Profound Medical Corp 10-Q for FY2026 Q3
Profound Medical Corp. (PROF)
About this 10-Q
Profound Medical Corp filed this 10-Q on November 5, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $9.83M
- up 85.9% from $5.29M a year earlier
- Net loss
- $7.72M
- compared with a net loss of $7.98M a year earlier
- Diluted EPS
- -$0.21
- compared with -$0.26 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
Ontario, | |
(State or other jurisdiction of | (I.R.S. Employer |
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
| ☐ | Accelerated filer | | ☐ |
| ☒ | Smaller reporting company | | ||
Emerging growth company | | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 5, 2026, the registrant had
EXPLANATORY NOTE
Profound Medical Corp. (the “Company”) qualifies as a “Foreign Private Issuer,” as defined in Rule 3b-4 under the Securities Exchange Act of 1934 (the “Exchange Act”) and is exempt from filing quarterly reports on Form 10-Q by virtue of Rules 13a-13 and 15d-13 under the Exchange Act. The Company has voluntarily elected to file this Quarterly Report on Form 10-Q for the quarter ended September 30, 2026.
Form 10-Q – QUARTERLY REPORT
For the Quarter Ended September 30, 2026
Table of Contents
| | Page |
PART I. | Financial Information | |
Item 1. | Condensed Consolidated Financial Statements | |
| 1 | |
| Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) | 2 |
| Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) | 3 |
| 5 | |
| 6 | |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 | |
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i
Profound Medical Corp.
CONDENSED CONSOLIDATED BALANCE SHEETS
(USD in thousands, except per share data)
(unaudited)
| | September 30, | | December 31, |
| | 2026 | | 2025 |
| | $ | | $ |
Assets | | | | |
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Current assets: | | | | |
Cash | | |
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Trade and other receivables, net (note 3) | | |
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Inventory (note 4) | | |
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Prepaid expenses and deposits | | |
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Total current assets | | |
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Trade and other receivables, net (note 3) | | — | | |
Property and equipment, net (note 5) | | |
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Intangible assets, net (note 6) | | |
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Right-of-use assets, net (note 9) | | |
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Deferred tax assets, net | | | | |
Total assets | | |
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Liabilities | | |
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Current liabilities: | | |
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Accounts payable | | |
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Accrued expenses and other current liabilities (note 7) | | |
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Deferred revenue | | |
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Long-term debt (note 8) | | |
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Lease liabilities (note 9) | | |
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Income tax payable | | |
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Total current liabilities | | |
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Deferred revenue | | |
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Long-term debt (note 8) | | — |
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Lease liabilities (note 9) | | |
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Other non-current liabilities | | |
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Total liabilities | | |
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Shareholders’ equity | | |
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Common shares, | | |
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Additional paid-in capital | | |
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Accumulated other comprehensive income | | |
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Accumulated deficit | | ( |
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Total shareholders’ equity | | |
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Total liabilities and shareholders’ equity | | |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Profound Medical Corp.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(USD in thousands, except per share data)
(unaudited)
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||
| | 2026 | | 2025 | | 2026 | | 2025 |
| | $ | | $ | | $ | | $ |
Revenue (note 12) | | | | | | | | |
Recurring - non-capital |
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Capital equipment |
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Cost of sales |
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Gross profit |
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Operating expenses |
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Research and development |
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Selling, general and administrative |
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Total operating expenses |
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Operating loss |
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Other (income) expenses |
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Net finance income |
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Net foreign exchange (gain) loss |
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Total other (income) expenses |
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Net loss before income taxes |
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Income tax expense |
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Deferred tax (recovery) expense |
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Total income tax (recovery) expense | | ( | | | | | | |
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Net loss attributed to shareholders for the period |
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Other comprehensive (income) loss |
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Item that may be reclassified to (income) loss |
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Foreign currency translation adjustment |
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Net loss and other comprehensive loss for the period |
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Loss per share (note 13) |
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Basic and diluted net loss per common share |
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Basic and diluted weighted average common shares outstanding |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Profound Medical Corp.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(USD in thousands)
(unaudited)
| | | | | | | | Accumulated | | | | |
| | | | | | Additional | | Other | | | | |
| | | | | | Paid-in | | Comprehensive | | Accumulated | | |
| | Common Shares | | Capital | | Income | | Deficit | | Tota1 | ||
| | Shares | | Amount $ | | $ | | $ | | $ | | $ |
Balance - December 31, 2025 |
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| ( |
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Net loss for the period |
| — |
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| ( |
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Cumulative translation adjustment – net of tax of $ |
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| ( |
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| ( |
Vesting of DSUs (note 11) | | | | | | ( | | — | | — | | — |
Vesting of RSUs (note 11) | | | | | | ( | | — | | — | | — |
Share-based compensation (note 11) |
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Balance – March 31, 2026 |
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Net loss for the period |
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| ( |
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Cumulative translation adjustment – net of tax of $ |
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| ( |
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| ( |
Vesting of DSUs (note 11) |
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Vesting of RSUs (note 11) | | | | | | ( | | — | | — | | — |
Share-based compensation (note 11) |
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Balance – June 30, 2026 |
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Net loss for the period | | — | | — | | — | | — | | ( | | ( |
Cumulative translation adjustment – net of tax of $ | | — | | — | | — | | | | — | | |
Vesting of DSUs (note 11) | | | | | | ( | | — | | — | | — |
Vesting of RSUs (note 11) | | | | | | ( | | — | | — | | — |
Exercise of share options (note 11) | | | | | | ( | | — | | — | | |
Share-based compensation (note 11) | | — | | — | | | | — | | — | | |
Balance – September 30, 2026 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Profound Medical Corp.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(USD in thousands)
(unaudited)
| | | | | | | | Accumulated | | | |
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| | | | | | Additional | | Other | | | |
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| | | | | | Paid-in | | Comprehensive | | Accumulated | |
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| | Common Shares | | Capital | | Income | | Deficit | | Total | ||
| | Shares | | Amount $ | | $ | | $ | | $ | | $ |
Balance - December 31, 2024 |
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| ( |
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Net loss for the period |
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| ( |
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Cumulative translation adjustment – net of tax of $ |
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Vesting of RSUs (note 11) | | | | | | ( | | — | | — | | — |
Share-based compensation (note 11) |
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Balance – March 31, 2025 |
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Net loss for the period | | — | | — | | — | | — | | ( | | ( |
Cumulative translation adjustment – net of tax of $ | | — | | — | | — | | | | — | | |
Share-based compensation (note 11) | | — | | — | | | | — | | — | | |
Balance – June 30, 2025 | | | | | | | | | | ( | | |
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Net loss for the period | | — | | — | | — | | — | | ( | | ( |
Cumulative translation adjustment – net of tax of $ | | — | | — | | — | | ( | | — | | ( |
Vesting of RSUs (note 11) | | | | | | ( | | — | | — | | — |
Vesting of DSUs (note 11) | | | | | | ( | | — | | — | | — |
Share-based compensation (note 11) | | — | | — | | | | — | | — | | |
Balance – September 30, 2025 | | | | | | | | | | ( | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Profound Medical Corp.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(USD in thousands)
(unaudited)
| | Nine Months Ended September 30, | ||
| | 2026 | | 2025 |
| | $ | | $ |
Cash flows from operating activities |
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Net loss for the period |
| ( | | ( |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation of property and equipment (note 5) |
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Amortization of intangible assets (note 6) |
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Non-cash lease expense adjustment |
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Share-based compensation (note 11) |
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Interest and accretion expense |
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Changes in operating assets and liabilities: |
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Trade and other receivables (note 3) |
| ( | | ( |
Inventory (note 4) |
| ( | | ( |
Prepaid expenses and deposits |
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Accounts payable, accrued expenses and other liabilities (note 7) |
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Deferred revenue |
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Income taxes payable |
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Deferred tax assets |
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Net cash used in operating activities |
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Cash flows from financing activities |
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Repayments of long-term debt (note 8) | | — | | ( |
Proceeds from the exercise of stock options (note 11) |
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Net cash provided by (used in) financing activities | | | | ( |
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Net decrease in cash | | ( | | ( |
Effect of exchange rate changes on cash | | ( | | |
Cash, beginning of period | | | | |
Cash, end of period | | | | |
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Supplemental cash flow information: | | | | |
Interest paid | | | | |
Income taxes paid, net of refunds received | | | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Profound Medical Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1Description of business
Profound Medical Corp. (Profound) (the Company) was incorporated under the Ontario Business Corporations Act on July 16, 2014. The Company is a commercial-stage medical device company focused on the development and marketing of customizable, incision-free therapeutic systems for the ablation of diseased tissue utilizing platform technologies.
The Company’s registered address is 2400 Skymark Avenue, Unit 6, Mississauga, Ontario, Canada, L4W 5K5.
2 | Summary of significant accounting policies |
Basis of preparation
The Company prepares its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (US GAAP). The condensed consolidated financial statements include the accounts of wholly owned subsidiaries, after elimination of intercompany accounts and transactions. The consolidated financial information presented herein reflects all financial information that, in the opinion of management, is necessary for a fair statement of financial position, results of operations and cash flows for the periods presented.
Unaudited condensed consolidated financial statements
The condensed consolidated balance sheet as of September 30, 2026, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2026 and 2025, the condensed consolidated statements of shareholders’ equity for the three and nine months ended September 30, 2026 and 2025, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2026 and 2025, are unaudited. The financial data and other information disclosed in these notes to the consolidated financial statements related to September 30, 2026, and the three and nine months ended September 30, 2026 and 2025, are also unaudited. The accompanying condensed consolidated balance sheet as of December 31, 2025, has been derived from the audited consolidated financial statements included in the Annual Report on Form 10-K (“Annual Report”) filed with the Securities and Exchange Commission on March 5, 2026.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to a fair statement of the Company’s financial position as of September 30, 2026, and the results of its operations and cash flows for the three and nine months ended September 30, 2026 and 2025. The results for the three and nine months ended September 30, 2026, are not necessarily indicative of results to be expected for the year ending December 31, 2026, or for any other period or for any future year and should be read in conjunction with the annual consolidated financial statements included in the Annual Report.
Use of estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the allocation of transaction prices and timing of revenue recognition, assumptions related to the determination of expected credit losses, and the valuation of stock options. The Company based its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.
6
Recent Accounting Pronouncements
In January 2026, the Company adopted ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The Company elected the practical expedient to assume that current conditions as of the balance-sheet date remain unchanged for the remaining life of its current accounts receivable and contract assets. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.
3 | Trade and other receivables, net |
Trade receivables and other receivables, net, as of September 30, 2026 and December 31, 2025 consists of the following:
| | September 30, | | December 31, |
| | 2026 | | 2025 |
| | $ | | $ |
Trade receivables, gross |
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Contract assets, gross | | — | | |
Trade receivables and contract assets | | | | |
Allowance for expected credit losses |
| ( |
| ( |
Trade receivables, net |
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Tax receivables |
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Other receivables |
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Total trade and other receivables, net |
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Less: Current portion | | | | |
Long-term portion | | — | | |
The activity in the allowance for expected credit losses for trade receivables and contract assets was as follows:
| | September 30, | | December 31, |
| | 2026 | | 2025 |
| | $ | | $ |
Balance - Beginning of the period | | | | |
Write off against the allowance | | ( | | — |
Provision for allowance for expected credit losses | | | | |
Balance - End of the period | | | | |
4 | Inventory |
Inventory as of September 30, 2026 and December 31, 2025 consists of the following:
| | September 30, | | December 31, |
| | 2026 | | 2025 |
| | $ | | $ |
Finished goods |
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Raw materials |
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Inventory |
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During the three and nine months ended September 30, 2026, $
7
5 | Property and equipment, net |
The major components of property and equipment, net, as of September 30, 2026 and December 31, 2025 consist of the following:
| | September 30, | | December 31, |
| | 2026 | | 2025 |
| | $ | | $ |
Leasehold improvements |
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Equipment | | | | |
Equipment under operating lease |
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Total |
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Accumulated depreciation |
| ( |
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Property and equipment, net |
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Depreciation expense for the three and nine months ended September 30, 2026 was $
6 | Intangible assets |
The major components of intangible assets as of September 30, 2026 and December 31, 2025 consist of:
| | | | September 30, 2026 | | December 31, 2025 | ||||||||
| | | | $ | | $ | ||||||||
| | Weighted | | | | | | | | | | | | |
| | Average | | | | | | | | | | | | |
| | Remaining | | | | Accumulated | | | | | | Accumulated | | |
| | Useful | | Gross | | Amortization | | Net | | Gross | | Amortization | | Net |
| | Lives | | Carrying | | and | | Carrying | | Carrying | | and | | Carrying |
| | (Years) | | Amount | | Impairments | | Amount | | Amount | | Impairments | | Amount |
Exclusive license agreement | | | | | ( | | | | | | ( | | | |
Software | | — | | | | ( | | — | | | | ( | | — |
Distribution rights | | | | | ( | | | | | | ( | | | |
| | | | | | ( | | | | | | ( | | |
The Company has a license agreement (the license) with Sunnybrook Health Sciences Centre (Sunnybrook), pursuant to which Sunnybrook licenses to the Company certain intellectual property and exclusively licensed-in rights that enable the Company to use Sunnybrook’s technology for MRI-guided trans-urethral ultrasound therapy. The Company has the option to acquire rights to improvements to the relevant technology and intellectual property. If the Company fails to comply with any of its obligations or otherwise breaches this agreement, Sunnybrook may have the right to terminate the license.
7 | Accrued expenses and other current liabilities |
Accrued expenses and other current liabilities, as of September 30, 2026 and December 31, 2025 consist of the following:
| | September 30, | | December 31, |
| | 2026 | | 2025 |
| | $ | | $ |
Accrued employee compensation | | | | |
Clinical trials | | | | |
Other general accruals | | | | |
Accrued expenses and other current liabilities | | | | |
8
8 | Long-term debt |
On March 3, 2025, the Company entered into an amended and restated credit agreement (the “CIBC Credit Agreement”), with Canadian Imperial Bank of Commerce (“CIBC”) which amended the terms of the CIBC Loan and the existing long-term debt provided under the Original CIBC Credit Agreement was repaid with proceeds from a new revolving line of credit provided by CIBC to Profound. This was accounted for as a modification of debt whereby a new effective interest rate was established based on the carrying value of the debt and the revised cash flows. The line of credit bears interest at the Wall Street Journal subject to a floor of
The obligations are secured by, inter alia, a general security agreement over the assets and the assets of the Company’s subsidiaries. The revolving line of credit matures on March 3, 2027 and provides that Profound may request a one-time increase in the principal amount of the revolving line of credit up to a maximum amount of $
| | September 30, | | December 31, |
| | 2026 | | 2025 |
| | $ | | $ |
Balance - Beginning of period | | | | |
Interest expense | | | | |
Interest paid | | ( | | ( |
Foreign exchange | | | | |
Repayment | | — | | ( |
Balance - End of period | | | | |
Less: Current portion | | | | — |
Long-term portion | | — | | |
9 | Leases |
Leases where the Company is the Lessee
The Company leases certain office premises. In January 2026, the Company entered into a lease modification agreement for one of its office premises that extended the lease term and modified the payment schedule. This modification did not provide the Company with the right to use any additional underlying assets and therefore was accounted for as a modification of an existing operating lease, resulting in a remeasurement of the related operating lease liability using an updated incremental borrowing rate and a corresponding adjustment to the right‑of‑use asset. The extension commenced October 1, 2026, with fixed payment structures expiring in 2033. Lease liabilities and corresponding right-of-use assets were recognized based on the present value of future lease payments.
9
Lease expense for the three and nine months ended September 30, 2026 and 2025:
| | Three Months Ended September 30, | ||
| | 2026 | | 2025 |
| | $ | | $ |
Operating lease costs |
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Total lease costs |
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| | Nine Months Ended September 30, | ||
| | 2026 | | 2025 |
| | $ | | $ |
Operating lease costs | | | | |
Total lease costs | | | | |
Other information related to operating leases is as follows:
| | Nine Months Ended September 30, |
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| | 2026 | | 2025 |
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Cash paid from operating cash flows for amounts included in the measurement of lease liabilities |
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Weighted average remaining lease term |
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Weighted average discount rate |
| | % | | % |
Maturities of the operating lease liabilities and minimum payments for operating leases having initial or remaining noncancellable terms in excess of one year as of September 30, 2026 were as follows:
2026 | | — |
2027 |
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2028 |
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2029 |
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2030 |
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Thereafter |
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Total |
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Less: Imputed interest |
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Present value of remaining lease payments |
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Less: Current portion |
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Non-current portion |
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10 | Share capital |
Common shares
The Company is authorized to issue an unlimited number of common shares.
| | September 30, | | December 31, |
| | 2026 | | 2025 |
Issued and outstanding (with | | $ | | $ |
| | | |
Voting Power
Except as otherwise required by law, the holders of common shares possess all voting power for the election of the Company’s directors and all other matters requiring shareholder action. Holders of common shares are entitled to
10
Dividends
Holders of common shares will be entitled to receive such dividends, if any, as may be declared from time to time by the Company’s board of directors in its discretion out of funds legally available therefor. In no event will any stock dividends or stock splits or combinations of stock be declared or made on common stock unless the shares of common stock at the time outstanding are treated equally and identically.
Liquidation, Dissolution and Winding Up
In the event of the Company’s voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up, the holders of the common stock will be entitled to receive an equal amount per share of all of the Company’s assets of whatever kind available for distribution to shareholders, after the rights of the creditors have been satisfied.
11 | Share-based payments |
Share options
Effective May 20, 2020, the Company adopted amendments to the share option plan (the Share Option Plan). The aggregate maximum number of common shares that may be issued under the Share Option Plan, together with all other security-based compensation arrangements of the Company, is limited to
As of September 30, 2026,
A summary of the share option activity during the period presented and the total number of share options outstanding as of those dates are set forth below:
| | | | Weighted average |
| | Number | | exercise price |
| | of options | | C$ |
Balance - December 31, 2025 |
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Granted |
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Exercised |
| ( |
| |
Forfeited/expired |
| ( |
| |
Balance - September 30, 2026 |
| |
| |
Exercisable - September 30, 2026 |
| |
| |
Expected to vest - September 30, 2026 |
| |
| |
The Company estimated the fair value of the share options granted during the period using the Black-Scholes option pricing model with the weighted average assumptions below. The Company estimated the expected future stock price volatility for its common stock by using its historical volatility based on daily price observations for the most recent historical period equal to the length of the instrument’s expected life of options.
11
| | March 17, | | May 19, | | June 11, | | September 17, | |
Grant date | | 2026 | | 2026 | | 2026 |
| 2026 | |
Exercise price |
| C$ | | C$ | | C$ | | C$ | |
Expected volatility |
| | % | | % | | % | | % |
Expected life of options |
| | | | | ||||
Risk-free interest rate |
| | % | | % | | % | | % |
Dividend yield |
| — | | — | | — | | — | |
The weighted average grant date fair values of share options granted for the three and nine months ended September 30, 2026 were C$
Long-term incentive plan
Effective May 17, 2023, the Company adopted the amended long term incentive plan (the LTIP). The LTIP is an incentive-based equity compensation plan that provides for the grant of restricted share units (the RSUs) and deferred share units (the DSUs, together with the RSUs, the Units). The aggregate maximum number of common shares that may be reserved for issuance under the LTIP in respect of grants of RSUs and DSUs is limited to
The following table summarizes RSUs activities:
| | | | Weighted |
| | | | average grant |
| | | | date fair value |
| | Number of | | per share |
| | RSUs | | C$ |
Balance - December 31, 2025 |
| |
| |
Granted |
| | | |
Vested |
| ( | | |
Forfeited |
| ( | | |
Balance - September 30, 2026 |
| | | |
A summary of the DSUs changes during the period are set forth below:
| | | | Weighted |
| | | | average grant |
| | | | date fair value |
| | Number of | | per share |
| | DSUs | | C$ |
Balance - December 31, 2025 |
| |
| |
Granted | | | | |
Vested |
| ( | | |
Forfeited |
| ( | | |
Balance - September 30, 2026 |
| | | |
12
Share-based compensation expense
The following table presents the components and classification of share-based compensation recognized for share options, RSUs, and DSUs for the three and nine months ended September 30, 2026 and 2025:
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||
| | 2026 | | 2025 | | 2026 | | 2025 |
| | $ | | $ | | $ | | $ |
Share options |
| ( | | | | |
| |
RSUs |
| | | | | |
| |
DSUs |
| | | | | |
| |
Share-based compensation |
| | | | | |
| |
| | | | | | | | |
Cost of sales |
| | | | | ( |
| |
Research and development |
| | | | | |
| |
Selling, general and administrative |
| | | | | |
| |
Share-based compensation |
| | | | | |
| |
12 | Revenue |
The following table provides information about disaggregated revenue by products and services:
|
| Three Months Ended September 30, | ||
| | 2026 | | 2025 |
| | $ | | $ |
Timing of transfer of control | | | | |
Point in time revenue | | | | |
Service revenue recognized over time | | | | |
| | | | |
| | Nine Months Ended September 30, | ||
| | 2026 | | 2025 |
| | $ | | $ |
Timing of transfer of control | | | | |
Point in time revenue | | |
| |
Service revenue recognized over time | | |
| |
| | |
| |
13 | Loss per share |
The following table shows the calculation of basic and diluted loss per share:
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
| | $ | | $ | | $ | | $ | ||||
Net loss for the period |
| | | | | | | | |
| | |
Weighted average number of common shares |
| | | | | | | | |
| | |
Basic and diluted loss per share |
| | | | | | | | |
| | |
The computation of diluted loss per share is equal to the basic loss per share due to the anti-dilutive effect of the share options, RSUs and DSUs. Of the
13
14 | Segment reporting |
The Company’s operations are categorized into
The following tables represent total revenue by geographic area, based on the location of the reporting entity for the three months ended September 30, 2026 and 2025, respectively:
|
| For the three months ended September 30, 2026 | ||||||
| | Canada | | USA | | Germany | | Total |
| | $ | | $ | | $ | | $ |
Revenue | | | | | | | | |
Recurring - non-capital | | | | | | | | |
Capital equipment | | | | | | | | |
| | | | | | | | |
| | For the three months ended September 30, 2025 | ||||||
| | Canada | | USA | | Germany | | Total |
| | $ | | $ | | $ | | $ |
Revenue |
| |
| | | |
| |
Recurring - non-capital | | | | | | | | |
Capital equipment |
| — |
| | | — |
| |
|
| |
| | | |
| |
| | For the nine months ended September 30, 2026 | ||||||
| | Canada | | USA | | Germany | | Total |
| | $ | | $ | | $ | | $ |
Revenue |
| |
| | | |
| |
Recurring - non-capital | | | | | | | | |
Capital equipment |
| |
| | | |
| |
|
| |
| | | |
| |
| | For the nine months ended September 30, 2025 | ||||||
| | Canada | | USA | | Germany | | Total |
| | $ | | $ | | $ | | $ |
Revenue |
| |
| | | |
| |
Recurring - non-capital | | | | | | | | |
Capital equipment |
| |
| | | — |
| |
|
| |
| | | |
| |
14
The following tables represent other geographic information for the nine months ended September 30, 2026 and the year ended December 31, 2025:
| | For the period ended September 30, 2026 | ||||||||||
| | Canada | | USA | | Germany | | China | | Finland | | Total |
| | $ | | $ | | $ | | $ | | $ | | $ |
Total assets |
| |
| |
| |
| |
| |
| |
Intangible assets |
| |
| — |
| — |
| — |
| — |
| |
Property and equipment |
| — |
| |
| — |
| — |
| |
| |
Right-of-use assets |
| |
| — |
| — |
| — |
| — |
| |
Amortization of intangible assets |
| |
| — |
| — |
| — |
| — |
| |
Depreciation of property and equipment |
| |
| |
| — |
| — |
| |
| |
| | For the year ended December 31, 2025 | ||||||||||
| | Canada | | USA | | Germany | | China | | Finland | | Total |
| | $ | | $ | | $ | | $ | | $ | | $ |
Total assets |
| |
| |
| |
| |
| |
| |
Intangible assets |
| |
| — |
| — |
| — |
| — |
| |
Property and equipment |
| |
| |
| — |
| — |
| |
| |
Right-of-use assets |
| |
| — |
| — |
| — |
| — |
| |
Amortization of intangible assets |
| |
| — |
| — |
| — |
| — |
| |
Depreciation of property and equipment |
| |
| |
| — |
| — |
| — |
| |
15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
As used in this Quarterly Report on Form 10-Q, the “Company”, the “Registrant”, “we” or “us” refer to Profound Medical Corp. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes that appear elsewhere in this report. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, assumptions and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in the Risk Factors section of the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 5, 2026, and elsewhere in this report under “Part II, Other Information—Item 1A, Risk Factors.” Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies and operations, financing plans, potential growth opportunities, potential market opportunities, potential results of our development efforts or trials, and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s plans, estimates, assumptions and beliefs only as of the date of this report. Except as required by law, we assume no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Unless stated otherwise, all references to “$” are to United States dollars in thousands and all references to “C$” are to Canadian dollars in thousands.
Overview
We are a commercial-stage medical device company focused on the development and marketing of AI-powered, MRI-guided, incision-free therapies for the ablation of diseased tissue utilizing our platform technologies and leveraging the healthcare system’s existing imaging infrastructure. Our lead product (the “TULSA-PRO system”) combines real-time MRI, robotically driven transurethral sweeping-action thermal ultrasound with closed-loop temperature feedback control for the ablation of prostate tissue. The product is comprised of one-time-use devices and capital equipment that are used in conjunction with a customer’s existing MRI scanner.
We are commercializing TULSA-PRO, a technology that combines real-time MRI, robotically-driven transurethral ultrasound and closed-loop temperature feedback control. The TULSA procedure, performed using the TULSA-PRO system, has the potential of becoming a mainstream treatment modality across the entire prostate disease spectrum; ranging from low-, intermediate-, or high-risk prostate cancer; to hybrid patients suffering from both prostate cancer and benign prostatic hyperplasia (“BPH”); to men with BPH only; and also, to patients requiring salvage therapy for radio-recurrent localized prostate cancer. TULSA employs real-time MR guidance for pixel-by-pixel precision to preserve prostate disease patients’ urinary continence and sexual function, while killing the targeted prostate tissue via a precise sound absorption technology that gently heats it to kill temperature (55-57°C). TULSA is an incision- and radiation-free “one-and-done” procedure performed in a single session that takes a few hours. Virtually all prostate shapes and sizes can be safely, effectively, and efficiently treated with TULSA. There is generally no bleeding associated with the procedure; no hospital stay is required; and most TULSA patients report quick recovery to their normal routine. TULSA-PRO is CE marked, Health Canada approved, and 510(k) cleared by the U.S. Food and Drug Administration (“FDA”).
We are also commercializing Sonalleve, an innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases. Sonalleve has also been approved by the China National Medical Products Administration for the non-invasive treatment of uterine fibroids and has FDA approval under a Humanitarian Device Exemption for the treatment of osteoid osteoma. We are in the early stages of exploring additional potential treatment markets for Sonalleve where the technology has been shown to have clinical application, such as non-invasive ablation of abdominal cancers and hyperthermia for cancer therapy.
16
Results of Operations
Comparison of Three and Nine Months Ended September 30, 2026 and 2025
The following selected financial information as of and for the three and nine months ended September 30, 2026 and 2025 have been derived from the unaudited consolidated financial statements and should be read in conjunction with those unaudited consolidated financial statements and related notes.
| | For the nine months ended September 30, | ||
| | 2026 | | 2025 |
| | $ | | $ |
Revenue | | 17,650 | | 10,121 |
Operating expenses | | 40,367 | | 41,287 |
Other (income) expense | | (2,669) | | 284 |
Net loss for the period | | 24,315 | | 34,395 |
Basic and diluted loss per share | | 0.67 | | 1.14 |
| | For the three months ended September 30, | | ||||||
| | 2026 | | 2025 | | Change |
| ||
| | $ | | $ | | $ | | % |
|
Revenue | | 9,830 | | 5,289 | | 4,541 | | 86 | % |
Cost of sales |
| 2,150 | | 1,358 | | 792 | | 58 | % |
Gross profit |
| 7,680 | | 3,931 | | 3,749 | | 95 | % |
Gross margin | | 78 | % | 74 | % | | | | |
| | | | | | | | | |
Expenses |
| | | | | | | | |
Research and development |
| 5,806 | | 5,418 | | 388 | | 7 | % |
Selling, general and administrative |
| 9,695 | | 7,426 | | 2,269 | | 31 | % |
Total operating expenses |
| 15,501 | | 12,844 | | 2,657 | | 21 | % |
| | | | | | | | | |
Other (income) expense |
| | | | | | | | |
Net finance (income) expense |
| (196) | | (122) | | (74) | | 61 | % |
Net foreign exchange (gain) loss |
| 101 |
| (935) |
| 1,036 |
| (111) | % |
Total other (income) expense |
| (95) | | (1,057) | | 962 | | (91) | % |
| | | | | | | | | |
Net loss before income taxes |
| 7,726 | | 7,856 | | (130) | | (2) | % |
| | | | | | | | | |
Income taxes |
| (4) | | 121 | | (125) | | (103) | % |
| | | | | | | | | |
Net loss attributed to shareholders for the period |
| 7,722 | | 7,977 | | (255) | | (3) | % |
| | | | | | | | | |
Other comprehensive (income) loss |
| | | | | | | | |
Item that may be reclassified to profit or loss |
| | | | | | | | |
Foreign currency translation adjustment |
| (134) | | 808 | | (942) | | (117) | % |
Net loss and other comprehensive loss for the period |
| 7,588 | | 8,785 | | (1,197) | | (14) | % |
| | | | | | | | | |
Loss per share |
| | | | | | | | |
Basic and diluted net loss per common share |
| 0.21 | | 0.26 | | (0.05) | | (19) | % |
Basic and diluted weighted average common shares outstanding |
| 36,556,064 | | 30,104,497 | | | | | |
17
|
| For the nine months ended September 30, | | ||||||
| | 2026 | | 2025 | | Change | | ||
| | $ | | $ | | $ | | % | |
Revenue | | 17,650 | | 10,121 | | 7,529 | | 74 | % |
Cost of sales | | 4,191 | | 2,719 | | 1,472 | | 54 | % |
Gross profit | | 13,459 | | 7,402 | | 6,057 | | 82 | % |
Gross margin | | 76 | % | 73 | % | | | | |
| | | | | | | | | |
Expenses | | | | | | | | | |
Research and development | | 16,722 | | 16,324 | | 398 | | 2 | % |
Selling, general and administrative | | 23,645 | | 24,963 | | (1,318) | | (5) | % |
Total operating expenses | | 40,367 | | 41,287 | | (920) | | (2) | % |
| | | | | | | | | |
Other (income) expense | | | | | | | | | |
Net finance (income) expense | | (909) | | (910) | | 1 | | 0 | % |
Net foreign exchange (gain) loss | | (1,760) | | 1,194 | | (2,954) | | (247) | % |
Total other (income) expense | | (2,669) | | 284 | | (2,953) | | (1,040) | % |
| | | | | | | | | |
Net loss before income taxes | | 24,239 | | 34,169 | | (9,930) | | (29) | % |
| | | | | | | | | |
Income taxes | | 76 | | 226 | | (150) | | (66) | % |
| | | | | | | | | |
Net loss attributed to shareholders for the period | | 24,315 | | 34,395 | | (10,080) | | (29) | % |
| | | | | | | | | |
Other comprehensive (income) loss | | | | | | | | | |
Item that may be reclassified to profit or loss | | | | | | | | | |
Foreign currency translation adjustment | | 1,821 | | (2,008) | | 3,829 | | (191) | % |
Net loss and other comprehensive loss for the period | | 26,136 | | 32,387 | | (6,251) | | (19) | % |
| | | | | | | | | |
Loss per share | | | | | | | | | |
Basic and diluted net loss per common share | | 0.67 | | 1.14 | | (0.47) | | (41) | % |
Basic and diluted weighted average common shares outstanding | | 36,402,550 | | 30,119,569 | | | | | |
Key Components of Our Results of Operations
Revenue
We deploy a hybrid revenue business model in the United States to market TULSA-PRO by charging for the system separately as capital and an additional charge for the one-time-use devices. The Sonalleve product is marketed primarily outside North America deploying a one-time capital sales model with limited recurring service revenue. Outside of North America, we generate most of our revenues from our system sales (both TULSA-PRO and Sonalleve) in Europe and Asia where we deploy a hybrid business model, charging for the system separately as capital and an additional charge for the one-time-use devices. Revenue is comprised of (a) recurring – non-capital revenue, which consists of the sale of one-time-use devices and services associated with maintenance contracts and (b) capital equipment, which is the one-time sale of capital equipment and the lease of capital equipment.
For the three months ended September 30, 2026, we recorded revenue totaling $9,830, consisting of $5,724 from the one-time sale of capital equipment and $4,106 from recurring – non-capital revenue. For the three months ended September 30, 2025, we recorded revenue of $5,289, consisting of $1,223 from the one-time sale of capital equipment and $4,066 from recurring – non-capital revenue. The increase of $4,541, or 86%, in revenue for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 was the result of higher capital sales overseas and within the United States during the third quarter of 2026.
18
For the nine months ended September 30, 2026, we recorded revenue totaling $17,650, consisting of $9,458 from the one-time sale of capital equipment and $8,192 from recurring – non-capital revenue. For the nine months ended September 30, 2025, we recorded revenue of $10,121, consisting of $2,693 from the one-time sale of capital equipment and $7,428, from recurring – non-capital revenue. The increase of $7,529, or 74%, in revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was driven by higher capital sales as well as recurring revenue.
Cost of Sales
Cost of sales primarily includes the cost of finished goods, depreciation of equipment under lease, inventory write-downs, royalties, warranty expenses, freight and direct overhead and labor expenses necessary to acquire or manufacture the finished goods.
For the three months ended September 30, 2026, we recorded a cost of sales of $2,150, related to the sale of medical devices, capital and non-capital, which reflects 78% gross margin. For the three months ended September 30, 2025, we recorded a cost of sales of $1,358, which reflects a 74% gross margin. The increase of $792, or 58%, in cost of sales for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 was the result of increase in volume of sale of capital systems, which contains a higher margin and continued strong price discipline. The gross profit was higher in the three months ended September 30, 2026 by $3,749, or 95%, due to growth in the number of capital systems sold.
For the nine months ended September 30, 2026, we recorded a cost of sales of $4,191, related to the sale of medical devices, capital and non-capital, which reflects a 76% gross margin. For the nine months ended September 30, 2025, we recorded a cost of sales of $2,719, which reflects a 73% gross margin. The increase of $1,472, or 54%, in cost of sales for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was the result of a different product combination whereby more capital equipment was sold which contains a higher margin and continued strong price discipline. The gross profit was higher in the nine months ended September 30, 2026 by $6,057, or 82%, due to growth in the number of capital systems sold.
Operating Expenses
Operating expenses consist of two components: research and development (“R&D”) and selling, general and administrative (“SG&A”).
R&D Expenses
R&D expenses are comprised of costs incurred in performing R&D activities, including new product development, continuous product improvement, investment in clinical trials and related manufacturing costs, materials and supplies, salaries and benefits, consulting fees, patent procurement costs, and occupancy costs related to R&D activity.
For the three months ended September 30, 2026, R&D expenses increased by $388, or 7%, to $5,806 compared to $5,418 for the three months ended September 30, 2025. The increase in R&D expenses was largely due to increased personnel-related expenses, including higher headcount, travel expenditures and higher consulting and material expenditures due to R&D initiatives to reduce product costs and improve efficiencies and predictability of our products and supply chain.
For the nine months ended September 30, 2026, R&D expenses increased by $398, or 2%, to $16,722 compared to $16,324 for the nine months ended September 30, 2025. The increase in R&D expenses was largely due to increased personnel-related expenses, including higher headcount, travel expenditures and higher consulting and material expenditures due to R&D initiatives to reduce product costs and improve efficiencies and predictability of our products and supply chain. Offsetting these costs were a reduction in clinical trial costs due to CAPTAIN trial enrollment completion.
These expenses emphasize our commitment to the ongoing development and improvement of the products while further demonstrating the commitment to a reliable and customizable product.
19
SG&A expenses
Selling, general and administrative expenses are comprised of business development costs related to the market development activities and commercialization of our systems, including salaries and benefits, marketing support functions, occupancy costs, insurance, various management and administrative support functions and other miscellaneous marketing and management costs.
SG&A expenses for the three months ended September 30, 2026 increased by $2,269, or 31%, to $9,695 compared to $7,426 for the three months ended September 30, 2025. The increase in SG&A was primarily due to increased commission expenses driven by our revenue growth, consulting fees for recruitment, severance expense, as well as an increase in promotion and marketing expenses to support our revenue.
SG&A expenses for the nine months ended September 30, 2026 decreased by $1,318, or 5%, to $23,645 compared to $24,963 for the nine months ended September 30, 2025. The decrease in SG&A was primarily due to decreased personnel-related expenses, including share based compensation and lower wages, and an overall discount in our insurance premiums for the same coverage from the prior year. Offsetting these expenses was an increase in consulting fees for recruitment as well as an increase in promotion and marketing expenses.
Net finance income
Net finance income is primarily comprised of the following: (i) the CIBC Credit Agreement (as defined herein) accreting to the principal amount repayable and its related interest expense; and (ii) interest income from cash.
Net finance income increased by $74 to ($196) during the three months ended September 30, 2026, compared to ($122) during the three months ended September 30, 2025. The increase in net finance income was primarily due to an increase in interest income from cash.
Net finance income decreased by $1 to ($909) during the nine months ended September 30, 2026, compared to ($910) during the nine months ended September 30, 2025. Net finance income remained substantially consistent with the prior-year period.
Net foreign exchange (gain) loss
Net foreign exchange (gain) loss is primarily comprised of the change in the foreign exchange rates for the Company’s foreign currency denominated cash, trade receivables and accounts payable.
Net foreign exchange (gain) loss increased by $1,036 to $101 during the three months ended September 30, 2026, compared to ($935) during the three months ended September 30, 2025. The increase in net foreign exchange (gain) loss was primarily due to exposure changes and a decrease in the EUR and CAD currency rates.
Net foreign exchange (gain) loss decreased by $2,954 to ($1,760) during the nine months ended September 30, 2026, compared to $1,194 during the nine months ended September 30, 2025. The decrease in net foreign exchange (gain) loss was primarily due to an increase in the EUR and CAD currency rates.
Liquidity and Capital Resources
As of September 30, 2026, we had cash of $33,343 compared to $59,723 as of December 31, 2025. Historically, our primary source of cash has been financing activities, e.g., equity offerings as well as the CIBC Loan (as defined below).
Based on our current operating plans, we expect that our existing cash and sales of our products and services will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of the issuance of these unaudited consolidated financial statements. During that time, we expect that our expenses will increase, primarily due to the continued commercialization of TULSA-PRO and Sonalleve. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.
20
Use of Proceeds
2025 Offering and non-brokered private placement
We received net proceeds of $40,801 from the public offering and the private placement (together, the “2025 Offering”) completed in December 2025. We intend to use net proceeds from the 2025 Offering to fund the continued commercialization of the TULSA-PRO system in the United States, the continued development and commercialization of the TULSA-PRO system and the Sonalleve system globally and for working capital and general corporate purposes. In addition, there have been no material adjustments to the cost or timing of the business objective previously disclosed in such prospectus supplement.
| | Total spending of proceeds |
| | from the 2025 |
| | Offering as of |
| | September 30, 2026 |
| | $ |
TULSA-PRO commercialization | | 28,267 |
Sonalleve development and commercialization | | 5,856 |
Working capital and general corporate purposes |
| 6,678 |
Total |
| 40,801 |
CIBC Loan
On March 3, 2025, we entered into an amended and restated credit agreement (the “CIBC Credit Agreement”) with Canadian Imperial Bank of Commerce (“CIBC”), which amended the terms of the loan with CIBC (the “CIBC Loan”) and the existing long-term debt provided under the original credit agreement with CIBC was repaid with proceeds from a new revolving line of credit provided by CIBC to us. The line of credit bears interest at the Wall Street Journal Prime Rate subject to a floor of 6.25%. Following an amendment to the CIBC Credit Agreement on September 30, 2025, the amended financial covenants are that unrestricted cash is at all times the greater of: (i) to the extent that EBITDA is a negative number or loss for the most recent six-month period, the amount of such loss, or (ii) $10,000, reported on a monthly basis and that revenue for the 12 month period must be 15% greater than revenue for the same period in the prior fiscal year, reported on a quarterly basis. We are in compliance with these financial covenants as of September 30, 2026. Future compliance with the financial covenants included in the CIBC Credit Agreement is dependent upon achieving certain revenue, EBITDA, and anticipated unrestricted cash levels.
The obligations are secured by, inter alia, a general security agreement over our assets and the assets of our subsidiaries. The revolving line of credit matures on March 3, 2027 and provides that we may request a one-time increase in the principal amount of the revolving line of credit up to a maximum amount of $10,000, which is subject to the approval of CIBC in its sole discretion.
Cash Flows
The following table summarizes our cash flows for each of the periods presented (in thousands):
| | Nine months ended September 30, | ||
| | 2026 | | 2025 |
| | $ | | $ |
Cash provided by (used in) operating activities | | (24,927) | | (31,641) |
Cash provided by (used in) financing activities |
| 36 |
| (290) |
Foreign exchange on cash |
| (1,489) |
| 1,845 |
Net increase (decrease) in cash |
| (26,380) |
| (30,086) |
Operating Activities
Net cash used in operating activities for the nine months ended September 30, 2026 was $(24,927), primarily attributable to a net loss of $24,315 and $3,319 in net operating assets and liabilities, partially offset by $2,707 of non-cash charges. The cash used in operating activities was primarily due to the increased efforts supporting the commercialization and expansion of our products which resulted in an increase in marketing and promotion fees. Non-cash charges consisted primarily of share-based compensation, amortization and depreciation.
21
Net cash used in operating activities for the nine months ended September 30, 2025 was $(31,641). The principal use of the operating cash flows during the period related to a net loss of $34,395 and a change in net operating assets and liabilities of $(1,836) and in non-cash charges of $4,590. The cash used in operating expenses was primarily due to the increased efforts supporting the commercialization and expansion of our products. This resulted in an increase in headcount, travel, clinical trial costs and marketing fees. Non-cash charges consisted primarily of share-based compensation, amortization and depreciation.
Financing Activities
Net cash provided by (used in) financing activities for the nine months ended September 30, 2026 was $36 from the exercise of share options.
Net cash provided by (used in) financing activities for the nine months ended September 30, 2025 was $(290) from the repayments of long-term debt principal.
Foreign Exchange on Cash
Cash was impacted by the change in the foreign exchange rates for the Company’s foreign currency denominated cash. The value of our currencies decreased, resulting in a decrease in our cash holdings.
Funding Requirements
Based on our current operating plans, we expect that our existing cash and sales of our products and services will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of the issuance of these unaudited consolidated financial statements. During that time, we expect that our expenses will increase, primarily due to the continued commercialization of TULSA-PRO and Sonalleve.
We manage liquidity risk by monitoring actual and projected cash flows. A cash flow forecast is performed regularly to ensure that we have sufficient cash to meet our operational needs while maintaining sufficient liquidity. Our cash requirements depend on numerous factors, including market acceptance of our products, the resources devoted to developing and supporting the products and other factors. We expect to continue to devote substantial resources to expand procedure adoption and acceptance of our products.
We may require additional capital to fund R&D activities and any significant expansion of operations. Potential sources of capital could include equity and/or debt financings, development agreements or marketing agreements, the collection of revenue resulting from future commercialization activities and/or new strategic partnership agreements to fund some or all costs of development. There can be no assurance that we will be able to obtain the capital sufficient to meet any or all of our needs. The availability of equity or debt financing will be affected by, among other things, the results of R&D, our ability to obtain regulatory approvals, the market acceptance of our products, the state of the capital markets generally, strategic alliance agreements and other relevant commercial considerations. In addition, if we raise additional funds by issuing equity securities, existing security holders will likely experience dilution, and any incurring of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict operations. Any failure on our part to raise additional funds on terms favorable to us or at all may require us to significantly change or curtail current or planned operations in order to conserve cash until such time, if ever, that sufficient proceeds from operations are generated, and could result in us not being in a position to take advantage of business opportunities, in the termination or delay of clinical trials for our products, in curtailment of product development programs designed to identify new products, in the sale or assignment of rights to technologies, product and/or an inability to file market approval applications at all or in time to competitively market products.
Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies since December 31, 2025. For a description of critical accounting policies that affect our significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements, refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K dated March 5, 2026.
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Recent Accounting Pronouncements
See Note 2 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures.
Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2026, have concluded that, based on such evaluation, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. You should read this description of our controls and procedures together with “Item 9A. Controls and Procedures” included in our Annual Report on Form 10-K, which was filed with the SEC on March 5, 2026.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting, as identified in connection with evaluation required by Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that occurred during the three months ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be subject to legal proceedings. We are not currently a party to or aware of any proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
Item 1A. Risk Factors.
Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows, and prospects. These risks are discussed more fully in the section entitled “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 5, 2026 (the “2025 Annual Report”). There have been no material changes to the risk factors described in the 2025 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
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Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
Rule 10b5-1 Trading Plans
During the three months ended September 30, 2026, none of our
Item 6. Exhibits.
Exhibit Number | | Exhibit Description | | Filed with this Report | | Incorporated by Reference herein from Form or Schedule | | Filing Date | | SEC File/Reg. Number |
3.1 | | | | | Form S-8 | | 11/7/2019 | | 333-234574 | |
3.2 | | | | | Form S-8 | | 11/7/2019 | | 333-234574 | |
3.3 | | | | | Form S-8 | | 11/7/2019 | | 333-234574 | |
3.4 | | | | | Form S-8 | | 11/7/2019 | | 333-234574 | |
10.1# | | | X | | | | | | | |
10.2#* | | | X | | | | | | | |
10.3#* | | | X | | | | | | | |
10.4‡* | | | | | Form 8-K | | 11/3/2026 | | 001-39032 | |
31.1 | | | X | | | | | | | |
31.2 | | | X | | | | | | | |
32† | | | X | | | | | | |
† The certifications attached as Exhibit 32 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of such Form 10-Q), irrespective of any general incorporation language contained in such filing.
# Indicates a management contract or compensatory plan or arrangement.
‡ Certain portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
* Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish a copy of any omitted schedule or exhibit to the SEC upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | PROFOUND MEDICAL CORP. | |
| | | |
Date: November 5, 2026 | By: | /s/ Arun Menawat | |
| | | Name: Arun Menawat |
| | | Title: Chief Executive Officer |
| | | (Principal Executive Officer) |
| | | |
Date: November 5, 2026 | | By: | /s/ Matthew Sobczyk |
| | | Name: Matthew Sobczyk |
| | | Title: Chief Financial Officer |
| | | (Principal Financial and Accounting Officer) |
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Exhibit 10.1
THURSDAY, AUGUST 27, 2026
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “Agreementˮ) dated as of the 1st day of September 2026 (the “Effective Dateˮ).
BETWEEN
PROFOUND MEDICAL US INC.
(the “Companyˮ) AND
RICHARD FABIAN
(the “Employeeˮ)
WHEREAS the Company and the Employee wish the Company to employ the Employee on the terms and conditions set forth herein.
NOW THEREFORE in consideration of the covenants and agreements herein, the sufficiency of which is acknowledged by each of the parties, the parties agree as follows:
1.EMPLOYMENT
1.1Effectiveness of the Agreement: This Agreement will be deemed effective as of the Effective Date.
1.2Title The Employee shall serve the Company as its President and shall serve as an officer and/or director of affiliates of the Company as required by the board of directors of the Company (the “Boardˮ) from time to time, including serving as the President of Profound Medical Corporation (the “Parentˮ), as directed by the board of directors and CEO of the Parent from time to time. The Employee will report to the Board. The Employee acknowledges the Company may re assign, re-allocate, or re-organize the Employeeʼs duties and responsibilities if reasonable based on changing circumstances, provided such duties and responsibilities are consistent with the role of a President of the Company and a President of the Parent, and do not reflect a material adverse change in the Employeeʼs status, duties or reporting relationship.
1.3Service During the term of this Agreement, in addition to the Employeeʼs common law duties to the Company, the Employee covenants and agrees as follows:
(a)Loyalty to the Company: Throughout the Employeeʼs employment, the Employee will faithfully serve the Company and use the Employeeʼs best efforts to promote the business of the Company. The Employee will act honestly and in good faith, in the best interests of the Company.
(b)Service It is anticipated that the Employee will serve in the capacities set forth above on a full-time basis and shall devote the Employeeʼs working hours to duties set forth herein. The Employee shall not engage in any other business, profession or occupation, or become an officer, employee, contractor for service, agent, or representative of any other company, partnership, firm, person, organization, or enterprise during the term of this Agreement. Notwithstanding the foregoing, the Employee may participate in a non-operating capacity on the boards of directors of no more than two 2 companies (for profit or not-for-profit), provided in each case that such participation does not interfere with the proper discharge of the Employeeʼs duties to the Company hereunder and further provided that the Employee receives the advance written approval of the Chair of the Board (which approval shall not be unreasonably withheld) prior to serving on such a board.
(c)No Personal Benefit The Employee will not receive or accept for the Employeeʼs own benefit or for any other person or entityʼs benefit, either directly or indirectly, any commission, rebate, discount, gratuity or profit from any person or entity having or proposing to have one or more business transactions with the Company, without the prior approval of the Company, except as permitted by the Company policy.
(d)Business Opportunities: During the Employeeʼs employment with the Company, the Employee will, to the extent reasonably practicable, communicate and channel to the Company all knowledge, business and customer contacts and any other information that could concern or be in any way beneficial to the business of the Company. Any such information communicated to the Company as aforesaid will be and remain the property of the Company notwithstanding any subsequent termination of the Employeeʼs employment.
(e)Place of Work: For the first twelve 12 months of the Employeeʼs employment with the Company (the “Initial Periodˮ), the Employee will spend approximately fifty percent 50% of the Employeeʼs time each month in Toronto. To that end, the Company will lease a place in the Companyʼs name for the Employeeʼs exclusive use during the Initial Period and for thirty 30 days thereafter (the “Rentalˮ), which Rental shall be approved by the Company. The Rental shall be reasonable in size and rent and be located within a reasonable distance of the Companyʼs Toronto office. The Company shall be solely responsible for paying the monthly
rent, however, to the extent utilities are not included in the rent, the Employee shall bear sole responsibility for payment of those utilities. The Employee understands and agrees that the Company may be required to report this benefit as income attributable to the Employee.
Following the expiration of the Initial Period, the Company and the Employee shall participate in good faith discussions to determine the subsequent amount of the Employeeʼs time to be spent in Toronto, which amount shall depend on the Companyʼs then-current needs but is currently expected to be one 1 week per month. The Employee will be required to travel (both domestically and internationally) as required by the Company from time to time in order to perform the Employeeʼs duties.
(f)Pre-existing Obligations: The Employee is hereby requested and directed by the Company to comply with any existing common law, contractual or statutory obligations to the Employeeʼs former employer and to any other person or entity. The Company is not employing the Employee to obtain the confidential information or business opportunities of the Employeeʼs former employer or any other person or entity and expressly prohibits the use of such information or opportunities in the course of Employeeʼs employment by the Company.
1.4Directorship and Offices: Upon the termination of employment with the Company for any reason, unless otherwise requested by the Company, the Employee will immediately resign any directorship or office the Employee may hold in the Company, Parent or any other affiliates of the Company and, except as provided expressly in this Agreement, the Employee will not be entitled to receive any written notice of termination or payment in lieu of notice, or to receive any severance pay, damages or compensation for loss of any directorship, office or otherwise. The Employee agrees that failure to tender such resignation(s) will amount to termination for Cause (as defined in Section 3.3(c)), for which the Company may treat the employment as being terminated for after-acquired Cause. Notwithstanding the foregoing, the termination of employment will not automatically disqualify the Employee from serving as a director.
1.5Exclusion/Debarment: The Employee represents and warrants that the Employee has never been, and as a condition of continued employment shall never be, during the term of this Agreement, excluded from any contracting by any Canadian or United States government agency or authority. The Employee further represents and warrants that the Employee is not subject to any final adverse action, as that term is defined in 42 U.S.C. § 1320a-7e(g), and that no final adverse action has previously occurred or is pending or threatened against the Employee. The Employee represents and warrants that the Employee is not under investigation by the FDA or any other Canadian, United States or foreign regulatory agency nor has the Employee been debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded by any Canadian, United States or foreign government department or agency.
1.6Company Policy: The Employee acknowledges and agrees that the employment relationship will be governed by the standards and terms established by the Companyʼs policies as they are established from time to time and the Employee agrees to comply with the terms of such policies which may be introduced, amended, deleted or modified in the sole discretion of the Company, provided that doing so does not constitute a material change in the Employeeʼs terms of employment.
1.7Professional Conduct The Employee acknowledges and agrees that effective performance of the Employeeʼs duties requires integrity and the Companyʼs confidence in the Employeeʼs working relationships with other employees of the Company and with all other persons with whom the Employee deals in the course of employment.
2.COMPENSATION
2.1Base Salary: The Employee will earn an annualized salary of US$550,000 (as in effect from time to time, the “Base Salaryˮ), less applicable deductions, payable in arrears for all services and work the Employee performs for the Company. Any increases will be in the discretion of the Board. The Base Salary will be payable in accordance with the Companyʼs normal payroll practices.
2.2Annual Discretionary Bonus: Provided that through the date of payment the Employee remains an employee of the Company in good standing and the Employee has not received or given notice of termination, for each calendar year, the Employee will be eligible to receive an annual bonus of up to 100% of the Employeeʼs Base Salary for such year (and if there were changes in the Base Salary over the course of the year, the actual amounts due and owing for the entire year as Base Salary in effect from time to time) based on the assessment by the Board of the Employeeʼs and the Companyʼs achievement of certain milestones and objectives determined by the Board. Such milestones and objectives (including the evaluation of achievement thereof), and the bonus amount, will be at the sole discretion of the Board and will be payable in accordance with the Companyʼs standard payroll policies, subject to applicable payroll deductions and withholdings. Such bonus shall be paid within ninety 90 days after the end of the applicable calendar year.
2.3Stock Options: The Company shall recommend to the board of directors of the Parent that the Employee is granted 200,000 restricted share units (“RSUsˮ) that shall vest in accordance with the current terms of the Parentʼs 2020 Amended and Restated Long Term Incentive Plan, as amended and restated on April 3, 2023 (the “LTIPˮ) (i.e. to vest over 3 years in 3 equal annual installments) and options to purchase 475,00 common shares of the Parent (“Stock Optionsˮ). The Stock Options shall vest [in accordance with the current vesting schedule set forth in the Parentʼs Second Amended and Restated Share Option Plan (the “Option Planˮ) (i.e.. to vest over 4 years with ¼ vesting on the first anniversary of the issuance
of the Stock Options and the remainder vesting in 36 equal monthly installments). The RSUs and the Stock Options shall be governed, respectively, by the LTIP, the Option Plan, the applicable stock option award agreements, and any other document discussing the disposition of such equity.
2.4Benefits The Employee will be entitled to participate in the standard insurance plans and other benefit programs (the “Employee Benefitsˮ) which are substantially similar, to the extent practical and commercially reasonable, which the Parent offers to its executive level employees from time-to-time. The Company reserves the right to unilaterally revise the terms of the Employee Benefits, to change carriers, or to eliminate any Employee Benefits altogether. The Employee Benefits will be provided in accordance with the formal plan documents or policies and any issues with respect to entitlement or payment of benefits under any of the Employee Benefits will be governed by the terms of such documents or policies establishing the benefits in issue and will be a matter between the Employee and the insurer. The Companyʼs liability with respect to the Employee Benefits will be limited to the payment of its share of applicable premiums.
2.5Car Allowance The Company shall provide the Employee with a monthly car allowance of US$1000 converted into US dollars in accordance with the Companyʼs payroll policy, as amended from time to time.
2.6Expenses The Company will reimburse the Employee for all reasonable business expenses actually and exclusively incurred in connection with the performance of duties under this Agreement, provided such expenses are incurred and accounted for in accordance with the general policies and procedures of the Company, as established from time to time.
2.7National Holidays: The Company recognizes the national holidays observed in the United States.
2.8Vacation The Employee shall be entitled to four 4 weeks of paid vacation per annum, to be taken at such reasonable times as the Company shall in its discretion permit and in accordance with the Companyʼs vacation policy in effect from time to time. Vacation entitlement for any partial year of employment shall be pro-rated based on the portion of the year worked by the Employee. Unused, accrued vacation will not be paid out at termination unless applicable law requires otherwise.
3.TERMINATION OF AGREEMENT AND EMPLOYMENT
3.1Obligations Upon Termination Upon termination of the Employeeʼs employment, for any reason:
(a)the Company shall pay the Employee for (i) all unpaid Base Salary, and any unused
vacation that may be required to be paid out by law, earned or accrued up to and including the Employeeʼs last day of employment (the “Termination Dateˮ), such payment to be made no later than the first regular payroll date of the Company following the Termination Date; (ii) reimbursement of any eligible unreimbursed business expenses incurred by Employee through the Termination Date and timely and properly reported by Employee, such reimbursement to be paid in accordance with Company policy; and (iii) any other payments and benefits to which Employee may be entitled under the terms of any applicable compensation or benefit arrangement of the Company or under applicable law as of the Termination Date;
(b)all benefits coverage and other perquisites of the Employeeʼs employment shall cease on the later of the Termination Date or as specified in 3.3(a), subject to applicable law and plan terms; and
(c)all files, computer disks, information and documents pertaining to the Companyʼs business shall remain the property of the Company, and shall promptly be delivered by the Employee to the Companyʼs office, and no copy, duplication or reproduction of any kind whatsoever shall be made of such files, computer disks, information or documents, or retained by the Employee, without the express written consent of the Company. The Employee agrees to deliver all electronic information to the Company and to destroy any copies held by the Employee belonging to the Company.
3.2Termination by the Employee: The Employee may terminate this Agreement at any time by providing the Company with ninety 90 daysʼ prior written notice. Upon receipt of such notice, the Company may at any time terminate the employment of the Employee and pay the Employee the amount of Base Salary and continue all Employee Benefits the Employee would have otherwise received during the balance of the aforementioned notice period, subject to applicable law.
3.3Termination by the Company: The Company may terminate the Employeeʼs employment at any time:
(a)without Cause by providing the Employee (subject to Section 3.8 with an amount of pay equivalent to the then current Base Salary in accordance with the chart set forth below (the applicable period following the Termination Date, the “Severance Periodˮ), less applicable withholdings and deductions.
For the duration of the Severance Period, the Employee shall have the obligation to timely seek comparable alternate employment or engagement and the Employee shall promptly report to the Company any earnings therefrom and any other information reasonably requested by the Company with respect to such alternate employment or engagement. For the Severance Period, the amount of the severance benefits paid under Section 3.3(a) shall be reduced by the amount of any compensation earned by the Employee as a result of employment or engagement with another entity or individual, including base salary, signing bonuses, consulting fees, and other fees, bonuses and commissions. In the event any such benefits are subject to mitigation or offset by alternative employment or service, all restrictive covenants (including non-competition, non-solicitation, non-disparagement, and confidentiality obligations) shall remain fully in force and enforceable without regard to any such mitigation or offset. Further, for the avoidance of doubt, the severance benefits set forth in this Section 3.3(a) are in lieu of, and not in addition to, any severance benefits for which the Employee may be eligible pursuant to Section 3.4 and are, at all times, subject the Employeeʼs timely execution, without revocation, of the Release as described in Section 3.8.
(b)for frustration of contract upon the death of the Employee or any incapacitation of the Employee that constitutes an undue hardship for the Company;
(c)at any time for Cause, without notice or pay in lieu of notice or any other form of compensation, severance pay or damages. For the purposes of this Agreement, “Causeˮ includes:
i.any material breach of the provisions of this Agreement or the Companyʼs policies by the Employee if the Company has provided the Employee, with written notice of such breach and such breach has not been remedied within thirty 30 days thereafter;
ii.any intentional or grossly negligent disclosure of any Confidential Information by the Employee;
iii.any fraud, misappropriation of the property or funds of the Company or its affiliates, embezzlement, or other similar acts of dishonesty;
iv.the willful allowance by the Employee of the Employeeʼs duty to the Company or its affiliates and the Employeeʼs personal interests to come into conflict in a material way in relation to any transaction or matter that is of a substantial nature, other than conflicts which are fully disclosed and approved by the Board;
v.the Employeeʼs criminal, or other conviction of any criminal summary conviction offence or
indictable offence that is detrimental to the business or reputation of the Company or its affiliates; and/or
vi.if the Employeeʼs misconduct causes the Employee to be subject to a final and non-appealable enforcement order (or regulatory settlement in respect thereof) concerning a securities, financial services, health or other regulatory offence that is detrimental to the business or reputation of the Company or its affiliates.
3.4Termination in Connection with Change In Control:
(a)“Change in Controlˮ means (i) a reorganization or merger of the Parent with or into any other corporation or corporations or on an acquisition of securities of the Parent (excluding an equity financing of the Parent with the principal purpose of raising capital or a merger with any subsidiary or other affiliate) in which transaction the Parentʼs shareholders immediately prior to such transaction own immediately after such transaction, less than 50% of the voting power of the surviving corporation or its parent, and/or (ii) the sale or disposition by the Parent to an unrelated third party of substantially all of its business and assets. Without limiting the foregoing, a transaction will not constitute a Change in Control if (x) its sole purpose is to change the jurisdiction of the Parentʼs incorporation, or (y) its sole purpose is to create a holding company or other entity that will be owned in substantially the same proportions by the persons who held the Parentʼs securities immediately prior to such transaction.
(b)If Employeeʼs employment is terminated without Cause within 30 days prior to, upon or within 12 months following the occurrence of a Change in Control, and in accordance with Section 3.8 the Employee signs and returns to the Company without revocation a release prepared by the Company of all legally waivable claims related to or arising from the Employeeʼs employment with the Company, then (i) the Company shall pay the Employee twelve 12 months of the Employeeʼs then-current annual Base Salary, less applicable withholdings and deductions, and (ii) the Stock Options shall vest as set forth in Section 3.4(d) (collectively, the “Change in Control Benefitsˮ).
(c)If, within twelve 12 months following a Change in Control, there is a material diminution of the Employeeʼs role in the Company, change in work location of more than 50 kilometers (except as contemplated pursuant to Section 1.3(e) hereto), diminution of status, any materially detrimental change in compensation (including options and bonus) or benefits (considered as a whole), or diminution of reporting structure, the Employee shall have the right to resign within 30 days after the event and receive the Change in Control Benefits, subject to Section 3.8.
(d)If the Employee is entitled to Change in Control Benefits, then, subject to Section 3.8, any unvested Stock Options shall immediately vest. If any provision of this Agreement conflicts
with a provision of the Stock Option agreement(s) or applicable stock option plan, the provision more favorable to the Employee shall govern.
(e)For the avoidance of doubt, the severance benefits set forth in this Section 3.4 are in lieu of, and not in addition to, any severance benefits for which the Employee may be eligible pursuant to Section 3.3(a) and are, at all times, subject the Employeeʼs timely execution, without revocation, of the Release as described in Section 3.8.
3.5Timing of Payments: Unless applicable law requires otherwise, all amounts payable hereunder in respect of Base Salary shall be paid in installments in accordance with the Companyʼs normal payroll practices.
3.6No Implied Entitlement Other than as expressly provided herein, the Employee will not be entitled to receive any further pay or compensation, severance pay, notice, payment in lieu of notice, incentives, bonuses, benefits or damages of any kind from the Company or from any affiliate of the Company. The Employee will not be entitled to receive any further pay or compensation (except for pay, if any, accrued and owing under this Agreement up to the date of termination of employment) from the Company, and for clarity, without limiting the foregoing, the Employee will not be entitled to any bonus payment that has not already been awarded to the Employee by the Company.
3.7Continued Effect: Notwithstanding any changes in the terms and conditions of the Employeeʼs employment which may occur in the future, including any changes in position, duties or compensation, the termination provisions in this Agreement will continue to be in effect for the duration of the Employeeʼs employment with the Company unless otherwise amended in writing and signed by the Company.
3.8Obligations Upon Termination The Employee agrees that the Employee shall not be entitled to receive any severance fee or other benefits under Section 3.3 or 3.4 of this Agreement if the Employee breaches any of the Employeeʼs obligations arising under Sections 4, 5, 6, 7, 8, 9 and 11 hereof. The Employee acknowledges that until a release in substantially the same form of Exhibit A hereto (a “Releaseˮ) is timely executed and delivered to the Company and becomes effective and irrevocable, the Company will not make any severance payments or benefits due under Section 3.3 or 3.4 of this Agreement following termination of the Employee, and any such severance payments or benefits that would otherwise be provided within 28 days following the Employeeʼs Termination Date shall instead be paid in a lump sum on the Companyʼs first regular payroll date thereafter (with the remaining payments and benefits provided on the original schedule). The Employee further acknowledges that if the Release is not timely executed and delivered to the Company, or if it is revoked following delivery, the severance payments and other benefits described in Sections 3.3 and 3.4 shall be forfeited.
4.CONFIDENTIAL INFORMATION PROTECTIONS
4.1At all times during and after the Employeeʼs employment, the Employee will hold in confidence and will not disclose, use, lecture upon, or publish any of the Companyʼs Confidential Information (defined below), except as may be required in connection with the Employeeʼs work for the Company, or as expressly authorized by the Board. Unless forming part of the Employeeʼs customary duties for the Company, the Employee will obtain the written approval of the Board before publishing or submitting for publication any material (written, oral, or otherwise) that relates to the Employeeʼs work at the Company and/or incorporates any Confidential Information. The Employee hereby assigns to the Company any rights the Employee may have or acquire in any and all Confidential Information and recognize that all Confidential Information shall be the sole and exclusive property of the Company and its assigns.
4.2The term “Confidential Informationˮ shall mean any and all confidential knowledge, data or information related to the Companyʼs business or its actual or demonstrably anticipated research or development, including without limitation (a) trade secrets, inventions, ideas, processes, computer source and object code, data, formulae, programs, other works of authorship, know-how, improvements, discoveries, developments, designs, and techniques;
(b) information regarding products, services, plans for research and development, marketing and business plans, budgets, financial statements, contracts, prices, suppliers, employees and customers; (c) information regarding the skills and compensation of the Companyʼs employees, contractors, and any other service providers of the Company and (d) the existence of any business discussions, negotiations, or agreements between the Company and any third party.
4.3The Employee understands that the Company has received and in the future will receive from third parties confidential or proprietary information (“Third Party Informationˮ) subject to a duty on the Companyʼs part to maintain the confidentiality of such information and to use it only for certain limited purposes. During and after the term of the Employeeʼs employment, the Employee will hold Third Party Information in strict confidence and will not disclose to anyone (other than the Company personnel who need to know such information in connection with their work for the Company) or use, Third Party Information, except in connection with the Employeeʼs work for the Company or unless expressly authorized by an officer of the Company in writing.
4.4The Employee represents that employment by the Company does not and will not breach any agreement with any former employer, including any non-compete agreement or any agreement to keep in confidence or refrain from using information acquired by the Employee prior to employment by the Company. The Employee further represents that the Employee has not entered into, and will not enter into, any agreement, either written or oral, in conflict with
the Employeeʼs obligations under this Agreement. During employment by the Company, the Employee will not improperly make use of, or disclose, any information or trade secrets of any former employer or other third party, nor will the Employee bring onto the premises of the Company or use any unpublished documents or any property belonging to any former employer or other third party, in violation of any lawful agreements with that former employer or third party. The Employee will use in the performance of the Employeeʼs duties only information that is generally known and used by persons with training and experience comparable to the Employeeʼs own, is common knowledge in the industry or otherwise legally in the public domain, or is otherwise provided or developed by the Company.
4.5Notwithstanding any other provision of this Agreement: (a) the Employee will not be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that: (i) is made A in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and B solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed under seal in a lawsuit or other proceeding; and (b) if the Employee files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Employee may disclose the Companyʼs trade secrets to the Employeeʼs attorney and use the trade secret information in the court proceeding if the Employee: (i) files any document containing trade secrets under seal; and (ii) does not disclose trade secrets, except pursuant to court order.
4.6The Employee understands that nothing contained in this Agreement limits the Employeeʼs ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (each, a “Government Agencyˮ). The Employee further understands that this Agreement does not limit the Employeeʼs ability to communicate with any Government Agencies; participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company; or make any disclosures required by law. This Agreement does not limit the Employeeʼs right to receive an award for information provided to any Government Agencies.
5.INVENTIONS
5.1As used in this Agreement, the term “Inventionˮ means any ideas, concepts, information, materials, processes, data, programs, know-how, improvements, discoveries, developments, designs, artwork, formulae, other copyrightable works, and techniques and all Intellectual Property Rights in any of the items listed above. The term “Intellectual Property Rightsˮ means all trade secrets, copyrights, trademarks, mask work rights, patents and other intellectual property rights recognized by the laws of any jurisdiction or country. The term
“Moral Rightsˮ means all paternity, integrity, disclosure, withdrawal, special and any other similar rights recognized by the laws of any jurisdiction or country.
5.2The Employee has disclosed in Exhibit B a complete list of all Inventions that (a) the Employee has, or has caused to be, alone or jointly with others, conceived, developed, or reduced to practice prior to the commencement of the Employeeʼs employment by the Company; (b) in which the Employee has an ownership interest or which the Employee has a license to use; (c) and that the Employee wishes to have excluded from the scope of this Agreement (collectively referred to as “Prior Inventionsˮ). If no Prior Inventions are listed in Exhibit B, the Employee warrants that there are no Prior Inventions. The Employee agrees that the Employee will not incorporate, or permit to be incorporated, Prior Inventions in any of the Company Inventions (defined below) without the Companyʼs prior written consent. If, in the course of the Employeeʼs employment with the Company, the Employee incorporates a Prior Invention into a Company process, machine or other work, the Employee hereby grants the Company a non-exclusive, perpetual, fully-paid and royalty-free, irrevocable and worldwide license, with rights to sublicense through multiple levels of sublicensees, to reproduce, make derivative works of, distribute, publicly perform, and publicly display in any form or medium, whether now known or later developed, make, have made, use, sell, import, offer for sale, and exercise any and all present or future rights in, such Prior Invention.
5.3Inventions assigned to the Company or to a third party, including patentable inventions and trade secrets, as directed by the Company pursuant to this Section 5 are referred to in this Agreement as “Company Inventionsˮ. Subject to subsection 5.5 (including the proviso set forth therein) and the Prior Inventions the Employee has set forth in Exhibit B, the Employee hereby assigns and agrees to assign in the future (when any such Inventions or Intellectual Property Rights are first reduced to practice or first fixed in a tangible medium, as applicable) to the Company all rights, title, and interest in and to any and all Inventions (and all Intellectual Property Rights with respect thereto) made, conceived, reduced to practice, or learned by the Employee, either alone or with others, during the period of the Employeeʼs employment by the Company. Any assignment of Inventions (and all Intellectual Property Rights with respect thereto) hereunder includes an assignment of all Moral Rights. To the extent such Moral Rights cannot be assigned to the Company, and to the extent the following is allowed by the laws in any country where Moral Rights exist, the Employee hereby unconditionally and irrevocably waives the enforcement of such Moral Rights, and all claims and causes of action of any kind against the Company or related to the Companyʼs customers, with respect to such rights. The Employee further acknowledges and agrees that neither the Employeeʼs successors-in-interest nor legal heirs retain any Moral Rights in any Inventions (and any Intellectual Property Rights with respect thereto). Notwithstanding the foregoing or anything else in this Agreement, this assignment of Inventions does not apply to an Invention for which all of the following are true: (a) the Employee did not use the Companyʼs equipment, supplies, facilities, or trade secret information; (b) the Employee developed the Invention entirely on the
Employeeʼs own time; (c) the Invention does not relate directly to the Companyʼs business or to the Companyʼs actual or demonstrably anticipated research or development; and (d) the Invention does not result from any work the Employee performs for the Company.
5.4During the period of employment, the Employee will promptly and fully disclose to the Company in writing (a) all Inventions authored, conceived, or reduced to practice by the Employee, either alone or with others, and (b) all patent applications filed by the Employee or in which the Employee is named as an inventor or co-inventor; provided, however, that such disclosure obligation does not apply to Inventions (or Intellectual Property Rights with respect thereto) which are not directly or indirectly related to the Companyʼs then current or future business or are not invented with the Company resources or during the Employeeʼs working hours. The Employee agrees to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that is required by the Company) of all Inventions made by the Employee during the period of the Employeeʼs employment by the Company, which records shall be available to, and remain the sole property of, the Company at all times.
5.5The Employee agrees that, as directed by the Company, the Employee will assign to the Company or a third party, including without limitation, all rights, title, and interest in and to any particular Company Invention, including any patentable invention or trade secret; provided, however, it is understood that the Company will not elect to direct such assignment of a Company Invention if it is not directly or indirectly related to the Companyʼs then current or future business or was not invented with the Company resources or during Employeeʼs working hours.
5.6During and after the period of employment and at the Companyʼs request and expense, the Employee will provide reasonable assistance to the Company, including consenting to and joining in any action, to obtain and enforce Canadian, United States and foreign Intellectual Property Rights and Moral Rights relating to Company Inventions in all countries. If the Company is unable to secure the Employeeʼs signature on any document needed in connection with such purposes, the Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as the Employeeʼs agent and attorney in fact, which appointment is coupled with an interest, to act on the Employeeʼs behalf to execute and file any such documents and to do all other lawfully permitted acts to further such purposes with the same legal force and effect as if executed by the Employee.
5.7The Employee agrees that the Employee will not incorporate into any Company software or otherwise deliver to the Company any software code licensed under the GNU General Public License or Lesser General Public License or any other license that, by its terms, requires or conditions the use or distribution of such code on the disclosure, licensing, or distribution of any source code owned or licensed by the Company.
6.RETURN OF COMPANY PROPERTY
6.1Without limiting the provisions of Section 3.1(c), upon termination of the Employeeʼs employment or upon the Companyʼs request at any other time, the Employee will deliver to the Company all of the Companyʼs property, equipment, and documents, together with all copies thereof, and any other material containing or disclosing any Inventions, Third Party Information or Confidential Information and certify in writing that the Employee has fully complied with the foregoing obligation. The Employee agrees that the Employee will not copy, delete, or alter any information contained upon any Company computer or Company equipment before the Employee returns it to the Company. In addition, if the Employee has used any personal computer, server, or e-mail system to receive, store, review, prepare or transmit any Company information, including but not limited to, Confidential Information, the Employee agrees to provide the Company with a computer-useable copy of all such Confidential Information and then permanently delete and expunge such Confidential Information from those systems; and the Employee agrees to provide the Company access to the Employeeʼs system as reasonably requested to verify that the necessary copying and/or deletion is completed.
7.RESTRICTIVE COVENANTS
7.1Non-Solicitation: The Employee covenants and agrees that for the period of the Employeeʼs employment by the Company and for one 1 year after termination of such employment for any reason (the “Restricted Periodˮ), the Employee will not actively, either directly or indirectly, solicit or attempt to solicit any current employee, independent contractor, or consultant of the Company or its affiliates to terminate his, her or its relationship with Company or its affiliates in order to become an employee, consultant, or independent contractor to or for any other person or entity.
7.2Non-Competition During the Restricted Period, the Employee shall not, individually or jointly, directly or indirectly: (i) engage in or assist others in engaging in the Business anywhere in the Restricted Territory; (ii) have an interest in any Person that engages directly or indirectly in the Business in the Restricted Territory in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee, or consultant; or (iii) intentionally interfere in any material respect with the business relationships (whether formed prior to or after the commencement of the Employeeʼs employment with the Company) between the Company and customers, suppliers, or other business relations of the Company. Notwithstanding the foregoing, the Employee may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange so long as the Employee is not a controlling Person of, or a member of a group that controls, such Person and does not, directly or indirectly, own 5% or more of any class of securities of such Person.
7.3Non-Disparagement: The Employee shall not make, directly or indirectly, through any other Person, any negative, derogatory or disparaging statements or communications, whether
written or oral, about the Company, the Parent or any of their respective affiliates, businesses, services, activities, business relationships, shareholders, members, partners, directors, officers, managers or employees. The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) with competent jurisdiction to order such Person to disclose or make accessible such information, nor will the foregoing be violated by truthful statements to any government agency.
7.4Definitions For purposes of this Agreement, the following terms shall mean the following:
(a)“Businessˮ means any business in which the Company is engaged or contemplates engaging in at the time of, or during the twelve 12 month period prior to, the Termination Date.
(b)“Personˮ means any natural person, sole proprietorship, partnership, joint venture, trust, unincorporated association, corporation, limited liability company, other entity, or governmental entity.
(c)“Restricted Territoryˮ means anywhere in the world.
7.5Reasonableness of Covenants: In signing this Agreement, the Employee gives the Company assurance that the Employee has carefully read and considered all of the terms and conditions of this Agreement, including the restraints imposed under this Section 7. The Employee agrees that these restraints are necessary for the reasonable and proper protection of the Company and the Parent and the Confidential Information and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area, and that these restraints, individually or in the aggregate, will not prevent the Employee from obtaining other suitable employment during the period in which the Employee is bound by the restraints. The Employee acknowledges that each of these covenants has a unique, very substantial and immeasurable value to the Company and to the Parent and that the Employee has sufficient assets and skills to provide a livelihood while such covenants remain in force. The Employee further covenants that the Employee will not challenge the reasonableness or enforceability of any of the covenants set forth in this Section 7. It is also agreed that the Parent is an express third-party beneficiary of, and will have the right to enforce, all of the Employeeʼs obligations to the Parent under this Agreement, including pursuant to this Section 7. In the event of any violation of the provisions of this Section 7, the Employee acknowledges and agrees that the post-termination restrictions contained in this Section 7 shall be extended by a period of time equal to the period of such violation, it being the intention of the Parties that the running of the applicable post-termination restriction period shall be tolled during any
period of such violation. The obligations contained in this Section 7 hereof shall survive the termination or expiration of Employeeʼs employment with the Company and shall be fully enforceable thereafter.
8.NOTIFICATION OF NEW EMPLOYER
8.1After the termination of this Agreement, the Employee consents to the notification of any new employer of the Employeeʼs rights and obligations under this Agreement, by the Company providing a copy of this Agreement.
9.INJUNCTIVE RELIEF
9.1The Employee acknowledges and agrees that: (a) the services to be rendered by the Employee to the Company are of a special and unique character; (b) the Employee will obtain knowledge and skill relevant to the Companyʼs industry, methods of doing business and marketing strategies by virtue of the Employeeʼs employment with the Company; (c) the restrictive covenants and other terms and conditions of this Agreement are reasonable and reasonably necessary to protect the legitimate business interest of the Company; (d) the amount of the Employeeʼs compensation reflects, in part, the Employeeʼs obligations and the Companyʼs rights under the restrictive covenants set forth herein; (e) the Employee has no expectation of any additional compensation, royalties or other payment of any kind not otherwise referenced herein in connection herewith; and (f) the Employee will not be subject to undue hardship by reason of full compliance with the terms and conditions of the restrictive covenants set forth herein or the Companyʼs enforcement thereof. The Employee further acknowledges that, because the Employeeʼs services are personal and unique and because the Employee will have access to the Confidential Information, any breach of the restrictive covenants set forth in this Agreement would cause irreparable injury to the Company and/or its affiliates for which monetary damages would not be an adequate remedy and, therefore, any such actual or threatened breach will entitle the Company to seek, in addition to other available remedies, temporary or permanent injunctive relief (including specific performance) or other equitable relief, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The rights and remedies provided to each party in this Agreement are cumulative and in addition to any other rights and remedies available to such party at law or in equity. In addition, the Employee acknowledges and agrees that, should the Employee violate any restrictive covenant, the obligation at issue will be tolled for the period of the violation and will resume to run from the first date on which the Employee ceases to be in violation of the obligation. The Employee further acknowledges and agrees that if should breach any restrictive covenant, then, in addition, to the Companyʼs other legal and equitable remedies, the Company may suspend or cease payment of any Change in Control or other severance payments and benefits to which the Employee might otherwise be entitled.
10.PUBLICITY
10.1Except to the extent required by the Employeeʼs duties or customarily performed by the Employee, the Employee shall not, without the prior written consent of the Company, make or give any public announcements, press releases or statements to the public or the press regarding the Employeeʼs work or the Companyʼs business.
11.NOTICES
11.1All notices, requests, demands and other communications to be given pursuant to the terms of this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of delivery if personally delivered or sent by a recognized overnight courier or (ii) on the date of transmission if sent by email (provided notice is then also promptly delivered personally or by a recognized overnight courier), in each case to the parties at the addresses listed below:
If to the Employee, at the Employeeʼs then current address in the Companyʼs payroll records;
If to the Company:
Profound Medical US Inc. | |
Attention: | Arun Menawat |
[***] | |
| |
With a copy (which shall not constitute notice) to: | |
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. | |
919 Third Avenue | |
New York, NY 10022 | |
| |
Attention: | Cheryl Reicin |
Email: | |
[***] | |
Each party may change its address for receipt of notice by giving notice of the change to the other party.
12.SURVIVAL
12.1The Employeeʼs obligations under this Agreement shall survive the termination of the Employeeʼs employment, regardless of the manner or reason for termination, including, without limitation, those set forth in Sections 4 through 7 hereof.
12.2The assignment of this Agreement by the Company to any successor or other assignee and shall be binding upon the Employeeʼs heirs and legal representatives.
13.SEVERABILITY
13.1Should any provision of this Agreement be held by a court of competent jurisdiction to be enforceable only if modified, or if any portion of this Agreement will be held as unenforceable and thus stricken, such holding will not affect the validity of the remainder of this Agreement, the balance of which will continue to be binding upon the parties with any such modification to become a part hereof and treated as though originally set forth in this Agreement. The parties further agree that any such court is expressly authorized to modify any such unenforceable provision of this Agreement in lieu of severing such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Agreement or by making such other modifications as it deems warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by applicable law. The parties expressly agree that this Agreement as so modified by the court will be binding upon and enforceable against each of them. In any event, should one or more of the provisions of this Agreement be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provisions hereof, and if such provision or provisions are not modified as provided above, this Agreement will be construed as if such invalid, illegal or unenforceable provisions had not been set forth herein.
14.WAIVER
14.1Any waiver or failure to enforce any provision of this Agreement on one occasion will not be deemed a waiver of that provision or any other provision on any other occasion.
15.ASSIGNMENT
15.1The Company may assign this Agreement to (i) an affiliate, subsidiary, related company or partnership without prior notice or consent of the Employee, or (ii) a new employer in connection with any transaction or reorganization; provided that any such successor or assignee expressly assumes in writing the Companyʼs obligations under this Agreement and has direct or indirect responsibility for managing the underlying business of the Company. This Agreement will inure to the benefit of the Company and its permitted successors and assigns. The Employee may not assign any of his rights nor delegate any of the duties hereunder.
16.ENTIRE AGREEMENT
16.1This Agreement is the final, complete and exclusive agreement of the parties with respect to the subject matter hereof, and supersedes all prior and contemporaneous written and oral communications, understandings, agreements, representations and warranties between the Employee and the Company with respect to such matters. No modification of or amendment to this Agreement, or any waiver of any rights under this Agreement, will be effective unless in writing and signed by the Employee and the Company. Any subsequent change or changes in duties, salary or compensation will not affect the validity or scope of this Agreement.
17.HEADINGS
17.1The headings utilized in this Agreement are for convenience only and are not to be construed in any way as additions or limitations of the covenants and agreements contained in this Agreement.
18.INDEPENDENT LEGAL ADVICE
18.1The Employee acknowledges that the Employee has read and understands this Agreement, and acknowledges that an opportunity was provided to obtain separate legal advice about it. The Company shall reimburse the Employee for the reasonable costs of obtaining legal advice regarding this Agreement.
19.COUNTERPARTS
19.1This Agreement may be executed in two or more counterparts, each of which will be deemed to be an original and all of which will constitute one Agreement.
20.GOVERNING LAW; VENUE
20.1This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware without regard to any conflict- or choice-of-law principle that would call for the application of the law of another jurisdiction. In the event of any alleged breach or threatened breach of this Agreement, the Employee hereby consents and submits to the jurisdiction of the state or federal courts located in Delaware. Notwithstanding the foregoing, it is understood and agreed that, for the duration of time in which the Employee is a resident of the State of Washington, the parties acknowledge and agree that any claim arising out of a breach or threatened breach of Section 7 of this Agreement shall be governed by the laws of the State of Washington and shall be subject to the jurisdiction of the state and federal courts located in King County, Washington. For clarity, if multiple breaches are alleged to have occurred, only those claims arising from or relating to Section 7 shall be subject to Washington law and venue.
21.COMPANY AND AFFILIATES
21.1Whenever the context suggests, the term “the Companyˮ shall also include the Parent and the affiliates of the Company and of the Parent, including, without limitation, for purposes of Sections 47 and 9. Without limiting the foregoing, Confidential Information of the Company includes information of the Parent and the affiliates of the Company and of the Parent, and the non-solicitation, non-competition, and non-disparagement clauses relate to the employees and business of the Parent and the and the affiliates of the Company and of the Parent.
22.TAX MATTERS
22.1The Company will have the right to withhold and deduct from any payments or deemed payments hereunder any amounts of tax withholding that it determines be required by federal,
state and local law, whether U.S. or non-U.S.
22.2This Agreement is intended to comply with or satisfy an exemption from Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and the Treasury Regulations and other administrative guidance promulgated thereunder (collectively, “Section 409Aˮ), and will be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral will be excluded from Section 409A to the maximum extent possible. If this Agreement provides for a payment to be made within a window of time (e.g., “payment will be made within 30 daysˮ), the date that payment is actually to be made will be within the sole and absolute discretion of the Company. To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensationˮ under Section 409A, and to the extent that such payment or benefit is payable upon the Employeeʼs termination of employment, then such payments or benefits will be payable only upon the Employeeʼs “separation from serviceˮ as determined under Section 409A, and “termination,ˮ “termination of employmentˮ and like terms will be construed accordingly. Furthermore, the parties hereto acknowledge and agree that all or any part of any payment to be made to the Employee within six months following the Employeeʼs separation from service other than by reason of the Employeeʼs death will instead be paid in a lump sum without interest on the first business day that is more than six months after the date of the Employeeʼs separation from service (or, if later, the first business day that is more than 18 months after the applicable date of correction, as required by Internal Revenue Service Notice 20106 if the Company determines in good faith that the Employee is a “specified employeeˮ within the meaning of Section 409A and that the earlier payment of such amount would give rise to tax, penalties or interest under Section 409A. All in-kind benefits provided and expenses eligible for reimbursement under this Agreement will be provided by the Company or incurred by the Employee during the time periods set forth in this Agreement. All reimbursements will be paid as soon as administratively practicable, but in no event will any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year will not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A, and in no event will the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Employee pursuant to Section 409A.
PROFOUND MEDICAL US INC.
By: | /s/ Arun Menawat | |
Name: | Arun Menawat | |
Title: | CEO | |
Offer Letter Acceptance
I have read and accept this offer of employment:
/s/ Richard Fabian | 08/27/2026 |
Richard R. Fabian | Date |
Exhibit 10.2
MUTUAL SEPARATION AGREEMENT
THIS MUTUAL SEPARATION AGREEMENT (including its Schedules, the “Agreement”) is made as of the 14th day of August, 2026 between Rashed Dewan (the “Employee”) and Profound Medical Corp. (the “Company”).
WHEREAS the Company and the Employee entered into an updated employment agreement, dated March 22, 2022 (the “Employment Agreement”);
AND WHEREAS the Employee desires to voluntarily resign from his employment with the Company, effective August 14, 2026 (the “Effective Date”);
AND WHEREAS the Company accepts the Employee’s voluntary resignation;
AND WHEREAS this Agreement sets forth the terms and conditions of the Employee’s voluntary resignation with the Company.
NOW THEREFORE in consideration of the mutual covenants and agreements contained in this Agreement, and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree that:
1.Resignation. The Employee hereby voluntarily resigns from his employment with the Company effective the Effective Date, and the Company hereby accepts such resignation.
2.Accrued Entitlements. The Company shall provide the Employee with all final wages, including accrued but unpaid Base Salary (as defined in the Employment Agreement) and vacation pay, owing up to the Effective Date in accordance with Ontario’s Employment Standards Act, 2000 and the Employment Agreement.
3.Separation Package. Conditional on the Employee’s agreement to, and compliance with, the terms and conditions of this Agreement, including, without limitation, the satisfaction of the Release Requirement (as defined below) and the Employee’s continued compliance with his obligations arising under the Employment Agreement (including, without limitation, those under Sections 4, 5, 6, 7, 8, 9 and 11) (collectively, the “Restrictive Covenants”), the Company hereby agrees to (i) provide the Employee with an aggregate payment of $375,000 USD, which is the equivalent to the Employee’s current Base Salary for a period of fifteen (15) months (the “Separation Payment”), (ii) subject to the terms, conditions and eligibility requirements of the applicable benefit plans and policies, continue to make the employer contributions required to be made in order to maintain the Employee’s current Employee Benefits (as defined in the Employment Agreement) for the fifteen (15)-month period immediately following the Effective Date, (iii) reimburse the Employee up to $5,000 CAD for reasonable legal fees incurred in connection with the review of this Agreement, subject to the provision of satisfactory supporting invoices, and (iv) permit the Employee’s vested stock options granted under the Company’s Second Amended and Restated Share Option Plan or a predecessor plan (“Share Option Plan”) that are outstanding as of the Effective Date to remain exercisable in accordance with their terms until the earlier of (a) the last day of the twelve (12) month period immediately following the Effective Date, and (b) the stock options’ applicable expiry date (the “Extended Exercise
Period”), and any such vested stock options that remain unexercised at the end of the applicable Extended Exercise Period shall immediately expire and shall be cancelled without compensation or further consideration (collectively (i) through (iv), the “Separation Package”). The Separation Payment shall be paid to the Employee in thirty 30) equal semi-monthly installments, commencing on or shortly following the date on which the Release Requirement is satisfied; provided, however, that the Employee may elect, at any time after six (6) months from the Effective Date, by delivering written notice to the Chair of the Company’s Human Resources and Corporate Governance Committee (the “Chair”) (currently, Arthur Rosenthal [***]), to receive the remaining balance of the Separation Payment as a lump sum payment. Any such lump sum payment shall be made as soon as reasonably practicable following the Chair’s receipt of the Employee’s written notice. Notwithstanding anything to the contrary contained herein, upon any breach by the Employee of a Restrictive Covenant or any other post-employment obligation owed to any member of the Company Group (as defined below), the Employee’s right to receive any unpaid compensation or benefits comprising the Separation Package shall immediately terminate, and the Employee shall forfeit any entitlement to such amounts and benefits not yet paid or provided as of the date of the breach.
4.Expenses. In accordance with the Company’s general expense policies and procedures currently in effect, the Company will reimburse the Executive for all eligible unpaid business expenses actually and exclusively incurred up to the Effective Date in connection with the performance of his duties under the Employment Agreement. In order to process any expenses, the Company requires the Employee to submit any statements or vouchers on or before 5:00 p.m. EST on August 19, 2026 to the Chair.
5.Equity Awards. The Employee currently holds stock options granted under the Company’s Share Option Plan and restricted share units (“RSUs”) granted under the Company’s Amended and Restated Long Term Incentive Plan (collectively, “Equity Awards”). Subject to paragraph 3(iv) of this Agreement and any subsequent written agreement between the parties, the Employee’s Equity Awards shall continue to be governed by the terms and conditions of the applicable equity plan and award agreements. For greater certainty and notwithstanding any terms of the Share Option Plan to the contrary, the Employee’s unvested stock options granted under the Share Option Plan shall immediately expire and shall be cancelled without compensation or further consideration on the Effective Date.
6.Employee Acknowledgement. The Employee acknowledges and agrees that, except as expressly set forth in this Agreement, the Employee shall not be entitled to any additional remuneration or benefits in respect of his employment with Company and the cessation thereof (including, without limitation, any salary, stock compensation (including common shares of, or any other shares or equity interests in (including stock options and RSUs), the Company), any bonus amounts, severance, notice of termination or payment in lieu of notice), whether pursuant to contract (including, without limitation, the Employment Agreement), tort, statute, common law or otherwise.
7.Directorship and Offices. Upon the Effective Date, the Employe will immediately resign any directorship or office the Employee may hold in the Company, its affiliates and its subsidiaries (collectively, the “Company Group”) and the Employee will not be entitled to receive any written notice of termination or payment in lieu of notice, or to receive any severance pay, damages or
2
compensation for loss of any directorship, office or otherwise.
8.Mutual Non-Disparagement. The Employee covenants and agrees that he shall not, at any time and for any reason, engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks (including, without limitation, the repetition or distribution of derogatory rumours, allegations, negative reports or comments) which are disparaging, deleterious or damaging to the integrity, reputation or goodwill of any member of the Company Group or their respective businesses, shareholders, directors, officers, employees, partners, and other representatives, other than truthful communications directly required by applicable laws or judicial or administrative process. The Company covenants and agrees that it shall not cause or encourage its directors, officers and executives, to, at any time and for any reason, engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks (including, without limitation, the repetition or distribution of derogatory rumours, allegations, negative reports or comments) which are disparaging, deleterious or damaging to the integrity or professional reputation of the Employee, other than truthful communications directly required by applicable laws or judicial or administrative process.
9.Indemnification and D+O Coverage. The Company will indemnify and hold the Employee harmless to the fullest extent permitted by law from and against any and all losses which the Employee may reasonably suffer sustain, incur or be required to pay in respect of any claim arising out of or in connection the Employee’s employment with the Company, provided that the indemnity provided for in this paragraph will only be available if: (i) the Employee acted honestly and in good faith with a view to the best interests of the Company; and (ii) in the case of a criminal or administrative claim that is enforced by monetary penalty, the Employee had reasonable grounds for believing the Employee’s conduct was lawful. For greater certainty, the Employee will not be entitled to indemnification to the extent that such claims or losses resulted from the Employee’s fraud, embezzlement, intentional misconduct or negligence.
Subject to the terms and upon the conditions herein, prior to the final disposition of any Proceeding (as defined below), the Company will advance to or on behalf of the Employee, from time to time and as they are incurred, all Expenses (as defined below) actually and reasonably suffered or incurred by or on behalf of the Employee in connection with such Proceeding. Where the Employee is requesting the Company to advance Expenses, the Employee must provide the Company with a written affirmation of the Employee’s good faith belief that the Employee is legally entitled to indemnification under this Agreement and a written undertaking to the Company, agreeing to repay any amounts so advanced if it should be ultimately determined in a final order of a court of competent jurisdiction that the Employee was not entitled to such advance or any part thereof. Any such advance hereunder shall be treated as a non-interest bearing, unsecured loan to the Employee, pending payment or extinguishment or repayment under the foregoing undertaking.
For purposes of this Agreement, “Proceeding” means any pending or completed civil, criminal, administrative or regulatory action, suit, hearing or other formal proceeding in which the Employee is involved by reason of the fact that the Employee is or was a director or officer of the Company. “Proceeding” does not include any action, suit or other proceeding commenced by the Employee, except a proceeding brought to defend against a claim or proceeding not initiated by the Employee.
For purposes of this Agreement, “Expenses” means reasonable legal fees and disbursements and
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all other reasonable out-of-pocket costs and expenses actually incurred by or on behalf of the Employee in connection with investigating, preparing for, defending, participating in, responding to or appealing any Proceeding. “Expenses” shall not include judgments, fines, penalties, taxes or amounts paid in settlement.
The Company shall maintain directors’ and officers’ liability insurance coverage for the Employee on terms that are no less favourable, and for a period no shorter, than the coverage provided to former directors and officers of the Company under the Company’s current directors’ and officers’ liability insurance policy (the “Current Policy”). As of the Effective Date, such coverage shall be provided pursuant to the Current Policy. In the event that the Current Policy is amended, replaced, or otherwise changed such that the coverage available to the Employee becomes less favourable, or is available for a shorter period, than the coverage provided under the Current Policy, the Company shall, at its own expense and in its sole discretion, either (i) procure and maintain comparable directors’ and officers’ liability insurance coverage for the Employee, or (ii) provide the Employee with funds sufficient to enable the Employee to obtain and maintain such coverage on a self-insured basis. Any such coverage shall be no less favourable, and for a period no shorter, than the coverage available to former directors and officers of the Company under the Current Policy.
10.Press Release. Prior to publicly releasing the press release and the internal announcement, if any, regarding the cessation of the Employee’s employment, the Company will provide the Employee with an opportunity to comment on its proposed press release and the internal announcement, if any. The Company shall consider, in good faith, any timely comments the Employee provides in respect of the press release and internal announcement, if any.
11.Release of Claims. No earlier than the Effective Date and no later than one (1) month immediately following the Effective Date, the Employee shall execute and deliver to the Company the Full and Final Release and Indemnity set forth in Schedule “A” to this Agreement (the “Release Requirement”).
12.Return of Property. Further to the Employee’s obligations set forth in Section 6 of the Employment Agreement, the Employee shall return, on or prior to the Effective Date, all property relating to or belonging to the Company Group including, without limitation, any data, removable discs, files, credit cards, records, contracts, keys, security passes, passwords, access codes, manuals and any other documents, papers, and information and all copies thereof, in any format whatsoever, including electronic format, in the Employee’s possession or control. The Employee shall also provide to the Company Group all means for accessing and/or controlling access to Company Information Technology Resources. For purposes of this Agreement, “Company Information Technology Resources” include any electronic resources used by the Company Group for data storage and communication. Notwithstanding the foregoing, the Employee may retain the Company-issued Microsoft Surface laptop, Dell XPS tablet, and iPhone 16 Pro Max, subject to verification by the Company’s IT department that all Company Group data and other confidential information have been removed from such devices.
13.Continuing Obligations. Notwithstanding the cessation of the Employee’s employment with the Company, the Employee acknowledges and agrees that he will continue to be bound by the restrictions and obligations imposed on him that extend beyond the cessation of his
4
employment (which survive and can be enforced by the Company in a court of competent jurisdiction), including without limitation, the Restrictive Covenants. The Employee undertakes that he will comply with such restrictions and obligations, which restrictions and obligations will survive the cessation of the Employee’s employment with the Company and are reasonably and properly required for the adequate protection of the business of the Company Group.
14.Covenants in Parallel. The restrictions and obligations on the Employee contained in this Agreement will operate in addition to, and in parallel of, any restrictions and obligations on the Employee contained in the Employment Agreement and in any other agreement entered into between the Employee and the Company.
15.Non-Disclosure. The parties hereto agree to keep the terms of this Agreement in strict confidence and not disclose the fact, terms or nature of this Agreement to any person or entity, except to Permitted Persons on the condition that such Permitted Person(s) agree to keep the terms of this Agreement in confidence and not to disclose the fact, terms or nature of this Agreement to any person or entity. For the purposes of this Agreement, “Permitted Persons” means only: (i) the Employee’s immediate family; (ii) to the extent that such disclosure may permit the Employee or the Company to obtain tax planning, legal or similar advice, applicable legal and financial advisors; and (iii) other parties as may be expressly required by applicable law.
16.Independent Legal Advice. The Employee acknowledges and agrees that he has had a reasonable opportunity to seek independent legal advice with respect to this Agreement, fully understands the terms contained in this Agreement, and that any failure on his part to seek independent legal advice shall not affect (and he shall not assert that it affects) the validity, enforceability or effect of this Agreement.
17.Currency; Deductions and Withholdings. All payments under this Agreement are in Canadian dollars (except for the Separation Payment in paragraph 3, which is in USD) and are subject to withholding taxes and statutory or authorized deductions.
18.Severability. If any provision of this Agreement, or part thereof, shall be found to be void or invalid by a court of competent jurisdiction, such void or invalid provision, or part thereof, shall be deemed to be severed from this Agreement without in any way affecting the validity, enforceability, or effect of any of the remaining provisions, or parts thereof, which shall be and remain in full force and effect.
19.Counterparts. This Agreement may be executed in counterparts and delivered by means of facsimile or other form of electronic transmission, each of which so executed shall be deemed to be an original and all such counterparts together shall constitute one and the same instrument.
20.Successors and Assigns. This Agreement shall be binding upon and enure to the benefit of the Company and its respective successors and assigns. This Agreement shall be binding upon the Employee and cannot be assigned by the Employee.
21.Entire Agreement. This Agreement constitutes the entire understanding between the Employee and the Company relating to the Employee’s cessation of employment, and supersedes and replaces any prior verbal or written agreements between the Employee and the Company with
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respect to the subject matter hereof. By signing below, the Employee hereby waives any right to assert a claim based on pre-contractual representations made by the Company or its representative (including the Company’s board of directors).
22.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
****************
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
I, Rashed Dewan, hereby acknowledge that I have read this Agreement and fully understand the nature and effect of it and the terms contained herein and that said terms are fair and reasonable and correctly set out my understanding and intention. I am entering into this Agreement voluntarily. I acknowledge that I have had an opportunity to obtain legal and any other advice that I deem appropriate.
/s/ Rashed Dewan | |
Rashed Dewan | |
| |
/s/ Tasneen Hasan | |
Witness | |
PROFOUND MEDICAL CORP. | | |
By: | /s/ Arun Menawat | |
Name: | Arun Menawat | |
Title: | CEO | |
[Signature Page to Mutual Separation Agreement]
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Exhibit 10.3
THIS CONTRACTOR SERVICES AGREEMENT (“Agreement”) is made as of August 14, 2026
BETWEEN:
PROFOUND MEDICAL CORP.
(hereinafter referred to as the “Company”)
AND:
RASHED DEWAN
(hereinafter referred to as the “Contractor”)
WHEREAS the Contractor was previously employed by the Company;
WHEREAS the Contractor resigned from his employment with the Company, effective August 14, 2026 (the “Resignation Date”), pursuant to a Mutual Separation Agreement entered into on August 14, 2026;
WHEREAS the Contractor wishes to assist the Company with certain services as an independent contractor on a part-time non-exclusive basis;
AND WHEREAS the Company agrees to engage such services of the Contractor on the terms and conditions as set out in this Agreement.
NOW THEREFORE this Agreement witnesseth that, in consideration of the foregoing recitals and of the mutual promises, covenants and agreements hereinafter set forth, the sufficiency of which the parties hereto accept and acknowledge, the parties hereto hereby promise, covenant and agree each with the other as follows:
1. | RECITALS |
1.1 | The Company and the Contractor acknowledge and agree that the above recitals are true and form part of this Agreement. |
2. | SERVICES |
2.1 | The Company hereby agrees to engage the Contractor upon the terms and conditions of this Agreement, and the Contractor hereby accepts such engagement and agrees to abide by the terms and conditions hereof. |
2.2 | The Contractor shall carry out the duties and services set out in Appendix “A” attached hereto (collectively, the “Services”). |
2.3 | The Services shall meet the reasonable quality standards of the Company. |
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2.4 | The Contractor shall keep the Company apprised as to Contractor’s progress with respect to the Services on a regular basis and as requested by the Company. During the Term, the Contractor will report to the Chair of the Company’s Human Resources and Corporate Governance Committee (currently, Arthur Rosenthal), or such other representative authorized by the Board. |
3. | TERM |
3.1 | The term of this Agreement shall commence on August 17, 2026 (the “Effective Date”), and shall continue until November 25, 2026 (the “Term”), subject to earlier termination as provided in Section 7 hereof. |
4. | REMUNERATION |
4.1 | In consideration for the satisfactory provision of the Services, the Contractor shall receive an hourly consulting fee (the “Base Remuneration”) of $200 CAD / hour, inclusive of applicable tax, subject to the receipt by the Company of satisfactory invoices as required by Section 4.2. |
4.2 | The Contractor shall keep accurate and detailed records of the hours worked for the Company and will invoice the Company at the end of each month during the Term. As soon as practicable following timely receipt of any such invoice and any reasonably necessary supporting documentation as requested by the Company, the Company agrees to make appropriate payment of the applicable Base Remuneration to the Contractor. |
4.3 | As of the Resignation Date, the Contractor held unvested restricted share units (the “RSUs”) granted pursuant to the Company’s Amended and Restated Long Term Incentive Plan (the “LTIP”). Conditional upon the Contractor providing the Services in accordance with the terms of this Agreement and remaining continuously engaged by the Company hereunder through the expiration of the Term, the Company shall permit 20,000 RSUs to continue vesting through to the last day of the Term at which time vesting will immediately cease and all unvested RSUs shall Expire (as defined in the LTIP) (the “RSU Vesting”). Except as expressly provided herein, the RSUs shall remain subject to all terms and conditions of the LTIP and the applicable grant agreement. |
5. | CONFIDENTIAL INFORMATION |
5.1 | During and after the Term, the Contractor shall keep secret and retain in strictest confidence and shall not use for the benefit of the Contractor or others, except (a) with the Company’s advance written consent, or (b) in the proper course of providing Services hereunder (only for the benefit of the Company), honestly, in good faith and with a view to the best interests of the Company, the following: all confidential matters of the Company, including, without limitation, “know-how”, secrets, operational methods, marketing plans or strategies, product development techniques or plans, divestiture plans, business acquisition plans, new personnel acquisition plans, technical processes, designs and designed projects, inventions and research projects, strategic and divestiture plans, clients or prospective clients and other affairs of the Company learned by the Contractor at any time. The foregoing includes any information received from the Company prior to the Term, but the prohibition shall |
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not apply to any matters: (x) which are generally known and have been publicly disclosed at the time of such use or disclosure (otherwise than by the Consultant’s disclosure), or (z) in which disclosure is required to be made by any law, regulation, governmental body or authority or by court order.
The Contractor acknowledges and agrees that the obligations under this Section 5.1 are to remain in effect during the Term and for a period of twenty four (24) months following the last day of the Term. The Contractor further acknowledges that the obligations contained in this Section 5.1 are not in substitution for any obligations that the Consultant may now or hereafter owe to the Company and that exist apart from this Section 5.1 and do not replace any rights of the Company with respect to any such obligations.
5.2 | All memoranda, notes, lists, records and other documents (and all copies thereof), including but not limited to such items stored in computer memories, on microfiche, disks or tapes or by any other means, made or compiled by or on behalf of the Contractor or made available to the Company during the Term, concerning, without limitation, the business of the Company or any of its clients are and shall at all times be the property of the Company or its clients, as applicable, and shall be delivered to the Company or to its client, as applicable, by the Consultant promptly upon the termination of this Agreement (for any reason), or at any other time, on request of the Company. |
6. | DEVOTION OF TIME |
6.1 | During the Term, the Contractor shall be available on an as-needed basis to provide the Services at the Company’s request. |
6.2 | The parties hereto agree that the Contractor may provide services to other entities or persons provided that such other services do not adversely affect the Contractor’s ability to provide the Services and otherwise fulfill the Contractor’s obligations hereunder. |
7. | TERMINATION OF AGREEMENT |
7.1 | This Agreement will automatically terminate upon conclusion of the Term, without any obligation on the Company beyond the provision of any Base Remuneration properly accrued under Section 4 to the date of termination and the RSU Vesting. |
7.2 | This Agreement may be terminated prior to conclusion of the Term as follows: |
(a) | by the Contractor, at any time, by providing one (1) week prior notice of termination to the Company, which notice may be waived, in whole or in part, by the Company, without further obligation to the Contractor beyond any Base Remuneration properly accrued under Section 4 to the date of termination; or |
(b) | by the Company, immediately without advance notice of termination or compensation beyond the provision of any Base Remuneration properly accrued under Section 4 to the date of termination, in the event of a material breach by the Contractor of any provision of this Agreement or any of his obligations owed to the Company. |
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(c) | Without limiting the generality of the foregoing, the Contractor acknowledges that upon the expiration of the Term or any termination by the Company of this Agreement, the Contractor shall not be entitled to any additional notice or payment in lieu of notice for loss of office or any similar compensation. |
8. | RELATIONSHIP |
8.1 | The Contractor and Company acknowledge and agree that: (a) the relationship of the Contractor to the Company is that of independent contractor; (b) the Contractor is not an employee of the Company; and (c) nothing in this Agreement shall be so construed. |
8.2 | The Contractor expressly agrees and represents that they will not hold themselves out as an employee of the Company or its agent. |
8.3 | The Contractor will calculate, withhold and remit all taxes and statutorily required payments including, without limitation, income taxes, employment insurance contributions, pension plan contributions, harmonized sales tax remittances, workers’ compensation insurance payments, employer health tax, and any similar or other taxes, amounts or other expenses, in any applicable jurisdiction, owing as a result of its receipt of the Base Remuneration. Since the Contractor is retained under this Agreement as an independent contractor, the Contractor acknowledges and agrees that the Company will not deduct or remit any amounts on account of income taxes or any other statutory deduction in respect of any monies paid by the Company to the Contractor. |
9. | NO AUTHORITY TO BIND THE COMPANY |
9.1 | The Contractor shall have no authority to act as agent of the Company, or to bind the Company to perform any obligations to any third party. |
10. | REMEDIES |
10.1 | The Contractor acknowledges that a breach or threatened breach by the Contractor of any provision in Sections 5, 8 and/or 9 may result in the Company and its shareholders suffering irreparable harm which cannot be calculated or fully or adequately compensated by recovery of damages alone. Accordingly, the Contractor agrees that the Company shall be entitled to interim and permanent injunctive relief, specific performance and other equitable remedies, in addition to any other relief to which the Company may become entitled. |
11. | MISCELLANEOUS |
11.1 | This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement. |
11.2 | This Agreement shall not be assignable by the Company or the Contractor. |
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11.3 | This Agreement will be construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and will be treated in all respects as an Ontario contract. |
11.4 | This Agreement may be signed by the parties in counterparts, both of which together shall form one and the same instrument and each of which so signed shall be deemed to be an original. This Agreement may be delivered by email or other electronic transmission. |
11.5 | The Contractor hereby declares, acknowledges and agrees that they have been advised by the Company to obtain, and has in fact obtained or waived, such independent legal, tax and other advice as the Contractor has deemed to be necessary or advisable in connection herewith and waives any claim which the Contractor may now or in the future have with respect to this Agreement or the subject matter hereof based in any way on the absence of, lack of access to or shortness of time available to rely on such advice. |
[Signature page follows]
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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date herein before set forth.
PROFOUND MEDICAL CORP. | | RASHED DEWAN |
by its authorized signatory: | | |
| | |
| | |
/s/ Arun Menawat | | /s/ Rashed Dewan |
Name: | | Name: |
| | |
| | |
August 14, 2026 | | August 14, 2026 |
Date: | | Date |
Exhibit 31.1
CERTIFICATIONS UNDER SECTION 302
I, Arun Menawat, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Profound Medical Corp.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 5, 2026 | |
| |
/s/ Arun Menawat | |
Arun Menawat | |
Principal Executive Officer | |
Exhibit 31.2
CERTIFICATIONS UNDER SECTION 302
I, Matthew Sobczyk, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Profound Medical Corp.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 5, 2026 | |
| |
/s/ Matthew Sobczyk | |
Matthew Sobczyk | |
Principal Financial Officer | |
Exhibit 32
CERTIFICATIONS UNDER SECTION 906
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Profound Medical Corp., an Ontario, Canada corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:
The Quarterly Report for the quarter ended September 30, 2026 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 5, 2026 | | /s/ Arun Menawat |
| | Arun Menawat |
| | Principal Executive Officer |
| | |
Dated: November 5, 2026 | | /s/ Matthew Sobczyk |
| | Matthew Sobczyk |
| | Principal Financial Officer |