,610,000 compared with $16,861,000 as at August 31, 2016. The increase
is mainly related to higher cash and cash equivalents of $6,667,000 explained by the closing of an equity financing of
$14,950,500 in December 2016, by higher trade and other receivables of $2,238,000 and by higher inventory of
$1,390,000 explained by an increase of the medical sector revenues.
Current liabilities totalled $7,698,000 as at August 31, 2017 compared with $3,067,000 as at August 31, 2016. The
increase is mainly explained by the reclassification of the convertible debenture amounting to $3,853,000 in the current
portion of liabilities because its maturity is now less than twelve months. Also, the increase is explained by higher
accounts payable and accrued liabilities of $868,000 related to the increase in production of FFR products.
Long-term liabilities totalled $1,947,000 as at August 31, 2017 compared with $6,482,000 as at August 31, 2016, a
decrease of $4,535,000. The decrease is mainly explained by the reclassification of the convertible debenture in the
current portion of liabilities as discussed previously.
10
SUMMARY OF CONSOLIDATED QUARTERLY RESULTS
The summary below presents the periods in which Opsens published unaudited interim financial statements.
(Unaudited, in thousands of Canadian dollars,
except for information per share)
Three-month
period ended
August 31,
2017
$
Three-month
period ended
May 31,
2017
$
Three-month
period ended
February 28,
2017
$
Three-month
period ended
November 30,
2016
$
Revenues
Net loss for the period
4,307
(1,153)
4,892
(1,842)
4,808
(1,001)
3,745
(2,541)
Net loss per share – Basic and diluted
(0.02)
(0.02)
(0.01)
(0.03)
(Unaudited, in thousands of Canadian dollars,
except for information per share)
Three-month
period ended
August 31, 2016
Three-month
period ended
May 31, 2016
$
$
Three-month
period ended
February 29,
2016
$
Three-month
period ended
November 30,
2015
$
Revenues
Net loss for the period
3,024
(3,025)
2,125
(3,076)
2,741
(1,523)
1,711
(1,658)
Net loss per share – Basic and diluted
(0.04)
(0.05)
(0.02)
(0.03)
For the Medical segment, activities are generally slower in the fourth quarter due to the summer vacations of
physicians.
11
LIQUIDITY AND CAPITAL RESOURCES
As of August 31, 2017, the Company had cash and cash equivalents of $12,570,000 compared with $5,903,000 as of
August 31, 2016. Of this amount as of August 31, 2017, $11,776,000 was invested in highly liquid, safe investments.
As of August 31, 2017, Opsens had a working capital of $15,909,000, compared with $9,503,000 as of August 31,
2016.
On December 8, 2016, the Company completed a public offering for aggregate gross proceeds of $14,950,500. In
connection with the offering, the Company issued a total of 9,967,000 shares at a price of $1.50 per share.
Expenses of the offering include underwriting fees of $889,530 and other professional fees and miscellaneous fees of
$305,403 for total fees of $1,194,933.
The company intend the use of proceeds from the equity financing as follow:
(In thousands of Canadian dollars)
Net proceeds from the issue, including
the over-allotment option
Use of proceeds
Sales and Marketing
Research and Development
Use of
funds as
planned
Over-
Allotment
Funds
available to
Opsens
from
equity
financing
Actual use
of funds as
at August,
2017
Funds
remaining
to be used
$
$
$
$
$
11,870,470
1,885,097 13,755,567
6,702,487
7,053,080
7,869,970
1,885,097
9,755,067
4,574,615
5,180,452
Production of clinical data
Further the development of Opsens’
FFR technology
Working capital
920,000
2,360,000
720,500
-
-
-
920,000
-
920,000
2,360,000
1,407,372
952,628
720,500
720,500
-
Total use of proceeds
11,870,470
1,885,097 13,755,567
6,702,487
7,053,080
There are no main variance between the use of funds planned and actual.
On May 27, 2016, the Company entered into a loan agreement of $836,000, net of transaction costs of $9,000, with
Investissement Québec. This loan bears interest at prime rate plus 0.25%, is payable in monthly instalments of $18,750,
and will be maturing in May 2020. This loan is secured by a movable hypothec on the Company’s assets. Under this
loan agreement, the Company is subject to certain covenants with respect to maintaining certain financial ratios, which
were met as of the date of this MD&A. On March 7, 2017, the Company received the final disbursement of the loan
amounting to $55,000.
On May 16, 2016, the Company completed a non-brokered private placement offering for aggregate gross proceeds of
$4,999,050. In connection with the offering, the Company issued a total of 4,761,000 units at a price of $1.05 per unit.
Each unit consists of one common share in the capital stock of Opsens and one-half of one common share purchase
warrant, with each whole common share purchase warrant entitling the holder thereof to purchase one common share
at a price of $1.55 until November 16, 2017.
Expenses of the offering include professional fees and miscellaneous fees for total fees of $102,563.
12
On May 20, 2016, the Company received an amount of $894,000 from the landlord in accordance with the long-term
lease signed by the Company to relocate its medical activities. This amount is presented in the balance sheet under the
caption “Deferred lease inducements”.
On April 18, 2016, the Company entered into a loan agreement amounting to $497,500, net of transaction costs of
$2,500, with Desjardins. This loan bears interest at prime rate plus 2.0%, is payable in monthly instalments of $10,417,
calculated over an amortization period of forty-eight (48) months and will be maturing in April 2018. This loan is
secured by a movable hypothec on the Company’s assets. Under this loan agreement, the Company is subject to certain
covenants with respect to maintaining certain financial ratios, which were met as of the date of this MD&A.
Under an agreement entered into with Canada Economic Development (“CED”), the Company may receive a
refundable contribution of a maximum amount of $200,000, non-interest bearing, to cover expenses related to the
commercialization of its OptoWire product for the FFR market. This contribution is paid out based on presentation by
the Company of invoices related to specific expenses since May 22, 2015. On April 1, 2016, the Company received an
amount of $65,000 of which $28,000 was recognized against administrative and sales and marketing expenses. On
March 29, 2017, the Company received the final disbursement of the contribution amounting to $135,000 of which
$48,000 was recognized against administrative and sales and marketing expenses.
On December 22, 2015, the Company completed a public offering for aggregate gross proceeds of $5,000,000. In
connection with the offering, the Company issued a total of 5,681,819 units at a price of $0.88 per unit. Each unit
consists of one common share in the capital stock of Opsens and one-half of one common share purchase warrant, with
each whole common share purchase warrant entitling the holder thereof to purchase one common share at a price of
$1.20 until June 22, 2017.
Expenses of the offering include underwriting fees of $276,202 and other professional fees and miscellaneous fees of
$323,713 for total fees of $599,915.
The Company also issued 313,886 broker warrants as additional compensation, each warrant entitling the holder to
purchase one common share of the Corporation at a price of $0.88 until June 22, 2017.
Concurrently with the public offering, the Company completed a non-brokered private placement offering of 184,400
units at a price of $0.88 per unit for aggregate gross proceeds of $162,272. Each unit comprises the same terms and
conditions than the units issued under the public offering. Expenses related to the private placement amount to $10,083.
The Company has an authorized line of credit for a maximum amount of $200,000, $50,000 of which is available at
all times and does not take into consideration the margining. When using the line of credit in an amount varying from
$50,000 and $100,000, the available credit is limited to an amount that is equal to 75% of Canadian accounts receivable
and 65% of foreign accounts receivable plus 50% of inventories of raw materials and finished goods. If the amount
used exceeds $100,000, the credit available is limited to an amount equal to 75% of Canadian accounts receivable and
90% of insured foreign accounts receivable plus 50% of inventories of raw materials and finished goods. This line of
credit bears interest at the financial institution’s prime rate plus 2% and is repayable on a weekly basis by $5,000
tranches. It is secured by a first-rank movable hypothec for an amount of $750,000 on the universality of receivables
and inventories.
Based on its cash and cash equivalents position, Opsens has the financial resources necessary to maintain short-term
operations, honour its commitments and support its anticipated growth and development activities. From a medium-
term perspective, Opsens may need to raise additional financing by issuing equity securities and/or debt. From a long-
term perspective, there is uncertainty about obtaining additional financing, given the risks and uncertainties identified
in the Risks and Uncertainties section of the Annual Information Form. Changes in cash and cash equivalents position
will largely depend on the rate of revenue growth in upcoming quarters.
13
SUMMARY OF CASH FLOWS
(In thousands of Canadian dollars)
Year Ended
August 31, 2017
$
Year Ended
August 31, 2016
$
Operating activities
Investing activities
Financing activities
Effect of foreign exchange rate changes on cash and cash equivalent
Net change in cash and cash equivalents
(8,777)
(430)
15,888
(14)
6,667
(9,496)
(3,120)
11,284
31
(1,301)
Operating activities
Cash flows used by our operating activities for the year ended August 31, 2017 were $8,777,000 compared with
$9,496,000 for the same period last year. The decrease in the cash flows used by our operating activities is mainly
explained by a positive variance of EBITDACO as explained previously. This is partly offset by a negative variance
in changes in non-cash operating working capital items mostly related to trade and other receivables.
Investing activities
For the year ended August 31, 2017, cash flows used by our investing activities reached $430,000 compared to
$3,120,000 for the year ended August 31, 2016. The decrease is mainly explained by the acquisitions of property, plant
and equipment related to the relocation in the new facility in 2016.
Financing activities
For the year ended August 31, 2017, cash flows generated by our financing reach $15,888,000 compared to 11,284,000
for the year ended August 31, 2016. The increased is mainly explained by a higher equity financing, partly offset by
lower long-term debt issuance.
14
COMMITMENTS
Leases
The Company leases offices in Québec under operating leases expiring on April 30, 2018 and September 30, 2025.
The main agreement is renewable for an additional five-year period.
Future payments for the leases, totalling $4,890,902, required in each of the forthcoming years are as follows:
2018
2019
2020
2021
2022
Thereafter
$
669,101
555,236
567,747
580,962
593,349
1,924,507
SUBSEQUENT EVENT
On September 1, 2017, the Company achieved a technical milestone related to the agreement with Abiomed and the
Company received a payment, amounting to $936,900 (US$750,000) that will be recorded as licensing revenues in the
consolidated statements of loss and comprehensive loss for fiscal year 2018.
On September 7, 2017, the Company has signed a loan agreement amounting to a maximum of $216,000 for acquisition
of property, plant and equipment.
On September 8, 2017, the Company has signed an agreement amounting to $1,574,734 with a supplier for raw material
purchases for the next 24 months.
15
INFORMATION BY REPORTABLE SEGMENTS
Sector’s Information
The Company is organized into two segments: Medical and Industrial.
Medical segment: In this segment, Opsens focuses mainly on the measure of FFR in interventional cardiology.
Industrial segment: In this segment, Opsens’ develops, manufactures and installs innovative fiber optic sensing
solutions for critical applications such as the monitoring of oil wells and other demanding industrial applications.
The principal factors employed in the identification of the two segments reflected in this note include the Company’s
organizational structure, the nature of the reporting lines to the President and Chief Executive Officer and the structure
of internal reporting documentation such as management accounts and budgets.
The same accounting policies are used for both reportable segments. Operations are carried out in the normal course
of operations and are measured at the exchange amount, which approximates prevailing prices in the markets.
Years ended August 31,
2016
Total
$
2017
Total
$
Medical
Industrial
Medical
Industrial
$
16,269,011
-
$
1,482,985
17,751,996
269,505
269,505
$
6,429,256
-
$
3,171,561
9,600,817
413,982
413,982
6,886,549
610,992
7,497,541
1,041,707
591,105
1,632,812
608,453
90,163
698,616
443,355
105,875
549,230
75,927
14,566
90,493
64,543
8,224
72,767
(289,936 )
282,743
(7,193 )
(167,106 )
223,970
56,864
163,745
-
163,745
732,425
-
732,425
External sales
Internal sales
Gross margin
Depreciation of property,
plant and equipment
Amortization of
intangible assets
Financial expenses
(revenues)
Change in fair value of
embedded derivative
Net loss
(4,879,287 )
(1,659,988 )
(6,539,275 )
(7,247,523 )
(2,031,912 )
(9,279,435 )
Acquisition of property,
plant and equipment
Additions to
intangible assets
Segment assets
Segment liabilities
490,155
9,024
499,179
2,934,675
131,924
3,066,599
86,285
25,992,083
9,487,517
18,515
1,617,718
156,960
104,800
27,609,801
9,644,477
108,264
14,281,597
8,973,258
54,376
2,579,879
575,795
162,640
16,861,476
9,549,053
16
The Company’s net loss per reportable segments reconciles to its consolidated financial statements as follows:
Gross margin per reportable segments
Elimination of inter-segment profits
Gross margin
Net loss per reportable segments
Elimination of inter-segment profits
Net loss and comprehensive loss
Geographic sector’s information
Revenue per geographic sector
Japan
United States
Canada
Other*
Years ended August 31,
2017
$
7,497,541
2,232
7,499,773
2016
$
1,632,812
(2,234 )
1,630,578
(6,539,275 )
(9,279,435 )
2,232
(2,234 )
(6,537,043 )
(9,281,669 )
Years ended August 31,
2017
$
2015
$
6,586,561
5,100,077
1,625,567
4,439,791
17,751,996
3,521,669
1,506,971
2,207,299
2,364,878
9,600,817
* Comprised of revenues generated in countries for which amounts are individually not significant.
Revenues are attributed to the geographic sector based on the clients’ location. Capital assets, which include property,
plant and equipment and intangible assets, are all located in Canada.
During the year ended August 31, 2017, revenues from two clients represented individually more than 10% of the total
revenues of the Company, i.e. 40% (medical’s reportable segment) and 17% (medical’s reportable segment).
During the year ended August 31, 2016, revenues from one client represented individually more than 10% of the total
revenues of the Company, i.e. approximately 37% (medical’s reportable segment).
Medical segment
For the year ended August 31, 2017, revenues from medical segment were $16,269,000 compared with $6,429,000 for
the year ended August 31, 2016, an increase of $9,840,000. The increase is explained by higher FFR revenues of
$7,109,000 and by higher other medical revenues of $1,724,000.
Gross margin was $6,887,000 for the year ended August 31, 2017 compared with $1,042,000 for the year ended August
31, 2016, an increase of $5,845,000. The gross margin percentage for the year ended August 31, 2016 was 16%
compared to 42% for the year ended August 31, 2017. The increase in gross margin is mainly explained by higher
revenues from our FFR products and from other medical revenues products line. The increase in gross margin
percentage reflects higher sales volume and the related scale economy combined with enhanced productivity.
17
Net loss for the medical segment was $4,879,000 for the year ended August 31, 2017 compared with $7,248,000 for
the same period last year. The decrease in net loss is mainly explained by higher medical sales, partly offset by higher
sales and marketing expenses as explained previously.
Working capital for the medical segment as at August 31, 2017 was $14,675,000 compared with $7,884,000 as at
August 31, 2016. The increase of $6,791,000 is mainly explained by higher cash and cash equivalents of $6,737,000
arising from the equity financing completed in December 2016, by higher trade and other receivables of $2,764,000
and by higher inventory of $1,771,000. This is partly offset by a higher level of accounts payable and accrued liabilities
of $1,192,000 and by the reclassification of the convertible debenture, amounting to $3,853,000, in current liabilities
since its maturity date is less than twelve (12) months.
Industrial segment
For the year ended August 31, 2017, revenues from industrial segment were $1,483,000 compared with $3,172,000
for the year ended August 31, 2016, a decrease of $1,689,000. The decrease is explained by lower revenues related to
the oil and gas product line of $1,427,000, a consequence of the difficult economic environment in Alberta, Canada.
Gross margin was $611,000 for the year ended August 31, 2017 compared with $591,000 for the same period in 2016,
an increase of $20,000. Gross margin percentage increase from 19% for the year ended August 31, 2016 to 41% for
the year ended August 31, 2017. The increase in gross margin percentage is mainly explained by sales of product with
higher margin than last year and by lower allowance for obsolete inventory than last year.
Net loss for the industrial segment was $1,660,000 for the year ended August 31, 2017 compared to $2,032,000 for
the year ended August 31, 2016. The decrease in net loss is mainly explained by a lower level of administrative and
marketing expenses.
Working capital for the industrial segment as at August 31, 2017 was $1,235,000 compared with $1,619,000 as at
August 31, 2016. The decrease of $384,000 is mainly explained by lower trade and other receivables of $527,000 and
by lower inventory of $384,000. This is partly offset by lower accounts payable and accrued liabilities of $373,000.
FOURTH QUARTER 2017
Revenues
Revenue totalled $4,307,000 for the quarter ended August 31, 2017 compared with $3,025,000 a year earlier. The
increase is explained by higher FFR revenues of $666,000 and other medical revenues of $807,000. This was partially
offset by a decrease in industrial revenues of $191,000.
Gross margin
Information and analysis in this section do not take into consideration licensing revenues arising from the Abiomed
agreement ($92,000 the quarter ended August 31, 2017 and 2016, respectively).
Gross margin was $1,913,000 for the quarter ended August 31, 2017 compared with a negative gross margin of
$225,000 for the same period last year, an increase of $2,138,000. The gross margin percentage increased from a
negative gross margin percentage of 7% for the three-month period ended August 31, 2016 to 44% for the three-month
period ended August 31, 2017. The increase in gross margin is explained by higher medical revenues. The increase in
gross margin percentage reflects higher sales volume and the related scale economy combined with enhanced
productivity in medical sector. This was partly offset by the recognition of an allowance for obsolete inventory of
$157,000.
18
Administrative expenses
Administrative expenses were $767,000 and $833,000, respectively, for the three-month periods ended August 31,
2017 and 2016. The decrease is mainly explained by lower salaries and fringe benefits, professional fees and rental
fees. This is partly offset by a higher allowance for doubtful account.
Sales and marketing expenses
Sales and marketing expenses for the quarter ended August 31, 2017 totalled $1,705,000, an increase of $438,000 over
the $1,267,000 reported during the same period in 2016. The increase is largely explained by higher headcount,
commissions, tradeshows, travelling, subcontractor and stock-based compensation expenses when compared with last
year due to the expansion of Opsens’ sales channel for its FFR products.
Research and development expenses
Research and development expenses totalled $736,000 for the three-month period ended August 31, 2017, an increase
of 34,000$ over the $702,000 reported during the same period in 2016. The variation is mainly explained by higher
salaries and fringe benefits and by higher supplies.
Financial expenses
Financial revenues reached $134,000 for the three-month period ended August 31, 2017 compared with financial
expenses of $2,000 for the same period last year. The increase in financial revenues during the period is explained by
a more favorable exchange rate resulting in a positive impact of $117,000 and by higher interest revenues of $13,000.
Change in fair value of embedded derivative
During the three-month period ended August 31, 2017, an expense of $84,000 ($88,000 for the three-month period
ended August 31, 2016) was recorded in the consolidated statements of loss and comprehensive loss.
Net loss
As a result of the foregoing, net loss for the quarter ended August 31, 2017 was $1,153,000 or $0.02 compared with
net loss of $3,025,000 or $0.04 for the same period in 2016.
INFORMATION ON SHARE CAPITAL
For the year ended August 31, 2017, the Company granted to some employees, Directors and consultants a total of
2,992,750 stock options with an average exercise price of $1.49, cancelled 981,750 stock options with an exercise
price of $1.03 and 1,074,250 stock options with an average exercise price of $0.40 were exercised.
For the year ended August 31, 2016, the Company granted to some employees, Directors and consultants a total of
2,154,750 stock options with an average exercise price of $0.95, cancelled 93,750 stock options with an exercise price
of $0.79 and 574,250 stock options with an average exercise price of $0.38 were exercised.
For the year ended August 31, 2017, 1,366,468 warrants expired with an average exercise price of $1.20 and 1,870,528
warrants with an average exercise price of $1.14 were exercised.
For the year ended August 31, 2016, the Company issued 5,313,610 warrants with units with an average exercise price
of $1.36 and issued 313,886 warrants to brokers with an average exercise price of $0.88. Also, 2,670,110 warrants
expired with an average exercise price of $1.05 and 790,316 warrants with an average exercise price of $0.74 were
exercised.
19
As at November 14, 2017, the following components of shareholders' equity are outstanding:
Common shares
Stock options
Warrants
Convertible debenture
Securities on a fully diluted basis
85,556,566
5,939,250
2,380,500
3,413,333
97,289,649
The number of shares that would be issued upon conversion of the debenture may vary depending on various
parameters such as the exchange rate and the conversion price per share. In the table above, the conversion was carried
out on the assumption that the exchange rate between the U.S. dollar and the Canadian dollar is 1.28 and the conversion
price is equal to $0.75 per share.
No dividend was declared per share for each share class.
RELATED-PARTY TRANSACTIONS
In the normal course of its operations, the Company has entered into transactions with related parties.
Years ended August 31,
2017
2016
$
$
59,134
29,248
Professional fees paid to a company
controlled by a director
Fees are incurred for the Company’s FFR activities.
FINANCIAL INSTRUMENTS
Fair Value
The fair value of cash and cash equivalents, trade and other receivables and accounts payable and accrued liabilities
approximates their carrying value due to their short-term maturities.
The fair value of long-term debt is based on the discounted value of future cash flows under the current financial
arrangements at the interest rate the Company expects to currently negotiate for loans with similar terms and conditions
and maturity dates. The fair value of long-term debt approximates its carrying value due to the current market rates.
The fair value of the convertible debenture is based on the discounted value of future cash flows under the current
financial arrangements at the interest rate the Company expects to currently negotiate for loans with similar terms and
conditions and maturity dates. The fair value of the debt component of the convertible debenture approximates
$2,143,900 as at August 31, 2017 ($1,905,700 as at August 31, 2016) and is classified at level 2 in the fair value
hierarchy.
Valuation Techniques and Assumptions Applied for the Purposes of Measuring Fair Value
The Company must maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. The Company primarily applies the market approach for recurring fair value measurements. The
three input levels used by the Company to measure fair value are the following:
20
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. An active market for the asset
or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to
provide pricing information on an ongoing basis.
Level 2 – Quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that
are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value
of the assets or liabilities.
The following table summarizes the fair value hierarchy under which the Company’s financial instruments are valued.
As at August 31, 2017
Total
Level 1
Level 2
Level 3
Financial assets (liabilities) measured at
fair value:
Convertible debenture – embedded
derivative
(1,097,653 )
-
(1,097,653 )
$
$
$
$
-
As at August 31, 2016
Total
Level 1
Level 2
Level 3
Financial assets (liabilities) measured at
fair value:
Convertible debenture – embedded
derivative
(979,635 )
-
(979,635 )
$
$
$
$
-
As explained in note 13 of the Company’s annual consolidated financial statements, the convertible debenture contains
an embedded derivative that must be measured at fair value at each reporting date with gains and losses in fair value
recognized through profit or loss. One of the most significant assumptions impacting the Company’s valuation of this
embedded derivative is the implied volatility. The fair value of the convertible debenture was determined using the
Black-Scholes pricing model using an implied volatility of 51% (55% in 2016), a discount rate of 1.26% (0.57% in
2016) and an expected life of 0.2 years (1.2 years in 2016). A 1% change in the implied volatility factor would have
changed the fair value of the embedded derivative by $6,143 ($9,575 for the year ended August 31, 2016).
Risk Management
The main risks arising from the Company’s financial instruments are credit risk, liquidity risk, interest rate risk and
foreign exchange risk. These risks arise from exposures that occur in the normal course of business and are managed
on a consolidated Company basis.
Credit Risk
Credit risk is the risk of an unexpected loss if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. The Company regularly monitors credit risk exposure and takes steps to mitigate the likelihood
of this exposure resulting in losses. The Company's exposure to credit risk currently relates to cash and cash equivalents
and to trade and other receivables. The Company’s credit risk management policies include the authorization to carry
out investment transactions with recognized financial institutions with credit ratings of at least A and higher, in either
21
bonds, money market funds or guaranteed investment certificates. Consequently, the Company manages credit risk by
complying with established investment policies.
The credit risk associated with trade and other receivables is generally considered normal as trade receivables consist
of a large number of customers spread across diverse geographical areas. Generally, the Company does not require
collateral or other security from customers for trade accounts receivable; however, credit is extended following an
evaluation of creditworthiness. In addition, the Company performs ongoing credit reviews of all of its customers and
establishes an allowance for doubtful accounts when accounts are determined to be at risks and/or uncollectible. Two
major customers represented 34% of the Company’s total accounts receivable as at August 31, 2017 (50% as at
August 31, 2016).
As at August 31, 2017, 37% (56% as at August 31, 2016) of the accounts receivable were of more than 90 days whereas
34% (30% as at August 31, 2016) of those were less than 30 days. The maximum exposure to the risk of credit for
accounts receivable corresponded to their book value. As at August 31, 2017, the allowance for doubtful accounts was
established at $940,929 ($491,623 as at August 31, 2016).
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial
liabilities that are settled in cash and/or another financial asset. The Company’s approach is to ensure it will have
sufficient liquidity to meet operational, capital and regulatory requirements and obligations, under both normal and
stressed circumstances. Cash flow projections are prepared and reviewed quarterly by the Board of Directors to
ensure a sufficient continuity of funding. The funding strategies used to manage this risk include the Company’s
access to capital markets and debt securities issues.
The following are the contractual maturities of the financial liabilities (principal and interest, assuming current interest
rates) as at August 31, 2017 and August 31, 2016:
12 to 24
After
months
24 months
$
-
$
-
August 31, 2017
Carrying
amount Cash flows
$
$
0 to 12
months
$
Accounts payable and
accrued liabilities
Long-term debt
2,909,516
2,909,516
2,909,516
1,445,168
1,580,231
492,722
526,052
561,457
Convertible debenture
3,853,225
2,770,358
2,770,358
-
-
Total
8,207,909
7,260,105
6,172,596
526,052
561,457
August 31, 2016
Carrying
amount Cash flows
$
$
0 to 12
months
$
Accounts payable and
accrued liabilities
2,041,873
2,041,873
2,041,873
12 to 24
After
months
24 months
$
-
$
-
Long-term debt
1,784,654
1,930,582
530,651
502,285
897,646
Convertible debenture
3,792,839
2,898,533
-
2,898,533
-
Total
7,619,366
6,870,988
2,572,524
3,400,818
897,646
22
Interest Rate Risk
The Company’s exposure to interest rate risk is summarized as follows:
Cash and cash equivalents
Trade and other receivables
Accounts payable and accrued liabilities
Long-term debt
Convertible debenture
Fixed interest rates
Non-interest bearing
Non-interest bearing
Non-interest bearing, fixed and variable interest rates
Fixed interest rates
Interest Rate Sensitivity Analysis
Interest rate risk exists when interest rate fluctuations modify the cash flows or the fair value of the Company’s
investments and embedded derivative. The Company owns investments with fixed interest rates. As at August 31,
2017, the Company was holding more than 94% (92% as at August 31, 2016) of its cash and cash equivalents in all-
time redeemable term deposits.
All else being equal, a hypothetical 1% interest rate increase or decrease wouldn’t have a significant impact on net
loss and comprehensive loss for the year ended August 31, 2017 (not significant for the year ended August 31, 2016).
Financial expenses (revenues)
Interest and bank charges
Interest on long-term debt
Interest and accreted interest on convertible debenture
Gain on foreign currency translation
Interest income
Concentration Risk
Years ended August 31,
2017
$
56,323
70,379
69,979
(19,374 )
(184,500 )
(7,193 )
2016
$
57,298
44,967
69,629
(3,988 )
(111,042 )
56,864
Concentration risk exists when investments are made with multiple entities that share similar characteristics or when
a large investment is made with a single entity. As at August 31, 2017 and 2016, the Company was holding 100% of
its cash equivalents portfolio in all-time redeemable term deposits with financial institutions with high
creditworthiness.
Foreign Exchange Risk
The Company realizes certain sales and purchases and certain supplies and professional services in US dollars, Euros
and British pound. Therefore, it is exposed to foreign currency fluctuations. The Company does not actively manage
this risk.
23
Foreign Currency Sensitivity Analysis
For the year ended August 31, 2017, if the Canadian dollar had strengthened 10% against the US dollar with all other
variables held constant, net loss and comprehensive loss would have been $79,000 higher ($260,000 lower for the year
ended August 31, 2016). Conversely, if the Canadian dollar had weakened 10% against the US dollar with all other
variables held constant, net loss and comprehensive loss would have been $79,000 lower for the year ended August
31, 2017 ($260,000 higher for the year ended August 31, 2016).
For the year ended August 31, 2017, if the Canadian dollar had strengthened 10% against the Euros with all other
variables held constant, net loss and comprehensive loss would have been $322,000 higher ($159,000 higher for the
year ended August 31, 2016). Conversely, if the Canadian dollar had weakened 10% against the Euros with all other
variables held constant, net loss and comprehensive loss would have been $322,000 lower for the year ended August
31, 2017 ($159,000 lower for the year ended August 31, 2016).
For the year ended August 31, 2017, if the Canadian dollar had strengthened 10% against the British pound with all
other variables held constant, net loss and comprehensive loss would have been $10,000 higher ($42,000 higher for
the year ended August 31, 2016). Conversely, if the Canadian dollar had weakened 10% against the British pound with
all other variables held constant, net loss and comprehensive loss would have been $10,000 lower for the year ended
August 31, 2017 ($42,000 lower for the year ended August 31, 2016).
As at August 31, 2017 and August 31, 2016, the risk to which the Company was exposed is established as follows:
Cash and cash equivalents (US$252,720; US$125,202 as at August
31, 2016)
Cash and cash equivalents (Euro 28,968; Euro 22,450 as at August
31, 2016)
Cash and cash equivalents (British pound 64; nil as at August
31, 2016)
Trade and other receivables (US$1,741,221; US$440,847 as at
August 31, 2016)
Trade and other receivables (Euro 625,813; Euro 205,129 as at
August 31, 2016)
Trade and other receivables (British pound 116,377; British pound
85,745 as at August 31, 2016)
Accounts payable and accrued liabilities (US$757,978;
US$317,632 as at August 31, 2016)
Accounts payable and accrued liabilities (Euro 4,408;
nil as at August 31, 2016)
Accounts payable and accrued liabilities (British pound 830;
nil as at August 31, 2016)
Convertible debenture (US$2,198,125; US$2,144,864 as at
August 31, 2016)
Embedded derivative (US$875,600; US$746,900
as at August 31, 2016)
Total
As at
August 31,
2017
$
As at
August 31,
2016
$
316,810
163,903
43,125
103
2,182,794
931,647
188,463
32,842
-
578,410
300,083
147,679
(950,202 )
(416,288 )
(6,563 )
(1,342 )
-
-
(2,755,572 )
(2,813,204 )
(1,097,653 )
(1,148,390 )
(979,635 )
(2,986,210 )
24
CAPITAL MANAGEMENT
The Company's objective in managing capital, primarily composed of shareholders' equity, long-term debt and the
convertible debenture, is to ensure sufficient liquidity to fund production activities, R&D, general and administrative
expenses, sales and marketing expenses, working capital and capital expenditures.
In the past, the Company has had access to liquidity through non-dilutive sources, including the sale of non-core assets,
long-term debts, investment tax credits and government assistance, interest income and public equity offerings.
As at August 31, 2017, the Company's working capital amounted to $15,909,209 ($9,502,625 as at August 31, 2016),
including cash and cash equivalents of $12,570,299 ($5,903,040 as at August 31, 2016). The accumulated deficit at
the same date was $37,076,057 ($30,539,014 as at August 31, 2016). Based on the Company's assessment, which
takes into account current cash and cash equivalents, as well as its strategic plan and corresponding budgets and
forecasts, the Company believes that it has sufficient liquidity and financial resources to fund planned expenditures
and other working capital needs for at least, but not limited to, the 12-month period following the consolidated
statements of financial position date of August 31, 2017.
The Company believes that its current liquid assets are sufficient to finance its activities in the short-term.
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions
and the risk characteristics of the underlying assets. Capital management objectives, policies and procedures have
remained unchanged since the last fiscal year.
For the years ended August 31, 2017 and 2016, the Company has not been in default under any of its obligations
regarding the long-term debt.
CAPACITY TO PRODUCE RESULTS
As discussed in the section “LIQUIDITY AND CAPITAL RESOURCES”, the Company has the required financial
resources for its short-term operations, to fulfill its commitments, to support its growth plan and for the development
of its activities. On a mid-term perspective, it is possible that additional financing, through the issuance of shares or
debt financing or any other means of financing, might be required.
From the human resources’ perspective, there are no vacancies in the major executive positions within the Company.
However, additional technical and production personnel as well as sales and marketing personnel will be required to
support the expected growth. Taking into account the employment market in Canada, US and EMEA, Opsens is
confident in its capacity to recruit qualified human resources in a timely fashion.
Regarding the strategy on corporate executive remuneration, it is oriented towards creation of long-term value for the
shareholders. Several corporate executives hold an important share and share-purchase option position, with rights to
be acquired over a four-year period in order to align shareholders’ interest with corporate executives’ interest. This
long-term vision stimulates innovation and the development of recurrent revenues.
25
NEW ACCOUNTING STANDARDS
There are no IFRSs or International Financial Reporting Interpretations Committee ("IFRIC") that are effective for the
first time in 2017 that would be expected to have a material impact on the Company.
Not yet adopted
IFRS 9, Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9, Financial Instruments. The new standard will replace
IAS 39, Financial instruments: recognition and measurement. The final amendments made in the new version include
guidance for the classification and measurement of financial assets and a third measurement category for financial
assets, fair value through other comprehensive income. The standard also contains a new expected loss impairment
model for debt instruments measured at amortized cost or fair value through other comprehensive income, lease
receivables, contract assets and certain written loan commitments and financial guarantee contracts. The standard is
effective for annual periods beginning on or after January 1, 2018 and must be applied retrospectively with some
exceptions. Early adoption is permitted. Restatement of prior periods in relation to the classification and measurement,
including impairment, is not required. The Company has not yet assessed the impact of this new standard.
IFRS 15, Revenue from Contracts with Customers
In May 2014, the IASB issued IFRS 15, Revenue from contracts with customers. IFRS 15 replaces all previous revenue
recognition standards, including IAS 18, Revenue, and related interpretations such as IFRIC 13, Customer loyalty
programmes. The standard sets out the requirements for recognizing revenue. Specifically, the new standard introduces
a comprehensive framework with the general principle being that an entity recognizes revenue to depict the transfer of
promised goods and services in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. The standard introduces more prescriptive guidance than was included in
previous standards and may result in changes in classification and disclosure in addition to changes in the timing of
recognition for certain types of revenues. On July 22, 2015, the IASB has confirmed a one-year deferral of the effective
date of IFRS 15 to January 1, 2018.
In April 2016, the IASB issued clarifications to IFRS 15, Revenue from contracts with customers. These clarifications
provide additional clarity on revenue recognition related to identifying performance obligations, application guidance
on principal versus agent and licenses of intellectual property. The Company is currently evaluating the impact of this
new standard on its financial statements.
IFRS 16, Lease
On January 13, 2016, the IASB released IFRS 16, Leases, which replace IAS 17, Leases, and the related interpretations
on leases such as IFRIC 4, Determining whether an arrangement contains a lease, SIC 15, Operating leases –
Incentives and SIC 27, Evaluating the substance of transactions in the legal form of a lease. This new standard specifies
how to recognize, measure, present and disclose leases. It also provides a single lessee accounting model, requiring
lessees to recognize assets and liabilities for all leases unless lease term is 12 months or less or the underlying asset
has a small value. Accounting for the lessor remain substantially unchanged. The standard is effective for periods
beginning on or after January 1, 2019, with earlier application permitted for companies that also apply IFRS 15,
Revenue from Contracts with Customers. The Company has not yet assessed the impact of this new standard.
IAS 7, Statement of cash flows
On January 29, 2016, the IASB published amendments to IAS 7, Statements of cash flows. The amendments are
intended to clarify IAS 7 to improve information provided to users of financial statements about an entity’s financing
activities. They are effective for annual periods beginning on or after January 1, 2017, with earlier application being
permitted. The adoption of these new requirements will have no impact on the Company’s consolidated financial
statements.
26
IFRIC 23, Uncertainty over income Tax Treatments
On June 7, 2017, the IASB issued IFRIC 23, Uncertainty over Income Tax Treatments (the “Interpretation”). The
Interpretation provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances
in which there is uncertainty over income tax treatments. The Interpretation is effective for annual periods beginning
on or after January 1, 2019. Earlier application is permitted. The Interpretation requires an entity to:
- Contemplate whether uncertain tax treatments should be considered separately, or together as a group, based
on which approach provides better predictions of the resolution;
- Reflect an uncertainty in the amount of income tax payable (recoverable) if it is probable that it will pay (or
recover) an amount for the uncertainty; and
- Measure a tax uncertainty based on the most likely amount or expected value depending on whichever
method better predicts the amount payable (recoverable).
The Company has not yet assessed the impact of this new interpretation.
DISCLOSURE CONTROLS AND PROCEDURES
In accordance with the requirements of National Instrument 52-109–Certification of Disclosure in Issuers’ Annual and
Interim Filings (“NI 52-109”), the Company’s management, including the Chief Executive Officer (“CEO”) and the
Chief Financial Officer (“CFO”), have evaluated the effectiveness of the Company’s disclosure controls and
procedures («DC&P»). Based upon the results of the evaluation, the Company’s CEO and CFO have concluded that
as at August 31, 2017, the Company’s disclosure controls and procedures to provide reasonable assurance that the
information required to be disclosed by the Company in reports it files is recorded, processed, summarized and reported
within the appropriate time periods and forms were effective.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Internal control over financial reporting (“ICFR”) is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
applicable IFRS. Internal control over financial reporting should include those policies and procedures that establish
the following:
• maintenance of records in reasonable detail, that accurately and fairly reflect the transactions and dispositions
•
•
•
of assets;
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with applicable IFRS;
receipts and expenditures are only being made in accordance with authorizations of management or the Board
of Directors; and
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on the financial instruments.
During the fiscal year, consistent with the Company’s listing on the Toronto Stock Exchange, the Company’s
management, with the participation of the CEO and CFO, assessed the effectiveness of the Company’s internal controls
over financial reporting and concluded that as at August 31, 2017, the Company’s internal control over financial
reporting was effective.
LIMITATIONS OF DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL
OVER FINANCIAL REPORTING
Investors should be aware that inherent limitations on the ability of the Company’s certifying officers to design and
implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 in the first annual financial period
following the completion of the graduation to the Toronto Stock Exchange may result in additional risks to the quality,
reliability, transparency and timeliness of annual filings and other filings provided under securities legislation. The
Company’s management, including the CEO and CFO, believe that due to inherent limitations, any disclosure controls
27
and procedures or internal control over financial reporting, no matter how well designed and operated, can provide
only reasonable, not absolute, assurance of achieving the desired control objectives. Further, the design of a control
system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative
to their costs. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that any
design will not succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the
inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be
detected. Additionally, management is required to use judgment in evaluating controls and procedures.
RISK FACTORS AND UNCERTAINTIES
The Company operates in an industry that contains various risks and uncertainties. Additional risks and uncertainties
not presently known by the Company, or which the Company deems to be currently insignificant, may impede the
Company’s performance. The materialization of one of the risks could harm the Company’s activities and have
significant negative impacts on its financial situation and its operating results. In that case, the Company’s stock price
could be affected.
There are important risks which management believes could impact the Company’s business. For information on risks
and uncertainties, please also refer to the “Risk Factors” section of our most recent Annual Information Form.
OFF-BALANCE SHEET ARRANGEMENTS
As of August 31, 2017, the Company was not the primary beneficiary in Special Purpose Entities and there were no
off-balance sheet arrangements.
OTHER INFORMATION
Updated information on the Company can be found on the SEDAR Web site at http://www.sedar.com.
On behalf of management,
Chief Financial Officer and Corporate Secretary
(s) Robin Villeneuve, CPA, CA
_______________
November 14, 2017
28 Consolidated Financial Statements
Opsens Inc.
Years ended August 31, 2017 and 2016
Deloitte LLP
925 Grande Allée West
Suite 400
Québec QC G1S 4Z4
Canada
Tel.: 418-624-3333
Fax. : 418-624-0414
www.deloitte.ca
Independent Auditor’s Report
To the Shareholders of Opsens Inc.
We have audited the accompanying consolidated financial statements of Opsens Inc., which comprise
the consolidated statements of financial position as at August 31, 2017, and August 31, 2016, and
the consolidated statements of loss and comprehensive loss, consolidated statements of changes in
equity and consolidated statements of cash flows for the years then ended, and a summary of
significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Canadian generally accepted auditing standards.
Those standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of Opsens Inc. as at August 31, 2017, and August 31, 2016, and its financial
performance and its cash flows for the years then ended in accordance with International Financial
Reporting Standards.
November 14, 2017
(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)(cid:66)
1 CPA auditor, CA, public accountancy permit No. A112991
Member of Deloitte Touche Tohmatsu Limited 30 Opsens Inc.
Consolidated Statements of Loss and Comprehensive Loss
Years ended August 31, 2017 and 2016
Revenues
Sales
Licensing (note 11a)
Cost of sales (note 24)
Gross margin
Expenses (income) (note 24)
Administrative
Sales and marketing
Research and development
Financial expenses (revenues) (note 25)
Change in fair value of embedded derivative (note 13)
2017
$
2016
$
16,377,834
9,233,401
1,374,162
367,416
17,751,996
9,600,817
10,252,223
7,970,239
7,499,773
1,630,578
3,774,473
6,975,208
3,130,583
(7,193 )
163,745
3,684,431
3,694,310
2,744,217
56,864
732,425
14,036,816
10,912,247
Net loss and total comprehensive loss attributable to shareholders
(6,537,043 )
(9,281,669 )
Basic and diluted net loss per share (note 15)
(0.08 )
(0.14 )
The accompanying notes are an integral part of the consolidated financial statements.
31 –
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33
Opsens Inc.
Consolidated Statements of Financial Position
Assets
Current
Cash and cash equivalents (note 16)
Trade and other receivables (note 5)
Tax credits receivable (note 21)
Inventories (note 6)
Prepaid expenses
Property, plant and equipment (note 7)
Intangible assets (note 8)
Liabilities
Current
Accounts payable and accrued liabilities (note 10)
Warranty provision (note 18)
Current portion of deferred revenues (note 11)
Current portion of long-term debt (note 12)
Convertible debenture (note 13)
Deferred revenues (note 11)
Long-term debt (note 12)
Convertible debenture (note 13)
Deferred lease inducements
Shareholders’ equity
Share capital (note 14a)
Reserve – Stock option plan (note 14b)
Reserve – Warrants (note 14c)
Deficit
Commitments (note 17)
Subsequent event (note 27)
As at August 31,
2017
$
As at August 31,
2016
$
12,570,299
4,218,938
916,675
5,446,508
454,286
23,606,706
3,355,410
647,685
27,609,801
2,909,516
128,910
366,408
439,438
3,853,225
7,697,497
41,673
1,005,730
-
899,577
9,644,477
5,903,040
1,981,426
365,000
4,056,824
263,734
12,570,024
3,646,849
644,603
16,861,476
2,041,873
177,870
366,408
481,248
-
3,067,399
408,085
1,303,406
3,792,839
977,324
9,549,053
49,581,504
2,560,583
2,899,294
(37,076,057 )
17,965,324
27,609,801
32,677,611
1,920,089
3,253,737
(30,539,014 )
7,312,423
16,861,476
The accompanying notes are an integral part of the consolidated financial statements.
Approved by the board
Signed [Jean Lavigueur]
director
Signed [Louis Laflamme]
director
34
Opsens Inc.
Consolidated Statements of Cash Flows
Years ended August 31, 2017 and 2016
Operating activities
Net loss
Adjustments for:
Depreciation of property, plant and equipment (note 7)
Amortization of intangible assets (note 8)
Loss (gain) on disposal of property, plant and equipment
Write-off of intangible assets
Stock-based compensation costs
Change in fair value of embedded derivative
Interest expense
Unrealized foreign exchange gain
Changes in non-cash operating
working capital items (note 16)
Investing activities
Acquisition of property, plant and equipment
Income tax credits on property, plant and equipment
Additions to intangible assets
Proceeds from disposal of property, plant and equipment
Interest received
Financing activities
Increase in long-term debt, net of transaction costs
Government grants on long-term debt
Reimbursement of long-term debt
Proceeds from issuance of shares and warrants (note 14a)
Shares and warrants issue costs (note 14a)
Interest paid
Effect of foreign exchange rate changes on cash
and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents – Beginning of year
Cash and cash equivalents – End of year
2017
$
2016
$
(6,537,043 )
(9,281,669 )
698,616
90,493
(39,213 )
11,225
864,054
163,745
52,085
(159,616 )
549,230
72,767
2,199
-
451,096
732,425
32,095
(39,889 )
(3,920,886 )
(8,776,540 )
(2,013,884 )
(9,495,630 )
(544,389 )
24,886
(158,491 )
131,217
116,522
(430,255 )
189,863
(48,416 )
(538,214 )
17,520,823
(1,194,933 )
(41,344 )
15,887,779
(3,088,204 )
-
(126,723 )
-
94,806
(3,120,121 )
1,398,637
(27,858 )
(338,243 )
10,962,118
(711,205 )
-
11,283,449
(13,725 )
31,730
6,667,259
5,903,040
12,570,299
(1,300,572 )
7,203,612
5,903,040
Additional information on the consolidated statements of cash flows is presented in note 16.
The accompanying notes are an integral part of the consolidated financial statements.
35 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
1.
Incorporation and Description of Business
Opsens Inc. (“Opsens” or the “Company”) is incorporated under the Business Corporations Act (Quebec).
Opsens focuses mainly on the measure of Fractional Flow Reserve ("FFR") in interventional cardiology. Opsens
offers an advanced optical-based pressure guidewire (OptoWire) that aims at improving the clinical outcome of
patients with coronary artery disease. Opsens is also involved in industrial activities through its wholly-owned
subsidiary Opsens Solutions Inc. (“Solutions”). Solutions develops, manufactures and installs innovative fibre
optic sensing solutions for critical applications such as the monitoring of oil wells and other demanding industrial
applications. The Company’s head office is located at 750, boulevard du ParcTechnologique, Québec, Québec,
Canada, G1P 4S3.
2.
Summary of Significant Accounting Policies
The significant accounting policies used in the preparation of the consolidated financial statements are as follows:
Basis of Measurement
The consolidated financial statements have been prepared under the historical cost convention, except for the
embedded derivative, which is measured at fair value.
Basis of Preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). The Company has
consistently applied the accounting policies throughout all years presented.
The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying the
Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and those of its wholly-owned
subsidiary, Opsens Solutions Inc. All intra-group transactions, balances, revenues and expenses are eliminated
in full on consolidation until they are realized with a third party.
Subsidiaries
A subsidiary is an entity over which the Company has control. The Company controls an entity when it is
exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. A subsidiary is fully consolidated from the date control is obtained and
they are no longer consolidated at the date control ceases.
Changes in the parent company’s ownership interest in a subsidiary that do not result in a loss of control are
accounted for as equity transactions.
36 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
2.
Summary of Significant Accounting Policies (continued)
Revenue Recognition
The Company’s revenue related to the sales of products are measured at the fair value of the consideration
received or receivable upon shipment of the product and when the risks and rewards of ownership have been
transferred to the customer, when there is no continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold, when the amount of revenue can be measured reliably
and when the recovery of the consideration is probable and the associated costs and possible return of goods
can be measured.
Industrial reportable segment revenues related to the sales of products and sensor installation services are
recognized when persuasive evidence of an arrangement exists, on-site installation has occurred, the price to
the buyer is fixed or determinable and collection is reasonably assured. For contract revenues earned over a
long period, revenues are recorded using the percentage-of-completion method. Therefore, these revenues are
recognized proportionately with the degree of completion of the work. The Company uses the efforts expended
method to calculate the degree of completion of work based on the number of hours incurred as at the reporting
date compared to the estimated total number of hours. Work in progress is valued by taking into consideration
the number of hours worked and contract costs incurred but not yet invoiced and the payments received. For
contracts where billings exceed contract costs incurred to date plus recognized profits less recognized losses,
the excess is shown on the consolidated statements of financial position as deferred revenues. Expected losses
are recorded as an expense when it is probable that total contract costs will exceed total contract revenue.
Reporting Currency and Foreign Currency Transactions
The consolidated financial statements are presented in Canadian dollars, which is also the functional currency
of the Company, as this is the principal currency of the economic environment in which it operates.
Foreign currency transactions are translated into Canadian dollars as follows: monetary assets and liabilities are
translated at the exchange rate in effect at the consolidated statements of financial position date, non-monetary
assets and liabilities are translated at historical rates, revenues and expenses are translated at the exchange
rates in effect at the time of the transaction and exchange gains and losses resulting from translation are reflected
in the consolidated statements of loss and comprehensive loss.
Research and Development Costs
Research costs are expensed as incurred. Development costs are expensed as incurred except for those which
meet generally accepted criteria for deferral, in which case, the costs are capitalized and amortized to operations
over the estimated period of benefit. No costs have been deferred during any of the years presented.
Research and Development Refundable Tax Credits and Government grant
Refundable research and development (“R&D”) tax credits and government assistance are accounted for using
the cost reduction method. Accordingly, refundable R&D tax credits and government assistance are recorded as
a reduction of the related expenses or capital expenditures in the period the expenses are incurred, provided that
the Company has reasonable assurance the refundable R&D tax credits or government assistance will be
realized.
37 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
2.
Summary of Significant Accounting Policies (continued)
Equity
Share capital represents the value of shares that have been issued. Any transaction costs associated with the
issuance of shares are deducted from share capital.
From time to time, the Company issues units consisting of common shares and common share purchase
warrants. The Company estimates the fair value of the common shares purchase warrants using the Black-
Scholes option pricing model. The difference between the unit price and the fair value of each warrants represents
the fair value attributable to each common share. Any transaction costs associated with the issuance of units are
apportioned between the common shares and warrants based on their relative fair values.
Share-based Payments
The Company offers a stock option plan described in note 14, which is determined as an equity-settled plan.
The Company uses the fair value-based method to assess the fair value of stock options as at their grant date.
The fair value is determined using the Black-Scholes option pricing model and is recognized in the consolidated
statements of loss and comprehensive loss as a compensation expense and credited to the stock option plan
reserve, using a graded vesting schedule over the vesting period, based on the Company’s estimate of the
number of shares that will eventually vest. At the end of each reporting period, the Company revises its estimate
of the number of equity instruments expected to vest. The impact of the revision of original estimates, if any, is
recognized in the consolidated statements of loss and comprehensive loss such that the cumulative
compensation expense reflects the revised estimate, with a corresponding adjustment to the stock option plan
reserve.
Any consideration received by the Company upon the exercise of stock options is credited to share capital, and
the stock option plan reserve component resulting from stock-based compensation is transferred to share capital
upon the issuance of the shares.
Cash and Cash Equivalents
Cash and cash equivalents include cash and short-term investments redeemable anytime or with a maturity of
three months or less beginning on the acquisition date.
Inventories
Inventories are valued at the lower of cost and net realizable value. Cost is essentially determined using the
weighted average cost. The cost of work in progress and finished goods comprises the cost of raw materials,
direct labor costs and an allocation of fixed and variable manufacturing overhead, including applicable
depreciation of property, plant and equipment based on normal production capability.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses. Inventories are written down to net realizable value when the cost of inventories
is determined not to be recoverable. When the circumstances that previously caused the inventories to be written
down below cost no longer exist or when there is clear evidence of an increase in net realizable value because
of changed economic circumstances, the amount of the write-down is reversed. The reversal is limited to the
amount of the original write-down.
38 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
2.
Summary of Significant Accounting Policies (continued)
Property, Plant and Equipment
Property, plant and equipment are recorded at cost, less accumulated depreciation and accumulated impairment
losses, if any. The cost of property, plant and equipment includes the purchase price and the directly attributable
costs of acquisition.
Depreciation is recorded using the straight-line method based on estimated useful lives, taking into account any
residual value, as follows:
Office furniture and equipment
Production equipment
Automotive equipment
Research and development equipment
Diagnostic and demonstration equipment
Research and development computer equipment
Computer equipment
Leasehold improvements
10 years
7 years
7 years
7 years
3 to 5 years
3 years
3 years
Remaining lease terms
of nine years
Depreciation methods, residual values and useful lives of property, plant and equipment are reviewed annually.
Any change is accounted for prospectively as a change in accounting estimates.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount and are recognized in the consolidated statements of loss and
comprehensive loss.
Intangible Assets
Intangible assets with finite useful lives consist of patents and software. They are recorded at cost and
amortization is recorded using the straight-line method based on estimated useful lives taking into account any
residual values, as follows:
Patents
Software
Term of underlying
patent - 20 years
3 years
The Company’s indefinite-life intangible assets consist of trademarks resulting from a business combination and
are not amortized.
39 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
2.
Summary of Significant Accounting Policies (continued)
Impairment of Non-Financial Assets
Goodwill and Indefinite-Life Intangible Assets
The carrying values of identifiable intangible assets with indefinite life and goodwill are tested annually for
impairment. Goodwill and indefinite-life intangible assets are allocated to CGUs for the purpose of impairment
testing based on the level at which management monitors it, which is not higher than an operating segment. The
allocation is made to those CGUs that are expected to benefit from the business combination in which goodwill
arose. The Company has elected to carry its annual impairment test during the last quarter of each year or at
any time if an indicator of impairment exists.
Non-Financial Assets with Finite Useful Life
The carrying values of non-financial assets with finite useful life, such as property, plant and equipment and
intangible assets with finite useful life, are assessed for impairment whenever events or changes in
circumstances indicate that their carrying amounts may not be recoverable. If any such indication exists, the
recoverable amount of the asset must be determined. Such assets are impaired if their recoverable amount is
lower than their carrying amount. If it is not possible to estimate the recoverable amount of an individual asset,
the recoverable amount of the CGU to which the asset belongs is tested for impairment.
Recognition of Impairment Charge
The recoverable amount is the higher of an asset’s fair value less costs of disposal or its value in use. If the
recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of
the asset or CGU is reduced to its recoverable amount. The resulting impairment charge is recognized in the
consolidated statements of loss and comprehensive loss. Impairment charges recognized in prior periods are
determined at each reporting date for any indications that the impairment charge has decreased or no longer
exists. When an impairment charge is subsequently reversed, the carrying amount of the asset or CGU is
increased to the revised estimate of its recoverable amount so that the increased carrying amount does not
exceed the carrying amount that would have been recorded had no impairment charges been recognized for the
asset or CGU in prior years. An impairment charge recognized for goodwill cannot be reversed.
Leases
Leases are classified as either operating or finance, based on the substance of the transaction at the inception
of the lease. The Company leases certain office premises and equipment in which a significant portion of the
risks and rewards of ownership are retained by the lessor. These are classified as operating leases. Payments
made under these leases are charged to the consolidated statements of loss and comprehensive loss on a
straight-line basis over the period of the lease.
The Company has a facility lease arrangement that includes tenant inducements. Rent expense is recorded
evenly over the term of the lease agreement. The difference between cash rental payments and the rent expense
recorded for accounting purposes is reflected as a deferred lease inducement in the consolidated statements of
financial position.
Finance leases which transfer to the Company substantially all the risks and benefits of ownership of the asset
are capitalized at the inception of the lease at the fair value of the leased asset or at the present value of the
minimum lease payments. Finance expenses are charged to the consolidated statements of loss and
comprehensive loss over the period of the agreement. Obligations under finance leases are included in financial
liabilities, net of finance costs allocated to future periods. Capitalized leased assets are depreciated over the
shorter of the estimated life of the asset or the lease term.
40 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
2.
Summary of Significant Accounting Policies (continued)
Warranty Provision
The Company offers a standard 12-month warranty excluding consumable and accessories.
For downhole materials, the Company guarantees that the downhole materials shall be free from defects but
given that the downhole environmental conditions are not exactly known, the Company does not guarantee the
performance of the downhole materials once they have entered the wellbore. The estimated cost of the warranty
is based on the history of defective products and accessories, the probability that these defects will arise and the
costs to repair them.
Income Taxes
Income tax expenses comprise current and deferred income taxes. Income taxes are recognized in the
consolidated statements of loss and comprehensive loss except to the extent that it relates to items recognized
directly in equity, in which case the income taxes are also recognized directly in equity.
Current Income Taxes
The current income tax assets and liabilities for the current and prior periods are measured at the amount
expected to be paid to or recovered from the taxation authorities. The income tax rates used to calculate the
amount are those that are enacted or substantively enacted at the consolidated statements of financial position
date in the tax jurisdiction where the Company and its subsidiary generate taxable income/loss.
Deferred Income Taxes
The Company provides for deferred income taxes using the liability method. Under this method, deferred income
tax assets and liabilities are determined based on deductible or taxable temporary differences between carrying
values and tax values of assets and liabilities as well as the carryforward of unused tax losses and deductions,
using enacted or substantively enacted income tax rates expected to be in effect for the years in which the assets
are expected to be realized or the liabilities settled.
Deferred income tax assets are recognized only to the extent that it is probable that taxable profits will be available
against which the deductible temporary differences can be utilized. The carrying amount of deferred tax assets
is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities are generally recognized for all taxable temporary differences and for taxable temporary
differences arising on investments in subsidiaries, except where the reversal of the temporary differences can be
controlled and it is probable that the differences will not reverse in the foreseeable future. However, deferred tax
is not recognized if it arises from the initial recognition of goodwill or the initial recognition of an asset or liability
in a transaction other than a business combination that, at the time of the transaction, affects neither accounting
nor taxable profit or loss.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the
same taxation authority on either the same taxable entity or different taxable entities where there is an intention
to settle the balances on a net basis.
Deferred income tax assets and liabilities are presented as non-current in the consolidated statements of financial
position.
41 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
2.
Summary of Significant Accounting Policies (continued)
Loss per Share
Basic net loss per share is calculated by dividing the net loss for the year attributable to equity owners of the
Company by the weighted-average number of common shares outstanding during the year.
Diluted net loss per share is calculated by dividing the net loss for the year attributable to equity owners of the
Company adjusted for the interests on the convertible debenture, net of tax, the unrealized foreign exchange
gain or loss, net of tax, and for the change in fair value of embedded derivative, net of tax, by the weighted-
average number of common shares outstanding during the year, plus the effects of dilutive common share
equivalents. This method requires that diluted net loss per share be calculated using the treasury stock method,
as if all dilutive potential common share equivalents had been exercised at the beginning of the reporting period,
or period of issuance, as the case may be, and that the funds obtained thereby be used to purchase common
shares of the Company at the fair value of the common shares during the period.
Financial Instruments
a) Classification
Financial assets and liabilities are recognized when the Company becomes a party to the contractual
provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from
the assets have expired or have been transferred and the Company has transferred substantially all risks
and rewards of ownership.
Financial assets and liabilities are offset and the net amount reported in the consolidated statements of
financial position when there is a legally enforceable right to offset the recognized amounts and there is an
intention to settle on a net basis, or realize the assets and settle the liabilities simultaneously.
At initial recognition, the Company classifies its financial instruments in the following categories, depending
on the purpose for which the instruments are required:
(cid:120) Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. The Company’s loans and receivables
are comprised of cash and cash equivalents and trade and other receivables and are included in the
current assets due to their short-term nature. Loans and receivables are initially recognized at fair value
plus transaction costs. Subsequently, loans and receivables are measured at amortized cost using the
effective interest method, which generally corresponds to the nominal amount due to their short-term
maturity, less a provision for impairment.
(cid:120) Financial liabilities at amortized cost: Financial liabilities at amortized cost include accounts payable and
accrued liabilities, long-term debt and the debt component of the convertible debenture. They are initially
recognized at fair value less transaction costs. Subsequently, they are measured at amortized cost using
the effective interest rate method.
Financial liabilities are classified as current liabilities if payment is due within twelve months. Otherwise,
they are presented as non-current liabilities.
(cid:120) Derivative financial instruments: Derivative financial instruments are comprised of the embedded
derivative representing the conversion option of the convertible debenture. The embedded derivative is
measured at fair value at each reporting date. The embedded derivative has been classified as held-for-
trading and is included in the consolidated statements of financial position within the convertible
debenture. It is classified as non-current based on the contractual terms specific to the instrument. Gains
and losses on re-measurement of the embedded derivative are recognized in the consolidated
statements of loss and comprehensive loss.
42 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
2.
Summary of Significant Accounting Policies (continued)
Financial Instruments (continued)
b)
Impairment of financial assets
A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial
recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of
that asset that can be estimated reliably.
Objective evidence that financial assets are impaired can include default or delinquency by a debtor and
indications that a debtor or issuer will enter bankruptcy.
c) Compound Financial Instrument
The compound financial instrument issued by the Company consists of the convertible debenture that can
be converted into common shares of the Company at the option of the holder. Since the debenture is
convertible into shares and contains a cash settlement feature, as described in note 13, it is accounted for
as a compound instrument with a debt component and a separate embedded derivative representing the
conversion option also classified as a liability. Both the debt and embedded derivative components of this
compound financial instrument are measured at fair value on initial recognition.
The debt component is subsequently accounted for at amortized cost using the effective interest rate
method. The embedded derivative is subsequently measured at fair value at each reporting date, with gains
and losses in fair value recognized in the consolidated statements of loss and comprehensive loss.
3.
Critical Accounting Estimates, Assumptions and Judgments
The preparation of the Company’s consolidated financial statements requires management to make judgments,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and
the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in a
material adjustment to the carrying value of the asset or liability affected.
For all these items, relevant accounting policies are discussed in note 2 of these consolidated financial
statements.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are revised if the revision affects only that period or in the
period of the revision and future periods, if the revision affects both the current and future periods.
The following are the critical judgements, assumptions and estimates that the directors have made in the process
of applying the Company’s accounting policies and that have the most significant effect on the amounts
recognized in the consolidated financial statements:
Inventories
The Company states its inventories at the lower of cost, determined with the weighted average cost basis method,
and net realizable value, and provides reserves for excess and obsolete inventories. The Company determines
its reserves for excess and obsolete inventories based on the quantities on hand at the reporting dates, compared
to foreseeable needs over the next twelve months, taking into account changes in demand, technology or market.
43 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
3.
Critical Accounting Estimates, Assumptions and Judgments (continued)
Useful Life of Depreciable Assets
Management reviews the useful life of depreciable assets at each reporting date. As at August 31, 2017,
management assesses that the useful lives represent the expected utility of the assets to the Company. The
carrying amounts are presented in notes 7 and 8. Actual results, however, may vary due to technical
obsolescence or changes in the market, particularly for computer equipment and software.
Government Assistance and Research and Development Tax Credits
Government assistance and research and development tax credits are recorded in the consolidated financial
statements when there is reasonable assurance that the Company has complied with, and will continue to comply
with, all of the conditions necessary to obtain the government assistance and research and development tax
credits.
Warranty Provision
The Company estimated warranty provision based on the history of defective products and the probability that
these defects will arise, as well as the related costs.
Revenue Recognition
Delivery generally occurs when the product is handed over to a transporter for shipment. At the time of the
transaction, the Company assesses whether the price associated with its revenue transaction is fixed or
determinable and whether or not collection is reasonably assured. The Company assesses collection based on
a number of factors, including past transaction history and the creditworthiness of the customer.
Stock-based Compensation
The Company uses judgment in assessing expected life, volatility, risk-free interest rate, as well as the estimated
number of options that will ultimately vest.
Warrants
Warrants are issued as part of equity financing. Warrants may be exercised at any moment after their issuance
until the expiration date. The Company uses judgment in assessing parameters like volatility and risk-free interest
rate.
Functional currency
The functional currency for the Company and its subsidiary is the currency of the primary economic environment
in which each operates. The Company has determined that the functional currency for the Company and its
subsidiary is the Canadian dollar. The determination of functional currency may require certain judgements to
determine the primary economic environment. The Company reconsiders the functional currency used when
there is a change in events and conditions which determined the primary economic environment
Deferred income tax asset
A deferred income tax asset will be recognized in the financial statements only when the Company concludes
that these tax assets will probably be materialized by shielding profits from taxes or otherwise. The tax asset
amount will be recorded based on the enacted and substantively enacted income tax rates for the year in which
the differences are expected to reverse.
44 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
4.
Changes in Accounting Policies
New and amended standards issued but not yet effective
IFRS 9, Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9, Financial Instruments. The new standard will replace
IAS 39, Financial instruments: recognition and measurement. The final amendments made in the new version
include guidance for the classification and measurement of financial assets and a third measurement category
for financial assets, fair value through other comprehensive income. The standard also contains a new expected
loss impairment model for debt instruments measured at amortized cost or fair value through other
comprehensive income, lease receivables, contract assets and certain written loan commitments and financial
guarantee contracts. The standard is effective for annual periods beginning on or after January 1, 2018 and must
be applied retrospectively with some exceptions. Early adoption is permitted. Restatement of prior periods in
relation to the classification and measurement, including impairment, is not required. The Company has not yet
assessed the impact of this new standard.
IFRS 15, Revenue from Contracts with Customers
In May 2014, the IASB issued IFRS 15, Revenue from contracts with customers. IFRS 15 replaces all previous
revenue recognition standards, including IAS 18, Revenue, and related interpretations such as IFRIC 13,
Customer loyalty programmes. The standard sets out the requirements for recognizing revenue. Specifically, the
new standard introduces a comprehensive framework with the general principle being that an entity recognizes
revenue to depict the transfer of promised goods and services in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those goods or services. The standard introduces more
prescriptive guidance than was included in previous standards and may result in changes in classification and
disclosure in addition to changes in the timing of recognition for certain types of revenues. On July 22, 2015, the
IASB has confirmed a one-year deferral of the effective date of IFRS 15 to January 1, 2018.
In April 2016, the IASB issued clarifications to IFRS 15, Revenue from contracts with customers. These
clarifications provide additional clarity on revenue recognition related to identifying performance obligations,
application guidance on principal versus agent and licenses of intellectual property. The Company is currently
evaluating the impact of this new standard on its financial statements.
IFRS 16, Lease
On January 13, 2016, the IASB released IFRS 16, Leases, which replace IAS 17, Leases, and the related
interpretations on leases such as IFRIC 4, Determining whether an arrangement contains a lease, SIC 15,
Operating leases – Incentives and SIC 27, Evaluating the substance of transactions in the legal form of a lease.
This new standard specifies how to recognize, measure, present and disclose leases. It also provides a single
lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless lease term is
12 months or less or the underlying asset has a small value. Accounting for the lessor remain substantially
unchanged. The standard is effective for periods beginning on or after January 1, 2019, with earlier application
permitted for companies that also apply IFRS 15, Revenue from Contracts with Customers. The Company has
not yet assessed the impact of this new standard.
IAS 7, Statement of cash flows
On January 29, 2016, the IASB published amendments to IAS 7, Statements of cash flows. The amendments
are intended to clarify IAS 7 to improve information provided to users of financial statements about an entity’s
financing activities. They are effective for annual periods beginning on or after January 1, 2017, with earlier
application being permitted. The adoption of these new requirements will have no impact on the Company’s
consolidated financial statements.
45 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
4.
Changes in Accounting Policies (continued)
IFRIC 23, Uncertainty over income Tax Treatments
On June 7, 2017, the IASB issued IFRIC 23, Uncertainty over Income Tax Treatments (the “Interpretation”). The
Interpretation provides guidance on the accounting for current and deferred tax liabilities and assets in
circumstances in which there is uncertainty over income tax treatments. The Interpretation is effective for annual
periods beginning on or after January 1, 2019. Earlier application is permitted. The Interpretation requires an
entity to:
-
-
Contemplate whether uncertain tax treatments should be considered separately, or together as a group,
based on which approach provides better predictions of the resolution;
Reflect an uncertainty in the amount of income tax payable (recoverable) if it is probable that it will pay (or
recover) an amount for the uncertainty; and
- Measure a tax uncertainty based on the most likely amount or expected value depending on whichever
method better predicts the amount payable (recoverable).
The Company has not yet assessed the impact of this new interpretation.
5.
Trade and other receivables
Trade
Allowance for doubtful accounts
Sales taxes receivable
Other receivables
Total
Allowance for doubtful accounts variation
Balance – Beginning of year
Amounts written off during the year
Additional provisions recognized
Balance – End of year
As at
August 31,
2017
$
4,716,013
(940,429 )
402,640
40,714
4,218,938
As at
August 31,
2016
$
2,176,251
(491,623 )
217,817
78,981
1,981,426
Years ended August 31,
2017
$
(491,623 )
-
(448,806 )
(940,429 )
2016
$
(3,032 )
1,759
(490,350 )
(491,623 )
46 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
6.
Inventories
Raw materials
Work in progress
Finished goods
Total
As at
August 31,
2017
$
2,415,146
1,566,244
1,465,118
5,446,508
As at
August 31,
2016
$
2,205,139
1,240,091
611,594
4,056,824
For the year ended August 31, 2017, $6,096,080 of inventories were expensed in the consolidated statements
of loss and comprehensive loss and presented in cost of sales ($4,556,764 for the year ended August 31, 2016).
Write-downs of inventories amounting to $157,000 ($809,000 in 2016) were included under cost of sales.
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49
Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
8.
Intangible Assets
Indefinite
lives –
Trademarks
$
Limited
lives –
Patents
$
Limited lives –
Software,
net of
income tax
credits of
$1,518
$
Internally
developed
Limited
lives –
Patents
$
Total
$
18,720
2,517
-
21,237
-
-
-
-
35,060
-
-
35,060
7,218
8,970
-
16,188
181,325
29,330
-
210,655
105,489
36,124
-
141,613
787,289 1,022,394
104,800
72,953
(17,484 )
(17,484 )
842,758 1,109,710
265,084
45,399
(6,259 )
304,224
377,791
90,493
(6,259 )
462,025
Cost
Balance as at August 31, 2016
Additions
Change due to derecognition
Balance as at August 31, 2017
Accumulated amortization
Balance as at August 31, 2016
Amortization
Change due to derecognition
Balance as at August 31, 2017
Net book value
as at August 31, 2017
21,237
18,872
69,042
538,534
647,685
Indefinite
lives –
Trademarks
$
Limited
lives –
Patents
$
Limited lives –
Software,
net of
income tax
credits of
$1,518
$
Internally
developed
Limited
lives –
Patents
$
Total
$
13,567
5,153
18,720
30,000
5,060
35,060
108,172
73,153
181,325
708,015
79,274
859,754
162,640
787,289 1,022,394
-
-
-
5,025
2,193
7,218
81,442
24,047
105,489
218,557
46,527
265,084
305,024
72,767
377,791
Cost
Balance as at August 31, 2015
Additions
Balance as at August 31, 2016
Accumulated amortization
Balance as at August 31, 2015
Amortization
Balance as at August 31, 2016
Net book value
as at August 31, 2016
18,720
27,842
75,836
522,205
644,603
The Company has considered indicators of impairment as of August 31, 2017. To date, the Company has
recorded aggregate impairment losses of $11,225 (nil for year ended August 31, 2016), primarily resulting from
patent applications not pursued.
50 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
9.
Authorized Line of Credit
The Company has an authorized line of credit for a maximum amount of $200,000, $50,000 of which is available
at all times and does not take into consideration the margining. When using the line of credit in an amount varying
from $50,000 and $100,000, the available credit is limited to an amount that is equal to 75% of Canadian accounts
receivable and 65% of foreign accounts receivable plus 50% of inventories of raw materials and finished goods.
If the amount used exceeds $100,000, the credit available is limited to an amount equal to 75% of Canadian
accounts receivable and 90% of insured foreign accounts receivable plus 50% of inventories of raw materials
and finished goods. This line of credit bears interest at the financial institution’s prime rate plus 2% and is
repayable on a weekly basis by $5,000 tranches. It is secured by a first-rank movable hypothec for an amount of
$750,000 on the universality of receivables and inventories. The credit line was not used as at August 31, 2017
and 2016.
The Company also has credit cards for a maximum of $75,000 to finance its current operations. The balance
used on these credit cards bears interest at the financial institution’s prime rate plus 8.5%.
10. Accounts payable and accrued liabilities
Suppliers
Salaries, employee benefits and others
Other liabilities
Total
11. Deferred Revenues
a) Licensing Agreement
As at
As at
August 31,
August 31,
2017
$
1,460,847
575,582
873,087
2016
$
875,027
423,716
743,130
2,909,516
2,041,873
On April 15, 2014, the Company announced it had entered into an agreement with Abiomed, Inc. (“Abiomed”)
in connection with its miniature optical pressure sensor technology for applications in circulatory assist
devices. The Company has granted Abiomed an exclusive worldwide license to integrate its miniature
pressure sensor in connection with Abiomed’s circulatory assist devices. Under the agreement, Abiomed will
pay Opsens an aggregate amount of US$6,000,000. $1,647,000 (US$1,500,000) has been paid on closing,
while the balance will be disbursed based on the achievement of certain milestones.
The Company applies the principles of IAS 18, Revenue, to record revenues arising from the agreement with
Abiomed. Therefore, the amount of $1,647,000 (US$1,500,000) paid on closing is recognized over the term
of the agreement. Revenues from milestone payments will be limited to costs incurred as long as the
milestones are not achieved. Upon the achievement of a milestone, the unrecognized portion of the milestone
will be recorded as revenues. During the year ended August 31, 2017, an amount of $366,412 ($367,416 for
the year ended August 31, 2016) related to the Abiomed agreement has been recognized as licensing
revenues in the consolidated statements of loss and comprehensive loss.
For the year ended August 31, 2017, the Company achieved a technical milestone related to the agreement
with Abiomed and consequently, it allows the Company to record, in the consolidated statements of loss and
comprehensive loss as licensing revenues an amount of $1,007,750 (US$750,000).
b) Other Deferred Revenues
Deferred revenues also comprise contracts where billings exceed contract costs incurred to date plus
recognized profits less recognized losses or when the Company receives payments in advance of meeting
the revenue recognition criteria.
51 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
12. Long-term Debt
Contributions repayable to Ministère des Finances et de l’Économie
(MFE), without interest (effective rate of 9%), repayable in five equal and
consecutive annual instalments of $82,718, maturing in February 2020.
Debt balance
Imputed interest
Contributions repayable to Canada Economic Development, without
interest (effective rate of 13.5%), repayable in twenty equal and
consecutive quarterly instalments of $15,000, maturing in August 2020.
Debt balance
Imputed interest
Contributions repayable to Canada Economic Development, without
interest (effective rate of 12%), repayable in 59 equal and consecutive
monthly instalments of $3,333 and a final payment of $3,353, maturing in
October 2023. The difference between amounts received and estimated
fair value is recognized as government grants.
Debt balance
Imputed interest
Secured loan from Export Development Canada, bearing interest at prime
rate plus 2.0%, secured by a movable hypothec on the universality of the
Company’s present and future property, plant and equipment and
intangible assets, payable in 48 monthly instalments of $10,417, maturing
in April 2018. Amounts received are net of transaction costs of $2,500.
Term loan, bearing interest at prime rate plus 0.25%, secured by a
movable hypothec on the universality of the Company’s present and
future property, plant and equipment and intangible assets, payable in
forty-eight monthly instalments of $18,750, maturing in May 2020.
Amounts received are net of transaction costs of $9,000.
Reimbursed during the year
Current portion
As of
August 31,
2017
$
As of
August 31,
2016
$
248,153
(30,583 )
217,570
330,872
(52,841 )
278,031
180,000
(32,601 )
147,399
240,000
(54,664 )
185,336
200,000
(65,601 )
134,399
65,137
(26,054 )
39,083
332,156
456,241
613,644
780,471
-
1,445,168
439,438
1,005,730
45,492
1,784,654
481,248
1,303,406
52 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
12. Long-term Debt (continued)
The annual principal instalments due on the long-term debt are $439,438 in 2018, $486,210 in 2019, $412,585 in
2020, $29,718 in 2021 and $33,285 in 2022.
Under the terms and conditions of the agreements on long-term debt with its lenders, the Company is subject to
certain covenants with respect to maintaining minimum financial ratios. As at August 31, 2017 and 2016, these
financial ratios were met by the Company.
13. Convertible Debenture
As at
As at
August 31,
August 31,
2017
$
2016
$
Debt component reported as liability (US$2,198,125; US$2,144,864 as
at August 31, 2016)
Embedded derivative reported as liability (US$875,600; US$746,900
as at August 31, 2016)
Total
2,755,572
2,813,204
1,097,653
3,853,225
979,635
3,792,839
On November 19, 2012, the Company issued a US$2,000,000 subordinated secured convertible debenture
maturing November 19, 2017. The convertible debenture bears interest at a rate of 2.0% per annum, payable at
maturity. At the holder’s option, the convertible debenture may be converted into common shares of the Company
at any time up to the maturity date, at a conversion price representing the market price of the shares. However,
the conversion price is subject to a minimum of $0.50 and a maximum of $0.75 per common share (the
“conversion price”).
The convertible debenture is also convertible at the Company’s option at the conversion price if the volume-
weighted average closing price per common share for the twenty trading days immediately preceding the fifth
trading day before such conversion date is at least $1.20 and if a minimum of 50,000 common shares have
traded on the TSX Exchange during each of the twenty trading days taken into account in the calculation of the
conversion price.
To secure the repayment of the convertible debenture, a movable hypothec on certain equipment has been given.
As at August 31, 2017, the net book value of property, plant and equipment pledged as collateral was nil (nil as
at August 31, 2016). This hypothec ranks second to certain long-term debts of the Company.
As noted above, the convertible debenture contains a conversion option that will result in an obligation to deliver
a fixed amount of equity in exchange of a variable amount of convertible debenture when translated in the
functional currency of the Company. Consequently, under IAS 32, “Financial Instruments: Presentation”, the
convertible debenture is accounted for as a compound instrument with a debt component and a separate
embedded derivative representing the conversion option. Both the debt and embedded derivative components
of this compound financial instrument are measured at fair value on initial recognition. The debt component is
subsequently accounted for at amortized cost using the effective interest rate method. The embedded derivative
is subsequently measured at fair value at each reporting date, with gains and losses in fair value recognized
through profit or loss.
53 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
13. Convertible Debenture (continued)
Expenses associated with the debenture consist of:
Interest expense
Accretion interest
Change in fair value of embedded derivative
Total
Years ended August 31,
2017
$
57,103
12,876
163,745
233,724
2016
$
56,659
12,970
732,425
802,054
As at August 31, 2017, the debt component of the convertible debenture has a fair value of $2,143,900
($1,905,700 as at August 31, 2016).
14. Share Capital, Stock Options and Warrants
a) Share capital
The Company has authorized an unlimited number of common shares (being voting and participating shares)
with no par value.
On December 8, 2016, the Company completed a public offering for aggregate gross proceeds of
$14,950,500. In connection with the offering, the Company issued a total of 9,967,000 shares at a price of
$1.50 per share.
Expenses of the offering include underwriting fees of $889,530 and other professional fees and miscellaneous
fees of $305,403 for total fees of $1,194,933.
On May 16, 2016, the Company completed a non-brokered private placement offering for aggregate gross
proceeds of $4,999,050. In connection with the offering, the Company issued a total of 4,761,000 units at a
price of $1.05 per unit. Each unit consists of one common share in the capital stock of Opsens and one-half
of one common share purchase warrant, with each whole common share purchase warrant entitling the holder
thereof to purchase one common share at a price of $1.55 until November 16, 2017. The value of one-half of
one common share purchase warrant was established at $0.08.
Expenses of the offering include professional fees and miscellaneous fees for total fees of $102,563. The
fees have been allocated on a prorata basis between share capital and the warrants reserve, $94,749 and
$7,814 respectively, based on the ratio established by their respective values as discussed above.
On December 22, 2015, the Company completed a public offering for aggregate gross proceeds of
$5,000,000. In connection with the offering, the Company issued a total of 5,681,819 units at a price of $0.88
per unit. Each unit consists of one common share in the capital stock of Opsens and one-half of one common
share purchase warrant, with each whole common share purchase warrant entitling the holder thereof to
purchase one common share at a price of $1.20 until June 22, 2017. The value of one-half of one common
share purchase warrant was established at $0.10.
Expenses of the offering include underwriting fees of $276,202 and other professional fees and miscellaneous
fees of $323,713 for total fees of $599,915 of which $598,559 have been paid and $1,356 are included in
accounts payable and accrued liabilities.
54 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
14. Share Capital, Stock Options and Warrants (continued)
a) Share capital (continued)
The Company also issued 313,886 broker warrants as additional compensation, each warrant entitling the
holder to purchase one common share of the Company at a price of $0.88 until June 22, 2017. The value of
one broker warrant was established at $0.29.
The total fees of $599,915 and the broker warrants value of $91,027 have been allocated on a prorata basis
between share capital and the warrants reserve, $612,179 and $78,763 respectively, based on the ratio
established by their respective values as described above.
Concurrently with the public offering, the Company completed a non-brokered private placement offering of
184,400 units at a price of $0.88 per unit for aggregate gross proceeds of $162,272. Each unit comprises the
same terms and conditions than the units issued under the public offering. Expenses related to the private
placement amounted to $10,083. The fees have been allocated on a prorata basis between share capital and
the warrants reserve, $8,937 and $1,146 respectively, based on the ratio established by their respective
values as discussed above.
During the year ended August 31, 2017, following the exercise of stock options, the Company issued
1,074,250 common shares (574,250 common shares for the year ended August 31, 2016) for a cash
consideration of $426,126 ($219,166 for the year ended August 31, 2016). As a result, an amount of $223,560
was reallocated from “Reserve – Stock option plan” to “Share capital” in shareholders’ equity ($139,168 for
the year ended August 31, 2016).
During the year ended August 31, 2017, following the exercise of warrants, the Company issued 1,870,528
common shares (790,316 common shares for the year ended August 31, 2016) for a cash consideration of
$2,144,197 ($581,630 for the year ended August 31, 2016). As a result, an amount of $354,443 was
reallocated from “Reserve – Warrants” to “Share capital” in shareholders’ equity ($33,013 for the year ended
August 31, 2016).
b) Stock options
The Shareholders approved the stock option plan on January 24, 2017 because, according to the policies of
the TSX Exchange, the stock option plan must be approved by the Company’s shareholders every three year.
The number of common shares reserved by the Board of Directors for options granted under the plan shall
not exceed 10% of the issued and outstanding common shares of the Company. The plan is available to the
Company’s directors, consultants, officers and employees.
The stock option plan stipulates that the terms of the options and the option price shall be fixed by the directors
subject to the price restrictions and other requirements imposed by the TSX Exchange. The exercise period
cannot exceed five years, beginning on the grant date. These options generally vest over a four-year period,
except for 700,000 outstanding stock options granted (600,000 stock options granted as at August 31, 2016),
which were completely vested at grant date. The exercise price of the options is the closing price of the shares
of the Company on the TSX Exchange on the trading day immediately preceding the date of grant.
The compensation expense in regards to the stock option plan for the year ended August 31, 2017 is
$864,054 ($451,096 for the year ended August 31, 2016).
55 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
14. Share Capital, Stock Options and Warrants (continued)
b) Stock options (continued)
The fair value of options granted was determined using the Black-Scholes option pricing model with the
following assumptions:
Years ended August 31,
2017
2016
Risk-free interest rate
Between 0.50% and 1.39%
Between 0.32% and 0.80%
Volatility
Between 49.98% and 102.25%
Between 62% and 112%
Dividend yield on shares
Expected life
Weighted share price
Weighted fair value per option at the
grant date
Nil
0 to 5 years
$1.49
$0.70
Nil
0 to 5 years
$0.95
$0.55
In addition, option valuation models require the input of highly-subjective assumptions, including the expected
stock price volatility. Any changes in the subjective input assumptions can affect the fair value estimate.
The expected volatility is based on the historical volatility of the underlying share price for a period equivalent
to the expected life of the options.
The situation of the outstanding stock option plan and the changes that took place between August 31, 2015
and August 31, 2017 are as follows:
Outstanding as at August 31, 2015
Options granted
Options exercised
Options cancelled
Outstanding as at August 31, 2016
Options granted
Options exercised
Options cancelled
Outstanding as at August 31, 2017
Options exercisable as at
August 31, 2017
Number of
options
3,542,750
2,154,750
(574,250 )
(93,750 )
5,029,500
2,992,750
(1,074,250 )
(981,750 )
5,966,250
Weighted-
average
exercise
price
$
0.50
0.95
0.38
0.79
0.70
1.49
0.40
1.03
1.10
2,200,188
0.81
56
Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
14. Share Capital, Stock Options and Warrants (continued)
b) Stock options (continued)
The table below provides information on the outstanding stock options as at August 31, 2017:
Number of outstanding stock Number of exercisable stock
options
options
Weighted-average
remaining contractual life
(years)
40,000
549,500
100,000
150,000
140,000
400,000
100,000
288,000
120,000
200,000
458,500
362,000
95,000
222,500
350,000
207,500
400,000
205,000
100,000
810,000
150,000
518,250
5,966,250
40,000
549,500
75,000
75,000
140,000
100,000
50,000
216,000
100,000
50,000
113,688
184,750
68,750
-
-
-
-
-
100,000
100,000
37,500
200,000
2,200,188
0.24
0.39
1.13
2.06
2.38
3.02
2.23
1.65
1.23
3.39
3.37
2.60
3.63
4.82
4.77
5.00
4.07
4.63
4.02
4.21
3.94
4.40
3.28
Exercise price
$
0.24
0.25
0.44
0.68
0.69
0.70
0.72
0.75
0.85
0.90
0.93
0.94
1.20
1.28
1.33
1.34
1.41
1.49
1.50
1.55
1.66
1.68
1.10
57 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
14. Share Capital, Stock Options and Warrants (continued)
c) Warrants
The situation of the outstanding warrants and the changes that took place between August 31, 2015 and
August 31, 2017 are as follows:
Outstanding as at August 31, 2015
Issued with units (note 14a)
Issued to brokers (note 14a)
Warrants expired
Warrants exercised (note 14a)
Outstanding as at August 31, 2016
Warrants expired
Warrants exercised (note 14a)
Outstanding as at August 31, 2017
Number of
warrants
3,450,426
5,313,610
313,886
(2,670,110 )
(790,316 )
5,617,496
(1,366,468 )
(1,870,528 )
2,380,500
Weighted-
average
exercise
price
$
0.98
1.36
0.88
1.05
0.74
1.33
1.20
1.14
1.55
Warrants exercisable as at August 31, 2017
2,380,500
1.55
15. Net Loss per Share
The table below presents a reconciliation between the basic net loss and the diluted net loss per share:
Net loss attributable to shareholders
Basic and diluted
Number of shares
Years ended August 31,
2017
$
2016
$
(6,537,043 )
(9,281,669 )
Basic and diluted weighted-average number of shares outstanding
80,954,643
66,735,651
Amount per share
Net loss per share
Basic
Diluted
(0.08 )
(0.08 )
(0.14 )
(0.14 )
58
Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
15. Net Loss per Share (continued)
Stock options, warrants and the convertible debenture are excluded from the calculation of the diluted weighted-
average number of shares outstanding when their exercise price is greater than the average market price of
common shares or when their effect is antidilutive. The number of such stock options, warrants and the nominal
value of the convertible debenture is presented below:
Stock options
Warrants
Convertible debenture
Years ended August 31,
2017
2016
1,783,250
2,380,500
297,500
5,303,610
US$2,000,000 US$2,000,000
For the years ended August 31, 2017 and 2016, the diluted amount per share was the same amount as the basic
amount per share, since the dilutive effect of stock options, warrants and convertible debenture was not included
in the calculation; otherwise, the effect would have been antidilutive. Accordingly, the diluted amount per share
for these years was calculated using the basic weighted average number of shares outstanding.
59 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
16. Additional Information on the Consolidated Statements of Cash Flows
Changes in non-cash operating working capital items
Trade and other receivables
Tax credits receivable
Inventories
Prepaid expenses
Accounts payable and accrued liabilities
Warranty provision
Deferred revenues
Deferred lease inducement
Supplementary information
Tax credits recorded against property, plant and equipment
Unpaid acquisition of property, plant and equipment
Unpaid additions to intangible assets
Cash and cash equivalents
Cash
Short-term investments
Years ended August 31,
2017
$
2016
$
(2,237,512 )
(390,537 )
(1,389,684 )
(190,552 )
780,518
(48,960 )
(366,412 )
(77,747 )
(3,920,886 )
161,138
158,865
5,945
As at
August 31,
2017
$
(1,420,333 )
(15,000 )
(1,219,054 )
(139,365 )
368,243
93,870
(609,943 )
927,698
(2,013,884 )
-
18,049
59,636
As at
August 31,
2016
$
794,470
11,775,829
12,570,299
454,740
5,448,300
5,903,040
60 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
17. Commitments
Leases
The Company leases offices in Québec under operating leases expiring on April 30, 2018 and September 30,
2025. The main agreement is renewable for an additional five-year period.
Future payments for the leases, totalling $4,890,902, required in each of the forthcoming years are as follows:
2018
2019
2020
2021
2022
Thereafter
$
669,101
555,236
567,747
580,962
593,349
1,924,507
In 2017, the offices lease expense is $801,600 ($909,969 in 2016).
18. Contractual Guarantees
During the normal course of business, the Company replaces defective parts under warranties offered at the sale
of the products. The term of the warranties is generally 12 months. During the year ended August 31, 2017, the
Company recognized an expense of $12,130 ($93,870 for the year ended August 31, 2016) for guarantees. A
provision of $128,910 is recorded for guarantees as at August 31, 2017 ($177,870 as at August 31, 2016). The
following table summarizes changes in warranty provision:
Balance – Beginning of year
Provisions recognized
Amounts used during the period
Balance – End of year
Years ended August 31,
2017
$
177,870
12,130
(61,090)
128,910
2016
$
84,000
93,870
-
177,870
This provision estimate is based on past experience. The actual costs that the Company may incur, as well as
the moment when the parts should be replaced, can differ from the estimated amount.
19. Government Assistance
Under an agreement entered into with Canada Economic Development, the Company may receive a refundable
contribution of a maximum amount of $200,000, non-interest bearing, to cover expenses related to the
commercialization of its FFR products. This contribution is paid out based on presentation by the Company
of invoices related to specific expenses since May 22, 2015. During the year ended August 31, 2017, the
Company received an amount of $134,863 ($65,137 for the year ended August 31, 2016) for which an amount
of $48,416 ($27,858 for the year ended August 31, 2016) was recognized against administrative and sales and
marketing.
61 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
20.
Income Taxes
The reconciliation of the income tax provision calculated using the combined Canadian federal and provincial
statutory income tax rate with the income tax provision in the consolidated financial statements is as follows:
Years ended August 31,
2017
$
2016
$
Income tax payable using the combined federal and provincial
statutory tax rate (26.8%; 26.9% in 2016)
(1,754,705 )
(2,498,200 )
Non-deductible expenses and others
Deductible financing fees
Taxable income
Non-taxable income tax credits
Losses carried forward
Income tax using effective income tax rate
893,561
(157,252 )
(98,321 )
(101,430 )
1,218,147
-
1,317,525
(98,835 )
(95,929 )
(114,103 )
1,489,542
-
As at August 31, 2017, the Company has tax losses of approximately $22,276,400 for federal purposes and
$21,701,400 for provincial purposes that can be used to reduce future taxable income. These losses expire as
follows:
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Federal
Provincial
$
$
515,000
42,000
400
463,000
40,000
400
1,552,000
1,509,000
716,000
692,000
1,404,000
1,214,000
500,000
2,123,000
1,285,000
237,000
1,091,000
2,513,000
5,759,000
4,539,000
500,000
2,146,000
1,280,000
239,000
1,125,000
2,510,000
5,493,000
4,490,000
22,276,400
21,701,400
62
Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
20.
Income Taxes (continued)
The Company also has undeducted research and development expenses of $9,211,000 ($8,205,000 as at
August 31, 2016) for federal purposes and $12,203,000 ($10,920,000 as at August 31, 2016) for provincial
purposes that are deferred over an undetermined period.
Deferred income tax assets related to unclaimed tax losses, financing costs, research and development
expenses and others as well as non-refundable scientific research tax credits adding up to approximately
$12,680,000 ($10,974,000 as at August 31, 2016) were not recognized due to the uncertainty concerning the
Company’s ability to generate taxable income. In addition, deferred tax liabilities of approximately $701,000
($672,000 as at August 31, 2016) related to federal investment tax credits on property, plant and equipment were
recognized and offset by a deferred income tax asset.
21. Tax Credits for Scientific Research and Experimental Development
For tax purposes, research and development expenses are detailed as follows:
Federal
Provincial
Years ended August 31,
2017
$
2016
$
1,548,000
1,499,000
1,598,000
1,539,000
These expenses have enabled the Company to become eligible for scientific research and experimental
development tax credits reimbursable for the following amounts:
Federal
Provincial
Years ended August 31,
2017
2016
$
-
$
-
378,000
378,000
365,000
365,000
These credits were recorded in research and development expenses in the consolidated statements of loss and
comprehensive loss.
Reimbursable scientific research and experimental development income tax credits earned for the year ended
August 31, 2017 and 2016 have not yet been reviewed by the taxation authorities, and the amounts granted
could differ from those that have been recorded.
Over the years, the Company qualified for federal income tax credits for scientific research and experimental
development, which were non-refundable and could be used against Part I Company tax. The accumulated
credits for the year ended August 31, 2017 are about $2,643,000 ($2,496,000 as at August 31, 2016) and expire
over a period of 7 to 20 years beginning in 2017.
63 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
22. Segmented Information
Segment’s Information
The Company is organized into two segments: Medical and Industrial.
Medical segment: In this segment, Opsens focuses mainly on the measure of FFR in interventional cardiology.
Industrial: In this segment, Opsens’ develops, manufactures and installs innovative fiber optic sensing solutions
for critical applications such as the monitoring of oil wells and other demanding industrial applications.
The principal factors employed in the identification of the two segments reflected in this note include the
Company’s organizational structure, the nature of the reporting lines to the President and Chief Executive Officer
and the structure of internal reporting documentation such as management accounts and budgets.
The same accounting policies are used for both reportable segments. Operations are carried out in the normal
course of operations and are measured at the exchange amount, which approximates prevailing prices in the
markets.
Years ended August 31,
Medical
Industrial
$
$
2017
Total
$
Medical
Industrial
$
$
2016
Total
$
External sales
Internal sales
Gross margin
Depreciation of property,
16,269,011
1,482,985 17,751,996
-
6,886,549
269,505
269,505
610,992
7,497,541
6,429,256
-
1,041,707
3,171,561
9,600,817
413,982
413,982
591,105
1,632,812
plant and equipment
608,453
90,163
698,616
443,355
105,875
549,230
Amortization of
intangible assets
Financial expenses
(revenues)
Change in fair value of
embedded derivative
75,927
14,566
90,493
64,543
8,224
72,767
(289,936 )
282,743
(7,193 )
(167,106 )
223,970
56,864
163,745
-
163,745
732,425
-
732,425
Net loss
(4,879,287 )
(1,659,988 )
(6,539,275 )
(7,247,523 )
(2,031,912 )
(9,279,435 )
Acquisition of property,
plant and equipment
Additions to
intangible assets
Segment assets
Segment liabilities
490,155
9,024
499,179
2,934,675
131,924
3,066,599
86,285
25,992,083
9,487,517
18,515
108,264
104,800
1,617,718 27,609,801 14,281,597
8,973,258
9,644,477
156,960
54,376
162,640
2,579,879 16,861,476
575,795
9,549,053
64
Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
22. Segmented Information (continued)
The Company’s net loss per reportable segments reconciles to its consolidated financial statements as follows:
Gross margin per reportable segments
Elimination of inter-segment profits
Gross margin
Net loss per reportable segments
Elimination of inter-segment profits
Net loss and comprehensive loss
Geographic sector’s information
Revenue per geographic sector
Japan
United States
Canada
Other*
Years ended August 31,
2017
$
7,497,541
2,232
7,499,773
2016
$
1,632,812
(2,234 )
1,630,578
(6,539,275 )
(9,279,435 )
2,232
(2,234 )
(6,537,043 )
(9,281,669 )
Years ended August 31,
2017
$
2016
$
6,586,561
5,100,077
1,625,567
4,439,791
17,751,996
3,521,669
1,506,971
2,207,299
2,364,878
9,600,817
* Comprised of revenues generated in countries for which amounts are individually not significant.
Revenues are attributed to the geographic sector based on the clients’ location. Capital assets, which include
property, plant and equipment and intangible assets, are all located in Canada.
During the year ended August 31, 2017, revenues from two clients represented individually more than 10% of
the total revenues of the Company, i.e. 40% (medical’s reportable segment) and 17% (medical’s reportable
segment).
During the year ended August 31, 2016, revenues from one client represented individually more than 10% of the
total revenues of the Company, i.e. 37% (medical’s reportable segment).
65 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
23. Related-party Transactions
In the normal course of its operations, the Company has entered into transactions with related parties.
Professional fees paid to a company
controlled by a director
Fees are incurred for the Company’s FFR activities.
Years ended August 31,
2017
$
2016
$
59,134
29,248
Key management personnel, having authority and responsibility for planning, directing and controlling the
activities of the Company, comprise the Chief Executive Officer, the Chief Financial Officer, the Business Unit
Manager of Opsens Solutions Inc. and other vice presidents. Compensation of key management personnel
during the year were as follows:
Short-term salaries and other benefits
Option-based awards
Years ended August 31,
2017
$
1,180,834
83,715
1,264,549
2016
$
1,317,208
95,646
1,412,854
The compensation of key executives is determined by the Human Resources and Compensation Committee,
taking into consideration individual performance and market trends.
66 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
24. Additional Information to the Consolidated Statements of Loss and Comprehensive Loss
Expenses (income) by function
Salaries & Other Benefits
Cost of sales
Administrative
Sales and marketing
Research and development
Years ended August 31,
2017
$
2016
$
9,866,131
7,604,580
Depreciation of Property, Plant and Equipment
698,616
549,230
Cost of sales
Administrative
Sales and Marketing
Research and development
Amortization of Intangible Assets
Administrative
Research and development
Government Assistance
Cost of sales
Administrative
Sales and marketing
Research and development
90,493
72,767
(48,416 )
(113,054 )
Income tax credits for research and development
(390,537 )
(424,173 )
Research and development
25. Financial Instruments
Fair Value
The fair value of cash and cash equivalents, trade and other receivables and accounts payable and accrued
liabilities approximates their carrying value due to their short-term maturities.
The fair value of long-term debt is based on the discounted value of future cash flows under the current financial
arrangements at the interest rate the Company expects to currently negotiate for loans with similar terms and
conditions and maturity dates. The fair value of long-term debt approximates its carrying value due to the current
market rates.
67 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
25. Financial Instruments (continued)
Fair Value (continued)
The fair value of the convertible debenture is based on the discounted value of future cash flows under the current
financial arrangements at the interest rate the Company expects to currently negotiate for loans with similar terms
and conditions and maturity dates. The fair value of the debt component of the convertible debenture
approximates $2,143,900 as at August 31, 2017 ($1,905,700 as at August 31, 2016) and is classified at level 2
in the fair value hierarchy.
Valuation Techniques and Assumptions Applied for the Purposes of Measuring Fair Value
The Company must maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. The Company primarily applies the market approach for recurring fair value measurements.
The three input levels used by the Company to measure fair value are the following:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. An active market for the
asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
Level 2 – Quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs
that are observable or can be corroborated by observable market data for substantially the full term of the assets
or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair
value of the assets or liabilities.
The following table summarizes the fair value hierarchy under which the Company’s financial instruments are
valued.
As at August 31, 2017
Total
Level 1
Level 2
Level 3
Financial assets (liabilities) measured at
fair value:
Convertible debenture – embedded
derivative
(1,097,653 )
-
(1,097,653 )
$
$
$
$
-
Financial assets (liabilities) measured at
fair value:
Convertible debenture – embedded
derivative
As at August 31, 2016
Total
Level 1
Level 2
Level 3
$
$
$
(979,635 )
-
(979,635 )
$
-
68 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
25. Financial Instruments (continued)
Valuation Techniques and Assumptions Applied for the Purposes of Measuring Fair Value
(continued)
As explained in note 13, the convertible debenture contains an embedded derivative that must be measured at
fair value at each reporting date with gains and losses in fair value recognized through profit or loss. One of the
most significant assumptions impacting the Company’s valuation of this embedded derivative is the implied
volatility. The fair value of the convertible debenture was determined using the Black-Scholes pricing model using
an implied volatility of 51% (55% in 2016), a discount rate of 1.26% (0.57% in 2016) and an expected life of 0.2
years (1.2 years in 2016). A 1% change in the implied volatility factor would have changed the fair value of the
embedded derivative by $6,143 ($9,575 for the year ended August 31, 2016).
Risk Management
The main risks arising from the Company’s financial instruments are credit risk, liquidity risk, interest rate risk
and foreign exchange risk. These risks arise from exposures that occur in the normal course of business and are
managed on a consolidated Company basis.
Credit Risk
Credit risk is the risk of an unexpected loss if a customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Company regularly monitors credit risk exposure and takes steps to mitigate the
likelihood of this exposure resulting in losses. The Company's exposure to credit risk currently relates to cash
and cash equivalents and to trade and other receivables. The Company’s credit risk management policies include
the authorization to carry out investment transactions with recognized financial institutions with credit ratings of
at least A and higher, in either bonds, money market funds or guaranteed investment certificates. Consequently,
the Company manages credit risk by complying with established investment policies.
The credit risk associated with trade and other receivables is generally considered normal as trade receivables
consist of a large number of customers spread across diverse geographical areas. Generally, the Company does
not require collateral or other security from customers for trade accounts receivable; however, credit is extended
following an evaluation of creditworthiness. In addition, the Company performs ongoing credit reviews of all of its
customers and establishes an allowance for doubtful accounts when accounts are determined to be at risks
and/or uncollectible. Two major customers represented 34% of the Company’s total accounts receivable as at
August 31, 2017 (50% as at August 31, 2016).
As at August 31, 2017, 37% (56% as at August 31, 2016) of the accounts receivable were of more than 90 days
whereas 34% (30% as at August 31, 2016) of those were less than 30 days. The maximum exposure to the risk
of credit for accounts receivable corresponded to their book value. As at August 31, 2017, the allowance for
doubtful accounts was established at $940,929 ($491,623 as at August 31, 2016).
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial
liabilities that are settled in cash and/or another financial asset. The Company’s approach is to ensure it will have
sufficient liquidity to meet operational, capital and regulatory requirements and obligations, under both normal
and stressed circumstances. Cash flow projections are prepared and reviewed quarterly by the Board of Directors
to ensure a sufficient continuity of funding. The funding strategies used to manage this risk include the Company’s
access to capital markets and debt securities issues.
69 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
25. Financial Instruments (continued)
Risk Management (continued)
Liquidity Risk (continued)
The following are the contractual maturities of the financial liabilities (principal and interest, assuming current
interest rates) as at August 31, 2017 and August 31, 2016:
August 31, 2017
Carrying
amount Cash flows
$
$
0 to 12
months
$
Accounts payable and
accrued liabilities
2,909,516
2,909,516
2,909,516
12 to 24
After
months
24 months
$
-
$
-
Long-term debt
1,445,168
1,580,231
492,722
526,052
561,457
Convertible debenture
3,853,225
2,770,358
2,770,358
-
-
Total
8,207,909
7,260,105
6,172,596
526,052
561,457
August 31, 2016
Carrying
amount Cash flows
$
$
0 to 12
months
$
Accounts payable and
accrued liabilities
2,041,873
2,041,873
2,041,873
12 to 24
After
months
24 months
$
-
$
-
Long-term debt
1,784,654
1,930,582
530,651
502,285
897,646
Convertible debenture
3,792,839
2,898,533
-
2,898,533
-
Total
7,619,366
6,870,988
2,572,524
3,400,818
897,646
Interest Rate Risk
The Company’s exposure to interest rate risk is summarized as follows:
Cash and cash equivalents
Trade and other receivables
Accounts payable and accrued liabilities
Long-term debt
Convertible debenture
Fixed interest rates
Non-interest bearing
Non-interest bearing
Non-interest bearing, fixed and variable interest rates
Fixed interest rates
Interest Rate Sensitivity Analysis
Interest rate risk exists when interest rate fluctuations modify the cash flows or the fair value of the Company’s
investments and embedded derivative. The Company owns investments with fixed interest rates. As at
August 31, 2017, the Company was holding more than 94% (92% as at August 31, 2016) of its cash and cash
equivalents in all-time redeemable term deposits.
All else being equal, a hypothetical 1% interest rate increase or decrease wouldn’t have a significant impact on
net loss and comprehensive loss for the year ended August 31, 2017 (not significant for the year ended
August 31, 2016).
70
Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
25. Financial Instruments (continued)
Risk Management (continued)
Financial expenses (revenues)
Interest and bank charges
Interest on long-term debt
Interest and accreted interest on convertible debenture (note 13)
Gain on foreign currency translation
Interest income
Years ended August 31,
2017
$
56,323
70,379
69,979
(19,374 )
(184,500 )
(7,193 )
2016
$
57,298
44,967
69,629
(3,988 )
(111,042 )
56,864
Concentration Risk
Concentration risk exists when investments are made with multiple entities that share similar characteristics or
when a large investment is made with a single entity. As at August 31, 2017 and 2016, the Company was holding
100% of its cash equivalents portfolio in all-time redeemable term deposits with financial institutions with high
creditworthiness.
Foreign Exchange Risk
The Company realizes certain sales and purchases and certain supplies and professional services in US dollars,
Euros and British pound. Therefore, it is exposed to foreign currency fluctuations. The Company does not actively
manage this risk.
Foreign Currency Sensitivity Analysis
For the year ended August 31, 2017, if the Canadian dollar had strengthened 10% against the US dollar with all
other variables held constant, net loss and comprehensive loss would have been $79,000 higher ($260,000 lower
for the year ended August 31, 2016). Conversely, if the Canadian dollar had weakened 10% against the US dollar
with all other variables held constant, net loss and comprehensive loss would have been $79,000 lower for the
year ended August 31, 2017 ($260,000 higher for the year ended August 31, 2016).
For the year ended August 31, 2017, if the Canadian dollar had strengthened 10% against the Euros with all
other variables held constant, net loss and comprehensive loss would have been $322,000 higher ($159,000
higher for the year ended August 31, 2016). Conversely, if the Canadian dollar had weakened 10% against the
Euros with all other variables held constant, net loss and comprehensive loss would have been $322,000 lower
for the year ended August 31, 2017 ($159,000 lower for the year ended August 31, 2016).
For the year ended August 31, 2017, if the Canadian dollar had strengthened 10% against the British pound with
all other variables held constant, net loss and comprehensive loss would have been $10,000 higher ($42,000
higher for the year ended August 31, 2016). Conversely, if the Canadian dollar had weakened 10% against the
British pound with all other variables held constant, net loss and comprehensive loss would have been $10,000
lower for the year ended August 31, 2017 ($42,000 lower for the year ended August 31, 2016).
71 Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
25. Financial Instruments (continued)
Risk Management (continued)
Foreign Currency Sensitivity Analysis (continued)
As at August 31, 2017 and August 31, 2016, the risk to which the Company was exposed is established as
follows:
Cash and cash equivalents (US$252,720; US$125,202 as at
August 31, 2016)
Cash and cash equivalents (Euro 28,968; Euro 22,450 as at
August 31, 2016)
Cash and cash equivalents (British pound 64; nil as at August
31, 2016)
Trade and other receivables (US$1,741,221; US$440,847 as at
August 31, 2016)
Trade and other receivables (Euro 625,813; Euro 205,129 as at
August 31, 2016)
Trade and other receivables (British pound 116,377; British
pound 85,745 as at August 31, 2016)
Accounts payable and accrued liabilities (US$757,978;
US$317,632 as at August 31, 2016)
Accounts payable and accrued liabilities (Euro 4,408;
nil as at August 31, 2016)
Accounts payable and accrued liabilities (British pound 830;
nil as at August 31, 2016)
Convertible debenture (US$2,198,125; US$2,144,864 as at
August 31, 2016)
Embedded derivative (US$875,600; US$746,900
as at August 31, 2016)
Total
26. Capital Management
As at
August 31,
2017
$
As at
August 31,
2016
$
316,810
163,903
43,125
32,842
103
-
2,182,794
578,410
931,647
300,083
188,463
147,679
(950,202 )
(416,288 )
(6,563 )
(1,342 )
-
-
(2,755,572 )
(2,813,204 )
(1,097,653 )
(1,148,390 )
(979,635 )
(2,986,210 )
The Company's objective in managing capital, primarily composed of shareholders' equity, long-term debt and
the convertible debenture, is to ensure sufficient liquidity to fund production activities, R&D, general and
administrative expenses, sales and marketing expenses, working capital and capital expenditures.
In the past, the Company has had access to liquidity through non-dilutive sources, including the sale of non-core
assets, long-term debts, investment tax credits and government assistance, interest income and public equity
offerings.
As at August 31, 2017, the Company's working capital amounted to $15,909,209 ($9,502,625 as at August 31,
2016), including cash and cash equivalents of $12,570,299 ($5,903,040 as at August 31, 2016). The accumulated
deficit at the same date was $37,076,057 ($30,539,014 as at August 31, 2016). Based on the Company's
assessment, which takes into account current cash and cash equivalents, as well as its strategic plan and
corresponding budgets and forecasts, the Company believes that it has sufficient liquidity and financial resources
to fund planned expenditures and other working capital needs for at least, but not limited to, the 12-month period
following the consolidated statements of financial position date of August 31, 2017.
72
Opsens Inc.
Notes to Consolidated Financial Statements
Years ended August 31, 2017 and 2016
26. Capital Management (continued)
The Company believes that its current liquid assets are sufficient to finance its activities in the short-term.
The Company manages the capital structure and makes adjustments to it in light of changes in economic
conditions and the risk characteristics of the underlying assets. Capital management objectives, policies and
procedures have remained unchanged since the last fiscal year.
For the years ended August 31, 2017 and 2016, the Company has not been in default under any of its obligations
regarding the long-term debt.
27. Subsequent event
On September 1, 2017, the Company achieved a technical milestone related to the agreement with Abiomed and
the Company received a payment, amounting to $936,900 (US$750,000) that will be recorded as licensing
revenues in the consolidated statements of loss and comprehensive loss for fiscal year 2018.
On September 7, 2017, the Company has signed a loan agreement amounting to a maximum of $216,000 for
acquisition of property, plant and equipment.
On September 8, 2017, the Company has signed an agreement amounting to $1,574,734 with a supplier for raw
material purchases for the next 24 months.
28. Approval of Consolidated Financial Statements
The consolidated financial statements were approved by the Board of Directors and authorized for issue on
November 14, 2017.
73 Governance
DIRECTORS
Denis M. Sirois
Chairman
OFFICERS
Louis Laflamme, CPA, CA
President and Chief Executive Officer
Louis Laflamme
President and Chief Executive Officer
Claude Belleville
Vice President, Medical Devices
Claude Belleville
Vice President, Medical Devices
Gaétan Duplain
President, Opsens Solutions
Gaétan Duplain
President, Opsens Solutions
Robin Villeneuve, CPA, CA
Chief Financial Officer and Corporate Secretary
Denis Harrington
Director
Jean Lavigueur
Director
Pat Mackin
Director
Corporate information
HEAD OFFICE
750 boulevard du Parc-Technologique
Quebec, QC G1P 4S3
Telephone: 418.781.0333
Fax: 418.781.0024
INVESTOR RELATIONS
For information about Opsens Inc. or to be placed
on the mailing list for quarterly reports and news
releases, contact Marie-Claude Poitras at the head
office or marie-claude.poitras@opsens.com.
STOCK EXCHANGE LISTING
Toronto Stock Exchange − Symbol: OPS
OTCQX − Symbol: OPSSF
AUDITORS
Deloitte S.E.N.C.R.L./s.r.l, Québec, QC
SHARES OUTSTANDING
85,540,816 (at August 31, 2017)
AST Trust Company (AST) (Canada)
2001 boulevard Robert-Bourassa, suite 1600
Montreal, QC H3A 2A6
Telephone: 1.800.387.0825
ANNUAL MEETING OF SHAREHOLDERS
Will be held at Opsens’ head office:
750 boulevard du Parc-Technologique
Quebec, QC G1P 4S3
Tuesday, January 23, 2018 – 10:30 a.m.
74 Opsens’ Markets
Interventional Cardiology -
Measurement of FFR
for
Opsens’ OptoWire,
one guidewire from start to finish
Electrical pressure guidewires account
the
largest share of the FFR market today. Opsens has
revolutionized the offer with its OptoWire, a guidewire
instrumented with an optical sensor, which, unlike wires
instrumented with electrical sensors, is not affected
by procedural contaminants, offers reliable pressure
measurement and the ability to deliver stents on the
wire, the freedom to reconnect and measure after
the intervention. In the United States, in Europe, in
Japan and in Canada, the OptoWire has proven itself
in clinical uses and has been the subject of scientific
articles that strengthen its profile among cardiologists,
and most recently in the Cardiovascular Intervention
and Therapeutics. According to the results obtained
with 90 OptoWire units, it might be reasonable to
use Opsens’ guidewire as a workhorse guidewire in
percutaneous coronary interventions.
Opsens is a leader in optical pressure measurement
technology. Its intellectual property is protected by 10
patents.
Opsens is based in Quebec (Canada). It is registered
with the FDA and has the ISO 13485 certification.
The facility is equipped with a 5,500 ft2 clean room
for production and assembly of its products. The
company has 130 employees.
Opsens, Head Office,
Quebec, Canada
Opsens, Clean room
Industrial - Growing Markets
Opsens’ versatile technologies can answer needs in
key, valuable markets. There is a positive sentiment
around our single-point measurement technology in
leading areas. This growing interest stems from the
fact that traditional technologies do not perform as
expected under certain conditions, opening avenues
for Opsens’ fiber optic technology.
Opsens capitalizes on its easily adaptable technology
and invests to offer applications to growing markets,
like semiconductors, aerospace and various other
applications.
INTERVENTIONAL
CARDIOLOGY – FFR
OptoWire, one guidewire
from start to finish
INDUSTRIAL
APPLICATIONS
Innovative fiber-based solutions
for a variety of industries
750 boulevard du Parc-Technologique, Quebec, QC G1P 4S3
T 418.781.0333 F 418.781.0024
opsens.com