PROFOUND MEDICAL CORP. CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 PRESENTED IN CANADIAN DOLLARS 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 (together, the Company) as of December 31, 2019 and 2018, and the related consolidated statements of loss and comprehensive loss, shareholders’ equity and 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, 2019 and 2018, and its financial performance and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. 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 audit 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. (signed) “PricewaterhouseCoopers LLP” Chartered Professional Accountants, Licensed Public Accountants Oakville, Canada March 3, 2020 We have served as the Company’s auditor since 2013. PricewaterhouseCoopers LLP PwC Centre, 354 Davis Road, Suite 600, Oakville, Ontario, Canada L6J 0C5 T: +1 905 815 6300, F: +1 905 815 6499 “PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership. Profound Medical Corp. Consolidated Balance Sheets As at December 31, 2019 and 2018 2019 2018 $ $ Assets Current assets Cash 19,222,195 30,687,183 Trade and other receivables (note 5) 4,058,136 2,686,112 Investment tax credits receivable 240,000 480,000 Inventory (note 6) 4,764,458 3,631,623 Prepaid expenses and deposits 1,335,620 434,871 Total current assets 29,620,409 37,919,789 Property and equipment (note 7) 684,718 1,207,357 Intangible assets (note 8) 3,128,820 4,013,561 Right-of-use assets (notes 2 and 9) 2,199,381 - Goodwill (note 8) 3,409,165 3,409,165 Total assets 39,042,493 46,549,872 Liabilities Current liabilities Accounts payable and accrued liabilities 3,933,114 3,912,350 Deferred revenue 654,763 312,558 Long-term debt (note 11) 5,144,461 1,339,583 Provisions (note 10) 134,956 1,352,017 Other liabilities (notes 11 and 12) 286,858 567,296 Derivative financial instrument (note 11) 254,769 98,203 Lease liabilities (notes 2 and 13) 258,685 - Income taxes payable 15,763 297,353 Total current liabilities 10,683,369 7,879,360 Long-term debt (note 11) 6,719,924 10,615,662 Deferred revenue 829,784 379,044 Provisions (note 10) 19,005 49,319 Other liabilities (notes 11 and 12) - 1,000,153 Lease liabilities (notes 2 and 13) 2,125,873 - Total liabilities 20,377,955 19,923,538 Shareholders’ Equity Share capital (note 14) 130,266,880 120,932,404 Contributed surplus 19,580,338 16,756,294 Accumulated other comprehensive loss (117,188) (28,703) Deficit (131,065,492) (111,033,661) Total Shareholders’ Equity 18,664,538 26,626,334 Total Liabilities and Shareholders’ Equity 39,042,493 46,549,872 The accompanying notes are an integral part of these consolidated financial statements. Profound Medical Corp. Consolidated Statements of Loss and Comprehensive Loss For the years ended December 31, 2019 and 2018 2019 2018 $ $ Revenue Products 4,895,427 2,421,331 Services 632,144 180,947 5,527,571 2,602,278 Cost of sales (note 16) 2,361,805 1,778,501 Gross profit 3,165,766 823,777 Operating expenses (note 16) Research and development net of investment tax credits of $nil (2018 – $240,000) 12,466,149 10,265,388 General and administrative 7,678,672 6,656,723 Selling and distribution 2,789,042 4,091,347 Total operating expenses 22,933,863 21,013,458 Operating Loss 19,768,097 20,189,681 Other income and expense Finance costs (note 17) 711,588 826,312 Finance income (481,309) (483,788) 230,279 342,524 Loss before taxes 19,998,376 20,532,205 Income taxes (note 18) 193,874 230,784 Net loss attributed to shareholders for the year 20,192,250 20,762,989 Other comprehensive loss (income) Item that may be reclassified to profit or loss Foreign currency translation adjustment net of tax (88,485) 29,226 Net loss and comprehensive loss for the year 20,103,765 20,792,215 Loss per share (note 19) Basic and diluted loss per common share 1.82 2.07 The accompanying notes are an integral part of these consolidated financial statements. Profound Medical Corp. Consolidated Statements of Changes in Shareholders’ Equity For the years ended December 31, 2019 and 2018 Accumulated other Number Share Contributed comprehensive of shares capital surplus income (loss) Deficit Total (note 4) $ $ $ $ $ Balance – January 1, 2018 7,311,738 98,365,770 6,103,970 (57,929) (90,270,672) 14,141,139 Net loss for the year - - - - (20,762,989) (20,762,989) Cumulative translation adjustment – net of tax of nil - - - 29,226 - 29,226 Exercise of share options 43,756 306,882 (201,625) - - 105,257 Share-based compensation (note 15) - - 1,086,199 - - 1,086,199 Issuance of units on bought deal financing (note 14) 3,450,000 22,259,752 9,767,750 - - 32,027,502 Balance – December 31, 2018 10,805,494 120,932,404 16,756,294 (28,703) (111,033,661) 26,626,334 Balance – January 1, 2019 10,805,494 120,932,404 16,756,294 (28,703) (111,033,661) 26,626,334 Change in accounting policy for IFRS 16 (note 2) - - - - 160,419 160,419 Restated balance – January 1, 2019 10,805,494 120,932,404 16,756,294 (28,703) (110,873,242) 26,786,753 Net loss for the year - - - - (20,192,250) (20,192,250) Cumulative translation adjustment – net of tax of nil - - - (88,485) - (88,485) Exercise of share options 1,800 10,080 (4,681) - - 5,399 Share-based compensation (note 15) - - 1,676,844 - - 1,676,844 Issuance of units from offering (note 14) 1,045,455 9,324,396 1,151,881 - - 10,476,277 Balance – December 31, 2019 11,852,749 130,266,880 19,580,338 (117,188) (131,065,492) 18,664,538 The accompanying notes are an integral part of these consolidated financial statements. Profound Medical Corp. Consolidated Statements of Cash Flows For the years ended December 31, 2019 and 2018 2019 2018 $ $ Operating activities Net loss for the year (20,192,250) (20,762,989) Adjustments to reconcile net loss to net cash flows from operating activities: Depreciation of property and equipment (note 7) 472,685 546,001 Amortization of intangible assets (note 8) 1,134,741 1,128,437 Depreciation of right-of-use assets (note 9) 406,397 - Share-based compensation (note 15) 1,676,844 1,086,199 Interest and accretion expense (note 17) 1,369,928 1,028,843 Change in deferred rent - 7,108 Deferred revenue 792,945 450,286 Change in fair value of derivative financial instrument (note 11) 156,566 (96,619) Change in fair value of contingent consideration (note 12) (968,883) (325,253) Changes in non-cash working capital balances Investment tax credits receivable 240,000 (240,000) Trade and other receivables (1,372,024) 1,565,546 Prepaid expenses and deposits (1,110,749) 141,157 Inventory (1,132,835) (2,200,466) Accounts payable and accrued liabilities (24,162) (1,167,336) Provisions (1,198,056) 319,875 Income taxes payable (281,590) 224,574 Net cash flow used in operating activities (20,030,443) (18,294,637) Investing activities Purchase of intangible assets (250,000) - Total cash used in investing activities (250,000) - Financing activities Issuance of common shares 11,500,001 34,500,000 Transaction costs paid (1,023,724) (2,472,498) Proceeds from bank loan - 12,500,000 Bank loan costs paid - (735,698) Payment of other liabilities (16,205) (5,851,489) Payment of long-term debt and interest (1,331,771) (166,975) Proceeds from share options exercised 5,399 105,257 Payment of lease liabilities (318,245) - Total cash from financing activities 8,815,455 37,878,597 Net change in cash during the year (11,464,988) 19,583,960 Cash – Beginning of year 30,687,183 11,103,223 Cash – End of year 19,222,195 30,687,183 The accompanying notes are an integral part of these consolidated financial statements.