Osprey Medical : Annual Report to Stockholders

2021

ANNUAL REPORT

TAKING KIDNEY CARE TO HEART.

TABLE OF CONTENTS

Letter from the Chairman ........................................................................................................................... 4

Letter from the President and CEO ................................................................................................. 5

Independent Auditors' Report ......................................................................................................... 6-7

Consolidated Financial Statements

Consolidated Balance Sheets ............................................................................................................... 8

Consolidated Statements of Operations ................................................................................. 9

Consolidated Statements of Shareholders' Equity .................................................. 10

Consolidated Statements of Cash Flows ............................................................................. 11

Notes to Consolidated Financial Statements ....................................................... 12-21

Shareholder Information ............................................................................................................... 22-25

Corporate Directory ....................................................................................................................................... 27

LETTER FROM THE CHAIRMAN

JOHN ERB

Dear Shareholders,

On behalf of Osprey Medical's Board of Directors and Management, it gives me great pleasure to present the Company's Annual Report for the 2021 Financial Year.

Reflecting on the last year, 2021 remained impacted by COVID-19, and the slow recovery was witnessed throughout the world healthcare community as we worked tirelessly to recuperate from the ongoing pandemic. During this period, the Osprey Medical team remained committed to driving commercial growth globally through the US-based commercial team and the GE Healthcare and RHCG distribution agreements. Additionally, Osprey's management continued to implement its operating cost reduction strategy and secured funding to support ongoing business operations.

Osprey Medical and GE Healthcare's commercial partnership gained significant traction internationally in 2021, with increased sales of 674% to prior year and approval from Health Canada for commercial launch of DyeVert into the Canadian market. With GE Healthcare's established distribution channel in Canada, initial orders were achieved, and Osprey looks forward to the Canadian market making material contributions in 2022.

Validation of Osprey's technology through clinical publications remained a focus in 2021 with multiple global conference presentations, scientific sessions, papers, and webinars highlighting the effectiveness of the DyeVert system to reduce contrast induced acute kidney injury (CI-AKI) in the cardiac cath lab.

The close collaboration between Osprey and GE was evident in the numerous presentations by key opinion leaders who spoke to the role of the DyeVert system in improving patient outcomes as well as publication of the "Three Perspectives on the Reduction of CI-AKI in Invasive Cardiology" report.

Throughout 2021, we witnessed a slow return of hospital procedure volumes, and our financial performance and growth reflect this. The units sold in 2021 increased by ~27% from 2020 achieving a net revenue of US$2.0m. Osprey's cost-effective global expansion strategy has bolstered this growth through the year whilst also achieving a ~9% reduction in operating costs from 2020. This growth in revenue and reduction in costs highlights our commercial resilience and gives hope for positive momentum to continue in 2022.

In addition to these cost initiatives, Osprey took active steps in raising capital of A$14.5m through the issue of unlisted options on a 1 for 1 basis to eligible shareholders with an exercise price of A$0.014. Further, the Company received a second loan of US$1.1m from the US Paycheck Protection Program, with the proceeds to go toward funding the ongoing commercial growth of Osprey.

Lastly, we were pleased to make two new appointments to the Osprey Medical Board of Directors - Steve Brandt and Marty Emerson - who each bring over 35 years' experience in the healthcare sector. We are excited to have Steve's and Marty's depth of experience and successful track records building commercial businesses in the cardiovascular space.

I would like to thank my fellow Board members, including CEO Mike McCormick, and Osprey's management and staff for their ongoing dedication, commitment, and determination as we continue to navigate through uncertainty in a prolonged pandemic. The progress and efficiencies achieved in 2021 will support the strong commercial foundation for growth into 2022.

On behalf of the Osprey Medical Board, I would like to thank all our shareholders for your ongoing support. We are proud of the progress made in 2021 and look forward to providing further progress updates and sharing our achievements with you throughout 2022.

Yours sincerely,

John Erb

Chairman

Osprey Medical Inc.

LETTER FROM THE PRESIDENT AND CEO

MIKE MCCORMICK

Dear Shareholders,

Reflecting on 2021, as we move into a period of global recovery following COVID-19 and despite some turbulence with the emergence of new variants, Osprey has proven its resilience while emerging stronger and better equipped to serve our customers.

This period witnessed hospitals slowly increasing procedure volumes from pandemic levels and refocusing on improving patient outcomes through quality initiatives. Our contribution to improving patient outcomes and lowering healthcare costs was evident in our performance throughout the year, which overall led to a 17% increase in total sales revenue.

Our performance was underpinned by our ongoing efforts in expanding our sales coverage and fostering our relationships with distribution partners. As a result of these efforts, we achieved some strong sales milestones while also reducing our operational costs by 9%.

Continued effort and hard work from the Osprey team has resulted in many key achievements for the Company this year, such as:

Sales Expansion

Over the last 12 months we have been working hard to expand the company's worldwide sales reach. In 2021 Osprey also expanded its existing strategic agreement with GE Healthcare following approval from Health Canada for a Canadian Medical Device License (MDL). The new agreement gives GE Healthcare Canada exclusive distribution rights domestically. In a testament to the effectiveness of GE's distribution capabilities, first sales were achieved in the region shortly after the agreement was signed, and we're expecting the Canadian market to make a material contribution to group revenues in the near to medium term.

The strategic partnership with GE Healthcare also significantly contributed to the total revenue generated outside the US (OUS). OUS sales grew by ~674% in 2021 and the partnership with GE played a pivotal role in achieving this increase and contributed to ~18% of total revenues for this period. GE-led promotional activities and distribution into new markets have helped validate the clinical and commercial effectiveness of Osprey's technology and speak to a strengthened relationship with the multinational conglomerate.

Key appointments

Osprey made two key appointments to the Board in the last year - Martin Emerson and Steven Brandt - who each bring over 35 years' experience in the healthcare sector. Martin Emerson's track record of success in market development, geographic expansion, and existing market growth makes him a welcome addition to the board, and Steven Brandt's extensive experience in new therapy adoption in the cardiovascular space has already proven highly beneficial to the organisation.

Technological validation

2021 has been a busy period for Osprey, with the DyeVert technology being featured in multiple conferences, scientific sessions, papers, and webinars. The highlighting of proven clinical outcomes of our technology by key opinion leaders speaks to the important role DyeVert plays in the reduction of CI-AKI. Some of the key events Osprey was featured in included The American Heart Association Scientific Sessions 2021, Cardiovascular News, and CHIP (Complex and Higher Risk Indicated Patient) Congress in Italy.

Financial

Strong financial results have been reported this year as we witnessed an increase in units sold and an overall ~17% increase in net revenue from 2020. Our strategic partnerships and sales network expansion throughout the year bolstered our position and helped minimise the impact of COVID disruptions. Supporting Osprey's sales growth, the Company has lowered its net cash outflows from operating activities in 2021 by ~9% in comparison to 2020. These impressive results are due to the execution of Osprey's operating cost reduction strategy which aims to sustainably lower Osprey's cost base while maintaining the highest standards of product quality and consistency.

Funding throughout the 2021 period was boosted from issued unlisted options on a 1 for 1 basis to eligible shareholders with an exercise price of A$0.014 issued as part of the 2020 capital raise. The exercise of these options in February last year resulted in A$14.5m being raised by the Company before costs. Osprey also received a second loan of US$1.1m from the US Paycheck Protection Program. Funds raised in 2021 have been used toward funding the ongoing commercial growth of Osprey and strengthening our partnership with GE Healthcare.

In September 2021, Osprey completed a 100:1 stock consolidation, with the main purpose being to align the Company's share price with its listed peers, reduce volatility, and appeal to more institutional investors.

Outlook

Despite the progress made in 2021, Covid has severely curtailed our ability to progress the Company as we had envisioned. As stated in Note 2 of the consolidated financial statement, the Company does not have liquidity to fund its operations through 2022. Management is aggressively seeking additional funding during the second quarter of 2022 to secure the best long-term outcome for the technology and the Company.

Throughout 2021, we continued our efforts into improving outcomes for CI-AKI patients, and these efforts will continue throughout 2022. I would like to thank our Board of Directors, employees, and shareholders for your continued support. Looking back on Osprey's 2021 performance provides an insight into our resilience and productivity throughout the year, which in turn has established a strong runway for success in the coming year.

Mike McCormick

Osprey Medical President and CEO

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