Annual
Report
2022
OpSens is an innovative medical technology company, leveraging its proprietary optical technology to bring next generation applications
primarily to the fi eld of cardiology. OpSens contributes to the diagnosis and treatment of coronary artery disease through its fl agship product,
the OptoWire, and in str uctural cardiology through the introduction of the SavvyWire, a recently FDA-cleared guidewire for the transcatheter
treatment of aortic valve stenosis, or TAVR.
Mission
1. Global Report for Cardiac Surgery – MedCore Bundle, February 2022
To contribute to healthcare through a unique expertise in innovative
medical products.
OpSens’ Cornerstones to Long-Term Success
•
Innovative products and applications backed by strong endorsements
from key opinion leaders around the world
•
Markets positioned for robust growth supported by clinical evidence and
aging population
•
Diversifi ed commercial capabilities through internal OpSens sales and
marketing team, worldwide distribution partners, and agreements with
major U.S. group purchasing organizations (GPOs), covering 90% of
hospitals and catheterization labs in the U.S. market
•
Strategic partnerships leveraging and monetizing proprietary optical
sensing technology
•
Creation of promising new applications in industrial fi elds within nuclear
and aerospace
•
Dedication to continuous development and improvement.
SavvyWire for Structural Cardiology — The Wait is Over
After months of anticipation in the cardiology community and being featured
on the most prestigious scientifi c platforms and at medical conferences,
OpSens received Health Canada approval for the SavvyWire in April 2022
and 510(k) U.S. FDA clearance in September 2022. OpSens is on its way to
a large-scale commercial launch in the U.S. in early 2023 with a European
CE Mark approval expected for a market release later in calendar year 2023.
SavvyWire: More Than a Wire — The Only 3-In-1 Solution
for the Rapidly Growing TAVR Market
OpSens’ SavvyWire is designed to help in valve positioning in TAVR
procedures, providing best-in-class valve delivery capability and improved
workfl ow. Designed on the base of OpSens’ FidelaTM second-generation
fi ber optic sensor, it is the fi rst and only sensor-guided 3-in-1 TAVR solution
providing stable aortic valve delivery and positioning, continuous accurate
hemodynamic measurement during the procedure, and reliable left
ventricular pacing without the need for adjunct devices or venous access.
TAVR, the fastest growing segment in structural cardiology is driven by an
aging population, superior clinical outcomes, and openness to new evidence
that people of all health conditions benefi t from this minimally invasive
treatment. The global TAVR market is currently estimated at more than
200,000 procedures and is expected to reach 400,000 in 2027.1
OptoWire for Coronary Artery Disease —
Flagship Product Continues to Gain Market Traction
OpSens fl agship product for cardiology, the OptoWire, is a pressure
measurement guidewire for fractional fl ow reserve (FFR) to help in the
diagnosis and treatment of coronary artery disease. Instrumented with
FidelaTM, the OptoWire has contributed to the diagnosis and treatment of
more than 200,000 patients worldwide in a procedure that is becoming
the model of excellence in treatment.
Continued Diversifi ed Worldwide Expansion
OpSens benefi ts from its diversifi ed commercial capabilities, including
an expanding internal sales and marketing team, worldwide distribution
partners, and agreements with major U.S. GPOs that now cover 90% of
hospitals and catheterization labs in the United States. The desire by key
organizations to offer their customers the OptoWire is a testament to the
guidewire’s ability to improve effi ciency and reduce costs in diagnosing and
treating arterial blockages, and to align with their customers’ mission to
better treat their patients.
In 2022, OpSens continued its expansion in the valuable U.S. market by
opening an offi ce in Minnesota, the ‘medical device capital of the U.S.’ With
the pandemic in the rear-view mirror, OpSens doubled its U.S. fi eld team in
2022 to accelerate product adoption and penetration by providing enhanced
education and fi rst-hand training to doctors and medical teams.
OpSens inauguration of Minnesota offi ce
Strategic Partnerships to Leverage
and Monetize Proprietary Optical Technology
OpSens’ second-generation sensor technology can be adapted to a variety of
applications, enabling business partnerships in valuable medical markets.
OpSens’ products are gaining increasing recognition in cardiology, thanks
to a steady growth in the number of uses and the release of clinical data
demonstrating the value and benefi ts of working with the OptoWire in
clinical situations.
Several companies, including Abiomed and Monteris, are integrating OpSens’
sensors into their products used in medical applications. These collaborations
highlight the quality of OpSens’ technology and position the Company for new
strategic agreements to drive future growth.
This year, OpSens was pleased with the signing of a four-year extension of
its agreement with Abiomed to continue supplying OpSens’ FidelaTM sensor
technology for Abiomed’s Impella® heart pump through April 2028.
Creation of Promising New Critical
Applications in Industrial Fields
OpSens’ versatile technologies can meet needs in valuable markets — as
traditional technologies do not perform as expected under certain conditions.
OpSens capitalizes on its easily adaptable technology and invests in
innovation to create applications in optical temperature, pressure, strain, and
other critical parameters for various growing markets, such as aerospace,
nuclear and others.
OpSens – Our Expertise Serving Patient Health
When a centre initially uses one of our products, a small team from OpSens goes to the centre to provide proper training, including observation of initial
procedure uses.
At the end of one of those initial sessions at a U.S.-based hospital using the SavvyWire, the OpSens team was debriefing in the hospital’s atrium. A lady
approached the team to ask if they were from the company providing the new product for the TAVR procedure.
“Yes, we are,” the OpSens team members responded.
She explained that her mother had received a new aortic valve that day. The doctor had told her the results and outlook were excellent and should allow
her mother to improve her life expectancy and quality of life. She wanted to express her gratitude and thanked the team for their work and dynamism.
What she did not know is that during the procedure, her mother’s heart had stopped beating for a few seconds. Faced with the emergency, the doctor
successfully used the SavvyWire’s unique pacing function to restore the patient’s heartbeat right away. The innovative feature of the SavvyWire was
critical in the success of the procedure.
It is moments and feedback like this that remind us why we do what we do everyday. We are proud to contribute to people’s health with our unique
expertise in innovative medical products. In this clinical case, we contributed directly to saving a patient’s life!
OpSens’ mission is to contribute to healthcare through unique expertise in developing innovative medical
products. OpSens is confident that it will advance its mission to improve medical treatments for heart
disease patients, while generating revenue growth in 2023 and creating shareholder value.
Dear shareholders,
1. Global Report for Cardiac Surgery – MedCore Bundle, February 2022
In fiscal year 2022, we advanced our vision of becoming a world leader
in optical measurement within medical and industrial applications.
In medical, we are accelerating our focus specifically on the field of
cardiology to bring innovation to key treatments, including:
• The launch of the SavvyWire to address the treatment of aortic valve
stenosis through transcatheter aortic valve replacement (TAVR)
• The expansion of the OptoWire to treat coronary artery disease; and,
• The development of valuable medical partnerships, such as the
one with Abiomed for ventricular assistance.
2022 Ends on a High Trend
After a slow start to the year due to the cumulated effects of the
on-going pandemic, which impacted the number of procedures
performed in hospitals and disrupted our supply chain, we realized
the expected resumption in revenue growth in the second half of
fiscal year 2022. Overall, revenues were up 2% for the year, and 11%
in the second half.
TAVR Business Becomes a Reality
Beyond our commercial success, 2022 was very much a year of
anticipation and preparation for our entry into the TAVR market.
With the development of our new product called the SavvyWire
completed, our focus was on obtaining regulatory authorizations
for Canada and the United States.
SavvyWire, a “3-in-1” solution, is an intelligent, pre-shaped, structural
guidewire with pressure monitoring, aimed at improving procedural
efficiency and clinical outcomes by allowing multiple steps over the
same device without exchange, during TAVR procedures.
Through much of 2022, while we waited for Health Canada and FDA
clearance, we prepared for the full-scale commercialization of the
product. This included:
• Presentation of data at various medical conferences;
• Development of a strong sales and marketing strategy;
• Opening of a satellite office in Minneapolis, Minnesota, the global
epicenter of the medical device industry;
• Advancement of commercial operations to prepare a
successful launch;
• Internal training of the sales force on the TAVR procedure and
SavvyWire; and,
• Ramp up of our manufacturing capabilities — including a physical
expansion of our production facility.
The SavvyWire’s commercialization will benefit from the synergy
of OpSens’ enlarged sales force and wide network of OptoMonitor
units already deployed around the world.
Our anticipation became a reality when we received Health
Canada’s authorization in April 2022, ahead of expectations, and
immediately began a limited market release. The SavvyWire
approval was anticipated after key opinion leaders, who had worked
with the product and software, expressed their enthusiasm about
the performance of our game-changing product.
In a made-for-Hollywood fashion, we received U.S. 510 (k) FDA
clearance in mid-September 2022, just two days before the
Transcatheter Cardiovascular Therapeutics Conference (TCT),
an annual scientific symposium of the Cardiovascular Research
Foundation (CRF). TCT is the premier educational meeting
specializing in interventional cardiovascular medicine, attracting
more than 10,000 attendees from 90 countries around the world.
With its game-changing product for TAVR, OpSens was one of the
stars of TCT this year. The event marked the launch of the U.S.
limited-market release, heading toward full commercialization in
North America in early calendar year 2023.
Another step to a global launch is the receipt of a CE Mark to advance
the product in 2023. This opens the door to much of the world with
what we believe is one of the industry’s most innovative ancillary
product, which will ultimately drive OpSens’ future revenue and
strategic value.
The road is wide open, as the TAVR procedure is growing rapidly
around the world, driven by the aging population and recent studies
that demonstrate its benefits for a broader array of patients. The
global TAVR market is currently estimated at more than 200,000
procedures and is expected to reach 400,000 in 2027.1
1
Customers are excited about the launch of the SavvyWire due to its
uniqueness in the industry. The SavvyWire is designed to provide
best-in-class valve delivery capability and improve workflow in the
TAVR procedure. A true 3-in-1 solution for stable aortic valve delivery
and positioning, continuous accurate hemodynamic measurement
during the procedure, and reliable left ventricular pacing without the
need for adjunct devices or venous access. The SavvyWire is the first
and only sensor-guided TAVR solution, designed to support TAVR
efficiency and lifetime patient management. The SavvyWire enables
significant TAVR procedural benefits by supporting multiple steps
over the same device without exchange, while delivering continuous,
accurate hemodynamic measurements and display.
Coronary Artery Disease Business
On the commercialization side of our business, particularly in the
coronary artery disease segment, our FFR and dPR products
showed their strong commercial potential and resumed their sales
growth as soon as headwinds from the pandemic began to subside.
We ended fiscal 2022 with record coronary sales in the second
semester, which we believe, sets the stage for fiscal 2023.
As we feel the pandemic is now in our rear-view mirror, we have
enacted initiatives to intensify our presence in the field, including the
doubling of our sales team in the U.S. and the appointment of key
personnel to enhance our commercialization efforts. Additionally,
we signed GPO contracts to enhance our reach into hospitals and
catheterization labs in the U.S. Through these GPOs, and our own
internal sales force efforts, OpSens now covers 90% of hospitals in
the U.S.
In Canada, revenues were up 9% during the year. While the impact
from the pandemic was similar to that of the U.S., OpSens was
awarded a multi-year contract as the main coronary pressure
guidewire for the eastern part of the province of Quebec, a deal which
has become a growth driver allowing us to elevate our performance
in the country.
The trend in EMEA was also positive. While we work with distributors
in this region, as opposed to a direct selling model in North
America, OpSens’ team has done a tremendous job of improving the
performance of distributors through enhanced educational activities.
Sensing Partnerships
Several companies are integrating OpSens’ sensors into their
products used in medical applications. One of our most valuable
partnerships is our supply agreement with Abiomed. We were
pleased to sign a four-year extension of this agreement to continue
supplying OpSens’ FidelaTM sensor technology for Abiomed’s
Impella® heart pump through April 2028.
Agreements like these not only validate our fiber optic sensor
technology but also provide us with a strong and predictable base
of revenue and growth.
The long-term opportunities in this segment continue to get more
attractive and we are working on an increasing number of potentially
significant opportunities, where OpSens’ proprietary sensing
components could be integrated into critical projects.
Industrial Segment
Our industrial segment leverages our fiber optic sensing technology
and knowledge by offering key solutions in optical temperature,
pressure, strain, and other critical parameters for various industries,
including aerospace, nuclear, and power electronics.
In particular, OpSens and our partners are developing an optical
fuel monitoring system for aerospace applications based on OpSens
Solutions’ patented fiber optic technology.
The other key project is the International Thermonuclear Experimental
Reactor (ITER), which is the world’s largest nuclear fusion and
scientific experiment, currently under construction in southern
France. OpSens was selected to supply our customer with fiber
optic absolute and differential pressure sensors, which will provide
critical information for accurate monitoring of their cryogenic valve
boxes. In total, it is anticipated that there will be a large number
of sensors at different phases of this important project for which
OpSens’ proprietary sensor technology would be applicable.
Perspectives
In 2023, our priority remains to increase the impact of our products
in cardiology from a commercial, clinical, and financial perspective,
as we set the stage for an even more successful future.
I thank the shareholders for their support in the deployment of
our strategy. I would also like to thank our customers, employees,
directors, suppliers, and partners for their support in the
development of OpSens.
In closing, we look forward to meeting with you at the annual virtual
shareholder meeting to be held in January 2023 to present the
Company’s progress and prospects.
Louis Laflamme, CPA
President and Chief Executive Officer
2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2022
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 year ended August 31, 2022, in comparison with the corresponding periods
ended August 31, 2021. In this Management’s Discussion and Analysis (“MD&A”), “OpSens,” “the Company,” “we,”
“us” and “our” mean OpSens Inc. and its subsidiaries. This MD&A should be read and interpreted in conjunction with
the information contained in our annual consolidated financial statements for the years ended August 31, 2022, and
2021, 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 21, 2022. 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 all currently available
information 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 21, 2022, and is subject to change after this 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.
COVID-19
The COVID-19 pandemic had a moderate impact on the consolidated financial statements for the year ended
August 31, 2022, following the supply chain disruptions that affected manufacturing and distribution of its
products and hospitals procedure disruptions. For the second semester of the year, there have been a decrease in
the negative impacts generated by the COVID-19 pandemic.
OVERVIEW
OpSens is a leader in advanced 2nd generation fiber optic sensor applications for cardiovascular interventions. The
Company’s current primary focus is the measurement of Fractional Flow Reserve (“FFR”) and the diastolic pressure
algorithm (“dPR”) in the coronary artery disease market. OpSens offers an optical guidewire (OptoWire) powered by
the 2nd generation optical sensor, Fidela, to measure pressure in the diagnosis and to improve clinical outcomes in
patients with coronary artery disease. OpSens recently entered the large and rapidly growing structural heart space
with its introduction of the SavvyWire as the first and only Sensor-Guided TAVR solution, designed to support TAVR
efficiency and lifetime patient management. OpSens also operates in the Industrial segment through its wholly-owned
subsidiary OpSens Solutions Inc. (“Solutions”). Solutions develops, manufactures, and installs innovative
measurement solutions using fibre optic sensors for critical and demanding industrial applications.
OpSens owns 21 patents and has four pending patents to protect its technologies in the Medical and Industrial sectors.
3
SECTORS OF ACTIVITY
In the Medical sector, OpSens markets the OptoWire and OptoMonitor to diagnose coronary artery disease. The
OptoWire provides cardiologists with an optimized pressure guidewire to navigate coronary arteries and cross
blockages with ease while measuring intracoronary blood pressure. This procedure is called FFR measurement, also
referred to as physiological measurement.
OpSens has obtained the required regulatory approvals for the OptoWire and OptoMonitor in the world’s largest
markets, namely the United States, Europe (including the Middle East), Japan and Canada. Furthermore, the need to
diagnose coronary artery disease without hyperemia induced by the injection of heart-stimulating drugs has emerged.
OpSens has developed its proprietary diastolic pressure ratio to meet this need. Non-Hyperemic Pressure Resting
indices (“NHPR”), such as OpSens’ dPR, are beneficial for some patients as they reduce procedure time, costs, and
discomfort. This product is available through the OptoMonitor and works in combination with the OptoWire. OpSens’
dPR is marketed in Japan, the United States, Canada, and Europe.
OpSens has established a direct sales force in the United States and Canada and primarily utilizes distributors in Europe
(including the Middle East) and Japan.
OpSens is currently starting the broader commercialization of its proprietary SavvyWire, a product targeting structural
heart market, one of the fastest growing segments of interventional cardiology. The SavvyWire is developed
specifically for transcatheter aortic valve replacement (“TAVR”), was approved in Canada in April 2022, and cleared
by the FDA for the U.S. market in September 2022.
OpSens also provides its proprietary sensing technology in the form of highly customizable microscale fiber optic
sensors for pressure and temperature, which can be used in a wide range of applications and are designed to be
integrated seamlessly into medical devices and life science research environments.
In the Industrial sector, OpSens’ expertise, technology, and products meet the needs of multiple markets, including
aerospace, nuclear, military, power electronics, geotechnical, and mining. OpSens’ portfolio of products and
technologies can be adapted to measure various parameters under the most difficult conditions and bring significant
benefits in terms of optimizing production and reducing risks to the environment and health.
As an example, fibre optic sensors perform well in the presence of electromagnetic fields, radio frequencies, micro-
waves, high-intensity magnetic waves (MR) or high-temperatures, elements that typically disrupt results with
conventional sensors. Customers’ needs are wide-ranging and require measuring various parameters like pressure,
temperature, strain, and others.
The Company focuses on business opportunities with the highest returns and has developed new products to fulfill
their specific needs. As an example, the new OPP-GD fibre optic differential pressure sensor and the new radiation-
resistant fibre optic pressure and temperature sensor have grabbed the attention of many industries such as aerospace
and nuclear.
MARKET OVERVIEW
In the Medical sector, coronary artery disease represents a significant and growing opportunity for the Company.
The prevalence of coronary artery disease is increasing rapidly. In the AHA report “Heart Disease and Stroke
Statistics” - based on health data compiled in more than 190 countries - coronary heart disease was the leading cause
of death worldwide in 2017 with 17.3 million deaths per year. This number is expected to exceed 23.6 million deaths
in 2030. Coronary heart disease is one of the leading causes of death in the developed world, and the cost of managing
and treating this disease is a significant burden to society. The benefits of FFR in patients with chronic coronary artery
disease were demonstrated through randomized clinical trials studies such as FAME I and FAME II published in 2009
and 2012 in the New England Journal of Medicine (NEJM) and several other outcome studies. FFR-guided treatment,
compared to assessment based only on angiography, led, after one year, respectively to a reduction of about 30% in
mortality, myocardial infarction, readmission for revascularization through percutaneous coronary intervention and
coronary bypass (FAME I study). FFR-guided treatment, compared to optimal medical therapy, also showed a
4
reduction of almost 90% in the risk of urgent revascularizations (FAME II study). Several reports also showed how
inaccurate diagnoses can lead to unnecessary use of “stents” to treat the coronary artery disease.
FFR-guided treatment, following the publication of FAME I and FAME II, have been recognized with the highest
recommendation (Class IA) by the European Society of Cardiology (ESC). In the United States, support for the increase
in the use of physiologic measurement continues to grow. In March 2017, the appropriate use criteria (“AUC”) for
chronic ischemic heart disease were updated to emphasize the use of FFR given its importance. The goal of the AUC
is to provide a framework for assessing general clinical practices and improving the quality of care. The new AUCs
reflect a recognition of the role and value of FFR, which should be beneficial for an expansion in the use of FFR
technologies. Payers, including Medicare, use the AUC to help formulate their repayment criteria.
In April 2018, the Ministry of Health, Labour and Welfare (“MHLW”) in Japan introduced a new regulation requiring
the physiology evaluation of all coronary artery stenosis prior to its treatment, specifically mentioning FFR as an
evaluation method. The MHLW revised medical fees and established a requirement to assess functional ischemia
(blockage of arteries) prior to treatment.
In the late 2010s, the use of non-hyperemic pressure ratios (NHPRs) has been an important factor to increase coronary
physiology penetration to make faster and easier assessment of coronary occlusions, by removing the need for
hyperemic drug injection. Like FFR, NHPRs also obtained the highest recommendation in the clinical guidelines for
the diagnostic assessment of coronary lesions thanks to the DEFINE and SWEDEHEART studies.
FFR and NHPR-guided coronary interventions have also been validated in patients with Acute Coronary Syndromes
(ACS) as a diagnostic tool to assess the severity of the non-culprit occlusion after the culprit blockage’s treatment,
showing a reduction in major adverse cardiovascular events compared to a culprit-occlusion-only treatment strategy,
with FFR being used in both a staged (DANAMI-3-PRIMULTI trial, published on LANCET) and acute (COMPARE-
ACUTE trial, published on NEJM) setting. This approach for patients with acute disease can expand the benefits of
FFR to a population twice as large as the chronic one.
These developments contribute to the steady growth of the coronary artery disease measurement market. According to
management and industry source estimates1, this market exceeded US$600 million worldwide in 2022 and anticipates
growth in the medium term to reach US$1 billion. This growth will be progressively fueled by upcoming technologies
implementing angiography-based or computed tomography (CT)-based physiology measurements. Currently these
assessments are being validated and the penetration in the physiology market is mainly due to the clinical studies being
performed. Angio and CT-based physiology is expected to partially expand at the expense of the wire-based physiology
procedures, but mainly to grow the overall market addressing patients not being diagnosed with physiology today.
Aortic Valve Stenosis occurs when the heart’s aortic valve becomes diseased and subsequently narrows. This
narrowing prevents the valve from fully opening, reducing, or blocking the blood flow from the heart into the aorta
(the main artery to the body) and onward to the rest of the body. In multiple studies, minimally invasive TAVR has
been shown to be superior to open-chest Surgical Aortic Valve Replacement (SAVR), with benefits including reduction
in hospital stay and lower mortality, for both high and low-risk patients.
The TAVR market size is significant and growing, with an estimated 2022 global market opportunity of $5 billion
doubling to an estimated size of $10 billion by 2028(2). This overall increase is being underpinned with investments in
device innovation combined with clinical(3) and economic evidence generation for intermediate and low risk - and
eventually asymptomatic patients – leading to larger patient populations in currently served markets, and growing
adoption in emerging markets. With the SavvyWire, Opsens is targeting a portion of that market. We currently estimate
that global 2023 TAVR volume will approach 275,000, with nearly 50% of the implants occurring in North America
and another 30% in Western Europe(4).
1. OpSens FFR Market Calculations based on GRAND VIEW RESEARCH (Feb. 2019).
2. Edwards Lifesciences, Dec. 8, 2021 Investor Conference, accessed February, 2022.
3. Edwards Lifesciences: PARTNER 3, EARLY TAVR (asymptomatic severe aortic stenosis), PROGRESS Trial (moderate AS) and Medtronic:
Evolut in Low-Risk patients.
4. OpSens TAVR and guidewire market calculations based on iData Research Inc. (Feb. 2022).
5
The overall value of the TAVR guidewire market is dependent on continued TAVR market expansion, growing
adoption of pre-shaped guidewires and is sensitive to pricing constraints, especially in geographies with national
healthcare systems. With anticipated growth in the TAVR market, adoption of pre-shaped guidewires, and additional
clinical utility, we anticipate the global unit volume opportunity to exceed 400,000 units by 2027(4).
Original Equipment Manufacturer (OEM): the Company’s technology, expertise, and products can serve several
markets including cardiovascular, neurovascular, MRI-adjacent therapies, renal, and others. The Company focuses
mainly on the following markets:
-
Cardiology Market: the opportunities in this market are related to several sub-markets where hemodynamic
monitoring and/or blood temperature measurement are likely to improve existing therapies or make new
therapies possible, namely coronary and peripheral interventions, structural heart interventions, heart
failure, and electrophysiology;
-
Neurology Market: the opportunities in this market are related principally to neurovascular interventions
such as coil embolization, thrombectomy, and neuro-oncology. Fiber optic sensors’ immunity to MRI and
microscale properties are particularly pertinent for this market.
In the Industrial sector, under this reportable segment, the Corporation’s technology, expertise, and products can
serve several markets including aerospace, nuclear, military, power electronics, geotechnical, and mining. The
Company focuses mainly on the following markets:
-
Aerospace Market: the opportunities in this market are principally related to fuel monitoring systems for
aircrafts. A new industrial version of the absolute pressure sensor and the recent addition of a differential
pressure sensor are the main products for these applications;
-
Nuclear Market: the opportunities in this market are related principally to new nuclear technologies to
produce energy. The new and recently patented fibre optic differential pressure sensor is the main solution
for that market;
-
Military and Power Electronics Markets: they include niche applications in which the Company is
currently engaged, such as EMI assessment of electro-pyrotechnic devices and thermal characterization of
power electronics devices.
4. OpSens TAVR and guidewire market calculations based on iData Research Inc. (Feb. 2022).
6
COMPETITION
In the Medical sector, coronary artery disease measurement market has five competitors and is currently dominated
by two major players who commercialize standard electrical technology. Competition is based on technological
advantages, brand recognition, customer service, marketing support and price. Over the past years, CT and
angiography-based FFR technologies, have emerged with new tools for functional lesion assessment without the need
for dedicated pressure wires.
For TAVR, the current global guidewire market is segmented into straight and pre-shaped guidewires and is currently
dominated by pre-shaped wires supplied by two companies. We anticipate these companies to continue providing
iterative, rather than platform, innovation and one additional entrant to the market sometime in early calendar year
2023. OpSens’ entrance into this market is expected to be notable, as no current TAVR guidewire combines the benefits
of being pre-shaped with the ability to deliver reliable left-ventricular rapid pacing while accurately measuring real-
time hemodynamic pressure.
In the Industrial sector, there is a sizable number of competitors. Competition is based primarily on technological
advantages. Our direct competition is made up of both opened and closed-ended companies with a global presence.
CORPORATE GROWTH STRATEGY
OpSens’ growth strategy is to become a key player in the Medical sector focusing on the coronary artery disease
measurement and on the TAVR procedure, where its products and technologies offer major advantages over the
competition. The Company also aims to capitalize on its technologies and products in the industrial markets. To this
end, the Company implements its corporate strategy based on its various segments of operations.
In the Medical sector, the Company’s growth strategy in the field of interventional cardiology is conducted by taking
market share in the established and growing coronary artery disease space and to enter a segment of the large, rapidly
growing global TAVR market:
Coronary Artery Disease:
Interventional cardiologists have started focusing on measurements performed with the heart at rest.
These measurements require greater accuracy and constant and repeated guidewire performance over time. With
Fidela, its second-generation optical sensor, the Company is convinced that there will be a growing interest in
the OptoWire beyond the 200,000 patients already served. Key differentiators include:
highly accurate measurement technology for improved reliability, essential to cardiologists’ decision-
making in the diagnosis of coronary artery disease; and
better and more trustworthy connectivity that is insensitive to blood contamination. The OptoWire can
be easily disconnected to be used as interventional wire and reconnected to measure the post-
intervention value without compromising accuracy.
Structural Heart:
OpSens has designed and developed the SavvyWire, leveraging the same Fidela second-generation optical sensor
used in OptoWire and Abiomed’s Impella systems. Unlike competitive TAVR guidewires that are just a wire,
SavvyWire is more than a wire and enables the world’s first and only sensor-guided TAVR solution. SavvyWire
uniquely provides a 3-in-1 solution for stable aortic valve delivery and positioning, continuous accurate
hemodynamic measurement during the procedure, and reliable left ventricular pacing without the need for adjunct
devices or venous access.
These key attributes are considered significant benefits to the medical community and have been highly
anticipated by physicians who perform TAVR procedures to optimize efficiency and workflow by eliminating
products and device exchanges. OpSens received Health Canada Approval in April 2022, completed a limited
market release in August, and now has over 100 patients served in Canada.
We received FDA 510(k) clearance in September 2022 just ahead of a major TCT conference, then announced
first use in the U.S. with 10 consecutive patients treated with a variety of anatomies and levels of complexity
7
including bicuspid valve, severe vessel tortuosity, horizontal aorta, failed prior surgical valve (valve-in-valve)
using both balloon-expandable and self-expandable valves, and balloon valvuloplasty. We are conducting a
limited market release in the U.S. through the end of calendar year 2022, with a full launch anticipated in early
2023.
Finally, OpSens has submitted for CE Mark, and we anticipate approval in FY23. We will leverage CE Mark,
Health Canada Approval and FDA clearance to register and conduct initial cases in FY23 in Europe and Middle
East.
OptoMonitor:
Ease of use and seamless workflow of the OptoMonitor III monitoring system also play a significant role in the
expansion of physiology assessment and enable sensor-guided TAVR. OpSens is playing a growing role in the
competitive arena both with hardware and software solutions aiming to integrate physiology in the interventional
workflow and hemodynamics and pacing into the TAVR workflow.
Sales Force:
Direct Sales Force: OpSens has established a direct sales team, hiring a seasoned staff with solid expertise in
coronary artery disease and structural heart disease. This sales force has been implemented to increase OpSens’
market and commercialization penetration in the United States and Canada and has doubled within FY 2022.
OpSens also targets agreements with group purchasing organizations to accelerate penetration, particularly in the
United States. OpSens has successfully signed several agreements with group purchasing organizations.
Distributor Sales Force: OpSens has signed distribution agreements in Europe, Asia, and the Middle East. These
agreements allow OpSens to focus on market penetration with leading business partners in their respective
markets.
Clinical Data
Major clinical studies previously suspended due to the COVID-19 pandemic have now fully resumed with pre-
pandemic enrollment speed. Recent studies were designed and prepared during the pandemic with limited cathlab
operation and are now about to start. Opsens aims to generate meaningful clinical data on OptoWire performance
and benefit, but also on the importance of hemodynamic in the treatment of coronary artery disease. We are also
planning clinical studies to come in 2023 on SavvyWire. On October 26, 2022, OpSens announced first
SavvyWire cases in Europe and launch of SAFE-TAVI study.
Innovation
In this ever-evolving and state-of-the-art market, OpSens plans to leverage its expertise in fiber-optic sensing
medical devices to create new products and develop new fibre optic sensing technologies for cardiology
assessment that address other unmet medical needs. Commitment to innovation has always been a driving force
behind the Company’s success and desire to improve its intellectual property portfolio and value proposition for
customers.
OpSens offers a broad selection of microscale optical sensors to measure pressure and temperature that can be
used in a wide range of applications and that are designed to be integrated into other medical devices. The
Company aims to partner with key players in the medical device industry. The partnership with Abiomed Inc.
(“Abiomed”), for the use of its miniature sensors and technology, is an example of the type of partnership the
Company targets.
In the Industrial sector, the Company’s business strategy is achieved by:
•
Target Market: OpSens Solutions’ target markets are aerospace, nuclear, military, power electronics,
geotechnical, and mining. These are markets where OpSens’ products offer unique advantages over its
competitors; and
•
Innovation: OpSens Solutions continually invests in innovations for its products, so they can offer unique
advantages over competitors. For example, the Company’s optical strain and pressure sensors have received
8
the attention of major players in the aerospace industry because they require no shielding or grounding and
because of their ease of deployment.
NON-IFRS FINANCIAL MEASURES – EBITDAO
The Company quarterly reviews net income (loss) and Earnings Before Interest, Taxes, Depreciation, Amortization
and Stock-based compensation costs (“EBITDAO”). EBITDAO 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. EBITDAO
is defined by the Company as the addition of net income (loss), financial expenses, taxes, depreciation and amortization
and stock-based compensation costs. The Company uses EBITDAO 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 to see the Company’s results through the eyes of management, and to better
understand its historical and future financial performance.
RECONCILIATION OF EBITDAO TO NET INCOME (LOSS)
(In thousands of Canadian dollars)
Year ended
August 31,
2022
Year ended
August 31,
2021
Year ended
August 31,
2020
$
$
$
Net income (loss)
(11,378)
(1,150)
(2,644)
Financial expenses
312
637
684
Depreciation of property, plant and equipment
and right-of-use assets
1,553
1,544
1,548
Amortization of intangible assets
264
230
120
Stock-based compensation costs
1,161
459
438
Current income tax expense
43
21
-
EBITDAO
(8,045)
1,741
146
The negative variance of EBITDAO for the year ended August 31, 2022, is mainly explained by the increase in our
operating expenses and by lower gross margin in the medical segment.
9
SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands of Canadian dollars, except for
information per share)
Year ended
August 31,
2022
Year ended
August 31,
2021
Year ended
August 31,
2020
$
$
$
Revenues
Sales
Medical
31,427
30,985
26,996
Industrial
3,577
3,363
2,457
35,004
34,348
29,453
Other
320
116
-
35,324
34,464
29,453
Cost of sales
17,523
15,783
13,834
Gross margin
17,801
18,681
15,619
Gross margin percentage
50%
54%
53%
Operating expenses
Administrative
7,822
6,473
5,041
Sales and marketing
12,576
7,649
8,780
Research and development
8,358
5,510
5,441
28,756
19,632
19,262
Other income
-
(740)
(1,683)
Financial expenses
312
637
684
Loss on foreign currency
68
281
-
Loss before income taxes
(11,335)
(1,129)
(2,644)
Current income tax expense
43
21
-
Net loss
(11,378)
(1,150)
(2,644)
Basic and diluted net loss per share
(0.11)
(0.01)
(0.03)
The following table presents share-based payment and related expenses amounts recognized by the Company:
(In thousands of Canadian dollars)
Year ended
August 31,
2022
Year ended
August 31,
2021
Year ended
August 31,
2020
$
$
$
Cost of sales
31
31
31
Administrative
540
175
173
Sales and marketing
331
99
137
Research and development
259
154
97
Stock-based compensation costs
1,161
459
438
10
Revenues
The Company reported revenues of $35,324,000 for the year ended August 31, 2022, compared to $34,464,000 for the
corresponding period in 2021, an increase of $860,000 or 2%. Sales in the Medical segment totalled $31,427,000
(excluding other revenues) for the year ended August 31, 2022, compared to $30,985,000 for the same period in 2021,
an increase of $442,000. The increase in Medical segment revenues is explained by higher sales in the original
equipment manufacturer (“OEM”) line of business of $1,439,000 compared with the same period in 2021. This is
partly offset by lower sales in the coronary artery disease measurement sales (FFR and dPR) of $1,087,000 compared
to the same period last year. The Company recorded its first revenue related to its new guidewire for TAVR procedure
during the fiscal year 2022.
The Company also reported other revenues of $320,000 related to a new development project with OEM partners for
the year ended August 31, 2022, compared to $116,000 for the same period in 2021.
Sales in the Industrial segment totalled $3,577,000 for the year ended August 31, 2022, compared to sales of
$3,363,000 for the same period in 2021. The slight increase is explained by a higher volume of orders compared to the
same period last year.
For the years ended August 31, 2022, and 2021, price has been slightly reduced by GPO’s agreements.
The Company’s revenues are generated in U.S. dollars, Canadian dollars, euros, and British pounds; fluctuations in
the exchange rate affect revenues and net loss. For the year ended August 31, 2022, revenues were negatively affected
by $565,000 compared to the same period last year (sales were negatively impacted by $1,360,000 for the year ended
August 31, 2021).
As at August 31, 2022, OpSens’ total backlog of purchases orders received from clients amounted to $18,104,000
($14,565,000 as at August 31, 2021).
Gross Margin
Gross margin was $17,801,000 for the year ended August 31, 2022, compared to $18,681,000 for the same period last
year. The gross margin percentage decreased to 50% for the year ended August 31, 2022, compared to 54% for the
year ended August 31, 2021. The decrease in gross margin is mainly explained by the end-of-life of the production for
OptoWire 2, higher manufacturing costs during the COVID-19 period and by the decrease in the average sales price
for the EMEA market due to the depreciation of the euro currency.
Administrative Expenses
Administrative expenses were at $7,822,000 and $6,473,000, respectively, for the years ended August 31, 2022, and
2021. The increase is largely explained by higher headcount and by higher share-based compensation expenses.
Sales and Marketing Expenses
Sales and marketing expenses totalled $12,576,000 for the year ended August 31, 2022, an increase of $4,927,000 over
the $7,649,000 reported during the same period in 2021. The increase is largely explained by higher headcount,
commissions, in-person trade shows, subcontractors, travelling expenses and share-based compensation expenses
related to the expansion of our direct sales force to accelerate the growth of our coronary artery disease market and to
enter a segment of the large, rapidly growing global TAVR market.
Research and Development Expenses
Research and development expenses totalled $8,358,000 for the year ended August 31, 2022, an increase of $2,848,000
over the $5,510,000 reported during the same period in 2021. The increase is largely explained by higher headcount
and subcontractors dedicated to the development of new products and software in our medical segment. These
investments are justified in order to improve OpSens’ competitiveness and achieve our growth objectives.
11
Other Income
Other income was nil and $740,000, respectively, for the years ended August 31, 2022, and 2021. Last year we received
a non-refundable contribution under the Canada Emergency Wage Subsidy (CEWS) program.
Financial Expenses
Financial expenses totalled $312,000 for the year ended August 31, 2022, compared to $637,000 for the same period
in 2021. The decrease in financial expenses is mainly explained by lower interest expenses of $294,000 following the
repayment of the long-term loan with a Canadian financial institution in September 2021.
Loss on Foreign Currency
Loss on foreign currency totalled $68,000 for the year ended August 31, 2022, compared to $281,000 for the same
period in 2021.
Net Loss
As a result of the foregoing, net loss for the year ended August 31, 2022, was $11,378,000 compared to $1,150,000
for the same period in 2021.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION DATA
Total assets as at August 31, 2022, were $48,511,000 compared to $58,512,000 as at August 31, 2021. The decrease
is mainly related to lower cash and cash equivalents of $14,747,000 following the repayment of the long-term loan
with a Canadian financial institution and the increase in the operating expenses.
Current liabilities totalled $8,601,000 as of August 31, 2022, compared to $7,395,000 as of August 31, 2021.
The increase is mainly explained by higher accounts payable and accrued liabilities of $3,457,000. This is partly offset
by a lower current portion of long-term debt of $2,332,000.
Long-term liabilities totalled $5,651,000 as of August 31, 2022, compared to $8,787,000 as of August 31, 2021, a
decrease of $3,136,000. The decrease is mainly explained by the repayment of the long-term loan with a Canadian
financial institution. This is partly offset by the increase of the lease liabilities.
(In thousands of Canadian dollars)
As at
August 31,
2022
As at
August 31,
2021
As at
August 31,
2020
$
$
$
Current assets
39,015
49,783
22,543
Total assets
48,511
58,512
31,098
Current liabilities
8,601
7,395
5,655
Long-term liabilities
5,651
8,787
10,906
Shareholders’ equity
34,259
42,330
15,347
12
SUMMARY OF CONSOLIDATED QUARTERLY RESULTS
The summary below presents the periods in which OpSens published unaudited consolidated interim financial
statements.
(Unaudited, in thousands of Canadian dollars,
except for information per share)
Three-month
period ended
August 31,
2022
Three-month
period ended
May 31,
2022
Three-month
period ended
February 28,
2022
Three-month
period ended
November 30,
2021
$
$
$
$
Revenues
9,052
10,076
8,100
8,096
Net loss for the period
(4,029)
(2,856)
(2,404)
(2,089)
Basic and diluted net loss per share
(0.04)
(0.03)
(0.02)
(0.02)
(Unaudited, in thousands of Canadian dollars,
except for information per share)
Three-month
period ended
August 31,
2021
Three-month
period ended
May 31,
2021
Three-month
period ended
February 28,
2021
Three-month
period ended
November 30,
2020
$
$
$
$
Revenues
8,066
9,233
8,829
8,336
Net income (loss) for the period
(1,215)
(570)
41
594
Basic and diluted net income (loss) per share
(0.01)
(0.01)
0.00
0.01
For the Medical sector, activities are generally slower in the fourth quarter due to the summer vacations of physicians.
LIQUIDITY AND CAPITAL RESOURCES
As at August 31, 2022, the Company had cash and cash equivalents of $23,816,000 compared to $38,563,000 as at
August 31, 2021. Of this amount as at August 31, 2022, $21,194,000 were invested in highly-liquid, safe investments.
As at August 31, 2022, OpSens had a working capital of $30,415,000, compared to $42,388,000 as at August 31, 2021.
The decrease in working capital is mainly related to lower cash and cash equivalents following the reimbursement of
the long-term loan with a Canadian financial institution and the increase in the operating expenses.
On February 25, 2021, the Company completed a bought deal public offering for aggregate gross proceeds of
$28,750,000. In connection with the offering, the Company issued a total of 15,972,222 shares at a price of $1.80 per
share. Transaction costs of the offering include underwriting fees of $1,725,000 and other professional fees and
miscellaneous fees of $401,000 for total transaction costs of $2,126,000.
13
The company intends the use of proceeds from the equity financing as follow:
(In Canadian dollars)
Use of
funds as
planned
Over-
Allotment
Funds
available to
OpSens
from
equity
financing
Actual use
of funds as
at August
31, 2022
Funds
remaining
to be used
$
$
$
$
$
Net proceeds from the issue, including
the over-allotment option
22,874,000
3,750,000
26,624,000
16,810,211
9,813,789
Use of proceeds
Sales and Marketing
7,000,000
-
7,000,000
7,000,000
-
Research and Development
8,000,000
-
8,000,000
8,000,000
-
Capital expenditures and production ramp-up
3,000,000
-
3,000,000
1,501,733
1,498,267
Working capital
4,874,000
3,750,000
8,624,000
308,478
8,315,522
Total use of proceeds
22,874,000
3,750,000
26,624,000
16,810,211
9,813,789
Under a loan agreement with a Canadian financial institution, the Company is authorized to draw a maximum amount
of $600,000 under the facility. The loan bears interest at the prime rate plus 1.00% and is repayable in monthly
instalments of $16,667 and will mature in October 2024. The loan has a nine-month moratorium period without
payment of principal following the date of the signature of the agreement. It is secured by a movable hypothec on the
universality of the property, plant and equipment and intangible assets, present and future of the Company. On
November 27, 2020, the Company received proceeds of $600,000 from this facility. Under this loan agreement, the
Company is subject to certain covenants, which were met as of the date of this MD&A.
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 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 will largely
depend on the rate of revenue growth in upcoming quarters.
14
SUMMARY OF CASH FLOWS
(In thousands of Canadian dollars)
Year ended
August 31,
2022
Year ended
August 31,
2021
$
$
Operating activities
(8,781)
2,839
Investing activities
(973)
(937)
Financing activities
(5,011)
25,875
Effect of foreign exchange rate changes on
cash and cash equivalents
18
(98)
Net change in cash and cash equivalents
(14,747)
27,679
Operating Activities
For the year ended August 31, 2022, cash flows used by our operating activities were $8,781,000 compared to cash
flows generated of 2,839,000 for the same period last year. The increase in cash flows used by our operating activities
is mainly explained by a negative variance of EBITDAO, as explained previously and by a negative variance of
changes in non-cash operating working capital items related to trade and other receivables and prepaid expenses. This
is partly offset by a positive variance of changes in non-cash operating working capital items related to accounts
payable and accrued liabilities.
Investing Activities
For the year ended August 31, 2022, cash flows used by our investing activities reached $973,000 compared to
$937,000 for the same period in 2021. The slight increase in cash flows used is mainly explained by higher acquisition
of property, plant and equipment assets for the Medical sector. This is partly offset by an increase in interest received.
Financing Activities
For the year ended August 31, 2022, cash flows used by financing activities reached $5,011,000 compared to cash
flows generated of $25,875,000 for the same period in 2021. The variation is mainly explained by completion of a
bought deal public offering in February 2021 and by the repayment of the long-term loan with a Canadian financial
institution in September 2021.
15
INFORMATION BY REPORTABLE SEGMENTS
Segmented Information
The Company is organized into two segments: Medical and Industrial.
Medical segment: in this segment, OpSens focuses mainly on physiological measurement such as FFR and dPR in the
coronary artery disease market and on the TAVR procedure in the structural market. Opsens also supplies a wide range
of miniature optical sensors to measure pressure and temperature to be used in a wide range of applications that can be
integrated in other medical devices. This also includes other revenues related to its optical sensor technology.
Industrial segment: in this segment, OpSens develops, manufactures, and installs innovative fibre optic sensing
solutions for critical and demanding industrial applications.
The principal factors employed in the identification of the two segments 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 business and are measured at the exchange amount, which approximates prevailing prices in the markets.
Years ended August 31
2022
2021
Medical
Industrial
Total
Medical
Industrial
Total
$
$
$
$
$
$
External sales
31,747,408
3,576,498
35,323,906
31,101,209
3,362,611
34,463,820
Internal sales
84,363
259,961
344,324
111,695
381,797
493,492
Gross margin
15,506,597
2,294,121
17,800,718
16,457,466
2,222,896
18,680,362
Depreciation of property,
plant and equipment and
right-of-use assets
1,342,485
210,896
1,553,381
1,362,247
181,951
1,544,198
Amortization of intangible
assets
244,980
19,181
264,161
218,255
11,644
229,899
Other income
-
-
-
445,506
294,656
740,162
Financial expenses
13,854
297,633
311,487
318,488
318,636
637,124
Loss (gain) on foreign
currency translation
73,558
(5,311 )
68,247
221,522
59,102
280,624
Current income tax expense
43,693
-
43,693
21,186
-
21,186
Net (loss) income
(11,764,281 )
386,051
(11,378,230 )
(1,969,256 )
818,828
(1,150,428 )
Acquisition of property,
plant and equipment
980,552
18,794
999,346
651,109
44,650
695,759
Additions to intangible
assets
314,138
59,917
374,055
264,398
19,788
284,186
Segment assets
45,525,229
2,986,062
48,511,291
56,212,182
2,300,223
58,512,405
Segment liabilities
13,334,210
918,339
14,252,549
15,246,157
936,253
16,182,410
16
Information by geographic segment
Years ended August 31,
2022
2021
$
$
Revenue by geographic segment
United States
14,883,524
12,862,452
Japan
5,993,435
7,277,326
Canada
3,428,461
3,270,982
Other*
11,018,486
11,053,060
35,323,906
34,463,820
* Comprised of revenues generated in countries for which amounts are individually not significant.
Revenues are attributed to the geographic segment based on the client’s location.
Non-current assets, which include property, plant and equipment, intangible assets and right-of-use assets, are located
in Canada, except non-current assets located in United States of $191,909 as at August 31, 2022 ($19,440 as at
August 31, 2021).
For the year ended August 31, 2022, revenues from two clients from the Medical’s reportable segment represented
individually more than 10% of the total revenues of the Company i.e., 23% and 16% (21% and 19% for the year ended
August 31, 2021).
Medical Segment
For the year ended August 31, 2022, sales from the Medical segment were $31,427,000 compared to $30,985,000 for
the year ended August 31, 2021, an increase of $442,000. The increase is explained by higher OEM medical sales of
$1,439,000. This is partly offset by lower coronary artery disease product sales of $1,087,000.
Gross margin was $15,507,000 for the year ended August 31, 2022, compared to $16,458,000 for the year ended
August 31, 2021, a decrease of $951,000. The gross margin percentage decreased at 49% for the year ended August
31, 2022, compared to 53% for year ended August 31, 2021. The decrease in gross margin percentage is mainly
explained by the end-of-life production for OptoWire 2, higher manufacturing costs during the COVID-19 period and
by the decreased in the average sales price for the EMEA market due to depreciation for the euro currency.
Net loss for the medical segment was $11,764,000 for the year ended August 31, 2022, compared to $1,969,000 for
the same period last year. The increase in net loss is mainly explained by higher operating expenses in the current year
and by lower gross margin.
Working capital for the Medical segment as at August 31, 2022, was $28,719,000 compared to $41,372,000 as at
August 31, 2021. The decrease of $12,653,000 is mainly explained by lower cash and cash equivalents of $15,001,000.
This is partly offset by higher prepaid expenses of $1,079,000 and by higher trade and other receivables of $1,384,000.
Industrial Segment
For the year ended August 31, 2022, external sales from the Industrial segment were $3,577,000 compared to
$3,363,000 for the year ended August 31, 2021, an increase of $214,000 mostly explained by a higher volume of orders
compared to the same period last year.
17
Gross margin was $2,294,000 for the year ended August 31, 2022, compared to $2,223,000 for the same period in
2021, an increase of $71,000. The gross margin percentage slightly increased from 59% for the year ended
August 31, 2021, to 60% for the year ended August 31, 2022.
Net income for the Industrial segment was $386,000 for the year ended August 31, 2022, compared to $819,000 for
the year ended August 31, 2021. The decrease is mainly explained by a non-refundable contribution under the Canada
Emergency Wage Subsidy (CEWS) program received last year.
Working capital for the Industrial segment as at August 31, 2022, was $1,696,000 compared to $1,016,000 as at
August 31, 2021. The increase is mainly explained by higher trade and other receivables of $339,000, by higher cash
and cash equivalents of $252,000 and by higher inventory of $179,000. This is partly offset by higher accounts payable
and accrued liabilities of $207,000.
FOURTH QUARTER 2022
Revenues
Revenues totalled $9,052,000 for the three-month period ended August 31, 2022, compared to $8,066,000 for the
corresponding period in 2021, an increase of $986,000. The increase is explained by higher revenues in all segments.
Gross Margin
Gross margin was $4,375,000 for the three-month period ended August 31, 2022, compared to $4,016,000 for the same
period last year. The gross margin percentage decreased to 48% for the three-month period ended August 31, 2022,
compared to 50% for the three-month period ended August 31, 2021. The decrease in gross margin percentage is
mainly explained by the end-of-life production for OptoWire 2.
Administrative Expenses
Administrative expenses were at $1,872,000 and $1,794,000, respectively, for the three-month period ended
August 31, 2022, and the three-month period ended August 31, 2021. The increase is largely explained by higher
headcount.
Sales and Marketing Expenses
Sales and marketing expenses totalled $4,339,000 for the three-month period ended August 31, 2022, an increase of
$2,148,000 over the $2,191,000 reported during the same period in 2021. The increase is largely explained by higher
headcount, commissions, in person trade shows, subcontractors and travelling expenses when compared to last year
related to the expansion of our direct sales force to accelerate the growth of our coronary artery disease market and to
enter a segment of the large, rapidly growing global TAVR market.
Research and Development Expenses
Research and development expenses totalled $2,244,000 for the three-month period ended August 31, 2022, an increase
of $904,000 over the $1,340,000 reported during the same period in 2021. The increase is largely explained by the
higher headcount and subcontractors dedicated to the development of new products and software in our medical
segment. These additions aim at improving OpSens’ competitiveness and at achieving our growth objectives.
Other Income
Other income was nil and $19,000, respectively, for the three-month periods ended August 31, 2022, and August 31,
2021. The decrease is explained by a non-refundable contribution under the CEWS program received last year.
18
Financial Expenses
Financial expenses totalled $1,000 for the three-month period ended August 31, 2022, compared to $141,000 for the
same period in 2021. The decrease in financial expenses is mainly explained by lower interest expenses of $65,000
and a higher interest income of $87,000.
Gain on Foreign Currency
Gain on foreign currency totalled $52,000 for the three-month period ended August 31, 2022, compared to $202,000
for the same period in 2021.
Net Loss
As a result of the foregoing, net loss for the three-month period ended August 31, 2022, was $4,029,000 compared to
$1,215,000 for the same period in 2021.
PRODUCT DEVELOPMENT
Years ended August 31
2022
2021
$
$
SavvyWire
880,000
1,334,000
R&D expenses
7,478,000
4,176,000
8,358,000
5,510,000
As a percentage of revenues
24%
16%
OpSens is developing the SavvyWire, a product targeting the TAVR market in structural cardiology, one of the fastest
growing segments of cardiology, It is anticipated to become the first guidewire intended to deliver a valvular prosthesis
while allowing continuous hemodynamic pressure measurement during the procedure and having reliable left
ventricular pacing capacity.
OpSens has successfully completed the planned in-human clinical study on twenty patients required to complete
regulatory filing in U.S. Regulatory filing for Canada, United States and Europe were done during Q2 2022. SavvyWire
was approved in Canada in April 2022 and in the United States in September 2022. Product launch of the SavvyWire
is deployed as authorizations are received.
Expenses related to the development of the SavvyWire since the beginning of the project total $3,298,000.
19
INFORMATION ON SHARE CAPITAL
For the year ended August 31, 2022, the Company granted to some employees and directors a total of 2,868,250 stock
options with an average exercise price of $2.43, cancelled 553,375 stock options with an exercise price of $1.44,
1,678,000 stock options with an average exercise price of $1.29 were exercised, and 131,000 stock options with an
exercise price of $1.44 expired.
For the year ended August 31, 2021, the Company granted to some employees and directors a total of 2,342,500 stock
options with an average exercise price of $1.71, cancelled 566,625 stock options with an exercise price of $1.10,
whereas 904,500 stock options with an average exercise price of $1.15 were exercised, and 327,500 stock options with
an exercise price of $1.21 expired.
As at November 21, 2022, the following components of shareholders’ equity are outstanding:
Common shares
108,884,312
Stock options
7,991,414
Securities on a fully diluted basis
116,875,726
No dividend was declared per share for each share class.
RELATED PARTY TRANSACTIONS
Key management personnel, having authority and responsibility for planning, directing and controlling the activities
of the Company, comprise the Executive Chairman, the Chief Executive Officer, the Chief Financial Officer, the
Chief Commercial Officer and the President of OpSens Solutions Inc. Compensation of key management personnel
and directors for the years ended August 31, 2022, and 2021 were as follows:
The compensation of key executives is determined by the Human Resources and Compensation Committee, taking
into consideration individual performance and market trends.
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.
Years ended August 31
2022
2021
$
$
Short-term salaries and other benefits
1,718,459
1,219,527
Option-based awards
432,386
119,303
2,150,845
1,338,830
20
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.
Risk Management
The main risks arising from the Company’s financial instruments are credit risk, liquidity risk, interest rate risk,
concentration risk and foreign exchange risk. These risks arise from exposures that occur in the normal course of
business and are managed on a consolidated 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. In general, 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 checks of its customers and
establishes an allowance for doubtful accounts when accounts are determined to be uncollectible. Two major customers
represented 35.98% of the Company’s total accounts receivable as at August 31, 2022 (34.67% as at August 31, 2021).
As at August 31, 2022, 0.03% (10.36% as at August 31, 2021) of the accounts receivable were of more than 90 days
whereas 68.02% (64.51% as at August 31, 2021) 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, 2022, the allowance for doubtful
accounts was nil ($213,353 as at August 31, 2021).
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.
21
The following are the contractual maturities of the financial liabilities (principal and interest, assuming current
interest rates) as at August 31, 2022, and 2021:
As at August 31, 2021
Carrying
0 to 12
12 to 24
After
amount
Cash flows
months
months
24 months
$
$
$
$
$
Accounts payable and accrued
liabilities
3,842,871
3,842,871
3,842,871
-
-
Long-term debt
7,396,817
7,370,774
2,822,089
2,801,422
1,747,263
Total
11,239,688
11,213,645
6,664,960
2,801,422
1,747,263
Interest Rate Risk
The Company’s exposure to interest rate risk is summarized as follows:
Cash and cash equivalents
Fixed and variable interest rates
Trade and other receivables
Non-interest bearing
Accounts payable and accrued liabilities
Non-interest bearing
Long-term debt
Non-interest-bearing and fixed and variable 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. The Company owns investments with fixed and variable interest rates. As at August 31, 2022, the
Company was holding more than 89% (93% as at August 31, 2021) of its cash and cash equivalents in all-time
redeemable term deposits.
All else being equal, a hypothetical 1% interest rate increase or decrease would have an impact of $8,507 on net loss
and comprehensive loss for the year ended August 31, 2022 ($75,939 for the year ended August 31, 2021).
As at August 31, 2022
Carrying
0 to 12
12 to 24
After
amount
Cash flows
months
months
24 months
$
$
$
$
$
Accounts payable and accrued
liabilities
7,300,262
7,300,262
7,300,262
-
-
Long-term debt
1,110,076
1,053,190
462,684
436,944
153,562
Total
8,410,338
8,353,452
7,762,946
436,944
153,562
22
Financial Expenses (Revenues)
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, 2022, and 2021, 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 mainly of raw materials, salaries and other benefits, supplies and
professional services in U.S. dollars, Euros and British pounds. Therefore, it is exposed to foreign currency
fluctuations. The Company does not actively manage this risk
Foreign Currency Sensitivity Analysis
Based on the Company’s foreign exchange risk noted above, varying the foreign exchange rate to reflect a 10%
strengthening in the Canadian dollar would have decreased (increased) the net loss as follows, assuming that all other
variables remained constant. An assumed 10% weakening of the foreign currency would have had an equal but opposite
effect on the basis that all other variables remained constant.
Year ended August 31, 2021
CA$/US$
CA$/EUR€
CA$/GBP£
$
$
$
Decrease (increase) of the
net loss
10% appreciation in the
Canadian dollar
(1,000,000 )
(621,000 )
25,000
Decrease (increase) of the
net loss
10% depreciation in the
Canadian dollar
1,000,000
621,000
(25,000 )
Years ended August 31
2022
2021
$
$
Interest and bank charges
210,822
80,498
Interest on long-term debt
102,401
398,605
Interest on lease liabilities
270,038
267,557
Interest income
(271,774 )
(109,536 )
311,487
637,124
Year ended August 31, 2022
CA$/US$
CA$/EUR€
CA$/GBP£
$
$
$
Decrease (increase) of the
net loss
10% appreciation in the
Canadian dollar
(461,000 )
(580,000 )
34,000
Decrease (increase) of the
net loss
10% depreciation in the
Canadian dollar
461,000
580,000
(34,000 )
23
As at August 31, 2022 and 2021, the risks to which the Company was exposed is established as follows:
As at
August 31,
As at
August 31,
2022
2021
$
$
Cash and cash equivalents (US$1,105,744;
US$1,350,764 as at August 31, 2021)
1,449,741
1,704,259
Cash and cash equivalents (€ 344,904;
€ 233,721 as at August 31, 2021)
453,928
348,385
Cash and cash equivalents (£ 6,115;
£ 3,039 as at August 31, 2021)
9,320
5,277
Trade and other receivables (US$2,848,057;
US$1,828,513 as at August 31, 2021)
3,734,087
2,307,035
Trade and other receivables (€ 956,523;
€ 815,415 as at August 31, 2021)
1,258,880
1,215,458
Trade and other receivables (£ 97,768;
£ 52,500 as at August 31, 2021)
149,008
91,166
Accounts payable and accrued liabilities (US$1,846,808;
US$376,989 as at August 31, 2021)
(2,421,350 )
(475,647 )
Accounts payable and accrued liabilities (€ 63,690;
€ 9,273 as at August 31, 2021)
(83,822 )
(13,822 )
Accounts payable and accrued liabilities (£ 16,283;
£ 6,753 as at August 31, 2021)
(24,817 )
(11,726 )
Total
4,524,975
5,170,385
CAPITAL MANAGEMENT
The Company's objective in managing capital, primarily composed of shareholders' equity, long-term debt and lease
liabilities, is to ensure sufficient liquidity to fund production and R&D activities, 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, government assistance, R&D tax credits, interest income and to liquidity through dilutive sources as
public equity offerings.
As at August 31, 2022, the Company's working capital amounted to $30,414,701 ($42,387,696 as at August 31, 2021),
including cash and cash equivalents of $23,816,490 ($38,563,271 as at August 31, 2021). The accumulated deficit at
the same date was $55,773,679 ($44,395,449 as at August 31, 2021). 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 after the reporting date of August 31, 2022.
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
broadly remained unchanged since the last fiscal year.
For the years ended August 31, 2022, and 2021, the Company has not been in default on any of its obligations regarding
long-term debt and lease liabilities.
24
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. Considering the employment market in Canada, the United States and Europe, the
Company is confident in its capacity to recruit qualified human resources in a timely fashion.
Regarding the strategy on corporate executive compensation, it is oriented toward creating 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 to align shareholders’ interest with corporate executives’ interest. This long-term
vision stimulates innovation and the development of recurring revenues.
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, 2022, 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 consolidated 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 disposals
of assets;
•
Reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated
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 disposal
of the Company’s assets that could have a material effect on the financial instruments.
An evaluation was carried out, under the supervision of the CEO and the CFO, of the design and effectiveness of our
internal controls over financial reporting. Based on this evaluation, the CEO and the CFO concluded that the internal
controls over financial reporting are effective as at August 31, 2022.
RISK FACTORS
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.
25
There are other 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, 2022, 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
_______________
November 21, 2022
26
Consolidated Financial Statements
OpSens Inc.
Years ended August 31, 2022 and 2021
27
Independent Auditor’s Report
To the shareholders and the Board of Directors of OpSens Inc.
Opinion
We have audited the consolidated financial statements of OpSens Inc. (the “Company”), which comprise the
consolidated statements of financial position as at August 31, 2022 and 2021, and the consolidated statements
of loss and comprehensive loss, changes in equity and cash flows for the years then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies (collectively referred to
as the “financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position
of the Company as at August 31, 2022 and 2021, and its financial performance and its cash flows for the years
then ended in accordance with International Financial Reporting Standards (“IFRS”).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”).
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of
the Financial Statements section of our report. We are independent of the Company in accordance with the
ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements for the year ended August 31, 2022. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
We have determined that there are no key audit matters to communicate in our auditor’s report.
Other Information
Management is responsible for the other information. The other information comprises:
•
Management’s Discussion and Analysis
•
The information, other than the financial statements and our auditor’s report thereon, in the Annual Report.
Our opinion on the financial statements does not cover the other information and we do not and will not express
any form of assurance conclusion thereon. In connection with our audit of the financial statements, our
responsibility is to read the other information identified above and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the
work we have performed on this other information, we conclude that there is a material misstatement of this other
information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.
The Annual Report is expected to be made available to us after the date of the auditor’s report. If, based on the
work we will perform on this other information, we conclude that there is a material misstatement of this other
information, we are required to report that fact to those charged with governance.
28
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with IFRS, and for such internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
•
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
29
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Sophie Fortin.
Quebec City, Canada
November 21, 2022
_________________
1CPA auditor, public accountancy permit No. A124208
30
OpSens Inc.
Consolidated Statements of Loss and Comprehensive Loss
Years ended August 31, 2022 and 2021
(in Canadian dollars)
2022
2021
$
$
Revenues
Sales
35,003,815
34,347,899
Other
320,091
115,921
35,323,906
34,463,820
Cost of sales
17,523,188
15,783,458
Gross margin
17,800,718
18,680,362
Operating expenses (Note 21)
Administrative
7,822,257
6,472,857
Sales and marketing
12,575,441
7,649,336
Research and development
8,357,823
5,509,825
28,755,521
19,632,018
Other income (Note 16)
-
(740,162 )
Financial expenses (Note 22)
311,487
637,124
Loss on foreign currency translation
68,247
280,624
Loss before income taxes
(11,334,537 )
(1,129,242 )
Current income tax expense
43,693
21,186
Net loss
(11,378,230 )
(1,150,428 )
Other comprehensive income (loss)
Items that may be reclassified subsequently to net loss
Net changes in unrealized gain (loss) on translation of foreign operations
(10,797 )
8,662
Comprehensive loss
(11,389,027 )
(1,141,766 )
Basic and diluted net loss per share (Note 13)
(0.11 )
(0.01 )
The accompanying notes are an integral part of the consolidated financial statements.
31
OpSens Inc.
Consolidated Statement of Changes in Equity
Year ended August 31, 2022
(in Canadian dollars)
Common shares
Share capital
Reserve – Stock
option plan
Accumulated
other
comprehensive
loss – Foreign
operations
translation
Deficit
Total
(number)
$
$
$
$
$
Balance as at August 31, 2021
107,157,039
82,894,802
3,821,980
8,662
(44,395,449 )
42,329,995
Common shares issued pursuant to the stock
option plan (Note 12a)
1,678,000
3,048,765
(892,314 )
-
-
2,156,451
Stock-based compensation costs (Note 12b)
-
-
1,161,323
-
-
1,161,323
Other comprehensive loss – Net changes in
unrealized loss on translation of foreign
operations
-
-
-
(10,797 )
-
(10,797 )
Net loss
-
-
-
-
(11,378,230 )
(11,378,230 )
Balance as at August 31, 2022
108,835,039
85,943,567
4,090,989
(2,135 )
(55,773,679 )
34,258,742
The accompanying notes are an integral part of the consolidated financial statements.
OpSens Inc.
Consolidated Statement of Changes in Equity
Year ended August 31, 2021
(in Canadian dollars)
Common shares
Share capital
Reserve – Stock
option plan
Accumulated
other
comprehensive
income – Foreign
operations
translation
Deficit
Total
(number)
$
$
$
$
$
Balance as at August 31, 2020
90,280,317
54,768,369
3,823,514
-
(43,245,021 )
15,346,862
Common shares issued in connection with a
public bought deal offering (Note 12a)
15,972,222
26,624,000
-
-
-
26,624,000
Common shares issued pursuant to the stock
option plan (Note 12a)
904,500
1,502,433
(460,077 )
-
-
1,042,356
Stock-based compensation costs (Note 12b)
-
-
458,543
-
-
458,543
Other comprehensive income – Net changes in
unrealized gain on translation of foreign
operations
-
-
-
8,662
-
8,662
Net loss
-
-
-
-
(1,150,428 )
(1,150,428 )
Balance as at August 31, 2021
107,157,039
82,894,802
3,821,980
8,662
(44,395,449 )
42,329,995
The accompanying notes are an integral part of the consolidated financial statements.
33
OpSens Inc.
Consolidated Statements of Financial Position
(in Canadian dollars)
As at
August 31,
2022
As at
August 31,
2021
$
$
Assets
Current
Cash and cash equivalents (Note 14)
23,816,490
38,563,271
Trade and other receivables (Note 4)
5,855,295
4,135,446
Government assistance receivable (Note 16)
264,695
-
Tax credits receivable (Note 18)
655,418
320,000
Inventories (Note 5)
6,672,179
6,115,091
Prepaid expenses
1,751,567
648,884
39,015,644
49,782,692
Property, plant and equipment (Note 6)
2,683,077
2,731,508
Intangible assets (Note 7)
1,786,491
1,676,597
Right-of-use assets (Note 11)
5,026,079
4,321,608
48,511,291
58,512,405
Liabilities
Current
Accounts payable and accrued liabilities (Note 9)
7,300,262
3,842,871
Warranty provision (Note 15)
52,419
83,803
Deferred revenues
204,283
120,710
Current income taxes payable
10,979
19,895
Current portion of long-term debt (Note 10)
470,516
2,802,223
Current portion of lease liabilities (Note 11)
562,484
525,494
8,600,943
7,394,996
Long-term debt (Note 10)
639,560
4,594,594
Lease liabilities (Note 11)
5,012,046
4,192,820
14,252,549
16,182,410
Shareholders’ equity
Share capital (Note 12a)
85,943,567
82,894,802
Reserve – Stock option plan (Note 12b)
4,090,989
3,821,980
Accumulated other comprehensive income (loss)
(2,135 )
8,662
Deficit
(55,773,679 )
(44,395,449 )
34,258,742
42,329,995
48,511,291
58,512,405
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, 2022 and 2021
(in Canadian dollars)
2022
2021
$
$
Operating activities
Net loss
(11,378,230 )
(1,150,428 )
Adjustments for:
Depreciation of property, plant and equipment and right-of-use assets
(Notes 6 and 11)
1,553,381
1,544,198
Amortisation of intangible assets (Note 7)
264,161
229,899
Loss on disposal of property, plant and equipment
156,244
267,562
Stock-based compensation costs (Note 12b)
1,161,323
458,543
Interest expense
136,768
568,130
Unrealized foreign exchange loss (gain)
(31,043 )
106,757
Changes in non-cash operating working capital items (Note 14)
(643,955 )
814,833
(8,781,351 )
2,839,494
Investing activities
Acquisition of property, plant and equipment (Notes 6 and 14)
(857,996 )
(746,837 )
Additions to intangible assets (Notes 7 and 14)
(350,519 )
(288,150 )
Interest received
235,673
97,529
(972,842 )
(937,458 )
Financing activities
Increase in long-term debt, net of transaction costs
-
842,180
Reimbursement of long-term debt
(6,317,585 )
(1,550,736 )
Payment of lease liabilities
(508,097 )
(453,686 )
Proceeds from issuance of shares (Note 12a)
2,156,451
29,792,356
Transaction costs attributable to the issuance of common shares
(Note 12a)
-
(2,126,000 )
Interest paid
(341,597 )
(628,851 )
(5,010,828 )
25,875,263
Effect of foreign exchange rate changes on cash and cash equivalents
18,240
(98,047 )
Increase (decrease) in cash and cash equivalents
(14,746,781 )
27,679,252
Cash and cash equivalents – Beginning of year
38,563,271
10,884,019
Cash and cash equivalents – End of year
23,816,490
38,563,271
Additional information on the consolidated statements of cash flows is presented in Note 14.
The accompanying notes are an integral part of the consolidated financial statements.
35
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
1.
Incorporation and Description of Business
OpSens Inc. (“OpSens” or the “Company”) is incorporated under the Business Corporations Act (Quebec).
OpSens focuses mainly on physiological measurement such as Fractional Flow Reserve (FFR) and Diastolic
Pressure Ratio (dPR) in the coronary artery disease market and on transcatheter aortic valve replacement (TAVR)
in the structural heart market. The Company supplies an advanced optical-based pressure guidewire (OptoWire),
a guidewire used in the TAVR procedure (SavvyWire) and a wide range of miniature optical sensors to measure
pressure and temperature to be used in a wide range of applications that can be integrated in other medical
devices. 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
and demanding industrial applications. The Company’s head office is located at 750, du Parc-Technologique
Blvd., 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 on the historical cost basis.
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 accordance with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgment in applying the Company's accounting
policies. The areas with a higher degree of judgment 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
subsidiaries. All intra-group transactions, balances, revenues and expenses are fully eliminated upon
consolidation until they are realized with a third party.
Subsidiary
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 the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
2.
Summary of Significant Accounting Policies (continued)
Revenue Recognition
The Company sells products through a direct sales force and to distributors. The Company recognizes sales
revenues for both medical and industrial segments upon shipment of products to customers, when the control
has been transferred to the buyer, there is no continuing management involvement with the products, the recovery
of the consideration is probable and the amount of revenue can be measured reliably. Sales are measured at the
fair value of the consideration to which the Company is entitled to receive in exchange for transferring the
promised products, net of any trade and volume discounts.
Milestone revenues are recognized over the agreement residual terms at the point in time when it is highly
probable that the respective milestone event criteria are met, and the risk of reversal of revenue recognition is
remote. These revenues are classified as Other in the consolidated statements of loss and comprehensive loss.
Reporting Currency and Foreign Currency
The consolidated financial statements are presented in Canadian dollars, which is the functional currency of the
Company, as this is the principal currency of the economic environment in which it operates.
Foreign Currency Transactions
Foreign currency transactions are translated into functional currency as follows: monetary assets and liabilities
that are denominated in foreign currencies are translated at the exchange rate in effect at the date of the
consolidated statements of financial position, non-monetary assets and liabilities that are denominated in foreign
currencies are translated at historical rates, revenues and expenses are translated at the exchange rates in effect
at the time of the transaction and exchange differences are recognized as Loss on foreign currency translation in
consolidated statements of loss and comprehensive loss in the period in which they arise.
Foreign Operations Translation
Each subsidiary determines its own functional currency. The items included in its financial statements are
therefore measured in this functional currency. For entities that have a functional currency that differs from the
Company, their financial statements are translated in Canadian dollars as follows: assets and liabilities are
translated at the end-of-period exchange rate and revenues and expenses are translated at the monthly average
exchange rates in effect during the period. If exchange rates fluctuate significantly, revenues and expenses are
instead translated using the exchange rates at the dates of the transactions. All resulting exchange differences
are recognized in other comprehensive income (loss) as Net changes in unrealized gain (loss) on translation of
foreign operations.
Research and Development Costs
Research and development costs include mainly development projects for new products, improvements to
existing products and manufacturing processes, clinical research, regulatory compliance and manufacturing
engineering.
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 amortised to operations
over the estimated period of benefit. When costs are conditional to the achievement of milestones under research
and development arrangements with third parties, costs are expensed when the milestones results are achieved.
No development costs have been capitalized during any of the years presented.
37
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
2.
Summary of Significant Accounting Policies (continued)
Refundable Research and Development Tax Credits and Government Assistance
Refundable research and development (R&D) tax credits and government assistance, except for the Canada
Emergence Wage Subsidy (CEWS), 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 in which the expenses are incurred.
The Company received a non-refundable contribution for admissible salaries related to its workforce according to
the CEWS program. This contribution is classified as Other income in the consolidated statements of loss and
comprehensive loss.
Refundable R&D tax credits and government assistance are accounted when the Company has reasonable
assurance that it will comply with the conditions attaching to them and that the grants will be received.
Shareholders’ Equity
Share capital represents the value of shares that have been issued. Any transaction costs attributable to the
issuance of shares are deducted from share capital.
Share-based Compensation
The Company offers a stock option plan described in note 12b), which is determined as an equity-settled plan.
The Company uses the fair value-based method to measure 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.
38
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
2.
Summary of Significant Accounting Policies (continued)
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 labour costs, an allocation of fixed production overheads based on the normal capacity of the production,
including applicable depreciation of property, plant and equipment and right-of-use assets, and an allocation of
variable production overheads based on the actual use of the production facilities.
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 a change in economic circumstances, the amount of the write-down is reversed. The reversal is limited to the
amount of the original write-down.
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 over the estimated useful life, considering any residual
value, as follows:
Office furniture and equipment
10 years
Production equipment
7 years
Research and development equipment
7 years
Diagnostic and demonstration equipment
3 to 5 years
Research and development computer equipment
3 years
Computer equipment
3 years
Leasehold improvements
Remaining lease terms
(2 to 11 years)
Depreciation methods, residual values and useful life 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 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.
39
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
2.
Summary of Significant Accounting Policies (continued)
Intangible Assets
Intangible assets with finite useful life consist of patents and software, including internally software development
costs. Intangible assets acquired separately are recorded at cost. The amount initially recognized for internally
generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first
meets the recognition criteria, and comprises all directly attributable costs necessary to create, produce, and
prepare the asset to be capable of operating in the manner intended by management. After initial recognition,
intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recorded using the straight-line method over the estimated useful life considering any residual
value, as follows:
Patents
Term of underlying patent - 20 years
Software
Internally generated software
3 to 15 years
5 years
The Company’s indefinite-life intangible assets consist of trademarks and are not amortised.
Impairment of Non-Financial Assets
Indefinite-Life Intangible Assets
The carrying values of identifiable intangible assets with indefinite life are tested annually for impairment.
Indefinite-life intangible assets are allocated to cash generating units (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
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, intangible
assets with finite useful life and right-of-use assets, are assessed for impairment whenever events or changes in
circumstances indicate that their carrying amounts may not be recoverable. If such an indicator 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.
40
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
2.
Summary of Significant Accounting Policies (continued)
Leases
At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. All leases are recognized on the statements of financial position with right-of-use
assets and lease liabilities, except for short-term leases and leases for which the underlying asset is of low value.
For these, the Company decided to recognize lease payments as expenses on a straight-line basis over the
period of the lease.
Right-of-Use Assets
The Company recognizes right-of-use assets and lease liabilities at the start date of the contract. Right-of-use
assets are measured at cost less any accumulated depreciation and any accumulated impairment losses and
adjusted for any remeasurement of the lease liabilities. The cost of the right-of-use asset comprises the amount
of the initial measurement of the lease liability, any initial direct costs, any lease payments made at or before the
commencement date, less any lease incentives received and the costs to be incurred to dismantle and remove
the underlying asset. Right-of-use assets are depreciated using the straight-line method over the period from the
commencement date to the earlier of the end of the useful life of the right-of-use assets or the end of the leases
term. The leases term includes the non-cancellable period and the renewal options reasonably certain to be
exercised. The leases term is one year for hosting servers and ranges from two to eleven years for buildings.
Depreciation methods and useful lives are reviewed annually.
Lease Liabilities
At the commencement date of the lease, the lease liabilities are measured at the present value of the lease
payments to be made over the period of the lease. The present value is determined using the incremental
borrowing rate of the Company at the start date of the contract if the implicit interest rate cannot be readily
determined. The lease payments include fixed payments and variable lease payments that depend on an index
or a rate. Variable lease payments that do not depend on an index or a rate are not included in the measurement
of lease liabilities but instead are recognized as expenses when the payment occurs. After the commencement
date, the carrying amount of lease liabilities is then increased to reflect interest on the lease liabilities and reduced
to reflect the lease payments made. The carrying amount of lease liabilities is remeasured when there is a change
in future lease payments, in renewal options or in the periods of the lease. The remeasurement amount of the
lease liabilities is recognized as an adjustment to the right-of-use assets, or in the consolidated statements of
loss and comprehensive loss when the carrying amount of the right-of-use assets is reduced to zero.
Classification and Presentation
Depreciation charge for right-of-use assets, expenses related to variable lease payments not included in the
measurement of lease liabilities and loss (gain) related to lease modifications are, if applicable, allocated between
the functions presented in the consolidated statements of loss and comprehensive loss. Interests related to the
lease liabilities are rather classified as Financial expenses. Lease payments related to the principal portion of the
lease liabilities are classified as Payment of lease liabilities within cash flows from financing activities. Lease
payments related to the interest portion of the lease liabilities are classified as Interest paid within cash flows from
financing activities.
Warranty Provision
The Company offers a standard 12-month warranty excluding consumables and accessories. Provision for the
expected cost of warranty obligations is recognized at the date of sale of the relevant products, at the
management’s best estimate of the expenditure required to settle the warranty obligation.
41
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
2.
Summary of Significant Accounting Policies (continued)
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 received by the taxation authorities. The income tax rates used to calculate the amount
are those that are enacted or substantively enacted at the date of the consolidated statements of financial position
in the tax jurisdiction where the Company generates taxable income/loss.
Deferred Income Taxes
The Company follows the liability method of accounting for deferred income taxes. 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 carry forward of unused tax losses and
deductions, using enacted or substantively enacted income tax rates expected to apply to taxable income in 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 assets 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 to different taxable entities that intend to settle the
balances on a net basis.
Loss per Share
Basic net loss per share is calculated by dividing the net loss for the year attributable to shareholders 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 shareholders of the
Company 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.
42
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
2.
Summary of Significant Accounting Policies (continued)
Financial Instruments
Financial assets at fair value through profit and loss (FVTPL): Financial assets carried at FVTPL are initially
recorded at fair value and transaction costs are expensed in the consolidated statements of loss and
comprehensive loss. Realized and unrealized gains and losses arising from changes in the fair value of the
financial assets held at FVTPL are included in the consolidated statements of loss and comprehensive loss in the
period in which they arise.
Financial liabilities at FVTPL: These financial liabilities are initially recognized at fair value, and transaction costs
directly attributable to issuing the financial liabilities are expensed in the consolidated statements of loss and
comprehensive loss. Financial liabilities that are required to be measured at FVTPL have all fair value movements,
including those related to changes in the credit risk of the liability, recognized in the consolidated statements of
loss and comprehensive loss.
Financial assets at fair value through other comprehensive income (FVTOCI): Investments in equity and debt
instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are
measured at fair value, with gains and losses arising from changes in fair value recognized in other
comprehensive income in the period in which they arise without subsequent reclassification to net loss in the case
of equity instruments.
Financial assets at amortised cost: A financial asset is measured at amortised cost if the objective of the business
model is to hold the financial asset for the collection of contractual cash flows, and the asset's contractual cash
flows are comprised solely of payments of principal and interest. They are classified as current assets or
non-current assets based on their maturity date and are initially recognized at fair value and subsequently carried
at amortised cost less any impairment.
Financial liabilities at amortised cost: These financial liabilities are initially recognized at fair value and are
subsequently measured at amortised cost using the effective interest method.
The Company’s financial instruments are classified as follows:
Financial instruments
IFRS 9 – Measurement category
Cash and cash equivalents
Amortised cost
Trade and other receivables
Amortised cost
Accounts payable and accrued liabilities
Amortised cost
Long-term debt
Amortised cost
Impairment of financial assets at amortised cost: The Company recognizes a loss allowance for expected credit
losses on financial assets that are measured at amortised cost. The Company has chosen the simplified approach
which requires to measure the loss allowance at an amount equal to lifetime expected credit losses that is the
maximum contractual period over which the entity is exposed to credit risk. The net change in expected credit
losses is recognized to the net loss.
43
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
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 related asset or related liability. Management has considered the potential
impact of COVID-19 in its critical estimates, assumptions and judgments and continues to monitor and evaluate
the situation and its impact on the Company’s activities.
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.
Impact Assessment of the COVID-19 Pandemic
The COVID-19 pandemic had a moderate impact on the consolidated financial statements for the year ended
August 31, 2022, following the supply chain disruptions that affected manufacturing and distribution of its products
and hospitals procedure disruptions. For the second semester of the year, there have been a decrease in the
negative impacts generated by the COVID-19 pandemic.
The following critical estimates, judgments and assumptions have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year.
Inventories
The Company measures 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, considering changes in demand, technology
and market.
Useful Life of Depreciable Assets
Management reviews the useful life of depreciable assets at each reporting date. As at August 31, 2022,
management stated that the useful life represents the expected utility of the assets to the Company. The carrying
amounts are presented in notes 6 and 7. Actual results, however, may vary due to technical obsolescence or
changes in the market, particularly for computer equipment and software.
Impairment of Non-Financial Assets
When the Company performs an impairment test for its non-financial assets, the recoverable amount of the asset
or the CGU must be determined. For that purpose, the Company evaluates the higher of assets fair value less
costs of disposal and its value in use. This evaluation requires a high degree of judgment and several estimates
including future cash flows, discount rates and other variables.
44
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
3.
Critical Accounting Estimates, Assumptions and Judgments (continued)
Leases
Upon the occurrence of either a significant event or a significant change in circumstances, the Company reviews
if it has the reasonable certainty to exercise an extension option of the lease, or not to exercise a termination
option. Future lease payments are also reviewed by management, resulting in a remeasurement of the carrying
amount of right-of-use assets and lease liabilities. To measure lease liabilities at the present value of the
remaining lease payments, the Company must also determine its incremental borrowing rate when the implicit
interest rate of the contract cannot be readily determined.
Government Assistance and Refundable R&D Tax Credits
Government assistance, including the CEWS, and refundable R&D 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 refundable R&D 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.
Loss Allowance for Expected Credit Losses
The Company evaluates the expected credit losses on financial assets that are measured at amortised cost using
a provision matrix based on the historical credit losses, the time value of money and past events, current
conditions and forecasts of future economic conditions. The particularities of each debtor are taken into account
in this analysis.
Stock-based Compensation
The Company uses judgment in assessing expected life, volatility, risk-free interest rates, as well as the estimated
number of options that will ultimately vest.
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 collection is reasonably assured. The Company assesses collection based on several
factors, including past transaction history and the creditworthiness of the customer. For the milestone revenues,
the Company estimates the probability that the respective milestone event criteria are met.
Functional Currency
The functional currency for the Company and its subsidiaries is the currency of the primary economic environment
in which each operates. The determination of functional currency may require certain judgments 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.
45
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
3.
Critical Accounting Estimates, Assumptions and Judgments (continued)
Income Taxes
Management estimates income taxes based on the tax laws applicable in the jurisdictions where the Company
operates.
A deferred income tax asset will be recognized in the consolidated 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.
4.
Trade and Other Receivables
As at
August 31,
As at
August 31,
2022
2021
$
$
Trade
5,601,931
4,204,946
Allowance for expected credit losses
-
(213,353 )
Sales taxes receivable
246,869
102,919
Other receivables
6,495
40,934
Total
5,855,295
4,135,446
Allowance for Expected Credit Losses
Years ended August 31,
2022
2021
$
$
Balance – Beginning of year
(213,353 )
-
Additional provision recognized
-
(213,353 )
Amount written off during the year as uncollectible
216,854
-
Effect of foreign exchange differences
(3,501 )
-
Balance – End of year
-
(213,353 )
5.
Inventories
As at
August 31,
As at
August 31,
2022
2021
$
$
Raw materials
4,112,389
3,107,546
Work in progress
1,507,108
1,580,270
Finished goods
1,052,682
1,427,275
Total
6,672,179
6,115,091
For the year ended August 31, 2022, $13,812,817 of inventories were expensed in the consolidated statements
of loss and comprehensive loss as Cost of sales ($12,393,833 for the year ended August 31, 2021). Write-downs
of inventories amounting to $121,470 ($114,680 for the year ended August 31, 2021) were included under Cost
of sales.
46
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
6.
Property, Plant and Equipment
Office
furniture
and
equipment,
net of
income tax
credits of
$3,420
Production
equipment,
net of income
tax credits of
$103,160
Diagnostic and
demonstration
equipment
Research and
development
equipment, net
of income tax
credits and
government
assistance of
$55,303
Research and
development
computer
equipment
Computer
equipment
Leasehold
improvements,
net of income tax
credits of
$44,823
Total
$
$
$
$
$
$
$
$
Cost
Balance as at August 31, 2021
502,640
3,869,465
400,870
551,576
90,751
336,802
1,028,552
6,780,656
Acquisition
108,867
391,230
73,064
52,984
7,567
185,733
179,901
999,346
Disposals
-
-
(275,646 )
-
-
-
-
(275,646 )
Effect of foreign exchange
differences
818
-
-
-
-
1,609
96
2,523
Balance as at August 31, 2022
612,325
4,260,695
198,288
604,560
98,318
524,144
1,208,549
7,506,879
Accumulated depreciation
Balance as at August 31, 2021
255,624
2,550,449
124,926
313,109
55,362
192,204
557,474
4,049,148
Disposals
-
-
(119,402 )
-
-
-
-
(119,402 )
Depreciation
52,744
489,611
61,003
61,174
21,793
99,209
108,036
893,570
Effect of foreign exchange
differences
17
-
-
-
-
455
14
486
Balance as at August 31, 2022
308,385
3,040,060
66,527
374,283
77,155
291,868
665,524
4,823,802
Net book value
as at August 31, 2022
303,940
1,220,635
131,761
230,277
21,163
232,276
543,025
2,683,077
47
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
6.
Property, Plant and Equipment (continued)
Office
furniture and
equipment,
net of
income tax
credits of
$3,420
Production
equipment,
net of income
tax credits of
$103,160
Diagnostic and
demonstration
equipment
Research and
development
equipment, net of
income tax credits
and government
assistance of
$55,303
Research and
development
computer
equipment
Computer
equipment
Leasehold
improvements, net
of income tax
credits of $44,823
Total
$
$
$
$
$
$
$
$
Cost
Balance as at August 31, 2020
562,164
3,855,483
650,257
1,568,067
125,467
597,685
1,300,504
8,659,627
Acquisition
16,724
147,252
275,414
30,460
25,347
133,694
66,868
695,759
Disposals
(76,248 )
(203,983 )
(524,801 )
(976,238 )
(60,063 )
(394,571 )
(338,820 )
(2,574,724 )
Transfers
-
70,713
-
(70,713 )
-
-
-
-
Effect of foreign exchange
differences
-
-
-
-
-
(6 )
-
(6 )
Balance as at August 31, 2021
502,640
3,869,465
400,870
551,576
90,751
336,802
1,028,552
6,780,656
Accumulated depreciation
Balance as at August 31, 2020
282,514
2,216,244
258,464
1,285,821
90,094
522,241
774,462
5,429,840
Disposals
(76,248 )
(203,983 )
(257,239 )
(976,238 )
(60,063 )
(394,571 )
(338,820 )
(2,307,162 )
Depreciation
49,358
472,292
123,701
69,422
25,331
64,492
121,832
926,428
Transfers
-
65,896
-
(65,896 )
-
-
-
-
Effect of foreign exchange
differences
-
-
-
-
-
42
-
42
Balance as at August 31, 2021
255,624
2,550,449
124,926
313,109
55,362
192,204
557,474
4,049,148
Net book value
as at August 31, 2021
247,016
1,319,016
275,944
238,467
35,389
144,598
471,078
2,731,508
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
7.
Intangible Assets
Indefinite life –
Trademarks
Finite life –
Internally
generated
software
Finite life –
Software
Finite life –
Internally
developed
patents
Total
$
$
$
$
$
Cost
Balance as at August 31, 2021
58,279
587,621
311,057
1,548,812
2,505,769
Additions
11,282
-
95,775
286,998
394,055
Grant recorded against
intangible
assets (Note 16)
-
(20,000 )
-
-
(20,000 )
Disposals
-
-
-
-
-
Balance as at August 31, 2022
69,561
567,621
406,832
1,835,810
2,879,824
Accumulated amortisation
Balance as at August 31, 2021
-
109,534
98,704
620,934
829,172
Amortisation
-
111,205
59,240
93,716
264,161
Disposals
-
-
-
-
-
Balance as at August 31, 2022
-
220,739
157,944
714,650
1,093,333
Net book value
as at August 31, 2022
69,561
346,882
248,888
1,121,160
1,786,491
Indefinite life –
Trademarks
Finite life –
Internally
generated
software
Finite life –
Software
Finite life –
Internally
developed
patents
Total
$
$
$
$
$
Cost
Balance as at August 31, 2020
45,673
584,264
349,791
1,398,335
2,378,063
Additions
12,606
49,633
117,746
150,477
330,462
Grant recorded against
intangible
assets (Note 16)
-
(46,276 )
-
-
(46,276 )
Disposals
-
-
(156,480 )
-
(156,480 )
Balance as at August 31, 2021
58,279
587,621
311,057
1,548,812
2,505,769
Accumulated amortisation
Balance as at August 31, 2020
-
-
221,184
534,569
755,753
Amortisation
-
109,534
34,000
86,365
229,899
Disposals
-
-
(156,480 )
-
(156,480 )
Balance as at August 31, 2021
-
109,534
98,704
620,934
829,172
Net book value
as at August 31, 2021
58,279
478,087
212,353
927,878
1,676,597
The Company has considered indicators of impairment as at August 31, 2022, to determinate if an impairment
loss was necessary in particular because of patent requests that have not been pursued. No impairment loss
was recognized for the years ended August 31, 2022 and 2021.
49
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
8.
Authorized Line of Credit
The Company has a revolving operating credit facility for a maximum of $1,000,000 (the credit limit). The available
revolving operating credit is limited to the lesser of the credit limit and 75% of eligible accounts receivable, plus
50% of eligible inventories, minus priority claims. The aggregate outstanding amount under the revolver may not
at any time exceed the credit limit. This revolving operating credit bears interest at the prime rate plus 1% and is
repayable on the first anniversary of the date of the agreement. The Company is also allowed to prepay this
facility in whole or in part at any time without penalty. It is secured by a first-rank movable hypothec on the
universality of receivables and inventories. This credit line was not used as at August 31, 2022 and 2021.
Since September 2021, the Company also had an additional non-revolving credit facility of $10,000,000 that
could be used for growth and working capital purposes and that was secured by a first-rank movable hypothec
on the universality of the Company’s present and future property, plant and equipment and intangible assets.
The Company could use the credit facility through two advances that had to be made by August 31, 2022. The
Company had to pay an annual fee of 0.50% on the unused portion of the credit facility. This credit line was not
used as at August 31, 2022. Thus, this non-revolving credit facility of $10,000,00 has been automatically
cancelled.
The Company also has credit cards for a maximum of $100,000 to finance its current operations. The balance
used on these credit cards bears interest at a rate of 19.99%.
9.
Accounts Payable and Accrued Liabilities
As at
August 31,
As at
August 31,
2022
2021
$
$
Suppliers
2,438,572
877,729
Salaries, employee benefits and other
3,038,488
1,877,880
Other liabilities
1,823,202
1,087,262
Total
7,300,262
3,842,871
50
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
10.
Long-term Debt
As at August
31,
As at
August 31,
2022
2021
$
$
Contributions repayable to Canada Economic Development (CED), without
interest (effective rate of 12.00%), repayable in 59 equal and consecutive
monthly instalments of $3,333 and a final payment of $3,353, maturing in
July 2024 without payment from April to December 2020 inclusive due to
a nine-month moratorium.
Debt balance
76,679
116,675
Imputed interest
(5,101 )
(11,622 )
71,578
105,053
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 48
monthly instalments of $4,500, maturing in August 2022 without principal
payment from March to August 2020 inclusive due to a six-month
moratorium. Amounts received are net of transaction costs of $2,160.
-
53,900
Term loan, bearing interest at prime rate plus 2.00%, secured by a movable
hypothec on the universality of the Company’s present and future
property, plant and equipment and intangible assets, maturing in
February 2024 without principal payment for a 24-month period following
the signature of an agreement in March 2019. The principal is payable in
36 monthly instalments of $194,444. Amounts received are net of
transaction costs of $87,468. The Company finally prepaid the entire
balance of the term loan in September 2021 for a principal amount of
$5,833,333.
-
5,804,813
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, maturing in June
2024 without principal payment for a 12-month period following the receipt
of the first tranche of the loan in October 2019. The second and last
tranche of the loan for $242,180 has been received in January 2021. The
principal is payable in 44 monthly instalments of $10,938 and a final
payment of $10,386. Amounts received are net of transaction costs of
$5,250.
239,300
369,507
Term loan bearing interest at 6.66% payable in 111 monthly instalments of
$8,070, maturing in September 2025.
361,361
463,544
Term loan, bearing interest at prime rate plus 1.00%, secured by a movable
hypothec on the universality of the Company’s present and future
property, plant and equipment and intangible assets, maturing in
November 2024 without principal payment for a 12-month period following
the receipt of the loan in November 2020. The principal is payable in 37
monthly instalments of $16,216.
437,837
600,000
1,110,076
7,396,817
Current portion
470,516
2,802,223
639,560
4,594,594
51
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
10.
Long-term Debt (continued)
The following table presents changes in long-term debt for the Company for the years ended August 31, 2022
and 2021:
Years ended August 31,
2022
2021
$
$
Balance – Beginning of year
7,396,817
8,068,565
Increase in long-term debt
-
842,180
Reimbursement of long-term debt
(6,317,585 )
(1,550,736 )
Amortisation of transaction costs
30,844
36,808
Balance – End of year
1,110,076
7,396,817
The annual principal instalments due on the long-term debt are:
As at
August 31,
As at
August 31,
2022
2021
$
$
Less than 1 year
470,516
2,802,223
1 to 2 years
455,440
2,800,058
2 to 3 years
173,350
1,625,731
3 to 4 years
10,770
158,035
4 to 5 years
-
10,770
1,110,076
7,396,817
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, 2022 and 2021, these
financial ratios were met by the Company.
52
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
11.
Leases
Right-of-Use Assets
The following tables present changes in right-of-use assets for the Company for the years ended August 31,
2022 and 2021:
Year ended August 31, 2022
Buildings
Hosting
servers
Total
$
$
$
Balance as at August 31, 2021
4,307,220
14,388
4,321,608
New leases / leases modifications
1,308,305
51,122
1,359,427
Depreciation of right-of-use assets
(619,859 )
(39,952 )
(659,811 )
Effect of foreign exchange differences
4,855
-
4,855
Balance as at August 31, 2022
5,000,521
25,558
5,026,079
Year ended August 31, 2021
Buildings
Hosting
servers
Total
$
$
$
Balance as at August 31, 2020
4,462,365
50,613
4,512,978
New leases / leases modifications
430,537
(4,137 )
426,400
Depreciation of right-of-use assets
(585,682 )
(32,088 )
(617,770 )
Balance as at August 31, 2021
4,307,220
14,388
4,321,608
Lease Liabilities
The following tables present changes in lease liabilities for the Company for the years ended August 31, 2022
and 2021:
Year ended August 31, 2022
Buildings
Hosting
servers
Total
$
$
$
Balance as at August 31, 2021
4,702,589
15,725
4,718,314
New leases / leases modifications
1,308,305
51,122
1,359,427
Payment of lease liabilities
(744,758 )
(39,363 )
(784,121 )
Sublease income from right-of-use assets
5,986
-
5,986
Interest expense on lease liabilities
268,939
1,099
270,038
Effect of foreign exchange differences
4,886
-
4,886
Balance as at August 31, 2022
5,545,947
28,583
5,574,530
Current portion
533,901
28,583
562,484
Long-term lease liabilities as at August 31, 2022
5,012,046
-
5,012,046
53
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
11.
Leases (continued)
Year ended August 31, 2021
Buildings
Hosting
servers
Total
$
$
$
Balance as at August 31, 2020
4,692,531
53,069
4,745,600
New leases / leases modifications
430,537
(4,137 )
426,400
Payment of lease liabilities
(709,871 )
(35,314 )
(745,185 )
Sublease income from right-of-use assets
23,942
-
23,942
Interest expense on lease liabilities
265,450
2,107
267,557
Balance as at August 31, 2021
4,702,589
15,725
4,718,314
Current portion
509,769
15,725
525,494
Long-term lease liabilities as at August 31, 2021
4,192,820
-
4,192,820
The lease payments, based on the expected undiscounted contractual cash flows, are as follows over the period
of the leases:
As at
August 31,
As at
August 31,
2022
2021
$
$
Less than 1 year
854,427
765,549
1 to 2 years
768,536
769,175
2 to 3 years
573,807
726,938
3 to 4 years
586,215
576,257
4 to 5 years
598,901
587,782
More than 5 years
4,104,868
2,524,166
7,486,754
5,949,867
For the years ended August 31, 2022 and 2021, expenses relating to short-term leases and leases for which the
underlying asset is of low value were not significant.
The Company is not exposed to a significant liquidity risk regarding its lease liabilities. The Company’s treasury
function oversees lease liabilities.
54
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
11.
Leases (continued)
As at August 31, 2022, the Company also has leases not yet commenced for buildings to which the Company is
committed. These leases will begin in October 2022 (maturing in December 2033) and in January 2024 (maturing
in December 2033). As at August 31, 2021, there were no leases not yet commenced.
The lease payments for the leases not yet commenced are as follows:
As at
August 31,
2022
$
Less than 1 year
168,417
1 to 2 years
481,841
2 to 3 years
526,507
3 to 4 years
536,793
4 to 5 years
547,184
More than 5 years
3,809,246
6,069,988
12.
Shareholders’ Equity
a) Share Capital
During the year ended August 31, 2022, following the exercise of stock options, the Company issued
1,678,000 common shares (904,500 common shares for the year ended August 31, 2021) for a cash
consideration of $2,156,451 ($1,042,356 for the year ended August 31, 2021). As a result, an amount of
$892,314 was reallocated from Reserve – Stock option plan to Share capital in shareholders’ equity ($460,077
for the year ended August 31, 2021).
On February 25, 2021, the Company completed a public bought deal offering for aggregate gross proceeds
of $28,750,000. In connection with the offering, the Company issued a total of 15,972,222 common shares at
a price of $1.80 per common share. Transaction costs of the offering include underwriting fees of $1,725,000
and other professional fees and miscellaneous fees of $401,000 for total transactions costs of $2,126,000.
b) Stock Options
According to the policies of the TSX Exchange, the stock option plan must be approved by the Company’s
shareholders every three years. So, the shareholders approved the stock option plan on January 21, 2020.
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
subjected 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 1,230,000 stock options (1,020,000 stock options granted as at August 31, 2021), 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.
55
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
12.
Shareholders’ Equity
b) Stock Options (continued)
The fair value of the options granted issued was estimated using the Black-Scholes option pricing model using
the following assumptions:
Years ended August 31,
2022
2021
Risk-free interest rate
Between 0.38% and 3.52%
Between 0.17% and 0.84%
Volatility
Between 58.29% and 75.48% Between 55.81% and 73.20%
Dividend yield on shares
Nil
Nil
Expected life
0 to 5 years
0 to 5 years
Weighted share price
$2.43
$1.71
Weighted fair value per option at the
grant date
$1.12
$0.75
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 changes in the number of stock options granted by the Company and their weighted-average exercise
prices, for the years ended August 31, 2022 and 2021, are as follows:
Number of
options
Weighted-
average
exercise price
$
Outstanding as at August 31, 2020
6,596,375
1.01
Options granted
2,342,500
1.71
Options exercised
(904,500 )
1.15
Options expired
(327,500 )
1.21
Options cancelled
(566,625 )
1.10
Outstanding as at August 31, 2021
7,140,250
1.20
Options granted
2,868,250
2.43
Options exercised
(1,678,000 )
1.29
Options expired
(131,000 )
1.44
Options cancelled
(553,375 )
1.44
Outstanding as at August 31, 2022
7,646,125
1.62
Options exercisable as at August 31, 2022
3,427,219
1.21
56
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
12.
Shareholders’ Equity (continued)
b) Stock Options (continued)
The table below provides information on the outstanding stock options as at August 31, 2022:
Exercise price
Number of outstanding
stock options
Number of exercisable
stock options
Weighted average
remaining contractual life
(years)
$
0.51 – 1.00
2,955,625
2,277,218
1.71
1.01 – 1.50
652,500
252,188
2.75
1.51 – 2.00
1,085,000
235,625
4.03
2.01 – 2.50
2,047,250
404,063
4.51
2.51 – 3.00
475,000
158,125
4.29
3.01 – 3.50
-
-
-
3.51 – 4.00
430,750
100,000
4.23
1.62
7,646,125
3,427,219
3.18
13.
Net Loss per Share
The table below presents a reconciliation between the basic net loss and the diluted net loss per share:
Years ended August 31,
2022
2021
$
$
Net loss attributable to shareholders
Basic and diluted
(11,378,230 )
(1,150,428 )
Number of shares
Basic and diluted weighted average number of shares outstanding
108,219,362
98,806,987
Amount per share
Basic and diluted net loss per share
(0.11 )
(0.01 )
Stock options 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 stock options excluded from the calculation because their exercise price is greater
than the average market price of common shares is presented below:
Years ended August 31,
2022
2021
Stock options
905,750
1,733,750
For the years ended August 31, 2022 and 2021, the diluted amount per share was the same amount as the basic
amount per share, since the dilutive effect of stock options was not included in the calculation; otherwise, the
effect would have been antidilutive. Accordingly, the diluted amount per share for these periods was calculated
using the basic weighted average number of shares outstanding.
57
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
14.
Additional Information on the Consolidated Statements of Cash Flows
Years ended August 31,
2022
2021
$
$
Changes in non-cash operating working capital items
Trade and other receivables
(1,719,849 )
(94,366 )
Government assistance receivable
(264,695 )
428,601
Tax credits receivable
(335,418 )
(214,323 )
Inventories
(557,088 )
390,003
Prepaid expenses
(1,102,683 )
(69,991 )
Accounts payable and accrued liabilities
3,292,505
352,590
Warranty provision
(31,384 )
(69,335 )
Deferred revenues
83,573
71,759
Current income taxes payable
(8,916 )
19,895
(643,955 )
814,833
As at
August 31,
As at
August 31,
2022
2021
$
$
Supplementary information
Unpaid acquisition of property, plant and equipment
173,777
32,427
Unpaid additions to intangible assets
49,039
25,503
As at
August 31,
As at
August 31,
2022
2021
$
$
Cash and cash equivalents
Cash
2,622,426
2,700,529
Cash equivalents
21,194,064
35,862,742
23,816,490
38,563,271
58
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
15.
Warranty provision
During the normal course of business, the Company replaces defective parts under warranty provision offered at
the sale of the products. The term of the warranty is generally 12 months. The following table summarizes
changes in warranty provision:
Years ended August 31,
2022
2021
$
$
Balance – Beginning of year
83,803
153,138
Additional provision recognized
40,845
73,982
Unused amount reversed during the year
(12,497 )
(46,515 )
Amount used during the year
(59,926 )
(96,573 )
Effect of foreign exchange differences
194
(229 )
Balance – End of year
52,419
83,803
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.
16.
Government assistance
Under agreements reached with the National Research Council Canada with respect to the Industrial Research
Assistance Program (IRAP), the Company may receive a non-refundable contribution for a maximum amount of
$1,499,800 to cover some of its incurred costs to gather different data and develop new products for the coronary
intervention market, a non-refundable contribution for a maximum amount of $500,000 to cover some of its
incurred costs to develop a new product for the structural heart market and a non-refundable contribution for a
maximum amount of $500,000 to cover some of its incurred costs to develop an optical-based fuel monitoring
system for aerospace applications. For the year ended August 31, 2022, the Company recorded contributions
totalling $383,191 ($323,084 for the year ended August 31, 2021) which were accounted for against research
and development expenses.
Under agreements reached with the ministère de l’Économie et de l’Innovation, with respect to the Projet
stratégique mobilisateur (PSM), the Company may receive a non-refundable contribution for a maximum amount
of $512,713 to cover some of its incurred costs to develop a new product for the structural heart market. For the
year ended August 31, 2022, the Company recorded contributions totalling $200,130 ($211,990 for the year
ended August 31, 2021) which were accounted for against research and development expenses.
Under an agreement reached with the Ville de Québec, the Company may receive a non-refundable contribution
for a maximum amount of $350,000 to cover some of its incurred costs related to the development of a software
and sales and marketing expenses. For the year ended August 31, 2022, the Company recorded contributions
totalling $170,000 which were accounted for against internally generated software and sales and marketing
expenses (nil for the year ended August 31, 2021).
Under an agreement reached with Innovation, Science and Economic Development Canada, with respect to the
Strategic Innovation Fund, the Company may receive a non-refundable contribution for a maximum amount of
$125,000 to cover some of its incurred costs for artificial intelligence research. For the year ended August 31,
2022, the Company recorded contributions totalling $97,390 which were accounted for against research and
development expenses (nil for the year ended August 31, 2021).
Under an agreement reached with the Government of Québec, the Company may receive a non-refundable
contribution for a maximum amount of $180,000 to cover some of its incurred costs for the optimization of
manufacturing processes. For the year ended August 31, 2022, the Company recorded contributions totalling
$84,541 which were accounted for against research and development expenses (nil for the year ended August
31, 2021).
59
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
16.
Government assistance (continued)
Under agreements reached with Investissement Québec, the Company may receive a non-refundable
contribution for a maximum amount of $250,000 to cover some of its incurred costs to develop markets outside
the province of Quebec and to export products in North America. For the year ended August 31, 2022, the
Company recorded contributions totalling $126,273 which were accounted for against sales and marketing
expenses (nil for the year ended August 31, 2021).
Because of the spread of COVID-19 virus, the Government of Canada implemented the Canada Emergency
Wage Subsidy (CEWS) to cover admissible salaries for some employees. For the year ended August 31, 2022,
the Company didn’t receive the CEWS ($740,162 for the year ended August 31, 2021, which were accounted as
Other income).
Under an agreement reached with the ministère de l’Économie et de l’Innovation, the Company may receive a
non-refundable contribution for a maximum amount of $92,804 to cover some of its incurred costs related to the
development of a software. For the year ended August 31, 2022, the Company didn’t receive any contribution
under this agreement ($46,276 for the year ended August 31, 2021, which were accounted for against internally
generated software).
17.
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,
2022
2021
$
$
Income tax payable using the combined federal and provincial statutory
tax rate (26.5%; 26.5% in 2021)
(3,003,652 )
(299,249 )
Effect of different tax rates of subsidiaries in other jurisdictions
10,774
(2,573 )
Non-deductible expenses and other
813,786
823,431
Deductible financing fees
(117,592 )
(180,924 )
Non-taxable income tax credits
(119,651 )
(84,800 )
Losses carried forward
2,460,028
(234,699 )
Income tax using effective income tax rate
43,693
21,186
60
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
17.
Income Taxes (continued)
As at August 31, 2022, the Company has tax losses of approximately $34,951,000 for federal purposes and
$35,520,000 for provincial purposes that can be used to reduce future taxable income. These losses expire as
follows:
Federal
Provincial
$
$
2024
83,000
-
2025
42,000
-
2026
-
-
2027
1,552,000
1,259,000
2028
641,000
617,000
2029
463,000
273,000
2030
-
-
2031
1,731,000
1,754,000
2032
1,193,000
1,188,000
2033
181,000
183,000
2034
663,000
728,000
2035
2,513,000
2,510,000
2036
5,759,000
5,493,000
2037
5,447,000
5,427,000
2038
2,912,000
4,308,000
2039
271,000
325,000
2040
1,282,000
1,278,000
2041
-
-
2042
10,218,000
10,177,000
34,951,000
35,520,000
The Company also has undeducted research and development expenses of $13,957,000 ($12,489,000 as at
August 31, 2021) for federal purposes and $17,157,000 ($15,642,000 as at August 31, 2021) 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 R&D tax credits totalling approximately $19,313,000
($16,080,000 as at August 31, 2021) were not recognized due to the uncertainty about the Company’s ability to
generate taxable income. In addition, deferred tax liabilities of approximately $1,031,000 ($940,000 as at
August 31, 2021) related to federal investment tax credits on research and development expenses were
recognized and offset by a deferred income tax asset.
61
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
18.
R&D Tax Credits
For tax purposes, research and development expenses are detailed as follows:
Years ended August 31,
2022
2021
$
$
Federal
1,388,000
1,116,000
Provincial
1,429,000
1,173,000
These expenses have enabled the Company to become eligible for R&D tax credits reimbursable for the following
amounts:
Years ended August 31,
2022
2021
$
$
Federal
-
-
Provincial
425,000
320,000
425,000
320,000
These credits were accounted for against 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 years ended
August 31, 2022 and 2021, 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 R&D tax credits, which were non-refundable and could be used
against Part I Company tax. The accumulated credits as at August 31, 2022, are about $3,889,000 ($3,549,000
for the year ended August 31, 2021) and expire over a period of 5 to 20 years beginning in 2022.
62
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
19.
Segmented Information
Segmented Information
The Company is organized into two segments: Medical and Industrial.
Medical segment: in this segment, OpSens focuses mainly on physiological measurement such as FFR and dPR
in the coronary artery disease market and on the TAVR procedure in the structural heart market. The Company
also supplies a wide range of miniature optical sensors to measure pressure and temperature to be used in a
wide range of applications that can be integrated in other medical devices. This also includes other revenues
related to its optical sensor technology.
Industrial segment: in this segment, OpSens develops, manufactures and installs innovative fibre optic sensing
solutions for critical and 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 business and are measured at the exchange amount, which approximates prevailing prices in the
markets.
Years ended August 31,
2022
2021
Medical
Industrial
Total
Medical
Industrial
Total
$
$
$
$
$
$
External sales
31,747,408
3,576,498
35,323,906
31,101,209
3,362,611
34,463,820
Internal sales
84,363
259,961
344,324
111,695
381,797
493,492
Gross margin
15,506,597
2,294,121
17,800,718
16,457,466
2,222,896
18,680,362
Depreciation of property,
plant and equipment
and right-of-use assets
1,342,485
210,896
1,553,381
1,362,247
181,951
1,544,198
Amortisation of intangible
assets
244,980
19,181
264,161
218,255
11,644
229,899
Other income
-
-
-
445,506
294,656
740,162
Financial expenses
13,854
297,633
311,487
318,488
318,636
637,124
Loss (gain) on foreign
currency translation
73,558
(5,311 )
68,247
221,522
59,102
280,624
Current income tax
expense
43,693
-
43,693
21,186
-
21,186
Net income (loss)
(11,764,281 )
386,051 (11,378,230 ) (1,969,256 )
818,828
(1,150,428 )
Acquisition of property,
plant and equipment
980,552
18,794
999,346
651,109
44,650
695,759
Additions to intangible
assets
314,138
59,917
374,055
264,398
19,788
284,186
Segment assets
45,525,229
2,986,062
48,511,291
56,212,182
2,300,223
58,512,405
Segment liabilities
13,334,210
918,339
14,252,549
15,246,157
936,253
16,182,410
63
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
19.
Segmented Information (continued)
Information by geographic segment
Years ended August 31,
2022
2021
$
$
Revenue by geographic segment
United States
14,883,524
12,862,452
Japan
5,993,435
7,277,326
Canada
3,428,461
3,270,982
Other*
11,018,486
11,053,060
35,323,906
34,463,820
* Comprised of revenues generated in countries for which amounts are individually not significant.
Revenues are attributed to the geographic segment based on the clients’ location.
Non-current assets, which include property, plant and equipment, intangible assets and right-of-use assets, are
located in Canada, except non-current assets located in United States of $191,909 as at August 31, 2022
($19,440 as at August 31, 2021).
For the year ended August 31, 2022, revenues from two clients from the Medical’s reportable segment
represented individually more than 10% of the total revenues of the Company, i.e. 23% and 16% (21% and 19%
for the year ended August 31, 2021).
20.
Related Party Transactions
Key management personnel, having authority and responsibility for planning, directing and controlling the
activities of the Company, comprise the Executive Chairman, the Chief Executive Officer, the Chief Financial
Officer, the Chief Commercial Officer and the President of OpSens Solutions Inc. Compensation of key
management personnel and directors for the years ended August 31, 2022 and 2021 were as follows:
Years ended August 31,
2022
2021
$
$
Short-term salaries and other benefits
1,718,459
1,219,527
Option-based awards
432,386
119,303
2,150,845
1,338,830
The compensation of key executives is determined by the Human Resources and Compensation Committee,
taking into consideration individual performance and market trends.
64
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
21.
Additional Information to the Consolidated Statements of Loss and Comprehensive Loss
Years ended August 31,
Expenses (revenues) by function
2022
2021
$
$
Salaries and Other Benefits
20,738,090
14,652,074
Cost of sales
Administrative
Sales and marketing
Research and development
Depreciation of Property, Plant and Equipment and Righ-of-Use
Assets
1,553,381
1,544,198
Cost of sales
Administrative
Sales and marketing
Research and development
Amortisation of Intangible Assets
264,161
229,899
Administrative
Research and development
Government Assistance
(1,078,113 )
(535,074 )
Sales and marketing
Research and development
Refundable Research and Development Tax Credits
(451,512 )
(347,185 )
Research and development
65
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
22.
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.
Risk Management
The main risks arising from the Company’s financial instruments are credit risk, liquidity risk, interest rate risk,
concentration risk and foreign exchange risk. These risks arise from exposures that occur in the normal course
of business and are managed on a consolidated 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. In general, 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 checks of its
customers and establishes an allowance for doubtful accounts when accounts are determined to be uncollectible.
Two major customers represented 36% of the Company’s total accounts receivable as at August 31, 2022 (35%
as at August 31, 2021).
As at August 31, 2022, 0% (10% as at August 31, 2021) of the accounts receivable were of more than 90 days
whereas 68% (65% as at August 31, 2021) 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, 2022, the allowance for
doubtful accounts was nil ($213,353 as at August 31, 2021).
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.
66
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
22.
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, 2022 and 2021:
As at August 31, 2022
Carrying
0 to 12
12 to 24
After
amount
Cash flows
months
months
24 months
$
$
$
$
$
Accounts payable and accrued
liabilities
7,300,262
7,300,262
7,300,262
-
-
Long-term debt
1,110,076
1,053,190
462,684
436,944
153,562
Total
8,410,338
8,353,452
7,762,946
436,944
153,562
As at August 31, 2021
Carrying
0 to 12
12 to 24
After
amount
Cash flows
months
months
24 months
$
$
$
$
$
Accounts payable and accrued
liabilities
3,842,871
3,842,871
3,842,871
-
-
Long-term debt
7,396,817
7,370,774
2,822,089
2,801,422
1,747,263
Total
11,239,688
11,213,645
6,664,960
2,801,422
1,747,263
Interest Rate Risk
The Company’s exposure to interest rate risk is summarized as follows:
Cash and cash equivalents
Fixed and variable interest rates
Trade and other receivables
Non-interest-bearing
Accounts payable and accrued liabilities
Non-interest-bearing
Long-term debt
Non-interest-bearing and fixed and variable 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. The Company owns investments with fixed and variable interest rates. As at August 31, 2022, the
Company was holding more than 89% (93% as at August 31, 2021) of its cash and cash equivalents in all-time
redeemable term deposits.
All else being equal, a hypothetical 1% interest rate increase or decrease would have an impact of $8,507 on
net loss and comprehensive loss for the year ended August 31, 2022 ($75,939 for the year ended
August 31, 2021).
67
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
22.
Financial Instruments (continued)
Risk Management (continued)
Interest Rate Risk (continued)
Financial Expenses (Revenues)
Years ended August 31,
2022
2021
$
$
Interest and bank charges
210,822
80,498
Interest on long-term debt
102,401
398,605
Interest on lease liabilities
270,038
267,557
Interest income
(271,774 )
(109,536 )
311,487
637,124
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, 2022 and 2021, 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 mainly of raw materials, salaries and other benefits, supplies
and professional services in U.S. dollars, Euros and British pounds. Therefore, it is exposed to foreign currency
fluctuations. The Company does not actively manage this risk
Foreign Currency Sensitivity Analysis
Based on the Company’s foreign exchange risk noted above, varying the foreign exchange rate to reflect a 10%
strengthening in the Canadian dollar would have decreased (increased) the net loss as follows, assuming that
all other variables remained constant. An assumed 10% weakening of the foreign currency would have had an
equal but opposite effect on the basis that all other variables remained constant.
Year ended August 31, 2022
CA$/US$
CA$/EUR€
CA$/GBP£
$
$
$
Decrease (increase) of the
net loss
10% appreciation in the
Canadian dollar
(461,000 )
(580,000 )
34,000
Decrease (increase) of the
net loss
10% depreciation in the
Canadian dollar
461,000
580,000
(34,000 )
68
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
22.
Financial Instruments (continued)
Risk Management (continued)
Foreign Exchange Risk (continued)
Foreign Currency Sensitivity Analysis (continued)
Year ended August 31, 2021
CA$/US$
CA$/EUR€
CA$/GBP£
$
$
$
Decrease (increase) of the
net loss
10% appreciation in the
Canadian dollar
(1,000,000 )
(621,000 )
25,000
Decrease (increase) of the
net loss
10% depreciation in the
Canadian dollar
1,000,000
621,000
(25,000 )
As at August 31, 2022 and 2021, the risk to which the Company was exposed is established as follows:
As at
August 31,
As at
August 31,
2022
2021
$
$
Cash and cash equivalents (US$1,105,744;
US$1,350,764 as at August 31, 2021)
1,449,741
1,704,259
Cash and cash equivalents (€ 344,904;
€ 233,721 as at August 31, 2021)
453,928
348,385
Cash and cash equivalents (£ 6,115;
£ 3,039 as at August 31, 2021)
9,320
5,277
Trade and other receivables (US$2,848,057;
US$1,828,513 as at August 31, 2021)
3,734,087
2,307,035
Trade and other receivables (€ 956,523;
€ 815,415 as at August 31, 2021)
1,258,880
1,215,458
Trade and other receivables (£ 97,768;
£ 52,500 as at August 31, 2021)
149,008
91,166
Accounts payable and accrued liabilities (US$1,846,808;
US$376,989 as at August 31, 2021)
(2,421,350 )
(475,647 )
Accounts payable and accrued liabilities (€ 63,690;
€ 9,273 as at August 31, 2021)
(83,822 )
(13,822 )
Accounts payable and accrued liabilities (£ 16,283;
£ 6,753 as at August 31, 2021)
(24,817 )
(11,726 )
Total
4,524,975
5,170,385
69
OpSens Inc.
Notes to the Consolidated Financial Statements
Years ended August 31, 2022 and 2021
(in Canadian dollars)
23.
Capital Management
The Company's objective in managing capital, primarily composed of shareholders' equity, long-term debt and
lease liabilities, is to ensure sufficient liquidity to fund production and R&D activities, 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, government assistance, R&D tax credits, interest income and to liquidity through dilutive
sources as public equity offerings.
As at August 31, 2022, the Company's working capital amounted to $30,414,701 ($42,387,696 as at
August 31, 2021), including cash and cash equivalents of $23,816,490 ($38,563,271 as at August 31, 2021). The
accumulated deficit at the same date was $55,773,679 ($44,395,449 as at August 31, 2021). 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 after the reporting date of August 31, 2022.
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 broadly remained unchanged since the last fiscal year.
For the years ended August 31, 2022 and 2021, the Company has not been in default on any of its obligations
regarding long-term debt and lease liabilities.
24.
Approval of Consolidated Financial Statements
The consolidated financial statements were approved by the Board of Directors and authorized for issue on
November 21, 2022.
70
71
Governance
Directors
Alan Milinazzo
Executive Chairman of the Board of Directors
Louis Laflamme, CPA
President and Chief Executive Officer
Gaétan Duplain
President, OpSens Solutions
Lori Chmura
Director
Denis Harrington
Director
Jean Lavigueur, CPA
Director
Pat Mackin
Director
Denis M. Sirois
Director
Officers
Louis Laflamme, CPA
President and Chief Executive Officer
Gaétan Duplain
President, OpSens Solutions
Robin Villeneuve, CPA
Chief Financial Officer and Corporate Secretary
Corporate Information
Head Office
750 Boulevard du Parc-Technologique
Quebec, QC G1P 4S3
Phone: 418.781.0333
Fax: 418.781.0024
For additional information or to receive quarterly reports and
press releases, contact Marie-Claude Poitras at the head office or
at marie-claude.poitras@OpSens.com.
Registration
Toronto Stock Exchange – Symbol: OPS
OTCQX – Symbol: OPSSF
Auditors
Deloitte S.E.N.C.R.L./s.r.l, Quebec, QC
Shares in Circulation
108,835,039 (as of August 31, 2022)
Transfer Agent and Registrar
TSX Trust Company (TSX Trust)
TSX Trust Company (TSX Trust)
1700 – 1190 Avenue des Canadiens-de-Montréal
Montréal, QC H3B 0G7
T: 1-800-387-0825 F: 514.285.8846
Annual Meeting of Shareholders
The annual meeting will be held virtually via live webcast available
at https://bit.ly/3APxObt on January 24, 2023 at 10:00 a.m. (ET).
The Company encourages its shareholders to exercise their right
to vote with TSX Trust during the advance voting period that ends
on Friday, January 20, or 48 business hours prior to the event
scheduled for Tuesday, January 24, 2023, at 10:00 a.m.
Information and documents are available at www.OpSens.com.
72
OpSens’ Markets
1. Global Report for Cardiac Surgery – MedCore Bundle, February 2022
Launch of Game-Changing Product
for TAVR Market Underway in North America
OpSens’ SavvyWire, introduces an entirely new category of innovation to
the structural heart device market segment. It is designed to support the
minimalist TAVR approach, which has been growing among structural heart
physicians. This minimalist approach advances the procedure, allowing
patients to leave the hospital earlier, sometimes the same day.
The SavvyWire aims to optimize the implantation of replacement aortic
valves, promoting safety and speed in the intervention. It enables signifi cant
TAVR procedural benefi ts by supporting multiple steps over the same device
without exchange, providing best-in-class valve delivery capability and
improving workfl ow, while delivering continuous, accurate hemodynamic
measurements and display. It is the fi rst and only sensor guided TAVR solution,
designed to support TAVR effi ciency and lifetime patient management.
This 3-in-1 solution provides
•
stable percutaneous aortic valve delivery and positioning,
•
continuous accurate hemodynamic measurement during the procedure,
and
•
reliable left ventricular pacing without the need for adjunct devices or
venous access.
OpSens’ SavvyWire, has received Health Canada approval and 510(k) FDA
clearance for the SavvyWire and has begun a release in the North American
market. Once OpSens gets CE Mark, the product will be deployed in Europe,
the Middle East and Africa (EMEA).
The arrival of the SavvyWire is on trend with the progression of the minimalist
approach to TAVR procedures. Cardiologists traditionally performed open-
heart surgery to replace the narrowed aortic valve. Very minimally invasive,
the TAVR procedure was initially only indicated for inoperable patients with
severe symptomatic aortic stenosis, and later for patients at high surgical risk.
Clinical programs such as PARTNER and COREVALVE have since shown better
or equivalent clinical outcomes in intermediate and low surgical risk patients.
The minimalist TAVR procedure has made this intervention simpler and more
effi cient. TAVR is now a rapidly growing trend globally, driven by the aging
population and recent studies that demonstrate its benefi ts for a broader
array of patients. The global TAVR market is currently estimated at over
200,000 procedures and is expected to reach 400,000 in 20271.
OpSens’ product addresses a market that represents an extraordinary
opportunity for the Company and its shareholders. It answers an unmet
need of cardiologists and will create a synergy in the sales network that will
benefi t both the OptoWire and this new sector of activities. Its integration
will be facilitated by the fact that it works seamlessly with the OptoMonitor,
which is already installed in thousands of catheterization laboratories around
the world.
Aortic Stenosis
an abnormal narrowing of the aortic valve opening
Ph
oto
: S
tev
en
s L
ebl
an
c
Aortic Valve
Right Ventricle
Left Ventricle
Left Atrium
Normal Aortic Valve
Open
Open
Closed
Closed
Aortic Valve Stenosis
Aorta
Industrial applications
Innovative fi ber optic sensing solutions for various industries
including aerospace and nuclear
Cardiology
Measuring, a key step towards
better heart health
SavvyWire, OpSens’ new product
for the TAVR market
750 Boulevard du Parc-Technologique
Quebec, QC G1P 4S3
Telephone: 418.781.0333
OpSens.com