What changed in this filing

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Item 1A. Risk Factors

2026-03-05 compared with 2025-03-07 · 98 added, 102 removed, 995 unchanged (17% of the section changed)

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For the year ended December 31, 2025, we recorded a net loss of $42,570,000, and for the year ended December 31, 2024, we recorded a net loss of $27,816,000.

We expect to incur significant operating losses even as we begin to commercialize the TULSA-PRO system in the United States following our FDA clearance, which will require significant expenditures to increase our sales and marketing capabilities and expand our manufacturing and distribution capacity, as well as other expenses related to increasing reimbursement coverage and gaining market acceptance among patients, physicians/clinicians and others in the medical community.

We have incurred and we expect to incur additional significant operating losses even as we commercialize the TULSA-PRO system in the United States, which requires significant expenditures to increase our sales and marketing capabilities and expand our manufacturing and distribution capacity, as well as other expenses related to increasing reimbursement coverage and gaining market acceptance among patients, physicians/clinicians and others in the medical community.

In addition, we plan to continue product research and development and clinical trials and may pursue additional regulatory approvals.

We expect to have sufficient cash to finance our operations for at least the next 18 months.

While we currently expect to have sufficient cash to finance our operations for at least the next 18 months, our cash runway is based on a number of assumptions that may prove inaccurate, including the timing and level of product sales and gross margins, the pace of hiring and investments in commercial and manufacturing scale-up, and the timing and magnitude of clinical and regulatory expenditures.

A shortfall in expected cash inflows or higher-than-anticipated cash outflows could require us to curtail, delay or eliminate planned activities and/or to seek additional financing sooner than we anticipate.

There is no assurance that we will ever successfully commercialize our systems, generate significant revenues from our approved products or achieve profitability.

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In order to secure financing, if available, it is likely that we would need to sell additional Common Shares and/or securities that are exchangeable for or convertible into Common Shares, incur additional indebtedness and/or enter into development, manufacturing, distribution and/or licensing relationships.

Our CIBC Credit Agreement includes covenants which require us to achieve certain financial performance measures and contains restrictions on our ability to incur additional debt.

Our Amended and Restated Credit Agreement, dated March 3, 2025, between us and Canadian Imperial Bank of Commerce (“CIBC”) (the “CIBC Credit Agreement”) (which amended and restated our original credit agreement with CIBC entered into on November 3, 2022 (the “Original CIBC Credit Agreement”)), includes covenants which require us to achieve certain financial performance measures and contains restrictions on our ability to incur additional debt.

Any future equity financing may be dilutive to existing shareholders.

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If we do not obtain sufficient additional capital, there may be substantial doubt about our ability to continue as a going concern and realize assets and pay liabilities as they become due.

Depending upon the results of our research and development programs and the availability of financial resources, we could decide to accelerate, terminate or reduce certain projects, or commence

Depending upon the results of our research and development programs and the availability of financial resources, we could decide to accelerate, terminate or reduce certain projects, or commence new ones.

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 taking advantage of business opportunities, in the termination or delay of clinical trials for one or more of our product candidates, in curtailment of our product development programs designed to identify new product candidates, and/or in the sale or assignment of rights to our technologies, products or product candidates.

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See “—We rely on the compatibility of our products with MRI scanners in the successful commercialization of our products” above.

Our reliance on our distributors for a portion of our sales exposes us to heightened collection and credit risks, which could adversely affect our cash flows and results of operations.

Many of our sales to distributors are made on open credit, and customary payment terms may be longer in certain international markets.

Given the broad geographic coverage of our distributor relationships, we have in the past and may in the future experience difficulties surrounding the collection of payments.

Our exposure to credit risks of our collaborative partners may increase if our collaborative partners and their end customers are adversely affected by global or regional economic conditions.

We may also seek out, evaluate and negotiate other third-party marketing and/or distribution arrangements for our products in the jurisdictions where they are approved, which may involve the commitment of substantial time and effort and may not ultimately result in an arrangement that is favorable to our commercialization goals (e.g.

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and anticipated regulatory submission and approval dates for our products in additional jurisdictions, and for future product candidates.

adverse results from our clinical trials, and other factors and described herein, many of which are beyond our control.

The actual timing of these events can vary dramatically due to factors such as the uncertainties inherent in the arrangements sufficient to commercialize our products, including in respect of manufacturing, distribution and marketing, as well as market competition and adverse results from our clinical trials, and other factors as described herein, many of which are beyond our control.

There can be no assurance that we will achieve our commercialization goals in respect of the TULSA-PRO system in the United States, or that future efficacy and safety results from our TACT Pivotal Clinical Trial and CAPTAIN trial will be favorable.

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See “Risk Factors—We intend to rely primarily on our in-house sales and marketing capabilities for our commercialization strategy, which will require substantial build-up and commitment of resources” and “Risk Factors—We currently rely on our collaborative partners, and we may rely on additional collaborative partnerships, to assist in the sales and marketing and/or distribution of our approved products” below.

a material adverse effect on our business, financial condition and results of operations and it could cause the market value of our Common Shares to decline.

If we are unable to commercialize new products successfully, whether through a failure to achieve market acceptance, a failure to build our own in-house sales and marketing capabilities, a failure to maintain or secure new or existing marketing partners or to realize the benefits of our arrangements with our marketing and distribution partners, there may be a material adverse effect on our business, financial condition and results of operations and it could cause the market value of our Common Shares to decline.

Market acceptance of our approved products also depends on our ability to identify and address the relevant market.

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Accordingly, we intend to expand compatibility of the systems with other MRI scanners in the future, which would require design changes to our systems, collaboration with the manufacturer of the MRI scanner and may require additional regulatory approvals.

We may be unsuccessful in making the necessary design changes and, if required, receiving the necessary regulatory approvals for such changes, and the terms of any such arrangements that we may enter into in the future with

the MRI scanner manufacturers may not be on as favorable terms.

Accordingly, we can provide no assurance that we will be successful in any such expansion of the compatibility of our products to other MRI scanners.

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Although we expect there to be an out-of-pocket market for our authorized products, an out-of-pocket market alone is unlikely to be sufficient to support successful commercialization of such products.

To date we have not secured significant coverage or reimbursement for any of our products from government or third-party payers in the jurisdictions where we have obtained regulatory authorizations, including our TULSA-PRO system in the United States.

We can provide no assurance that third-party payers will provide coverage and adequate reimbursement for our TULSA-PRO system to treat our targeted indications based on our existing clinical data (such as our TACT and CAPTAIN data) or the results of any future clinical trials, or at all.

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We compete with several other medical device companies to hire and retain these skilled employees, and we may be unable to hire and retain such employees in numbers sufficient to increase our in-house capabilities.

We currently intend to partner with one or more additional QSR-compliant and FDA-registered contract manufacturers for our TULSA-PRO systems in the United States.

We currently intend to partner with one or more additional cGMP-compliant and FDA-registered contract manufacturers for our TULSA-PRO systems in the United States.

However, we may not be successful in establishing or maintaining such partnerships on acceptable terms or in the timeframe necessary to commercialize our products successfully, or at all.

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We believe that third-party payers, in determining reimbursement coverage for our products, including the TULSA-PRO system, generally would rely upon our clinical trial results, such as TACT and CAPTAIN, that were obtained in support of our applications for regulatory authorization;

however, we may be required to provide additional data from our existing trials and/or conduct additional

clinical trials prior to obtaining reimbursement coverage for the TULSA-PRO system and other authorized products, which would likely involve significant time and expense, and may have a material adverse effect on our business, results of operations and financial condition.

however, we may be required to provide additional data from our existing trials and/or conduct additional clinical trials prior to obtaining reimbursement coverage for the TULSA-PRO system and other authorized products, which would likely involve significant time and expense, and may have a material adverse effect on our business, results of operations and financial condition.

In the future, we may also seek regulatory authorization, which may include 510(k) clearance, for other product candidates, which likewise could be adversely affected by insufficient clinical trial results.

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● the FDA or other regulatory authorities concluding that the trial was not conducted in compliance with regulatory requirements or lacked controls necessary to ensure the integrity of the trial data.

We, the FDA or other regulatory authorities may suspend or terminate a clinical trial at any time if it is determined that enrolled subjects may be or are being exposed to unacceptable health risks, including the risk of death, that our devices are not manufactured under acceptable conditions or with acceptable quality, or that the trial is not being conducted according to the protocol and in compliance with Good Clinical Practice and regulatory requirements.

Further, success in nonclinical studies and early clinical trials does not mean that future clinical trials will be successful because medical devices and/or treatment options in later stage clinical trials may fail to demonstrate sufficient safety and efficacy to the satisfaction of the FDA and other regulatory authorities despite having progressed through initial clinical trials.

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For example, we will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial.

Moreover, the FDA and other regulatory authorities require us to comply with good clinical practice regulations and international standards relating to the conduct, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected.

Moreover, the FDA and other regulatory authorities require us to comply with GCP regulations and international standards relating to the conduct, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected.

Our reliance on third parties, over which we have limited control, to manage those operations does not relieve us of these responsibilities and requirements.

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Our anticipated growth will require additional expertise and the addition of new qualified personnel.

There is intense competition for

qualified personnel in the medical device field.

There is intense competition for qualified personnel in the medical device field.

Therefore, we may not be able to attract and retain the qualified personnel necessary for the development of our business.

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Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

The development and use of AI presents risks and challenges that can impact our business, including by posing security risks to our confidential information, proprietary information, and personal data and could give rise to legal and/or regulatory actions, damage our reputation, or otherwise materially harm our business.

AI is increasingly used in medical technology to enhance performance and efficiency.

To support this, various AI approaches were evaluated to identify opportunities to improve efficiencies.

AI has already been integrated into certain products and services, including the use of machine learning for automatic prostate segmentation, automatic ultrasound applicator alignment, and prediction of treatment times in TULSA-PRO.

Issues relating to the use of new and evolving technologies such as AI, machine learning, generative AI, and large language models, may cause us to experience perceived or actual brand or reputational harm, technical harm, competitive harm, legal liability, cybersecurity risks, privacy risks, compliance risks, security risks, ethical issues, and new or enhanced governmental or regulatory scrutiny, and we may incur additional costs to resolve such issues.

Litigation or government regulation related to the use of AI may also adversely impact our ability to develop and offer products that use AI, as well as increase the cost and complexity of doing so.

In addition, uncertainties regarding developing legal and regulatory requirements and standards may require significant resources to modify and maintain business practices to comply with U.S.

laws concerning the use of AI, the nature of which cannot be determined at this time.

In addition, the European Union recently passed the Artificial Intelligence Act, whose regulations will be developed over the coming year and, in the United States, the recent Executive Order concerning AI may result in extensive new federal rule-making.

Further, market demand and acceptance of AI technologies are uncertain, and we may be unsuccessful in our product development efforts.

As necessary, we have developed policies governing the use of AI to encourage appropriate use of AI by our employees, contractors, and authorized agents and that our assets, including intellectual property, competitive information, personal information we may collect or process, and customer information, are protected.

Any failure by our personnel, contractors, or other agents to adhere to any policies that we may establish could violate confidentiality obligations or applicable laws and regulations, jeopardize our intellectual property rights, cause or contribute to unlawful discrimination, or result in the misuse of personally identifiable information or the injection of malware into our systems, any of which could have a material adverse effect on our business, results of operations, and financial condition.

A portion of our employees are unionized, and our good labor relations may not continue.

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We cannot assure you that we will be successful in overcoming these risks or any other problems we may encounter in connection with the Sonalleve Transaction or potential future acquisitions.

with an acquisition, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our inability to successfully integrate the operations of an acquired business, including a successful implementation of the technologies and assets we acquire, and realize anticipated benefits associated with an acquisition, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Acquisitions or other strategic transactions may also result in dilution to our existing shareholders if we issue additional equity securities as consideration or partial consideration as well as in the incurrence of indebtedness if we borrow funds to finance such transactions.

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pre-market clearance, classification and approval;

recordkeeping procedures;

record keeping procedures;

advertising and promotion;

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The FDA’s 510(k) clearance process can take anywhere from three to 12 months or longer to complete.

The process of obtaining a PMA or De Novo classification is much more costly and uncertain than the 510(k) clearance process and generally takes from one to three years, or

even longer, from the time the application is submitted to the FDA.

The process of obtaining PMA approval or De Novo classification is much more costly and uncertain than the 510(k) clearance process and generally takes from one to three years, or even longer, from the time the application is submitted to the FDA.

In addition, PMAs and De Novo classification requests generally require the applicant to have conducted one or more clinical trials.

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To be able to continue to place our CE Marked devices on the EU market, if we decide to do so, such products must be re-certified under the New EU MDR before the applicable extended deadline of December 31, 2028.

The re-certification requires us to present documentation and other evidence demonstrating that the performance and the safety of the system has been maintained and that the

system continues to meet existing regulations and standards.

The re-certification requires us to present documentation and other evidence demonstrating that the performance and the safety of the system has been maintained and that the system continues to meet existing regulations and standards.

Otherwise, the marketing and sale of our TULSA-PRO and Sonalleve systems in EU member states may be temporarily or permanently prohibited.

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Clinical trials are subject to extensive monitoring, recordkeeping and reporting requirements.

Clinical trials must be conducted under the oversight of an IRB and must comply with FDA regulations, including but not limited to those relating to good clinical practices.

Clinical trials must be conducted under the oversight of an IRB and must comply with FDA regulations, including but not limited to those relating to GCP requirements.

To conduct a clinical trial, we must also obtain each subject’s informed consent which must comply with FDA requirements, state and federal privacy regulations and human subject protection regulations.

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Our authorized products, and any other products for which we obtain regulatory clearance or approval, as well as the respective manufacturing processes, postmarket surveillance and reporting, post-approval clinical testing and promotional activities for such products, are subject to continued regulatory review, oversight and periodic inspections by the FDA and other regulatory bodies (and Notified Bodies, as applicable).

In particular, we and some of our suppliers are required to comply with the QSR and international standards for the manufacture of products and other regulations which cover the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of any product for which we obtain regulatory clearance

Regulatory bodies, such as the FDA, enforce good manufacturing practice requirements, such as the QSR in the United States, and other regulations through periodic announced or unannounced inspections.

In particular, we and some of our suppliers are required to comply with cGMP standards for the manufacture of medical devices and other regulations which cover the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of any product for which we obtain regulatory clearance or approval.

Regulatory bodies, such as the FDA, enforce device cGMP requirements, such as the QSR and QMSR in the United States, and other regulations through periodic announced or unannounced inspections.

We and our contract manufacturers have been, and anticipate in the future being, subject to such inspections.

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In the United States, the FDA and other federal and state agencies, including the U.S.

Department of Justice, closely regulate compliance with all requirements governing medical device products, including requirements pertaining to marketing and promotion of devices in accordance with the provisions of the approved labeling and manufacturing of products in accordance with QSR requirements.

Violations of such requirements may lead to investigations alleging violations of the FFDCA and other statutes, including the False Claims Act and other federal and state healthcare fraud and abuse laws as well as state consumer protection laws.

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We have developed and maintain a quality management system for medical devices intended to ensure quality of our products and activities.

The system is designed to be in compliance with regulations in many different jurisdictions, including the QSR mandated by the FDA in the United States and the requirements of the MDD and New EU MDR in the European Union, including the international standard ISO 13485 required by the member states in Europe that recognize the CE Mark.

The FDA issued a final rule on January 31, 2024 describing revisions to the QSR to harmonize it with ISO 13485:2016.

The harmonized regulations, which will be called the Quality Management System Regulation, or QMSR, will become effective on February 2, 2026.

The system is designed to be in compliance with regulations in many different jurisdictions, including the QSR, and the new QMSR effective as of February 2, 2026, mandated by the FDA in the United States and the requirements of the MDD and New EU MDR in the European Union, including the international standard ISO 13485 required by the member states in Europe that recognize the CE Mark.

Compliance with regulations for quality management systems for medical device companies is time consuming and costly, and there are changes in such regulations from time to time.

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The manufacturing practices of our third-party suppliers are subject to ongoing regulation and periodic inspection.

In the United States, the methods used in, and the facilities used for, the manufacture of medical devices must comply with the QSR, which is a complex regulatory scheme that covers the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, and servicing of medical devices.

In the United States, the methods used in, and the facilities used for, the manufacture of medical devices must comply with the QSR, and starting on February 2, 2026 the new QMSR, which is a complex regulatory scheme that covers the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, and servicing of medical devices.

Furthermore, we will be required to verify that our suppliers maintain facilities, procedures and operations that comply with our quality standards and applicable regulatory requirements.

The FDA enforces the QSR through periodic announced or unannounced inspections of medical device manufacturing facilities, which may include the facilities of subcontractors.

The FDA enforces the QSR/QMSR through periodic announced or unannounced inspections of medical device manufacturing facilities, which may include the facilities of subcontractors.

Our authorized device products also subject to similar state regulations and various laws and regulations of other countries governing manufacturing.

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Once CE marked under the New EU MDR these changes must be disclosed to our Notified Body in the EU before implementation.

The Notified Body will then assess the changes and verify whether they affect the products’ conformity with the General Safety and Performance Requirements.

If the assessment is favorable the Notified Body will issue a new CE Certificate of Conformity or an

addendum to the existing certificates attesting compliance with the General Safety and Performance Requirements.

The Notified Body will then assess the changes and verify whether they affect the product’s conformity with the General Safety and Performance Requirements.

If the assessment is favorable the Notified Body will issue a new CE Certificate of Conformity or an addendum to the existing certificates attesting compliance with the General Safety and Performance Requirements.

We may also be required to assess the new manufacturer’s compliance with all applicable regulations and guidelines, which could further impede our ability to manufacture our products in a timely manner.

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“Serious incident” is defined as any incident that directly or indirectly led, might have led or might lead to any of the following:

(a) the death of a patient, user or other person, (b) the temporary or permanent serious deterioration of a patient’s, user’s or other person’s state of health, (c) a serious public health threat.

(a) the death of a patient, user or other

person, (b) the temporary or permanent serious deterioration of a patient’s, user’s or other person’s state of health, (c) a serious public health threat.

An FSCA is defined as a corrective action taken by a manufacturer for technical or medical reasons to prevent or reduce the risk of a serious incident in relation to a device made available on the market.

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Any such adverse event involving the TULSA-PRO or Sonalleve systems also could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection, audit or enforcement action.

Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of

personnel time and capital, distract management from operating the business and may harm our reputation and could have a material adverse effect on our business, financial condition and operating results.

Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of personnel time and capital, distract management from operating the business and may harm our reputation and could have a material adverse effect on our business, financial condition and operating results.

Legislative or regulatory reform of the healthcare systems in which we intend to operate may affect our ability to sell our products profitably and could adversely affect our business.

The governments and regulatory authorities in the United States, the European Commission, Canada and other markets in which we expect to sell our devices may propose and adopt new legislation and regulatory requirements relating to medical product approval criteria, manufacturing and marketing requirements.

In addition, regulations and guidance promulgated by the FDA, the European Commission, and other regulatory bodies are often revised or reinterpreted by the agency and other relevant regulatory bodies in ways that may significantly affect our business and products.

The governments and regulatory authorities in the United States, the European Union, Canada and other markets in which we expect to sell our devices may propose and adopt new legislation and regulatory requirements relating to medical product approval criteria, manufacturing and marketing requirements.

In addition, regulations and guidance promulgated by the FDA, the European Commission, Health Canada, and other regulatory bodies are often revised or reinterpreted by the agency and other relevant regulatory bodies in ways that may significantly affect our business and products.

It is impossible to predict whether legislative changes will be enacted or regulations, guidance or interpretations changed and what the impact of such changes, if any, may be.

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and may be vulnerable to cybersecurity threats.

Under the FDORA amendments to the DFDCA, any application for marketing authorization of the cyber device must include a software bill of materials and a cybersecurity plan describing the methods by which the manufacturer will monitor, identify and address cybersecurity vulnerabilities.

Under the FDORA amendments to the DFDCA, any application for marketing authorization of the cyber device

must include a software bill of materials and a cybersecurity plan describing the methods by which the manufacturer will monitor, identify and address cybersecurity vulnerabilities.

Any failure by a cyber device manufacturer to comply with applicable cybersecurity requirements is considered a violation of the FDDCA and will subject the manufacturer to enforcement actions and possibly legal sanctions.

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Existing and proposed changes in the laws and regulations affecting public companies may cause us to incur increased costs as we evaluate the implications of new rules and responds to new requirements.

Failure to comply with the new rules and regulations could

result in enforcement actions or the assessment of other penalties.

Failure to comply with the new rules and regulations could result in enforcement actions or the assessment of other penalties.

The new laws and regulations could make it more difficult to obtain certain types of insurance, including directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.

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This statute has been interpreted to apply to arrangements between device manufacturers on one hand and prescribers and purchasers on the other.

For example, the United States government has sought to apply the Anti-Kickback Statute to device manufacturers’ financial relationships with physician consultants.

For example, the United States government has sought to apply the Anti-Kickback

Statute to device manufacturers’ financial relationships with physician consultants.

Among other theories, the United States government has alleged that some such relationships are payments to induce the consultants to arrange for or recommend the ordering, purchasing or leasing of the manufacturers’ products by the hospitals, medical institutions and other entities with whom they are affiliated.

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Any action brought against us for violations of these laws or regulations, even if successfully defended, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

We may be subject to private qui tam actions brought by individual whistleblowers on behalf of the federal or state governments, with potential liability under the federal False Claims Act including mandatory treble damages and significant per-claim penalties.

We may be subject to private qui tam actions brought by individual whistleblowers on behalf of the federal or state governments, with potential liability under the federal

False Claims Act including mandatory treble damages and significant per-claim penalties.

If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations.

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, HIPAA as amended by HITECH), state data breach notification laws, state health information privacy laws and federal and state consumer protection laws ( e.g.

, Section 5 of the Federal Trade Commission Act), that govern the collection, use, disclosure and protection of health-related and other personal information could apply to our operations

or the operations of our collaborators.

, Section 5 of the Federal Trade Commission Act), that govern the collection, use, disclosure and protection of health-related and other personal information could apply to our operations or the operations of our collaborators.

In particular, HIPAA imposes requirements on certain healthcare providers, health plans and healthcare clearinghouses, or “covered entities,” as well as their business associates that perform services for them that involve the use or disclosure of individually identifiable health information, called protected health information (“PHI”), under HIPAA, relating to the privacy and security of PHI, including the use of mandatory contractual terms, or Business Association Agreements, in some circumstances, as well as privacy and security standards and breach notification requirements.

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In addition, the California Privacy Rights Act (“CPRA”) was recently enacted to strengthen elements of the CCPA and became effective on January 1, 2023.

A number of other states have considered similar privacy proposals, with states like Colorado, Connecticut, Delaware, Florida, Indiana, Iowa, Montana, Oregon, Tennessee, Texas, Utah and Virginia enacting their own privacy laws.

A number of other states have either enacted their own omnibus privacy laws or continued to deliberate and introduce similar privacy law proposals.

These privacy laws may impact our business activities and exemplify the vulnerability of our business to the evolving regulatory environment related to personal data.

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The GDPR also prohibits the international transfer of personal data from the EEA to countries outside of the EEA unless made to a country deemed to have adequate data privacy laws by the European Commission or a data transfer mechanism has been put in place.

If we or our partners’ or service providers’ privacy or data security measures fail to comply with the GDPR requirements, we may be subject to litigation, regulatory investigations,

enforcement notices requiring us to change the way we use personal data and/or fines of up to 20 million Euros or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, as well as compensation claims by affected individuals, negative publicity, reputational harm and a potential loss of business and goodwill.

If we or our partners’ or service providers’ privacy or data security measures fail to comply with the GDPR requirements, we may be subject to litigation, regulatory investigations, enforcement notices requiring us to change the way we use personal data and/or fines of up to 20 million Euros or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, as well as compensation claims by affected individuals, negative publicity, reputational harm and a potential loss of business and goodwill.

The GDPR may also impose additional compliance obligations relating to the transfer of data between us and our affiliates, collaborators, or other business partners.

For example, on July 16, 2020, the Court of Justice of the European Union (“CJEU”), issued a landmark opinion in the case Maximilian Schrems vs.

Facebook (Case C-311/18), called Schrems II.

This decision (a) calls into question commonly relied upon data transfer mechanisms as between the European Union Member States and the United States (such as the Standard Contractual Clauses) and (b) invalidates the European Union-U.S.

Privacy Shield on which many companies had relied as an acceptable mechanism for transferring such data from the European Union to the United States.

On July 10, 2023, the European Commission adopted an adequacy decision for a new mechanism for transferring data from the EU to the United States – the EU-US Data Privacy Framework (the “Framework”).

The Framework provides EU individuals with several new rights, including the right to obtain access to their data, or obtain correction or deletion of incorrect or unlawfully handled data.

The adequacy decision followed the signing of an executive order introducing new binding safeguards to address the points raised in the Schrems II decision.

Notably, the new obligations were geared to ensure that data can be accessed by US intelligence agencies only to the extent necessary and proportionate and to establish an independent and impartial redress mechanism to handle complaints from Europeans concerning the collection of their data for national security purposes.

The Commission will continually review developments in the US along with its adequacy decision.

The adequacy decision followed the signing of an executive order introducing new binding safeguards to address points raised by the Court of Justice of the European Union in a July 2020 decision that invalidated the previous EU-US data transfer framework.

Notably, the new obligations were geared to ensure that data can be accessed by U.S.

intelligence agencies only to the extent necessary and proportionate and to establish an independent and impartial redress mechanism to handle complaints from Europeans concerning the collection of their data for national security purposes.

The Commission will continually review developments in the U.S.

along with its adequacy decision.

Adequacy decisions can be adapted or even withdrawn in the event of developments affecting the level of protection in the applicable jurisdiction.

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Additionally, we are subject to the risk that a person could allege such fraud or other misconduct, even if none occurred.

harm, diminished potential profits and future earnings, and curtailment of our operations, any of which could adversely affect our business, financial condition, results of operations or prospects.

If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished potential profits and future earnings, and curtailment of our operations, any of which could adversely affect our business, financial condition, results of operations or prospects.

Compliance with environmental laws and regulations could be expensive, and failure to comply with these laws and regulations could subject us to significant liability.

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In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new medical products to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.

For example, over the last several years, the U.S.

government has shut down several times, including from December 22, 2018 through January 25, 2019, and congressional impasses periodically threaten to cause future government shutdowns.

Most recently, the U.S.

government nearly shutdown at the end of December 2024 due to disagreements in Congress over a continuing resolution package to fund federal government operations.

When a shutdown occurs, certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities.

Moreover, government shutdowns or slowdowns can increase the time needed for an agency to complete its review or make final approvals or other administrative decisions.

Future legislative and regulatory proposals may materially impact the ability of the FDA and other regulatory agencies to operate as they have historically operated.

We cannot be sure whether additional legislative changes or executive orders will be enacted, or whether any of the FDA’s regulations, guidances or interpretations will be changed, or what the impact of such changes on the agency and its scientific review staff, if any, may be.

For example, the FDA has experienced significant and rapid fluctuations in leadership and scientific review personnel, which may be key contributing factors in multiple reported delays in agency decision making on marketing applications and agency requests for additional data that are inconsistent with prior regulatory feedback.

In addition, the next FDA user fee reauthorization package entered the stakeholder negotiation phase in mid-2025, and any agreement will be sent to Congress in early 2027 for purposes of initiating the legislative process.

Reauthorization of the medical device user fee program would need to be finalized by Congress by the end of September 2027 in order to avoid a disruption in FDA’s performance goals for activities supported by user fees assessed against industry.

In addition, disruptions at the FDA and other agencies may also slow the time necessary for new medical products to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.

For example, political disputes in Congress may result in a shutdown of the U.S.

government, and in such cases certain regulatory agencies, such as the FDA and the SEC, would have to furlough employees and stop critical activities.

Moreover, government shutdowns or slowdowns can increase the time

needed for an agency to complete its review or make final approvals or other administrative decisions.

If a prolonged government shutdown or slowdown occurs, it could significantly affect the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

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For instance, we license exclusive intellectual property rights from Sunnybrook that enable us to use, manufacture, distribute and sell the TULSA-PRO system.

Under this royalty-free license, we are subject to various obligations, including

the milestone payment of C$250,000 we paid upon obtaining FDA clearance of our TULSA-PRO system, and legal costs associated with patent application preparation, filing and maintenance.

Under this royalty-free license, we are subject to various obligations, including the milestone payment of C$250,000 we paid upon obtaining FDA clearance of our TULSA-PRO system, and legal costs associated with patent application preparation, filing and maintenance.

If we breach or otherwise terminate any of the agreements under which we license rights to our technology from third parties, we could lose intellectual property rights that are important to our business and incur other liabilities.

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In some of the larger economic territories, such as the United States and the European Union, patent term extension/restoration may be available to compensate for time taken during aspects of a product candidate’s regulatory review.

However, we cannot be certain that any extension will be granted or, if granted, what the applicable time period or the scope of patent

protection afforded during any extended period will be.

However, we cannot be certain that any extension will be granted or, if granted, what the applicable time period or the scope of patent protection afforded during any extended period will be.

If we or our licensors are unable to obtain patent term extension/restoration or some other exclusivity, we could be subject to increased competition and our opportunity to establish or maintain product revenue could be substantially reduced or eliminated.

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Risks Relating to the International Scope of our Business

Our business, financial condition, cash flows and results of operations are subject to risks arising from our international operations.

Our business, financial condition, cash flows and results of operations are subject to risks arising from our international operations, including currently imposed and potential future tariffs and trade measures.

We conduct a portion of our business outside Canada and the U.S.

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difficulties in coordinating and managing foreign operations, price and currency exchange controls, political and economic instability, compliance with multiple regulatory regimes, differing degrees of protection for intellectual property, unexpected changes in foreign regulatory requirements and restrictive governmental actions.

On February 1, 2025, the President of the United States issued executive orders directing the United States to impose new tariffs on imports originating from Canada, Mexico and China.

These orders call for additional 25% duty on imports into the United States of Canadian origin and Mexican origin products and 10% duty on Chinese origin products, except for Canadian energy resources that are subject to an additional 10% duty.

We are assessing the direct and indirect impacts to our business of such tariffs, retaliatory tariffs or other trade protectionist measures implemented as this situation develops, and such impacts could be material.

As of March 2026, U.S.

tariff actions announced in 2025 have been halted and replaced with new tariff actions, which are subject to ongoing litigation and negotiations.

Under the tariff actions, most Canada- and Mexico-origin goods that do not claim and qualify for preferential treatment under the U.S.

– Mexico – Canada Agreement (USMCA) are subject to additional duties.

The scope and rates of these measures, available exclusions, and their interaction with pre-existing tariffs may change based on court outcomes, administrative guidance, and bilateral or multilateral arrangements.

We continually assess the direct and indirect impacts to our business of such tariffs, retaliatory tariffs or other trade protectionist measures implemented as this situation develops, and such impacts could be material.

At this time, there has been no significant impact to our business.

Adverse economic conditions impacting our customers or uncertainty about global economic conditions could cause purchases of our products to decline, which would adversely affect our revenues and operating results.

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Future sales or the issuances of our securities may cause the market price of our Common Shares to decline.

The market price of our Common Shares could decline as a result of issuances of securities (including our Common Shares) by us, exercises of outstanding options or warrants for additional Common Shares or sales by our existing shareholders of Common Shares in the market, or the perception that these issuances or sales could occur.

The market price of our Common Shares could decline as a result of issuances of securities (including our Common Shares) by us, exercises of outstanding options for additional Common Shares or sales by our existing shareholders of Common Shares in the market, or the perception that these issuances or sales could occur.

Sales of Common Shares by shareholders may make it more difficult for us to sell equity securities at a time and price that we deem appropriate.

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● announcement or expectation of additional debt or equity financing efforts;

● sales or issuances of our Common Shares by us, our insiders or our other shareholders, including by exercise of outstanding options or warrants;

● sales or issuances of our Common Shares by us, our insiders or our other shareholders, including by exercise of outstanding options;

● general economic and market conditions, including tariffs or trade restrictions.

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Furthermore, we believe that our business will grow both domestically and internationally, in which case our internal controls will become more complex and will require significantly more resources and attention to ensure our internal controls remain effective overall.

During the course of our testing, our management has identified and may identify additional material weaknesses or significant deficiencies, which may not be remedied in a timely manner to meet the deadline imposed by Sarbanes-Oxley.

As described below, we have identified a material weakness in our internal control over financial reporting for the year ended December 31, 2024.

If our management cannot favorably assess the effectiveness of our internal controls over financial reporting, or our independent registered public accounting firm identifies additional material weaknesses in our internal controls, investor confidence in our financial results may weaken, and the market price of our securities may suffer.

We have identified a material weakness in our internal control over financial reporting.

If we are unable to successfully remediate this material weakness in our internal control over financial reporting, we may not be able to report our financial condition or results of operations accurately or in a timely manner, which may adversely affect investor confidence in us and, as a result, materially and adversely affect our business and the value of our Common Shares.

We have identified a material weakness in our internal control over financial reporting for the year ended December 31, 2024.

In conjunction with the preparation of the Company’s financial statements for the year ended December 31, 2024, and specifically in connection with the recognition of revenue under ASC 606, Revenue from contracts with customers, management has determined that the controls over the review of contract terms and arrangements with customers did not operate effectively during 2024.

This material weakness resulted in audit adjustments to revenue, trade and other receivables and prepaid expenses, deposits and other assets, which were recorded prior to the issuance of the financial statements as of and for the year ended December 31, 2024.

Our efforts to address the identified material weakness are ongoing.

We cannot assure you that these measures will significantly improve or remediate the material weakness described above.

We also cannot assure you that we have identified all or that we will not have additional material weaknesses in the future.

Accordingly, a material weakness may still exist when we report on the effectiveness of our internal control over financial reporting for purposes of our attestation when required by reporting requirements under the Exchange Act or Section 404 of the Sarbanes-Oxley Act.

We expect to incur additional costs to remediate these control deficiencies, though there can be no assurance that our efforts will be successful or avoid potential future material weaknesses.

If we are unable to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, or if we identify any additional material weaknesses, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements

regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, and our stock price may decline as a result.

Any default under our existing debt that is not waived by the applicable lender could materially adversely impact our results of operations and financial results and may have a material adverse effect on the trading price of our Common Shares.

We are required to comply with the covenants in the CIBC Credit Agreement and such covenants may create a risk of default on our debt if we cannot satisfy or continue to satisfy these covenants.

If we are determined not to have complied or in the future cannot comply with a debt covenant or anticipate that we will be unable to comply with a debt covenant under any debt instrument we are a party to, including the CIBC Loan, management may seek a waiver and/or amendment to the applicable debt instrument in respect of any such covenant in order to avoid any breach or default that might otherwise result therefrom.

On March 31, 2024, we were in breach of the covenant in the CIBC Loan that revenue for any fiscal quarter must be 15% greater than revenue for the same fiscal quarter in the prior fiscal year.

If we are determined not to have complied or in the future cannot comply with a debt covenant or anticipate that we will be unable to comply with a debt covenant under any debt instrument we are a party to, including the CIBC Credit Agreement, management may seek a waiver and/or amendment to the applicable debt instrument in respect of any such covenant in order to avoid any breach or default that might otherwise result therefrom.

On March 31, 2024, we were in breach of the covenant in the Original CIBC Credit Agreement that revenue for any fiscal quarter must be 15% greater than revenue for the same fiscal quarter in the prior fiscal year.

Prior to such breach, we obtained a waiver from CIBC, pursuant to which CIBC has waived such breach.

On September 26, 2023, an amendment to the CIBC Loan changed financial covenants.

The revised covenants specify that unrestricted cash must be greater than either (i) negative EBITDA for the most recent nine -month period or (ii) $7,500, reported monthly.

On September 26, 2023, an amendment to the CIBC Credit Agreement changed financial covenants.

The revised covenants specified that unrestricted cash must be greater than either (i) negative EBITDA for the most recent nine -month period or (ii) $7,500, reported monthly.

Additionally, recurring revenue for any fiscal quarter must be 15% greater than the same quarter in the prior fiscal year, reported quarterly.

As of December 31, 2024, we were in compliance with these covenants.

Future compliance depends on achieving specific revenue, EBITDA, and cash levels.

On August 1, 2025, we were in breach of the covenant that unrestricted cash must be greater than either (i) negative EBITDA for the most recent nine-month period or (ii) $7,500.

CIBC waived such breach for the period beginning on August 1, 2025 through the date of an amendment to the CIBC Credit Agreement on September 30, 2025, which revised the liquidity covenant to state that unrestricted cash must at all times be the greater of:

(i) to the extent EBITDA is negative for such period, EBITDA for the most recent six-month period, or (ii) $10,000, reported on a monthly basis.

As of December 31, 2025, we were in compliance with these financial covenants.

Future compliance with the financial covenants included in the CIBC Credit Agreement is dependent upon achieving certain revenue, EBITDA, and anticipated cash levels.

If we default under a debt instrument, including the CIBC Loan, and the default is not waived by the lender(s), the debt extended pursuant to the CIBC Loan and any other debt instruments could become due and payable prior to its stated due date.

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Accordingly, if we are unable to negotiate a covenant waiver or replace or refinance our existing debt on favorable terms or at all, such default could materially adversely impact our results of operations and financial results and may have a material adverse effect on the trading price of our Common Shares.

Future compliance with the financial covenants included in the CIBC Loan is dependent upon achieving certain revenue, EBITDA, and anticipated cash levels.

Management considers there is a potential for a breach of these covenants in the future due to the volatility and unpredictability of our revenues.

Future compliance with the financial covenants included in the CIBC Credit Agreement is dependent upon achieving certain revenue, EBITDA, and anticipated unrestricted cash levels.

As a foreign private issuer whose shares are listed on Nasdaq, we intend to follow certain home country corporate governance practices instead of certain Nasdaq requirements.

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In particular, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404, which involve annual assessments of a company’s internal controls over financial reporting.

We may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and may need to establish an internal audit

We may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and may need to establish an internal audit function.

We cannot predict or estimate the amount of such additional costs we may incur as a result of becoming a U.S.

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citizens or residents.

Because all or a substantial portion of our assets and these persons are located outside the United States, it will be difficult for United States investors to effect service of process in the United States upon us or our directors or officers, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under the U.S.

States upon judgments of United States courts predicated upon civil liabilities under the U.S.

Exchange Act or other United States laws.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors