Profound Medical Corp. 10-K

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Financial Statements ​ ​ ​ Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 271 ) ​ F-2 Consolidated Balance Sheets as of December 31, 2025 and 2024 ​ F-4 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2025 and 2024 ​ F-5 Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2025 and 2024 ​ F-6 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024 ​ F-7 Notes to Consolidated Financial Statements ​ F-8 ​ ​ F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Profound Medical Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Profound Medical Corp. and its subsidiaries (the Company) as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, of shareholders’ equity and of cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. F-2 Table of Contents Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition As described in Notes 2 and 12 to the consolidated financial statements, the Company’s revenue was $16.1 million for the year ended December 31, 2025. Recurring non-capital revenue consists of revenues from the sale of one-time-use devices and services associated with extended warranties. Capital equipment revenue consists of revenues from the sale of capital equipment including installation and training amounts, which includes sales to distributors. The amount of revenue to be recognized is based on the transaction price the Company expects to receive in exchange for its goods and services. For contracts that contain multiple performance obligations the Company allocates the transaction price to each performance obligation and recognizes the related revenue when or as control of each individual performance obligation is transferred to customers. Revenue from sale of one-time-use devices and capital equipment is recognized when control is transferred to the customers, which generally occurs at the time of shipment. Service revenue related to extended warranties is deferred and recognized on a straight-line basis over the extended warranty period covered by the customer contract. The principal considerations for our determination that performing procedures relating to revenue recognition is a critical audit matter is the high degree of audit effort in performing procedures and evaluating audit evidence related to revenue recognition. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, evaluating the recognition of revenue on a sample basis by (i) evaluating contract terms; (ii) identifying and assessing performance obligations; and (iii) obtaining and evaluating the underlying purchase orders, shipping documents, invoices and payment support, as applicable. /s/ PricewaterhouseCoopers LLP Chartered Professional Accountants, Licensed Public Accountants Toronto, Canada March 5, 2026 We have served as the Company’s auditor since 2013. ​ F-3 Table of Contents Profound Medical Corp. Consolidated Balance Sheets As at December 31, 2025 and 2024 In USD (000s) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ $ ​ $ Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ Cash ​ 59,723 54,912 Trade and other receivables, net (note 3) ​ 7,200 7,045 Inventory (note 4) ​ 8,238 5,801 Prepaid expenses and deposits ​ 928 1,307 Total current assets ​ 76,089 69,065 ​ ​ ​ ​ ​ Trade and other receivables, net (note 3) ​ 300 ​ — Property and equipment, net (note 5) ​ 698 425 Intangible assets, net (note 6) ​ 138 261 Right-of-use assets, net (note 9) ​ 184 396 Deferred tax assets, net (note 13) ​ 66 ​ 87 Total assets ​ 77,475 70,234 ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ Accounts payable ​ 1,563 1,317 Accrued expenses and other current liabilities (note 7) ​ 3,815 2,835 Deferred revenue ​ 445 419 Long-term debt (note 8) ​ — 1,737 Lease liabilities (note 9) ​ 213 257 Income tax payable ​ 39 — Total current liabilities ​ 6,075 6,565 ​ ​ ​ ​ ​ Deferred revenue ​ 388 49 Long-term debt (note 8) ​ 4,499 2,924 Lease liabilities (note 9) ​ — 203 Other non - current liabilities (note 9) ​ 79 71 Total liabilities ​ 11,041 9,812 ​ ​ ​ ​ ​ Commitments and contingencies (note 15) ​ ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity ​ ​ ​ ​ ​ ​ ​ ​ Common shares, no par value, unlimited shares authorized, 36,293,640 and 30,039,809 issued and outstanding at December 31, 2025 and 2024, respectively (note 10) ​ 323,839 281,552 Additional paid-in capital ​ 25,310 21,298 Accumulated other comprehensive income ​ 5,025 2,742 Accumulated deficit ​ ( 287,740 ) ( 245,170 ) Total shareholders’ equity ​ 66,434 60,422 ​ ​ ​ ​ ​ Total liabilities and shareholders’ equity ​ 77,475 70,234 ​ The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents Profound Medical Corp. Consolidated Statements of Operations and Comprehensive Loss For the years ended December 31, 2025 and 2024 In USD (000s) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ ​ ​ $ ​ $ ​ Revenue (note 12) ​ ​ ​ ​ ​ Recurring - non-capital 9,730 8,240 Capital equipment 6,368 2,440 ​ 16,098 10,680 Cost of sales 4,705 3,643 Gross profit 11,393 7,037 ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ Research and development 20,596 16,965 Selling, general and administrative 32,051 23,134 Total operating expenses 52,647 40,099 ​ ​ ​ ​ ​ ​ Operating loss 41,254 33,062 ​ ​ ​ ​ ​ ​ Other (income) expenses ​ ​ Net finance (income) expense ( 1,070 ) ( 1,436 ) Net foreign exchange (gain) loss 2,134 ( 3,808 ) Total other (income) expenses 1,064 ( 5,244 ) ​ ​ ​ ​ ​ ​ Net loss before income taxes 42,318 27,818 ​ ​ ​ ​ ​ ​ Income tax expense (note 13) 231 144 Deferred tax (recovery) expense (note 13) 21 ( 146 ) Total income tax (recovery) expense ​ 252 ​ ( 2 ) ​ ​ ​ ​ ​ ​ ​ Net loss attributed to shareholders for the year 42,570 27,816 ​ ​ ​ ​ ​ ​ Other comprehensive (income) loss ​ ​ Item that may be reclassified to (income) loss ​ ​ Foreign currency translation adjustment ( 2,283 ) 2,823 ​ ​ ​ ​ ​ ​ Net loss and other comprehensive loss for the year 40,287 30,639 ​ ​ ​ ​ ​ ​ Loss per share (note 14) ​ ​ Basic and diluted net loss per common share 1.41 1.12 Basic and diluted weighted average common shares outstanding 30,232,966 24,765,503 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ F-5 Table of Contents Profound Medical Corp. Consolidated Statements of Shareholders’ Equity For the years ended December 31, 2025 and 2024 In USD (000s) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Paid-in ​ Comprehensive ​ Accumulated ​ ​ ​ ​ Common Shares ​ Capital ​ Income ​ Deficit ​ Tota1 ​ ​ Shares ​ Amount $ ​ $ ​ $ ​ $ ​ $ Balance – January 1, 2024 21,370,565 222,205 20,808 5,565 ( 217,354 ) 31,224 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss for the year — — — — ( 27,816 ) ( 27,816 ) Cumulative translation adjustment – net of tax of $ nil — — — ( 2,823 ) — ( 2,823 ) Shares issued in private placement and public offerings (note 10) ​ 8,425,039 ​ 57,211 ​ — ​ — ​ — ​ 57,211 Exercise of share options (note 11) 7,101 ​ 76 ( 31 ) — — 45 Vesting of RSUs (note 11) 228,774 1,990 ( 1,990 ) — — — Vesting of DSUs (note 11) ​ 8,330 ​ 70 ​ ( 70 ) ​ — ​ — ​ — Share-based compensation (note 11) — — 2,581 — — 2,581 Balance – December 31, 2024 30,039,809 281,552 21,298 2,742 ( 245,170 ) 60,422 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss for the year — — — — ( 42,570 ) ( 42,570 ) Cumulative translation adjustment – net of tax of $ nil — — — 2,283 — 2,283 Shares issued in private placement and public offerings (note 10) ​ 6,064,298 ​ 40,801 ​ — ​ — ​ — ​ 40,801 Exercise of share options (note 11) 1,250 ​ 14 ( 6 ) — — 8 Vesting of RSUs (note 11) 171,618 1,332 ( 1,332 ) — — — Vesting of DSUs (note 11) ​ 16,665 ​ 140 ​ ( 140 ) ​ — ​ — ​ — Share-based compensation (note 11) — — 5,490 — — 5,490 Balance – December 31, 2025 36,293,640 323,839 25,310 5,025 ( 287,740 ) 66,434 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ ​ F-6 Table of Contents Profound Medical Corp. Consolidated Statements of Cash Flows For the years ended December 31, 2025 and 2024 In USD (000s) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ $ ​ $ Cash flows from operating activities ​ ​ Net loss for the year ( 42,570 ) ( 27,816 ) Adjustments to reconcile net loss to net cash provided by operating activities: ​ ​ Depreciation of property and equipment (note 5) 373 707 Amortization of intangible assets (note 6) 187 229 Non-cash lease expense adjustment ( 37 ) ( 38 ) Share-based compensation (note 11) 5,490 2,581 Interest and accretion expense (note 8) 63 600 Change in amortized cost of trade and other receivables — ( 307 ) Changes in operating assets and liabilities: ​ ​ Trade and other receivables (note 3) ( 172 ) 186 Inventory (note 4) ( 2,822 ) 656 Prepaid expenses and deposits 464 31 Accounts payable, accrued expenses and other liabilities (note 7) 378 815 Deferred revenue 371 ( 948 ) Income taxes payable (note 13) 42 — Deferred tax liabilities (note 13) — ( 58 ) Deferred tax assets (note 13) ​ 26 ​ ( 91 ) Net cash used in operating activities ( 38,207 ) ( 23,453 ) ​ ​ ​ ​ ​ Cash flows from investing activities ​ ​ ​ ​ Purchase of property and equipment (note 5) ​ ( 176 ) ​ — Purchase of intangible assets (note 6) ​ ( 66 ) ​ — Net cash used in investing activities ​ ( 242 ) ​ — ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ Issuance of commons shares (note 10) ​ 42,436 ​ 62,106 Payments of financing costs (note 10) ​ ( 1,016 ) ​ ( 4,895 ) Repayments of long-term debt (note 8) ( 290 ) (2,560) Proceeds from the exercise of stock options (note 11) 8 45 Net cash provided by financing activities 41,138 54,696 ​ ​ ​ ​ ​ Net increase in cash and cash equivalents 2,689 31,243 Effect of exchange rate changes on cash 2,122 ( 2,544 ) Cash, beginning of year 54,912 26,213 Cash, end of year 59,723 54,912 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ F-7 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) 1 Description of business Profound Medical Corp. (Profound) and its subsidiaries (together, the Company) were 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 consolidated financial statements in accordance with accounting principles generally accepted in the United States (US GAAP). The 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. Use of estimates The preparation of the Company’s 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, assumptions related to the determination of expected credit loss, 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. Certain of the Company’s revenue is generated from sales to distributors. When the Company transacts with a distributor, its contractual arrangement is with the distributor and not with the end customer. Whether the Company transacts business with and receives the order from a distributor or directly from an end customer, its revenue recognition policy and resulting pattern of revenue recognition for the order are generally the same. The Company exercises judgement in determining when to recognize revenue. Consolidation The financial statements include the accounts of the Company and all its consolidated subsidiaries after elimination of intercompany transactions and balances. The Company consolidates all entities that it controls either through a majority voting interest or as the primary beneficiary of variable interest entities (VIE). Currently, the Company has no involvement with variable interest entities. All subsidiaries are evaluated under the voting interest entity model. The Company consolidates those entities it controls through a majority voting interest. The consolidated financial statements of the Company include the following wholly owned subsidiaries: Profound Medical Inc. (Canada), Profound Medical Oy (Finland), Profound Medical GmbH (Germany), Profound Medical (U.S.) Inc. (United States), Profound Medical Technology Services (Beijing) Co., Ltd. (China) and 2753079 Ontario Inc. (Canada). F-8 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) Segment reporting Operating segments reflect the way the Company is managed, and for which separate financial information is available and evaluated regularly by the Company’s chief operating decision maker (CODM) in deciding how to allocate resources and assess performance. The chief executive officer, who is the CODM, views the Company’s operations and manages its business in one operating segment, which is medical technology focused on magnetic resonance guided ablation procedures for the treatments to ablate the prostate gland, uterine fibroids, osteoid osteoma and nerves for palliative pain relief for patients with metastatic bone disease. Foreign currency translation The consolidated financial statements are presented in US dollars. The functional currency of Profound Medical Corp. is Canadian dollars. The functional currency of each subsidiary is determined based on facts and circumstances in the financial and operational environment relevant for each subsidiary. Where the Company’s presentation currency of US dollars differs from the functional currency of a subsidiary, the assets, liabilities and equity of the subsidiary are translated from the functional currency into the presentation currency at the exchange rates as at the reporting date. The income and expenses of the subsidiaries are translated at rates approximating the exchange rates at the dates of the transactions. Exchange differences arising on the translation of the consolidated financial statements of the Company’s subsidiaries are recognized in other comprehensive (income) loss. Foreign currency transactions are translated into the functional currency of the Company or its subsidiaries, using the exchange rates prevailing at the dates of these transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in currencies other than an entity’s functional currency are recognized in the consolidated statements of operations and comprehensive loss, within net foreign exchange (gain) loss. Fair value measurements Certain assets and liabilities of the Company are carried at fair value under US GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1 - Quoted prices in active markets for identical assets or liabilities. ● Level 2 - Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3 - Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. For assets and liabilities that are recognized in the consolidated financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing the categorization at the end of each reporting period. There were no transfers between levels during the period presented . The Company currently does not have any level 3 financial instruments. The Company considers its cash, trade and other receivables, net, prepaid expenses and deposits, accounts payable, accrued expenses and other liabilities and long-term debt to be financial instruments. F-9 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) Concentrations of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and trade and other receivables, net. The Company maintains its cash balances in various operating accounts including cash deposited at a major financial institution that management believes to be creditworthy. Management has not previously experienced non-performance by any financial institution. Concentrations of credit risk with respect to trade and other receivables, net are limited due to a large number of customers who are widely dispersed. The Company monitors the creditworthiness of its customers to which it grants credit terms in the normal course of business. Trade and other receivables and allowance for expected credit losses Trade and other receivables are stated net of an allowance for expected credit losses. The Company grants credit to customers in the normal course of business and maintains an allowance for expected credit losses which reflect the current estimate of credit losses expected to be incurred over the life of the receivables. The Company considers various factors in establishing, monitoring, and adjusting its allowance for expected credit losses, including the aging of the accounts and aging trends, the historical level of charge-offs, and specific credit exposures related to particular customers. The Company also monitors other risk factors, such as country risk, when determining credit limits for customers and establishing adequate allowances. Uncollectible accounts are written-off against the allowance when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, failure to make contractual payments for a period of greater than 180 days past due. Inventory Inventories are valued at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Cost is determined using the first-in, first-out method for finished goods and a weighted average basis using a standard cost methodology that approximates the actual cost. The Company evaluates the carrying value of inventory on a regular basis, taking into account factors such as historical and anticipated future sales compared with quantities on hand, the price the Company expects to obtain for products in their respective markets compared with historical cost, obsolescence due to development of technology. Property and equipment, net Property and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses. The initial cost of property and equipment consists of its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the assets have been put into operation, such as repairs and maintenance, are charged to the consolidated statements of operations and comprehensive loss during the year in which they are incurred. The major categories of property and equipment are depreciated on a straight-line basis as follows: ​ ​ ​ ​ ​ Furniture and fittings ​ ​ ​ 5 years Equipment ​ 5 years ​ Equipment under operating lease ​ 2 years ​ Leasehold improvements ​ Lesser of the estimated useful life or the lease term ​ ​ Residual values, methods of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate. F-10 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) Intangible assets The Company’s intangible assets are stated at cost, less accumulated amortization and accumulated impairment losses. Intangible assets are amortized on a straight-line basis in the consolidated statements of operations and comprehensive loss over their estimated useful lives. The major categories of intangible assets are amortized as follows: ​ ​ ​ ​ ​ Exclusive licence agreement ​ ​ ​ 20 years Distribution rights ​ 15 years ​ Software ​ 5 years ​ ​ Impairment of long-lived assets Property and equipment, net, right-of-use assets, and intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. These assets are evaluated for impairment on an individual asset or group of assets with similar characteristics basis. If indicators of impairment are present, the asset is tested for recoverability by comparing the carrying value of the asset to the related estimated undiscounted future cash flows expected to be derived from the asset, which include the amount and timing of the projected future cash flows. If the expected undiscounted cash flows are less than the carrying value of the asset, then the asset is considered to be impaired and its carrying value is written down to fair value, based on the related estimated discounted future cash flows. Accounts payable, accrued expenses and other current liabilities These amounts represent liabilities for goods and services provided to the Company before the end of the financial year, which are unpaid. Accounts payable, accrued expenses and other current liabilities are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method. Long-term debt Long-term debt is initially recognized at fair value, net of transaction costs incurred. Long-term debt is subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the principal amount is recognized in the consolidated statements of operations and comprehensive loss over the contractual lives of the long-term debt using the effective interest method. Long-term debt is removed from the consolidated balance sheets when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished and the consideration paid is recognized in the consolidated statements of operations and comprehensive loss, within other (income) expense, net. Leases Leases where the Company is the Lessee The Company accounts for leases in accordance with ASC 842, Leases (ASC 842). At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company determines the initial classification and measurement of its right-of-use assets and lease liabilities at the lease commencement date. The lease term includes any renewal options and termination options that the Company is reasonably certain to exercise. F-11 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) Lease liabilities and the corresponding right-of-use assets are recorded based on the present values of lease payments over the terms. The present value of the lease payments is determined using the rate implicit in that lease. If the information necessary to determine the rate implicit in a lease is not available, the Company uses its incremental borrowing rate at the commencement of the lease, which represents the rate of interest that the Company would incur to borrow on a collateralized basis over a similar term. All leases must be classified as either an operating lease or finance lease. The classification is determined based on whether substantive control has been transferred to the lessee. The classification governs the pattern of lease expense recognition. For leases classified as operating leases, total lease expense over the term of the lease is equal to the undiscounted payments due in accordance with the lease arrangement. Fixed lease expense is recognized on a straight-line basis over the term of each lease and includes: (i) imputed interest during the period on the lease liability determined using the effective interest rate method plus (ii) amortization of the right-of-use asset for that period. Amortization of the right-of-use asset during the period is calculated as the difference between the straight-line expense and the imputed interest on the lease liability for that period. Variable lease expense is recognized in the period in which the obligation for variable lease payments is incurred. All of the Company’s leases are classified as operating leases. The Company has elected not to record on the consolidated balance sheets a lease for which the term is 12 months or less. Leases where the Company is the Lessor Revenue from leasing arrangements is not subject to the revenue standard for contracts with customers and remains separately accounted for under ASC 842. In accordance with ASC 842, lessors should classify and account for a lease as an operating lease or a finance lease. All of the Company’s leases are qualified as operating leases. The Company does not derecognize the leased equipment at the time of the arrangement but depreciates the leased equipment over its useful life. Revenue Revenue is derived primarily from the sale of the TULSA-PRO and Sonalleve systems and one - time use devices. All products generally include a one-year warranty. The Company recognizes revenue when the customer obtains control of promised goods or services and in an amount that reflects the consideration to which the Company expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, the Company applies the five-step revenue model to contracts within its scope: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The amount of revenue to be recognized is based on the transaction price the Company expects to receive in exchange for its goods and services. For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation and recognizes the related revenue when or as control of each individual performance obligation is transferred to customers. Recurring – non-capital Recurring - non-capital revenue consists of the sale of one-time-use devices and services associated with extended warranties. Revenue from sale of one-time-use devices is recognized when control is transferred to the customers, which generally occurs at the time of shipment. Service revenue related to extended warranties is deferred and recognized on a straight-line basis over the extended warranty period covered by the customer contract. Capital equipment Capital equipment revenue consists of the sale of capital equipment including installation and training amounts, which includes sales to distributors. Revenue is recognized when the Company transfers control to the customer, which is generally at the time of shipment. The Company’s customer arrangements generally do not provide a right of return. F-12 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) Contract Assets Contract assets arise from billed amounts in customer arrangements and the Company’s right to payment is not just subject to the passage of time, typically related to installation of the product. The Company recognizes a receivable at the point in time at which it has an unconditional right to payment. Sales to distributors The Company markets and sells its products primarily through its direct sales force, which sells its products to end customers. A portion of the Company’s revenue is generated by sales to distributors. In markets where the Company does not maintain a direct presence, the Company engages distribution partners. When the Company transacts with a distributor, its contractual arrangement is with the distributor and not with the end customer. Whether the Company transacts business with and receives the order from a distributor or directly from an end customer, its revenue recognition policy and resulting pattern of revenue recognition for the order are generally the same. Cost of sales Cost of sales primarily includes the cost of finished goods, depreciation of equipment under lease, inventory write-downs, royalties, warranty expense, freight and direct overhead and labor expenses necessary to acquire or manufacture the finished goods. Income taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained based on the technical merits of the position. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. The provision for income taxes includes the effects of unrecognized tax benefits, as well as the related interest and penalties. Share-based compensation The Company grants share options periodically to certain employees, directors and officers. Options currently outstanding vest over four years and have a contractual life of ten years . Each tranche in an award is considered a separate award with its own vesting period and grant date fair value. The fair value of each tranche is measured at the date of grant using the Black-Scholes option pricing model. Compensation expense is recognized over the tranche’s vesting period using the graded vesting method by increasing additional paid-in capital based on the number of awards expected to vest. F-13 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) The Company has a long-term incentive plan (LTIP) with a requisite service period of 3 years . For each Restricted Share Unit (RSU) and Deferred Share Unit (DSU) granted under the long-term incentive plan, the Company recognizes an expense equal to the market value of a Profound common share at the date of grant based on the number of RSUs and DSUs expected to vest, recognized over the term of the vesting period, with a corresponding credit to additional paid-in capital for share-based compensation anticipated to be equity settled or a corresponding credit to a liability for those anticipated to be cash settled. Share-based compensation is adjusted for subsequent changes in management’s estimate of the number of RSUs or DSUs that are expected to vest, for RSUs or DSUs anticipated to be cash settled and changes in the market value of Profound common shares. The effect of these changes is recognized in the period of the change. Vested RSUs and DSUs are settled either in Profound common shares or in cash or a combination thereof at the discretion of the Company. As of December 31, 2025, the Company is authorized to issue under the share-based compensation arrangements a total of 2,939,785 share options and 1,778,388 units in the form of RSUs or DSUs . Share-based compensation is recognized in the consolidated statements of operations and comprehensive loss in the same manner as the award recipients’ other compensation costs. Forfeitures are recognized as a reduction of share-based compensation expense as they occur. Research and development costs Research and development costs are charged to expense as incurred. Clinical trial expenses result from obligations under contracts with vendors, consultants and clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to the Company. These expenses are recorded according to the progress of the clinical trial as measured by patient progression and the timing of various aspects of the clinical trial. Clinical trial accrual estimates are determined through discussions with internal clinical personnel and outside service providers as to the progress or state of completion of clinical trials, or the services completed. Service provider status is then compared to the contractually obligated fees to be paid for such services. During the course of a clinical trial, the Company may adjust the rate of clinical expense recognized if actual results differ from management’s estimates. Advertising and marketing costs Advertising and marketing costs are expensed as incurred. These costs are included in selling, general and administrative expenses and were $ 3,856 and $ 4,478 for the years ended December 31, 2025 and 2024, respectively. Loss per share Basic loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per share is calculated by dividing the applicable net loss by the sum of the weighted average number of shares outstanding during the reporting period and all additional common shares that would have been outstanding if potentially dilutive common shares had been issued during the reporting period, except where the effect of such common shares would be antidilutive. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive common shares would be antidilutive. Comprehensive (income) loss Comprehensive (income) loss comprises of net (income) loss and other comprehensive (income) loss. Other comprehensive (income) loss includes foreign currency translation adjustments. Accumulated other comprehensive (income) loss is recorded as a component of shareholders’ equity. F-14 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) Contingencies The Company records a liability in the consolidated financial statements on an undiscounted basis for loss contingencies related to legal actions when a loss is known or considered probable and the amount may be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known or probable, and may be reasonably estimated, the estimated loss or range of loss is disclosed. Recently issued accounting pronouncements In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements. The amendments in this update are the result of the FASB’s decision to incorporate into the Codification certain disclosures referred by the SEC that overlap with, but require incremental information to, US GAAP. The amendments in this update represent changes to clarify or improve disclosure and presentation requirements of a variety of topics in the Codification. For entities subject to the SEC’s existing requirements, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The amendments in this update should be applied prospectively. The Company is currently evaluating the impact of this guidance. In November 2024, the FASB issued ASU 2024 - 03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. The amendment in this update requires public business entities to disclose in the footnotes the following information about income statement expenses at each interim and annual reporting period. Within a tabular disclosure for each relevant income statement expense caption (a) specified natural expenses (b) expense reimbursements (c) amounts for certain other disclosure requirements in GAAP (d) other items remaining after disaggregation into the required categories and the total amount of selling expenses and, in annual reporting periods, the entity’s definition of selling expenses. The effective date for the amendment will be for annual periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this guidance. The Company does not believe there are any other recently issued, but not yet effective, accounting standards that would have a significant impact on the Company’s financial position or results of operations. 3 Trade and other receivables, net Trade receivables and other receivables, net, as of December 31, 2025 and 2024 consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ $ ​ $ Trade receivables, gross 7,621 5,245 Contract assets, gross ​ 386 ​ 1,340 Trade receivables and contract assets ​ 8,007 ​ 6,585 Allowance for expected credit losses ( 898 ) ( 158 ) Trade receivables, net 7,109 6,427 Tax receivables 311 308 Other receivables 80 310 Total trade and other receivables, net ​ 7,500 ​ 7,045 Less: Current portion ​ 7,200 ​ 7,045 Long-term portion ​ 300 ​ — ​ During the year ended December 31, 2025, $ nil (2024 – $ 2,147 ) of trade receivables were written off. F-15 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) The activity in the allowance for expected credit losses for trade receivables was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ $ ​ $ Balance, beginning of year 158 ​ 76 Provision for allowance for expected credit losses 740 82 Balance, end of year 898 158 ​ The allowance for expected credit losses as at December 31, 2025 and 2024 for trade receivables is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ ​ 0–30 ​ 31 ‑ 60 ​ 61 ‑ 90 ​ 90+ ​ Contract ​ ​ ​ ​ ​ ​ Current ​ ​ ​ days ​ ​ ​ days ​ ​ ​ days ​ ​ ​ days ​ ​ ​ assets ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expected loss rate 0.84 % 3.04 % 3.41 % 5.97 % 50 % 100 % ​ Gross carrying amount 6,626 ​ 21 14 56 904 386 ​ 8,007 Allowance for expected credit losses 56 1 — 3 452 386 ​ 898 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ ​ ​ 0–30 ​ ​ ​ 31 ‑ 60 ​ ​ ​ 61 ‑ 90 ​ ​ ​ 90+ ​ ​ ​ Contract ​ ​ ​ ​ ​ ​ Current ​ ​ ​ days ​ ​ ​ days ​ ​ ​ days ​ ​ ​ days ​ ​ ​ assets ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expected loss rate ​ 0.84 % 3.02 % 3.02 % 5.96 % 6.02 % 6.02 % ​ Gross carrying amount ​ 4,180 713 — — 352 1,340 ​ 6,585 Allowance for expected credit losses ​ 35 21 — — 21 81 ​ 158 ​ 4 Inventory Inventory as of December 31, 2025 and 2024 consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ $ ​ $ Finished goods 5,280 3,837 Raw materials 2,958 1,964 Inventory 8,238 5,801 ​ During the year ended December 31, 2025, $ 4,364 (2024 - $ 3,178 ) of inventory was recognized in cost of sales. The Company recognized $ nil inventory write - downs in cost of sales during the year ended December 31, 2025 (2024 – $ 43 ). ​ 5 Property and equipment, net The major components of property and equipment, net, as of December 31, 2025 and 2024 consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ $ ​ $ Leasehold improvements 542 542 Equipment ​ 176 ​ — Equipment under operating lease 1,571 2,273 Total 2,289 2,815 Accumulated depreciation ( 1,591 ) ( 2,390 ) Property and equipment, net 698 425 ​ Depreciation expense for the year ended December 31, 2025 was $ 373 (2024 - $ 707 ). During the year ended December 31, 2025, the Company sold $ 681 (2024 - $ 532 ) of equipment under operating lease to various customers. F-16 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) 6 Intangible assets The major components of intangible assets as of December 31, 2025 and 2024 consist of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ ​ $ ​ $ ​ ​ ​ ​ 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 licence agreement ​ 3.7 ​ 231 ​ ( 158 ) ​ 73 ​ 231 ​ ( 142 ) ​ 89 Distribution rights ​ 14.8 ​ 66 ​ ( 1 ) ​ 65 ​ — ​ — ​ — Software ​ — ​ 978 ​ ( 978 ) ​ — ​ 978 ​ ( 806 ) ​ 172 ​ ​ ​ ​ 1,275 ​ ( 1,137 ) ​ 138 ​ 1,209 ​ ( 948 ) ​ 261 ​ The Company has a licence agreement (the licence) with Sunnybrook Health Sciences Centre (Sunnybrook), pursuant to which Sunnybrook licenses to the Company certain intellectual property and exclusively licenced-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 licence. Amortization expense for the year ended December 31, 2025 was $ 187 (2024 - $ 229 ). Aggregate amortization expense for each of the five succeeding years related to intangible assets held as of December 31, 2025 is estimated as follows: ​ ​ ​ ​ 2026 ​ ​ ​ 24 2027 24 2028 24 2029 20 Thereafter ​ 46 Total 138 ​ ​ 7 Accrued expenses and other current liabilities Accrued expenses and other current liabilities, as of December 31, 2025 and 2024 consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ $ ​ $ Accrued employee compensation ​ 2,347 ​ 706 Clinical trails ​ 524 ​ 325 Other general accruals ​ 944 ​ 1,804 Accrued expenses and other current liabilities ​ 3,815 ​ 2,835 ​ ​ F-17 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) 8 Long-term debt On March 3, 2025, the Company entered into an amended and restated credit agreement with CIBC (the “ CIBC Credit Agreement ”), 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 Prime Rate subject to a floor of 6.25 %. The CIBC Credit Agreement contains financial covenants whereby unrestricted cash is at all times greater than EBITDA for the most recent nine-month period, reported on a monthly basis and that revenue for the 12 month period must be 15 % greater than revenue for the same time period in the prior fiscal year, reported on a quarterly basis. 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 an option to the Company to increase the amount of the revolving commitment by $ 5,000 within 18 months from March 3, 2025, subject to achieving a minimum trailing 12 month revenue exceeding $ 15,000 . The exercise of the option would result in the size of the revolving commitment increasing from $ 10,000 to a maximum of $ 15,000 . Additionally, the CIBC Credit Agreement 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 $ 10,000 , which is subject to the approval of CIBC in its sole discretion. On September 30, 2025, an amendment to the CIBC Agreement resulted in a change to one of the financial covenants. The amended covenant is that unrestricted cash must at all times be 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. The Company is in compliance with these financial covenants as at December 31, 2025. Future compliance with the financial covenants included in the CIBC Credit Agreement is dependent upon achieving certain revenue, EBITDA, and anticipated unrestricted cash levels. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ $ ​ $ Balance - Beginning of year ​ 4,661 ​ 7,104 Interest expense ​ 394 ​ 600 Interest paid ​ ( 331 ) ​ ( 582 ) Foreign exchange ​ 65 ​ ( 483 ) Repayment ​ ( 290 ) ​ (1,978) Balance - End of year ​ 4,499 ​ 4,661 Less: Current portion ​ — ​ 1,737 Long-term portion ​ 4,499 ​ 2,924 ​ ​ 9 Leases Leases where the Company is the Lessee The Company leases certain office premises. Its operating leases have fixed payment structures expiring in 2026. Subsequent to year end, the Company signed an extension that commences 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. Lease expense for the years 2025 and 2024 include: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ $ ​ $ ​ Operating lease costs ​ 238 ​ 243 Total lease costs ​ 238 ​ 243 ​ F-18 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) Other information related to operating leases for 2025 and 2024 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ Cash paid from operating cash flows for amounts included in the measurement of lease liabilities 282 288 Weighted average remaining lease term 0.75 years 1.75 years Weighted average discount rate 5.99 % 5.99 % ​ 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 December 31, 2025 were as follows: ​ ​ ​ ​ 2026 ​ ​ ​ 216 Total 216 Less: Imputed interest 3 Present value of remaining lease payments 213 Less: Current portion 213 Non-current portion — ​ Leases where the Company is the lessor Certain medical equipment are leased to customers under contractual arrangements that typically include an operating lease as well as performance obligations for sale of one-time-use devices. Contract terms vary by customer and may include options to terminate the contract or options to extend the contract. Where instruments are provided under operating lease arrangements, some portion or the entire lease revenue may be variable and collected as part of expected sales of certain related goods, which are separate performance obligations from subsequent non-lease component (e.g., sale of one-time-use devices). The allocation of revenue between the lease and non-lease components is based on standalone selling prices. Assets related to operating leases are reported within property and equipment, net on the consolidated balance sheets. The original cost and the net book value of such assets were $ 1,571 and $ 481 , respectively, as of December 31, 2025 (2024 - $ 2,273 and $ 332 , respectively). 10 Share capital Common shares The Company is authorized to issue an unlimited number of common shares. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Issued and outstanding (with no par value) ​ $ ​ $ 36,293,640 (2024 – 30,039,809 ) common shares ​ 323,839 ​ 281,552 ​ On January 2, 2024, the Company closed a public offering, resulting in the issuance of 2,666,667 common shares at a price of $ 7.50 , for gross proceeds of $ 20,000 ($ 18,238 , net of transaction costs). On January 16, 2024, the Company closed a non-brokered private placement, resulting in the issuance of 391,667 common shares at a price of $ 7.50 , for gross proceeds of $ 2,938 ($ 2,841 , net of transaction costs). On December 10, 2024, the Company closed a public offering, resulting in the issuance of 5,366,705 common shares at a price of $ 7.50 , for gross proceeds of $ 40,250 ( $ 36,132 , net of transaction costs). On December 22, 2025, the Company closed a public offering, resulting in the issuance of 5,142,870 common shares at a price of $ 7.00 , for gross proceeds of $ 36,000 ($ 34,379 , net of transaction costs). F-19 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) On December 30, 2025, the Company closed a private placement, resulting in the issuance of 921,428 common shares at a price of $ 7.00 , for gross proceeds of $ 6,450 ($ 6,422 , net of transaction costs). 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 one vote per share on matters to be voted on by shareholders. 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 maximum number of common shares reserved for issuance under the share option plan and the long-term incentive plan is 4,718,173 common shares or such other number as may be approved by the holders of the voting shares of the Company. As at December 31, 2025, 2,142,522 (2024 – 2,291,152 ) options are outstanding. Each share option granted allows the holder to purchase one common share, at an exercise price not less than the lesser of the closing trading price of the common shares on the TSX (or other exchange where the common shares are listed), on the date a share option is granted and the volume-weighted average price of the common shares for the five trading days immediately preceding the date the share option is granted. Share options granted under the Share Option Plan generally have a maximum term of ten years and vest over a period of up to four years. F-20 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) A summary of the share option activity during the year presented and the total number of share options outstanding as at those dates are set forth below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ Weighted ​ ​ ​ ​ ​ ​ average ​ average ​ ​ ​ ​ ​ ​ exercise ​ remaining ​ Aggregate ​ ​ Number ​ price ​ contractual ​ intrinsic ​ ​ ​ ​ of options ​ ​ ​ C$ ​ ​ ​ term ​ ​ ​ value Balance - January 1, 2024 1,474,809 16.19 ​ ​ Granted 946,900 11.14 ​ ​ Exercised ( 7,101 ) 8.99 ​ ​ Forfeited/expired ( 123,456 ) 16.17 ​ ​ Balance - December 31, 2024 2,291,152 14.13 5.36 429 Exercisable - December 31, 2024 1,326,573 15.98 4.92 348 Expected to vest - December 31, 2024 2,291,152 14.13 5.36 429 Balance - January 1, 2025 2,291,152 14.13 ​ ​ Granted 92,900 6.70 ​ ​ Exercised ( 1,250 ) 8.92 ​ ​ Forfeited/expired ( 240,280 ) 16.60 ​ ​ Balance - December 31, 2025 2,142,522 13.53 6.06 793 Exercisable - December 31, 2025 1,409,262 15.01 4.76 474 Expected to vest - December 31, 2025 2,142,522 13.53 6.06 793 ​ The Company estimated the fair value of the share options granted during the year 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 19, ​ May 20, ​ June 13, ​ August 25, ​ Grant date ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 Exercise price C$ 9.87 C$ 6.28 C$ 8.78 C$ 6.46 ​ Expected volatility 68 % 68 % 69 % 69 % Expected life of options 6 years 6 years 6 years 6 years ​ Risk-free interest rate 2.84 % 2.98 % 3.06 % 3.26 % Dividend yield — — — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ November 18, ​ March 18, ​ Grant date ​ ​ ​ 2024 ​ ​ ​ 2024 Exercise price C$ 11.14 C$ 11.24 ​ Expected volatility 70 % 70 % Expected life of options 6 years 6 years ​ Risk-free interest rate 3.17 % 3.54 % Dividend yield — — ​ ​ The weighted average grant date fair values of share options granted for the year ended December 31, 2025 were C$ 6.70 (2024 - C$ 11.14 ). The total remaining unrecognized compensation expense related to non-vested share options for the year ended December 31, 2025 was $ 2,588 , which will be amortized over the weighted-average period of 1.8 years. F-21 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) 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 maximum number of units which may be reserved for issuance under this LTIP in respect of grants of RSUs and DSUs shall not exceed 4.9 % of the issued and outstanding common shares on a non-diluted basis, provided that, the maximum number of shares which may be reserved for issuance pursuant to all of the Company’s security-based compensation arrangements shall not in the aggregate exceed 13 % of the issued and outstanding common shares on a non-diluted basis. The Company may grant Units to officers, directors or employees of the Company. Each Unit represents the right to receive one common share in accordance with the terms of the LTIP. The number of Units granted at any particular time will be calculated by dividing the dollar amount of such grant by the market value of a common share on the applicable grant date, which is equal to the volume weighted average trading price of all common shares traded on the TSX (or other exchange where the Common Shares are listed) for the five trading days immediately preceding such date. RSUs and DSUs granted under the LTIP vest over a period of up to three years. The following table summarizes RSUs activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ average grant ​ ​ ​ ​ date fair value ​ ​ Number of ​ per share ​ ​ ​ ​ RSUs ​ ​ ​ C$ Balance - January 1, 2024 493,396 12.23 Granted 107,500 11.02 Vested ( 228,774 ) 13.33 Forfeited ( 47,501 ) 11.25 Balance - December 31, 2024 324,621 11.16 Granted 911,000 ​ 8.93 Vested ( 171,618 ) ​ 10.88 Forfeited ( 204,668 ) ​ 9.57 Balance - December 31, 2025 859,335 ​ 9.23 ​ The total remaining unrecognized compensation expense related to non-vested RSUs for the year ended December 31, 2025 was $ 4,666 , which will be amortized over the weighted-average period of 1.6 years. A summary of the DSUs changes during the year are set forth below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ average grant ​ ​ ​ ​ date fair value ​ ​ Number of ​ per share ​ ​ ​ ​ DSUs ​ ​ ​ C$ Balance - January 1, 2024 75,000 10.40 Granted 25,000 11.07 Vested ( 8,330 ) 12.38 Balance - December 31, 2024 91,670 10.40 Granted 60,485 ​ 8.49 Vested ( 16,665 ) ​ 11.73 Balance - December 31, 2025 135,490 ​ 9.39 ​ The total remaining unrecognized compensation expense related to non-vested DSUs for the year ended December 31, 2025 was $ 471 , which will be amortized over the weighted-average period of 1.6 years. F-22 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) 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 years ended December 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ ​ ​ ​ $ ​ ​ ​ $ Share options 2,024 635 RSUs 2,430 1,517 DSUs 1,036 429 Share-based compensation 5,490 2,581 ​ ​ ​ ​ ​ Cost of sales 26 24 Research and development 1,319 636 Selling, general and administrative 4,145 1,921 Share-based compensation 5,490 2,581 ​ ​ 12 Revenue The following table provides information about disaggregated revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ $ ​ $ Timing of transfer of control ​ ​ Point in time revenue ​ 15,358 ​ 9,922 Service revenue recognized over time ​ 740 ​ 758 ​ ​ 16,098 ​ 10,680 ​ ​ 13 Income taxes Taxes on earnings reflect the annual effective rates, including charges for interest and penalties. Deferred income taxes reflect the tax consequences on future years of differences between the tax bases of assets and liabilities and their financial reporting amounts. The components of loss before income taxes for 2025 and 2024 consist of: ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ ​ ​ ​ $ ​ ​ ​ $ Domestic - Canada ​ ( 43,370 ) ( 28,286 ) Foreign ​ 1,052 468 ​ ​ ( 42,318 ) ( 27,818 ) ​ The components of (provision for) benefit from income taxes for 2025 and 2024 consist of: ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ ​ ​ ​ $ ​ ​ ​ $ Current ​ ​ ​ Foreign ​ 231 ​ 144 Total current income tax expense ​ 231 ​ 144 Deferred ​ ​ ​ ​ Foreign ​ 21 ​ ( 146 ) Total deferred tax expense ​ 21 ​ ( 146 ) Total income tax (recovery) expense ​ 252 ​ ( 2 ) ​ F-23 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) The income taxes paid by the Company are as follows: ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ ​ ​ ​ $ ​ ​ ​ $ United States ​ 68 193 Finland ​ 64 ​ 59 ​ ​ 132 ​ 252 ​ The (provision for) benefit from income taxes differs from the expected amount calculated by applying the Company’s Canadian federal statutory rate to loss before income taxes for 2025 and 2024 as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ ​ ​ ​ $ ​ ​ ​ % ​ ​ ​ $ ​ ​ ​ % Loss before income taxes ​ ( 42,318 ) ​ — ( 27,818 ) ​ — (Provision for) benefit from income taxes ​ ​ ​ ​ ​ ​ ​ ​ Canadian federal statutory rate of 15 % (2024 - 15 % ) ​ ( 6,348 ) ​ 15.0 ​ ( 4,173 ) ​ 15.0 Ontario Provincial tax ​ ( 4,655 ) ​ 11.0 ​ ( 2,998 ) ​ 10.8 Foreign tax effects ​ ​ ​ ​ ​ ​ ​ ​ United States ​ ​ ​ ​ ​ ​ ​ ​ Statutory tax rate differences between United States and Canada ​ 60 ​ ( 0.1 ) ​ 16 ​ — Finland ​ ​ ​ ​ ​ ​ ​ ​ Statutory tax rate differences between Finland and Canada ​ 2 ​ — ​ 10 ​ — Germany ​ ​ ​ ​ ​ ​ ​ ​ Statutory tax rate differences between Germany and Canada ​ 18 ​ — ​ ( 42 ) ​ 0.1 Changes in valuation allowance ​ 9,802 ​ ( 23.2 ) ​ 7,085 ​ ( 25.5 ) Non-taxable or non-deductible items ​ 1,097 ​ ( 2.6 ) ​ 206 ​ ( 0.7 ) Other adjustments ​ 276 ​ ( 0.7 ) ​ ( 106 ) ​ 0.3 Effective tax rate ​ 252 ​ ( 0.6 ) ​ ( 2 ) ​ — ​ The components of deferred tax assets and liabilities are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ ​ ​ ​ $ ​ ​ ​ $ Deferred tax assets: ​ ​ ​ ​ Operating loss carry forwards ​ 52,152 ​ 43,031 SR&ED expenditure pool ​ 4,454 ​ 4,344 Benefit of Investment tax credits ​ 2,151 ​ 2,078 Excess of tax value of property and equipment over book value ​ 2,390 ​ 2,392 Long term debt ​ 5 ​ ( 32 ) Financing fees ​ 1,331 ​ 1,042 Reserves ​ 980 ​ 827 Total deferred tax assets ​ 63,463 ​ 53,682 Valuation allowance ​ ( 63,397 ) ​ ( 53,595 ) Net deferred tax assets ​ 66 ​ 87 ​ Deferred income taxes reflect future tax effects of temporary differences between the tax and financial reporting basis of the Company’s assets and liabilities measured using enacted tax laws and statutory tax rates applicable to the periods when the temporary differences will affect taxable income. When necessary, deferred tax assets are reduced by a valuation allowance, if based on the weight of available positive and negative evidence, it is more likely than not that some portion or all the deferred tax assets will not be realized. The Company has $ 63,397 in valuation allowance against its deferred tax assets, for the year ended December 31, 2025 (2024 - $ 53,595 ). F-24 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) The Company has non-capital loss carry-forwards in Canada of approximately $ 204,045 which expires as follows: ​ ​ ​ ​ ​ ​ ​ ​ $ 2028 ​ 128 2029 ​ 215 2030 ​ 51 2031 ​ 446 Thereafter ​ 203,205 Total ​ 204,045 ​ The Company has SR&ED expenditures in Canada of approximately $ 17,472 as at December 31, 2025, which can be carried forward indefinitely to reduce future years’ taxable income. The Company has approximately $ 3,838 of Canadian federal and provincial tax credits that are available to be applied against Canadian federal and provincial taxes otherwise payable in future years and that expire in varying amounts from 2028 to 2045. ​ F-25 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) 14 Loss per share The following table shows the calculation of basic and diluted loss per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ Net loss for the year $ 42,570 $ 27,816 Weighted average number of common shares ​ 30,232,966 ​ 24,765,503 Basic and diluted loss per share $ 1.41 $ 1.12 ​ 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 2,142,522 (2024 – 2,291,152 ) share options, 859,335 (2024 – 324,621 ) RSUs, and 135,490 (2024 – 91,670 ) DSUs not included in the calculation of diluted loss per share for the year ended December 31, 2025, 1,409,262 (2024 – 1,326,573 ) were exercisable. 15 Commitments and contingencies All directors and officers of the Company are indemnified by the Company for various items including, but not limited to, all costs to settle lawsuits or actions due to their association with the Company, subject to certain restrictions. The Company has purchased directors’ and officers’ liability insurance to mitigate the cost of any potential future lawsuits or actions. The term of the indemnification is not explicitly defined but is limited to events for the period during which the indemnified party served as a director or officer of the Company. The maximum amount of any potential future payment cannot be reasonably estimated but could have a material adverse effect on the Company. The Company has also indemnified certain lenders and underwriters in relation to certain debt and equity offerings and their respective affiliates and directors, officers, employees, shareholders, partners, advisers and agents and each other person, if any, controlling any of the underwriters or lenders or their affiliates against certain liabilities. As of December 31, 2025 and 2024, no material amounts were accrued for the Company’s obligations under these indemnification provisions. 16 Segment reporting The Company’s operations are categorized into one industry segment, which is medical technology focused on magnetic resonance guided ablation procedures for the treatments to ablate the prostate gland, uterine fibroids, osteoid osteoma and nerves for palliative pain relief for patients with metastatic bone disease. The CODM regularly reviews the operating results of the Company on a consolidated basis as part of making decisions for allocating resources and evaluating performance. Further, the CODM is regularly provided with the consolidated expenses as noted on the consolidated statements of operations and comprehensive loss. The following tables represent total revenue by geographic area, based on the location of the location of the reporting entity for the years ended December 31, 2025 and 2024, respectively: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, 2025 ​ ​ Canada ​ USA ​ Germany ​ Total ​ ​ ​ ​ $ ​ ​ ​ $ ​ ​ ​ $ ​ ​ ​ $ Revenue ​ ​ ​ ​ ​ Recurring - non-capital ​ 862 ​ 8,095 ​ 773 ​ 9,730 Capital equipment 2,218 4,150 ​ — 6,368 ​ 3,080 12,245 ​ 773 16,098 ​ F-26 Table of Contents Profound Medical Corp. Notes to Consolidated Financial Statements December 31, 2025 and 2024 In USD (000s) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, 2024 ​ ​ Canada ​ USA ​ Germany ​ Total ​ ​ ​ ​ $ ​ ​ ​ $ ​ ​ ​ $ ​ ​ ​ $ Revenue ​ ​ ​ ​ ​ Recurring - non-capital ​ 891 ​ 6,458 ​ 891 ​ 8,240 Capital equipment 1,548 892 ​ — 2,440 ​ 2,439 7,350 ​ 891 10,680 ​ ​ The following tables represent other geographic information for the years ended December 31, 2025 and 2024, respectively: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, 2025 ​ ​ Canada ​ USA ​ Germany ​ China ​ Finland ​ Total ​ ​ ​ ​ $ ​ ​ ​ $ ​ ​ ​ $ ​ ​ ​ $ ​ ​ ​ $ ​ ​ ​ $ Total assets 63,046 9,791 1,243 137 3,258 77,475 Intangible assets 138 — — — — 138 Property and equipment 41 481 — — 176 698 Right-of-use assets 184 — — — — 184 Amortization of intangible assets 187 — — — — 187 Depreciation of property and equipment 51 322 — — — 373 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, 2024 ​ ​ Canada ​ USA ​ Germany ​ China ​ Finland ​ Total ​ ​ ​ ​ $ ​ ​ ​ $ ​ ​ ​ $ ​ ​ ​ $ ​ ​ ​ $ ​ ​ ​ $ Total assets 58,743 6,351 1,661 92 3,387 70,234 Intangible assets 261 — — — — 261 Property and equipment 93 332 — — — 425 Right-of-use assets 396 — — — — 396 Amortization of intangible assets 229 — — — — 229 Depreciation of property and equipment 66 641 — — — 707 ​ ​ ​ ​ ​ F-27 Table of Contents Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.