McCoy Global Inc. — Annual Report 2020

Mar 17, 2021

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CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020 and 2019

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MANAGEMENT STATEMENT OF RESPONSIBILITY

The preparation and presentation of the accompanying consolidated financial statements of McCoy Global Inc. (the “Corporation”),
which have been prepared in accordance with International Financial Reporting Standards, are the responsibility of management and
have been approved by the Board of Directors.

The consolidated financial statements include certain amounts that are based on the best estimates and judgments of management
and in their opinion present fairly, in all material respects, the Corporation’s financial position, financial performance and cash flows.
The Corporation’s accounting procedures and related systems of internal controls are designed to provide reasonable assurance that
its assets are safeguarded and its financial information is reliable.

The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, the Corporation’s external auditors. The
external auditors are responsible for examining the consolidated financial statements and expressing their opinion on the fairness of
the consolidated financial statements in accordance with International Financial Reporting Standards. The auditor’s report outlines the
scope of their audit examination and states their opinion.

The Board of Directors, through the Audit Committee, is responsible for overseeing management’s responsibility for financial reporting
and is ultimately responsible for reviewing and approving the consolidated financial statements. The Audit Committee meets regularly
with management and the external auditors to satisfy itself that each group is discharging its responsibilities with respect to internal
controls and financial reporting. The Audit Committee reports its findings to the Board of Directors for their consideration when approving
the consolidated financial statements for issuance to the shareholders. The external auditors have full and open access to the Audit
Committee, with and without the presence of management. The Audit Committee also considers, for review by the Board of Directors
and approval by the shareholders, the engagement or reappointment of the external auditors.

(signed) “Jim Rakievich”

(signed) “Lindsay McGill”

President & Chief Executive Officer

Vice President & Chief Financial Officer

March 16, 2021

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Independent auditor’s report

To the Shareholders of McCoy Global Inc.

Our opinion

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of McCoy Global Inc. and its subsidiaries (together, the Company) as at December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS).

What we have audited

The Company’s consolidated financial statements comprise:

• the consolidated statements of financial position as at December 31, 2020 and 2019;

• the consolidated statements of (loss) earnings and comprehensive loss for the years then ended;

• the consolidated statements of changes in equity for the years then ended;

• the consolidated statements of cash flows for the years then ended; and

• the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2020. These matters were

PricewaterhouseCoopers LLP Stantec Tower, 10220 103 Avenue NW, Suite 2200, Edmonton, Alberta, Canada T5J 0K4 T: +1 780 441 6700, F: +1 780 441 6776

“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

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addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter How our audit addressed the key audit matter

• How our audit addressed the key audit matter Our approach to addressing the matter included the following procedures, among others: � Tested how management determined the recoverable amount of the sole CGU as at December 31, 2020, which included the following:

Impairment assessment of goodwill, intangible assets and property, plant and equipment

Refer to note 3 – Significant accounting policies, note 6 – Property, plant and equipment, note 7 – Intangible assets, and note 8 – Impairment of non-financial assets to the consolidated financial statements.

• Tested the appropriateness of the method used and the mathematical accuracy of the discounted cash flow model.

• � Tested the reasonableness of the revenue growth rates and gross profit percentages applied by management in the discounted cash flow model by comparing them to the budget, management’s strategic plans approved by the Board of Directors, results historically achieved by the sole CGU and external metrics of North American and international rig and well counts.

The Corporation had goodwill of $3,481,000, intangible assets of $5,822,000 and property, plant and equipment (PP&E) of $10,466,000 as at December 31, 2020. The carrying values of intangible assets and PP&E with finite useful lives are tested for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. Goodwill and intangible assets with indefinite useful lives or under development are tested for impairment at least annually. For impairment testing, assets are grouped into cash generating units (CGUs), defined as the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets. The recoverable amount of an asset or CGU is the greater of its fair value less cost to sell and value in use (VIU). An impairment loss is recognized in earnings for the amount by which the carrying amount of an asset or CGU exceeds its recoverable amount.

• Professionals with specialized skill and knowledge in the field of valuation assisted in evaluating the appropriateness of management’s method and discounted cash flow model, as well as evaluating the reasonableness of the after-tax discount rate

• Tested the underlying data used in the discounted cash flow model.

In March 2020, the oil and gas industry experienced an unprecedented disruption as a result of the substantial decline in global demand for oil caused by the coronavirus (COVID-19) pandemic and subsequent cost reduction efforts. Drilling activity declined in the face of depressed crude oil pricing, with global rig counts declining through to June 2020 and experiencing modest improvements since that time. These market conditions were determined to be an indicator of

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Key audit matter

How our audit addressed the key audit matter

impairment requiring an assessment of the carrying values of the Corporation’s goodwill, intangible assets and PP&E. The carrying values of goodwill, intangible assets and PP&E are included in the Corporation’s sole CGU and the recoverable amount of this CGU was determined based on its VIU (the method), by discounting estimated future cash flows expected to be generated (discounted cash flow model).

Key assumptions used for the VIU calculation over the five-year financial forecast period require the use of estimates and judgments and include the revenue growth rates, gross profit percentages and after-tax discount rate. No impairment was recognized as a result of the 2020 impairment assessment.

We considered this a key audit matter due to (i) the significance of the goodwill, intangible assets and PP&E balances; (ii) the significant judgment made by management in determining the recoverable amount of the sole CGU, including the use of key assumptions; and (iii) the high degree of subjectivity and audit effort in performing audit procedures to test the key assumptions. Professionals with specialized skill and knowledge in the field of valuation assisted us in performing our procedures.

Valuation of inventories

Refer to note 3 – Significant accounting policies and note 5 – Inventories to the consolidated financial statements.

As at December 31, 2020, the Corporation held inventories of $15,925,000, net of a provision for excess and obsolescence (inventory provision) of $6,658,000. The Corporation’s inventories consist of raw materials, work-in-progress, parts to be used in production and finished goods available for sale. Finished goods available for sale consist of capital equipment and parts and accessories inventories that are available for sale to external

Our approach to addressing the matter included the following procedures, among others:

• Tested how management estimated the inventory provision, which included the following:

• Tested the data used by management in determining the inventory provision and recalculated the mathematical accuracy of the inventory provision.

• Evaluated the appropriateness of management’s inventory provisioning methodology.

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Key audit matter

parties.

Inventories are recorded 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 selling expenses. The net realizable value of capital equipment included in inventories is assessed on an individual product basis considering current market prices for the equipment and management’s assessment of forecasted demand. All other items in inventories are assessed for obsolescence at a distinct part level using a formulaic approach, providing for items that have not been sold or utilized in production in the 24 months previous to the consolidated statements of financial position date. This resulted in a charge of $1,303,000. Subsequent to applying the formulaic approach, management considered other factors relevant to the realizable value of inventory, which resulted in a net incremental inventory charge of $485,000 for parts that have not transacted in one year as of the consolidated statements of financial position date and relate to product lines whose sales forecasts are expected to be more severely impacted by the current economic environment. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write down is reversed up to the maximum of the original write down. Management also utilized judgment in assessing recoveries for inventory items that had previously been provided for and for which some quantity had subsequently been utilized or sold. For these items, management evaluated the quantity of usage or sales at the distinct part level in comparison to the total quantity on hand. For parts where usage or sale was not greater than 25% compared to a benchmark level, these remaining quantities of the specific part were provided for.

How our audit addressed the key audit matter

• For capital equipment, evaluated on a sample basis the reasonableness of market prices for equipment and management’s assessment of forecasted demand by assessing historical movements, forecasted external metrics supporting product demand, and discussions with management, including operations personnel.

• For all other items in inventories evaluated the reasonableness of:

• the rate applied to the items that have not been sold or utilized in production for the past 24 months by considering past experience;

• provision applied to the product lines whose sales forecasts are expected to be more severely impacted by the current economic environment and have not transacted in one year by evaluating forecasted external metrics supporting product line demand, sales orders and the Corporation’s backlog; and

• management’s benchmark level and quantity movements threshold of 25% to evaluate the inventory provision recovery through qualitative evaluations and considering past experience.

• Tested that parts to be used in production and finished goods available for sale inventories at year-end were recorded at the lower of cost and net realizable value by comparing a sample of inventory items to the most recent sales prices of the inventories or similar items.

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Key audit matter How our audit addressed the key audit matter

We consider this a key audit matter due to the magnitude of the inventories and inventory provision balances, the audit effort in testing the inventory provision balance and the significant judgments by management in determining the inventory provision.

Other information

Management is responsible for the other information. The other information comprises the Management’s Discussion and Analysis and the information, other than the consolidated financial statements and our auditor’s report thereon, included in the annual report.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

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Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Steven Hollinger.

/s/PricewaterhouseCoopers LLP

Chartered Professional Accountants

Edmonton, Alberta March 16, 2021

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Stated in thousands of Canadian dollars)

As at Note	December 31, 2020 December 31, 2019
Assets Current assets Cash and cash equivalents Restricted cash 11f Trade and other receivables 22 Inventories 5 Prepaid expenses and deposits	$ $ 12,136 8,382 500 500 3,610 8,791 15,925 23,031 679 664
Other receivables 22 Property, plant and equipment 6 Intangible assets 7 Goodwill	32,850 41,368 39 319 10,466 9,825 5,822 4,567 3,481 3,551
Total assets	52,658 59,630
Liabilities Current liabilities Trade and other payables 9 Customer deposits Provisions 10 Current lease liabilities 12 Borrowings 11	3,633 5,584 1,233 3,148 956 1,539 384 1,097 1,223 2,533
Provisions 10 Lease liabilities 12 Borrowings 11	7,429 13,901 - 58 3,644 2,164 6,081 5,657
Total liabilities	17,154 21,780
Shareholders’ equity 14 Share capital Contributed surplus Accumulated other comprehensive income Accumulated deficit	59,712 59,636 5,560 5,384 7,129 7,552 (36,897) (34,722)
Total shareholders’ equity	35,504 37,850
Total liabilities and shareholders’ equity	52,658 59,630

The accompanying notes are an integral part of these consolidated financial statements.

Approved by the Board of Directors

(signed) “Jim Rakievich” (signed) “Chris Seaver” Director Director

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CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS AND COMPREHENSIVE LOSS

(Stated in thousands of Canadian dollars, except per share amounts)

For the years ended	Note December 31, 2020 December 31, 2019
Revenue Cost of sales	$ $ 16 38,674 53,392 30,723 37,064
Gross profit	7,951 16,328
General and administration Research and development Sales and marketing Finance charges, net Restructuring charges Other(gains) losses, net	5,921 8,938 2,224 3,384 1,415 2,221 18 1,010 664 10 178 - 19 (631) 888
	10,117 16,095
(Loss) earnings before income taxes	(2,166) 233
Income tax expense Current	20 9 -
	9 -
Net (loss) earnings Other comprehensive loss Translation loss of foreign operations	(2,175) 233 (423) (2,990)
Comprehensive loss	(2,598) (2,757)
(Loss) earnings per share	21
Basic from net(loss) earnings	(0.08) 0.01
Diluted from net(loss) earnings	(0.08) 0.01

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Stated in thousands of Canadian dollars, except share amounts)

Note		Issued capital
	Number of shares Share capital Contributed surplus Accumulated other comprehensive income Retained earnings (deficit) Total equity
Balances at January 1, 2019	# $ $ $ $ $ 27,485,939 59,695 5,125 10,542 (34,955) 40,407
Net earnings Translation loss on foreign operations Employee share-based compensation expense Issuance of common shares under restricted share plan 15 Repurchase of shares 14	- - - - 233 233 - - - (2,990) - (2,990) - - 142 - - 142 230,250 126 - - - 126 (85,200) (185) 117 - - (68)
Balances at December 31, 2019	27,630,989 59,636 5,384 7,552 (34,722) 37,850
Net loss Translation loss on foreign operations Employee share-based compensation expense Issuance of common shares under restricted shareplan 15	- - - - (2,175) (2,175)
	- - - (423) (423)
	- - 176 - - 176
	171,500 76 - - - 76
Balances at December 31, 2020	27,802,489 59,712 5,560 7,129 (36,897) 35,504

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(Stated in thousands of Canadian dollars)

For the years ended	Note December 31, 2020 December 31, 2019
Cash generated from (used in) Operating activities Net (loss) earnings Adjustments for: Depreciation of property, plant and equipment Amortization of intangible assets Income tax expense Finance charges, net Share-based compensation expense Changes in non-cash working capital balances Change in restructuring and facility remediation provisions Income taxes paid Finance costs paid, net Gain on lease remeasurement Gain on disposal of property, plant and equipment	$ $
	(2,175) 233 6 2,473 2,729 7 843 155 9 - 1,010 664 15 273 189 25 8,348 4,159 10 (562) (388) (9) - (983) (669) 6 (292) - 19 (121) (154)
Net cash generated from operating activities	8,814 6,918
Investing activities Purchases of property, plant and equipment Proceeds from sale of property, plant and equipment Additions to intangible assets Business combination, net	(1,530) (1,418) 157 380 (2,257) (2,202) - (5,823)
Net cash used in investing activities	(3,630) (9,063)
Financing activities Repayment of borrowings Proceeds from borrowings Repurchase of common shares Proceeds from issuance of common shares under restricted share plan Principal elements of lease payments	11 (6,374) (1,317) 11 5,832 3,161 14 - (68) 15 76 126 12 (670) (941)
Net cash (used in) generated from financing activities	(1,136) 961
Effect of exchange rate changes on cash and cash equivalents	(294) (1,381)
Increase (decrease) in cash and cash equivalents Cash and cash equivalents – beginning of the year	3,754 (2,565) 8,382 10,947
Cash and cash equivalents – end of the year	12,136 8,382

The accompanying notes are an integral part of these consolidated financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2020 and 2019

(in thousands of Canadian dollars, except share data or unless otherwise specified)

1. NATURE OF OPERATIONS

McCoy Global Inc. (“McCoy”, “McCoy Global” or the “Corporation”) is incorporated and domiciled in Canada and is a leading provider
of equipment and technologies designed to support tubular running operations, enhance wellbore integrity and assist with collecting
critical data for the global energy industry. McCoy Global’s core products are used predominantly during the well construction phase
for both land and offshore wells during both oil and gas exploration and development.

The Corporation is engaged in the following:

• design, production and distribution of capital equipment to support tubular running operations, enhance wellbore integrity and to support capital equipment sales through aftermarket products and services such as technical support, consumables and replacement parts;

• design, production and distribution of data collection technologies used in rugged applications for the global energy industry as well as in construction, marine and aerospace;

• repair, maintenance and calibration of the Corporation’s capital equipment and similar competitor products; and

• rental of the Corporation’s equipment and technologies.

Set out below are McCoy’s principal operations:

			Ownership
Operating Name	Country of Incorporation	Operating Region	Interest
McCoy Global Canada Corp.	Canada	Canada	100%
McCoy Global FZE	United Arab Emirates	Eastern Hemisphere	100%
McCoy Global USA, Inc.	United States	United States, Central America & Latin America	100%

McCoy and its subsidiary companies are collectively referred to herein as the “Corporation.”

The address of the registered office of the Corporation is DLA Piper (Canada) LLP, Livingston Place, 1000 - 250 2nd Street SW, Calgary,
Alberta. The Corporation is listed on the Toronto Stock Exchange (“TSX”) under the symbol “MCB.”

2. STATEMENT OF COMPLIANCE

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board (“IASB”).

These consolidated financial statements were approved by the Board of Directors on March 16, 2021.

3. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used in the preparation of these consolidated financial statements are described below. These
policies have been consistently applied to all years presented unless otherwise stated herein.

a) BASIS OF PRESENTATION

The consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries. Intercompany
transactions and balances are eliminated on consolidation.

The consolidated financial statements have been prepared mainly under the historical cost basis. Other measurement bases used
are described in the applicable notes. The consolidated financial statements are presented in Canadian dollars, rounded to the
nearest thousand, except when otherwise indicated. The Corporation’s Canadian operations have a functional currency of
Canadian dollars. The Corporation’s principal operations in the United States and the United Arab Emirates have a functional
currency of US dollars.

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Presentation of the consolidated statements of financial position differentiates between current and non-current assets and
liabilities. The consolidated statements of (loss) earnings and comprehensive loss are presented using the function classification
for expenditures.

Impact of COVID-19 Pandemic

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. Governments worldwide, including
those countries in which the Corporation operates, have enacted emergency measures to combat the spread of the virus. These
measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused
a material disruption to businesses globally resulting in an economic slowdown and decreased demand for oil.

Although the duration and magnitude of the pandemic is uncertain, the current market environment, as further described in note
8, may have a significant adverse impact on the Corporation including, but not limited to, substantial reductions in revenue and
cash flows, increased risk of non-payment of accounts receivable and future impairments of inventory, property, plant and
equipment, intangible assets and goodwill. Estimates and judgments made by management in the preparation of these financial
statements are increasingly difficult and subject to a higher degree of measurement uncertainty during this volatile period. Any
significant adverse changes to these factors may further impact the Corporation’s operating plan and results, its liquidity and cash
flows and the valuation of long-lived assets.

In response to this uncertainty, the Corporation has completed the following actions to support ongoing liquidity:

• Reductions in workforce, throughout all functions of the Corporation;

• Salary and wage reductions across all levels of the organization;

• Reductions to budgeted capital expenditure for rental fleet additions and production equipment;

• Additional reductions to general and administrative overhead expenditures, non-essential travel and other discretionary spending; and

• Applications for government assistance, including the Canadian Emergency Wage Subsidy and the US Paycheck Protection Program.

b) BASIS OF CONSOLIDATION

Subsidiaries are those entities the Corporation controls. The Corporation controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is obtained by the Corporation until the date control ceases.

The acquisition method of accounting is used to account for the acquisition of subsidiaries as follows:

• consideration transferred is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange;

• acquisition transaction costs are expensed as incurred;

• identifiable assets acquired and liabilities assumed are measured at their fair value at the acquisition date;

• the excess of the fair value of consideration transferred over the fair value of the identifiable net assets acquired is recorded as goodwill; and

• if the fair value of the consideration transferred is less than the fair value of the net assets acquired, the difference is recognized directly in the consolidated statements of earnings (loss) and comprehensive loss.

c) CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of the Corporation’s consolidated financial statements requires management to make estimates and judgments
about the future that affect the application of accounting policies and the reported amounts of assets, liabilities and disclosures
of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and
expenses during the period. If these estimates and judgments prove to be inaccurate, future earnings may be materially impacted.

Estimates and underlying assumptions are reviewed on an ongoing basis and revisions to estimates are recognized prospectively.
Actual results may differ from those estimates.

The areas involving a higher degree of judgment or estimation that are significant to the consolidated financial statements are as
follows:

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(i) INVENTORIES

The Corporation records inventories at the lower of cost and net realizable value. Inventory writedowns, or reversals of
previous writedowns, are recorded each period as required and updated based on management’s judgment. Further
information regarding this judgment is described in note 3(g) and note 5.

(ii) TRADE AND OTHER RECEIVABLES

The Corporation records trade and other receivables at amortized cost. Writedowns for trade and other receivables are
recorded each period as required under the expected credit loss model and further updated based on management’s
judgment. Further information regarding judgments is described in note 22(b)(ii).

(iii) PROVISIONS

Estimates and judgments are used in measuring and recognizing provisions and the Corporation’s exposure to contingent
liabilities and onerous contracts. Judgment is necessary to determine the likelihood and estimated future outflow of resources
that may be required to settle any future or existing claims, onerous contracts or contingent obligations. Further information
regarding these estimates and judgments are described in note 3(m) and note 10.

(iv) INCOME TAXES

The Corporation operates in several tax jurisdictions and is required to estimate its income taxes in each of these tax
jurisdictions in preparing its consolidated financial statements. The calculation of income taxes requires the use of judgment.
Further information regarding the judgment used is described in note 3(o) and note 20.

Deferred tax assets are recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that
it is probable that future taxable profits will be available against which they can be utilized. Judgment and estimation are
necessary to determine the likelihood and availability of future taxable profits against which tax losses and tax credits carried
forward can be used. Further information regarding this judgment is described in note 3(o) and note 13.

(v) IMPAIRMENT OF NON-FINANCIAL ASSETS

Long-lived assets include property, plant and equipment, intangible assets and goodwill. The carrying value of these assets
is periodically reviewed for impairment (goodwill at least annually) or whenever events or changes in circumstances indicate
that their carrying amounts may not be recoverable in accordance with the accounting policy stated in note 3(l). Judgment is
required in the aggregation of assets into Cash Generating Units (“CGUs”).

The recoverable amounts of CGUs are determined based on the greater of fair value less cost to sell and value-in-use
calculations. These calculations require the use of estimates and judgments, including an estimation of the future cash flows
from the CGU or group of CGUs and judgment is required in determining the appropriate discount rate. In deriving the
underlying projected cash flows, assumptions must also be made about the impact of future drilling activity on revenues,
operating margins and market conditions over the useful life of the assets or CGUs. Although estimates are consistent with
current industry reports, internal planning and expected future operations, such estimations are subject to uncertainty and
judgment. Further information regarding the estimates and judgment used is described in note 8.

(vi) LEASES

Extension options are included in a number of property leases within the Corporation. In determining the lease term,
management considers all facts and circumstances that create an economic incentive to exercise an extension option.
Extension options are only included in the lease term if the lease is reasonably certain to be extended. Potential future cash
outflows have not been included in the lease liability because it is not reasonably certain that the leases will be extended.

The assessment is reviewed if a significant event or a significant change in circumstances occurs, which affects this assessment

and that is within the control of the lessee.

The Corporation makes estimates in determining the incremental borrowing rate used to measure the lease liability for each
lease contract. The incremental borrowing rate should reflect the interest that the Corporation would have to pay to borrow
at a similar term with similar security.

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(vii) BUSINESS COMBINATIONS

The Corporation applies judgment on the recognition and measurement of assets acquired and liabilities assumed, and
estimates are used to calculate and measure such adjustments. In measuring the fair value of the acquiree’s assets and
liabilities, management uses estimates about future cash flows and discount rates. Any measurement changes after initial
recognition would affect the measurement of goodwill.

d) TRANSLATION OF FOREIGN CURRENCY

(i) FOREIGN CURRENCY TRANSACTIONS

Monetary and non-monetary transactions denominated in foreign currencies are translated into the entity’s functional currency
at the exchange rate prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the exchange rate prevailing at the reporting date. Foreign currency translation differences
are recognized in earnings or loss.

(ii) FOREIGN OPERATIONS

The assets and liabilities of foreign operations, including fair value adjustments arising on acquisition, are translated into
Canadian dollars at the exchange rates at the reporting date. The earnings and expenditures of foreign operations are
translated into Canadian dollars each month using the monthly average foreign exchange rate applicable for that month.
Currency translation differences, including those on monetary items that form part of a net investment in a foreign operation,
are recognized in other comprehensive income (“OCI”) as a translation gain or loss on foreign operations, and may be
subsequently reclassified to earnings or loss on disposal of a foreign operation.

e) FINANCIAL INSTRUMENTS

Financial assets and liabilities are recognized when the Corporation becomes a party to the contractual provisions of the
instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been
transferred and the Corporation has transferred substantially all risks and rewards of ownership. Financial liabilities are
derecognized when the contractual obligation has been discharged, cancelled or expired.

(i) NON-DERIVATIVE FINANCIAL INSTRUMENTS

At initial recognition, non-derivative financial instruments are measured at fair value and are classified as either amortized
cost or fair value through profit or loss.

The Corporation has designated its non-derivative financial instruments as follows:

Financial Instrument	Measurement
Cash and cash equivalents	Amortized cost
Restricted cash	Amortized cost
Trade and other receivables	Amortized cost
Trade and other payables	Amortized cost
Borrowings	Amortized cost
Onerous contracts provisions	Amortized cost

Financial instruments at amortized cost are initially recognized at the amount expected to be received, less, when material,
a discount to reduce the loans and receivables to fair value. Subsequently, these instruments are measured at amortized cost
using the effective interest method less a provision for impairment.

f) CASH AND CASH EQUIVALENTS

Cash and cash equivalents primarily comprise Canadian dollar and US dollar cash on deposit. The Corporation holds local
currency for each location its operations are in for local purchases and expenditures.

g) INVENTORIES

Raw materials, work-in-progress and finished goods inventories are recorded at the lower of cost, as determined on a weighted
average cost basis, and net realizable value.

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Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and
selling expenses. The cost of work-in-progress and finished goods and manufactured production parts inventories includes raw
materials, direct labour and an estimated share of production overheads based on normal operating capacity. If the carrying
value exceeds net realizable value, a writedown is recognized. When the circumstances that previously caused inventories to be
written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed
economic circumstances, the amount of the writedown is reversed. The maximum reversal of any amount is the original writedown,
so that the new carrying amount is the lower of cost and the revised net realizable value.

Finished goods consist of parts and equipment inventories that are available for sale to external parties. Certain parts, classified
as finished goods, may also be used in the production of other finished goods.

h) PROPERTY, PLANT AND EQUIPMENT

(i) RECOGNITION AND MEASUREMENT

Items of property, plant and equipment (“PP&E”) are measured at cost less accumulated depreciation and any accumulated
impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other costs directly attributable to bring the assets to a working condition
for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located.
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to
the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

When parts of an item of PP&E have different useful lives, they are accounted for as separate major components of PP&E.

Gains and losses on disposals of PP&E are determined by comparing the proceeds with the carrying amount of the asset
and are included as part of other gains and losses in earnings.

(ii) SUBSEQUENT COSTS

Costs incurred subsequent to an asset being put into use are included in the asset’s carrying amount or recognized as a
separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Corporation and the cost can be measured reliably. The carrying amount of a replaced asset is derecognized when
replaced. Repairs and maintenance costs are charged to earnings or loss as incurred.

(iii) DEPRECIATION

PP&E is depreciated on a straight-line basis over the period of their expected useful lives as follows:

Buildings	15 years
Machinery and office equipment	3 – 15 years
Rental equipment	2 – 4 years
Computer equipment	1 – 3 years
Right-of-use assets	Lesser of the term of related lease and asset useful life
Leasehold improvements	Lesser of the term of related lease and asset useful life

No depreciation is charged on land. Depreciation is not recognized on assets under construction until such time that they are
ready for their intended use. Residual values, method of depreciation and useful lives of the assets are reviewed annually
and adjusted if appropriate. The effect of such changes is recognized in earnings or loss prospectively.

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i) INTANGIBLE ASSETS

(i) INTERNALLY GENERATED INTANGIBLE ASSETS

Expenditures on research are recognized as an expense as incurred.

Costs incurred on product development are capitalized as intangible assets when it is probable the development will provide
economic benefits, considering its commercial and technical feasibility, the resources available for development and that
costs can be measured reliably. The expenditures capitalized includes the cost of materials, direct labour and overhead costs
that are directly attributable to the asset in order for it to be capable of operating in the manner intended by management.
Subsequent to initial recognition, development expenditures are measured at cost less accumulated amortization and any
accumulated impairment losses.

The Corporation has incurred costs associated with the purchase and development of computer software. Computer software
is initially recorded at cost, including directly attributable expenditures that are necessary to prepare the software for its
intended use. Costs associated with maintaining computer software are recognized as an expense as incurred. Subsequent
to initial recognition, software development expenditures are measured at cost less accumulated amortization and any
accumulated impairment losses.

(ii) AMORTIZATION

Intangible assets with finite lives are amortized on a straight-line basis over the period of their expected useful lives as follows:

Acquired intellectual property			7	years
Internally generated intellectual property	3	–	5	years
Software	1	–	5	years

Amortization is not recognized on assets under development until such time that they are ready for their intended use.

j) GOODWILL

Goodwill reflects the excess of the consideration transferred, amount of non-controlling interest in the acquired entity, and
the acquisition date fair value of any prior equity interest in the acquired entity over the fair value of the net identified assets
acquired.

Goodwill is not amortized but is assessed for impairment at least annually or when events and circumstances indicate that
the carrying value may not be recoverable as described in note 3(l).

k) BUSINESS COMBINATIONS

Acquisitions of businesses and subsidiaries that meet the definition of a business are accounted for using the acquisition
method. The consideration of the acquisition is measured as that fair value of the identifiable assets given, equity instruments
issued and liabilities incurred or assumed at the date of the acquisition in exchange for control of the acquired business.
Acquisition-related costs are recognized in earnings or loss as incurred, other than those associated with the issue of debt or
equity securities.

l) IMPAIRMENT

(i) FINANCIAL ASSETS

The Corporation applies the IFRS 9 simplified approach to measuring expected credit losses, which uses a lifetime expected
credit loss allowance for all trade and other receivables. To measure the expected credit losses, trade and other receivables
have been grouped based on shared credit risk characteristics and the days past due. The carrying amount of the asset is
reduced by this amount, either directly or indirectly, through the use of an allowance account.

Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss
decreases and the decrease can be related objectively to an event occurring after the impairment was recognized.

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(ii) NON-FINANCIAL ASSETS

The carrying values of non-financial assets, such as PP&E and intangible assets with finite useful lives, are tested for impairment
when events or changes in circumstances indicate the carrying amount may not be recoverable. If any such indication exists,
the recoverable amount of the asset is determined. Goodwill and intangible assets with indefinite useful lives or under
development are tested for impairment at least annually.

For impairment testing, assets are grouped together into CGUs, defined as the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets. Corporate assets are allocated
to CGUs on a reasonable and consistent basis, where possible.

The recoverable amount of an asset or CGU is the greater of its fair value less costs to sell and value in use. Value in use is
based on the estimated future cash flows, discounted to their present value using an after-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the assets or CGU.

An impairment loss is recognized in earnings for the amount by which the asset’s or CGU’s carrying amount exceeds its
recoverable amount. An impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount.  Impairments of goodwill are never reversed. An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized.

m) PROVISIONS

Provisions are recognized when the Corporation has a present legal or constructive obligation as a result of past events, it is more
likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. The
timing or amount of the outflow may still be uncertain.

Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the end of the
reporting period. Each obligation is discounted to present value using the expected future cash flows at a rate that reflects current
market assessments of the time value of money and the risks specific to the liability.

A restructuring provision is recognized when the Corporation has developed a detailed formal plan for restructuring and has
formally announced the plan’s main features to those affected by it. The measurement of a restructuring provision includes only
the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the
restructuring and not associated with the ongoing activities of the Corporation.

n) LEASES

At inception of a contract, the Corporation assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To
assess whether a contract conveys the right to control the use of an identified asset, the Corporation uses the definition of a lease
in IFRS 16.

• As a lessee

The Corporation recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset
is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made
at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of
the lease term, unless the lease transfers ownership of the underlying asset to the Corporation by the end of the lease term
or the cost of the right-of-use asset reflects that the Corporation will exercise a purchase option. In addition, the right-of-use
asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Corporation’s
incremental borrowing rate. The Corporation determines its incremental borrowing rate by obtaining interest rates from
various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset
leased.

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The Corporation has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-
term leases, including IT equipment. The Corporation recognizes the lease payments associated with these leases as an
expense on a straight-line basis over the lease term.

• As a lessor

When the Corporation acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating
lease.

To classify each lease, the Corporation makes an overall assessment of whether the lease transfers substantially all of the
risks and rewards incidental to ownership of the underlying asset. As part of this assessment, the Corporation considers
certain indicators such as whether the lease is for the major part of the economic life of the asset.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made by customers under operating leases (net of any incentives received from the lessor) are
charged to earnings on a straight-line basis over the period of the lease.

Leases in which substantially all the risks and rewards of ownership have transferred to the Corporation’s customers are
classified as finance leases.

Each lease payment is allocated between revenue and finance income to achieve a constant rate on the finance lease
balance outstanding. The corresponding rental receivables, net of finance charges, are included in other receivables on the
consolidated statements of financial position. The interest element of the finance income is charged to earnings or loss over
the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

After the commencement date of a lease contract, remeasurements of a lease liability result from either a lease modification or
reassessment. A change in the scope of a lease contract, or the consideration for a lease, that was not part of its original terms
and conditions is considered a lease modification. A lease modification is assessed to determine whether it meets the criteria of
a separate lease that would require a separate right-of-use asset and a corresponding lease liability at the effective date of the
modification. If the lease modification is not a separate lease, the Corporation remeasures the lease liability to reflect changes to
the lease payments and adjusts the carrying amount of the right-of-use asset.  If the carrying amount of the right-of-use asset has
already been reduced to zero, the Corporation recognizes the remaining amount of the remeasurement in the determination of
profit or loss. A lease reassessment takes place when there are changes in the lease payments based on contractual clauses
included in the original contract. For lease reassessments, the lease liability is remeasured to reflect changes to the lease payments
and adjusts the carrying amount of the right-of-use asset.  If the carrying amount of the right-of-use asset has already been reduced
to zero, the Corporation recognizes the remaining amount of the remeasurement in the determination of profit or loss.

o) INCOME TAXES

Income tax expense comprises current and deferred taxes. Current and deferred taxes are normally recognized in earnings or
loss except to the extent that they relate to a business combination, or items recognized directly in equity or in OCI.

Current tax is the expected tax payable or receivable on the taxable income for the period, using the tax rates enacted, or
substantively enacted, at the end of the reporting period and any adjustment to tax payable in respect of previous years. Current
tax assets and liabilities are offset when they relate to taxes levied by the same tax authority on the same taxable entity and there
is a legally enforceable right to offset the current tax assets and liabilities.

Deferred tax is recognized in respect of temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. Deferred tax assets and liabilities are determined on a non-discounted
basis using tax rates and laws that have been enacted or substantively enacted at the consolidated statements of financial position
dates and are expected to apply when the deferred tax asset or liability is settled. Deferred tax assets are recognized to the
extent that it is probable that the assets can be recovered. Deferred tax assets and liabilities are presented as non-current.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and
they relate to taxes levied by the same tax authority on the same taxable entity.

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p) SHARE-BASED COMPENSATION

(i) EQUITY SETTLED SHARE-BASED COMPENSATION

The Corporation grants share options to certain employees, which are equity settled. Each tranche in an award is considered
a separate award with its own vesting period and grant date fair value. Fair value of each tranche is measured at the date
of grant using the Black-Scholes option pricing model. Compensation expense is recognized as an employee expense over
the tranche’s vesting period based on the number of awards expected to vest, by increasing contributed surplus. The number
of awards expected to vest is reviewed at least annually, with any impact recognized immediately.

(ii) CASH SETTLED SHARE-BASED COMPENSATION

The Corporation grants deferred share units (“DSUs”) to certain directors of the Corporation and the Corporation also grants
restricted shares under the terms of its restricted share plan (“RSP”) to certain employees of the Corporation, which are cash
settled. Fair value is measured at the date of grant using the share price at the date of issuance. Compensation expense is
recognized over the vesting period based on the number of awards expected to vest, by increasing or decreasing liabilities.
The number of awards expected to vest is reviewed at least annually, with any impact recognized immediately. The fair value
of the liability is remeasured on each consolidated statement of financial position date and settlement date, with any changes
in fair value recognized in earnings or loss.

q) SHARE CAPITAL

Common shares are classified as equity. Incremental costs directly attributable to the issuance of shares are recognized as a
deduction from equity.

r) EARNINGS PER SHARE

The Corporation presents basic and diluted earnings per share (“EPS”) data for its ordinary shares.

Basic EPS are calculated by dividing the net earnings for the year attributable to equity owners of the Corporation by the weighted
average number of common shares outstanding during the year.

Diluted EPS are calculated by adjusting the weighted average number of common shares outstanding for dilutive instruments. The
number of shares included with respect to options, warrants and similar instruments is computed using the treasury stock method.
The Corporation’s potentially dilutive common shares comprise share options granted to employees.

s) REVENUE

(i) SALE OF PRODUCTS

The Corporation’s products are sold based on purchase orders or contracts with customers that include fixed or determinable
prices and do not generally include a right of return or other significant post-delivery obligations. Revenue from product sales
is recognized at a point in time when a performance obligation has been satisfied by transferring control of promised goods
to the customer, which is typically at the point of shipment. Revenue is recognized net of any taxes collected from customers,
which are subsequently remitted to governmental authorities. Payment terms and conditions vary, but contracts generally do
not include a significant financing component. Provisions for estimated warranty costs are made at the time the related
revenue is recognized.

Miscellaneous charges invoiced to customers such as those for freight and crating are recorded on a net basis against the
costs incurred within the cost of sales line item on the consolidated statements of (loss) earnings and comprehensive loss as
the Corporation acts in an agent role for these activities.

(ii) RENDERING OF SERVICES

Revenues from repair, maintenance and calibration services are recognized over time as the services are rendered. Rates
for services are typically priced on a per man-hour or similar basis.

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(iii) RENTAL

Revenues from equipment rentals are recognized when there is a written arrangement in the form of a contract or purchase
order with the customer, a fixed or determinable sales price is established with the customer, performance requirements are
achieved and when recovery of the consideration is probable. Equipment rental revenue is recognized as performance
requirements are achieved in accordance with the terms of the relevant agreement with the customer.

t) GOVERNMENT ASSISTANCE

Government assistance is recognized in the consolidated statement of loss (earnings) and comprehensive loss when there is
reasonable assurance that the assistance will be received and the Corporation will comply with all relevant conditions. Government
assistance related to current expenses is recorded in the determination of net (loss) earnings in the same period.

4. FUTURE ACCOUNTING PRONOUNCEMENTS

From time to time IASB and IFRIC issue a number of new standards, amendments to standards and interpretations that are effective
for future reporting periods. There are no other standards that are not yet effective that would be expected to have a material impact
on the Corporation in the current or future reporting periods at this time.

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5. INVENTORIES

As at	December 31, 2020 December 31, 2019
	Gross inventories Provision for excess and obsolescence Net inventories Gross inventories Provision for excess and obsolescence Net inventories
Raw materials Work-in-progress Parts to be used in production	$ $ $ $ $ $ 1,341 (285) 1,056 1,822 (116) 1,706 1,778 - 1,778 1,890 - 1,890 10,506 (3,532) 6,974 11,421 (2,427) 8,994
Production inventory Capital equipment available for sale Parts and accessories available for sale	13,625 (3,817) 9,808 15,133 (2,543) 12,590 1,640 (627) 1,013 3,055 (642) 2,413 7,318 (2,214) 5,104 10,867 (2,839) 8,028
	22,583 (6,658) 15,925 29,055 (6,024) 23,031

Production inventories are purchased or produced for use in the production of finished goods. Finished goods available for sale consist
of capital equipment and parts and accessories inventories that are available for sale to external parties.

Included in cost of sales for the year ended December 31, 2020, is a net write-down of $1,786 (2019 – net recovery of $506). A write-
down is taken if management determines that the carrying value of the inventory item(s) exceed net realizable value. When the
circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an
increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed. The maximum
amount of any reversal is the original write-down, such that the new carrying amount is the lower of cost or the revised net realizable
value.

The net realizable value of capital equipment included in inventories is assessed on an individual product basis considering current
market prices for the equipment and management’s assessment of forecasted demand. For the year ended December 31, 2020, this
resulted in a net recovery of $2 (2019 – charge of $50). All other items in inventory are assessed for obsolescence at a distinct part
level. The estimated net realizable value of these items is determined using a formulaic approach, providing for items that have not
been sold or utilized in production in the 24 months previous to the consolidated statements of financial position date. This resulted in
a charge of $1,303 (2019 - recovery of $1,046). Subsequent to applying the formulaic approach described above, management
considered other factors relevant to the realizable value of inventory, which resulted in a net incremental charge of $485 (2019 – $490).
The net incremental charge relates to parts that have not transacted in one year as of the consolidated statements of financial position
date and relate to product lines whose sales forecasts are expected to be more severely impacted by the current economic environment
as described in note 3a. In addition, management also utilized judgment in assessing recoveries for inventory items that had previously
been provided for and for which some quantity had subsequently been utilized or sold. For these items, management evaluated the
quantity of usage or sales at the distinct part level in comparison to the total quantity on hand. For parts where usage or sale was not
greater than 25% compared to a benchmark level, these remaining quantities of the specific part were provided for.

During the year ended December 31, 2020 the Corporation disposed of $997 of inventory that had been identified as excess and
obsolete and provided for in previous years (2019 - $392).

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6. PROPERTY, PLANT AND EQUIPMENT (PP&E)

			Machinery,
			office and		Right-of-use
			computer	Rental	assets -	Leasehold
	Land	Buildings	equipment	equipment	buildings	improvements	Total
	$	$	$	$	$	$	$
Cost
At January 1, 2019	1,397	3,500	10,138	3,704	-	1,607	20,346
IFRS 16 transitional impact	-	-	-	-	3,800	-	3,800
Business combination	-	-	246	-	-	-	246
Additions	-	-	103	1,041	-	274	1,418
Disposals	-	-	(272)	(282)	(56)	-	(610)
Foreign exchange	(67)	(168)	(487)	(186)	(129)	(77)	(1,114)
At December 31, 2019	1,330	3,332	9,728	4,277	3,615	1,804	24,086
Lease remeasurement	-	-	-	-	1,867	-	1,867
Additions	-	-	63	-	-	32	95
Transfers from inventory	-	-	-	1,435	-	-	1,435
Disposals	-	-	(303)	(70)	(245)	-	(618)
Foreign exchange	(26)	(66)	(201)	(153)	(47)	(31)	(524)
At December 31, 2020	1,304	3,266	9,287	5,489	5,190	1,805	26,341
Accumulated
depreciation
At January 1, 2019	-	472	8,393	2,193	-	1,464	12,522
Depreciation	-	231	706	797	935	60	2,729
Disposals	-	-	(217)	(142)	(25)	-	(384)
Foreign exchange	-	(25)	(389)	(113)	(9)	(70)	(606)
At December 31, 2019	-	678	8,493	2,735	901	1,454	14,261
Depreciation	-	237	457	914	798	67	2,473
Disposals	-	-	(303)	(34)	(99)	-	(436)
Foreign exchange	-	(26)	(198)	(120)	(50)	(29)	(423)
December 31, 2020	-	889	8,449	3,495	1,550	1,492	15,875
Carrying amount
At December 31, 2019	1,330	2,654	1,235	1,542	2,714	350	9,825
At December 31, 2020	1,304	2,377	838	1,994	3,640	313	10,466

During the year ended December 31, 2020, depreciation included in cost of sales amounted to $2,234 (2019 - $2,565) and depreciation
in general and administration amounted to $239 (2019 -- $164).

Additions to the rental fleet during 2020 and 2019 are comprised of equipment capitalized from inventory.

Effective June 1, 2020, the Corporation amended an existing facility lease agreement for its Broussard, Louisiana facility. Under the
amended agreement, certain of the agreement’s terms were modified as follows:

• The lease term was extended from June 30, 2022 to May 31, 2027;

• Contractual annual lease payments were reduced by US$420 for the period from June 1, 2020 to May 31, 2022;

• Contractual annual lease payments for the extension period of June 30, 2022 to May 31, 2027 are US$600; and

• The Corporation returned a portion of the property under the original lease agreement to the landlord effective December 31, 2020.

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The lease modification resulted in a net increase of $1,867 to right-of-use assets and increase in lease liabilities of $1,575, with the
difference related to the return of a portion of the property being recorded as a gain of $292 included in other (gains) losses, net on
the consolidated statements of (loss) earnings and comprehensive loss. The lease liability was measured at the present value of the
remaining lease payments, discounted using the Corporation’s incremental borrowing rate as at June 1, 2020. The weighted average
incremental borrowing rate applied to the lease modification on June 1, 2020 was 9.0%.

7. INTANGIBLE ASSETS

	Internally		Software and
	generated	Acquired	internally
	intellectual	intellectual	generated
	property	property	software	Total
	$	$	$	$
Cost
At January 1, 2019	319	-	2,796	3,115
Additions	2,194	-	8	2,202
Business combination	-	2,596	-	2,596
Foreign exchange	(34)	(59)	(2)	(95)
At December 31, 2019	2,479	2,537	2,802	7,818
Additions	2,204	-	53	2,257
Foreign exchange	(154)	(51)	-	(205)
At December 31, 2020	4,529	2,486	2,855	9,870
Accumulated amortization
At January 1, 2019	319	-	2,787	3,106
Amortization	57	93	5	155
Foreign exchange	(7)	(2)	(1)	(10)
At December 31, 2019	369	91	2,791	3,251
Amortization	459	375	9	843
Foreign exchange	(24)	(22)	-	(46)
At December 31, 2020	804	444	2,800	4,048
Carrying amounts
At December 31, 2019	2,110	2,446	11	4,567
At December 31, 2020	3,725	2,042	55	5,822

As at December 31, 2020, intangible assets that were under development and not amortized amounted to $2,221 (2019 - $1,988).

During the year ended December 31, 2020, amortization included in cost of sales amounted to $834 (2019 - $150) and amortization in
general and administration amounted to $9 (2019 - $5).

When it is determined that the cost and accumulated amortization of assets have no remaining economic lives, they are retired.

The remaining amortization period of the finite life intangible assets is as follows:

The remaining amortization period of the finite life intangible assets is as follows:
	2020 2019
Internally generated intellectual property Acquired intellectual property Software	3 – 5 years 3 – 5 years 6 years 7 years 1 - 5 year 1 year

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8. IMPAIRMENT OF NON-FINANCIAL ASSETS

In March 2020, the oil and gas industry experienced an unprecedented disruption, as a result of the substantial decline in global
demand for oil caused by the coronavirus (“COVID-19”) pandemic and subsequent cost reduction efforts. Drilling activity declined in
the face of depressed crude oil pricing, with global rig counts declining through to June 2020 and experiencing modest improvement
since that time. These market conditions have significantly impacted the Corporation’s business and financial projections and as such,
were determined to be an indicator of impairment requiring an assessment of the carrying value of the Corporation’s goodwill,
intangible assets and property, plant and equipment. The carrying amount of goodwill, intangible assets and property, plant and
equipment are included in the Corporation’s sole CGU and the recoverable amount of this CGU was determined based on its value in
use, by discounting estimated future cash flows expected to be generated. The determination of the recoverable amount of the CGU
uses projections over a five-year period based on financial budgets approved by management and reviewed by the Corporation’s
Board of Directors. This evaluation was prepared as of December 31, 2020 (2019 – December 31).

Key assumptions used for the value in use calculations over the five-year financial forecast include:

	2020 2019
Average revenue growth Average gross profit percentage After-tax discount rate	11.5% 11.0% 36.2% 30.6% 16.7% 16.7%

Management has determined the values assigned to each of the above key assumptions as follows:

• Revenue cash flows: Estimated cash flows are based on actual and forecasted orders which are projected for future periods based on forecasted North American and international rig and well counts, past performance and management’s expectations of market development.

• Gross profit percentage: Based on past performance and management’s expectations for the future.

• After-tax discount rate: Estimated weighted average cost of capital that reflects the specific risks relating to the Corporation and locations in which it operates.

On completion of the impairment assessment, it was determined that no impairment was to be recognized as the recoverable amount
significantly exceeded the carrying value of the Corporation’s non-financial assets. Any significant adverse changes in future periods
to internal forecasts employed in the model or the external market conditions could reasonably be expected to negatively affect key
assumptions employed in the model and may result in future impairment charges, which could be material.

During the year ended December 31, 2019, the Corporation determined that the decline in drilling activity levels in the North American
land market was an indicator of impairment and performed an assessment of the carrying values of non-financial assets.  This
assessment did not result in an impairment charge.

9. TRADE AND OTHER PAYABLES

. TRADE ANDOTHERPAYABLES
Note	2020 2019
Trade payables Accrued liabilities and other payables Cash settled share-based compensation 15(b)	$ $ 2,346 4,207 1,074 1,180 213 197
	3,633 5,584

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10. PROVISIONS

					Facility
	Note	Warranty	Legal	Restructuring	remediation	Total
		$	$	$	$	$
At January 1, 2019		721	-	730	994	2,445
Transitional impact of IFRS 16	12	-	-	(582)	-	(582)
Provisions made during the year		229	147	-	614	990
Provisions utilized during the year		(304)	(25)	(51)	(951)	(1,331)
Business combination	26	126	-	-	-	126
Foreign exchange		(51)	-	-	-	(51)
At December 31, 2019		721	122	97	657	1,597
Provisions made during the year		275	-	178	45	498
Provisions utilized during the year		(202)	(122)	(128)	(657)	(1,109)
Foreign exchange		(28)	-	(2)	-	(30)
At December 31, 2020		766	-	145	45	956
Expected to be utilized within oneyear		766	-	145	45	956
Expected to be utilized thereafter		-	-	-	-	-

a) WARRANTY

The warranty provision relates to the expected cost of meeting warranty obligations. Judgment related to the provisions is based
on historical data and other known information and is an estimate of the warranty required for products sold on or before the
reporting date.

b) LEGAL

In the normal course of the Corporation’s business, it may become involved in, named as a party to, or be the subject of, various
legal proceedings related to personal injuries, environmental claims, property damage, contractual disputes, patent infringement
and regulatory matters, among others. The outcome of outstanding, pending or future proceedings cannot be predicted with
certainty and may be determined adversely to the Corporation and, as a result, could have a material adverse effect on the
Corporation’s financial performance, financial position and liquidity. Losses, if any, may be covered by the Corporation’s insurance.

c) RESTRUCTURING

As at December 31, 2020, restructuring provisions relate to certain unavoidable operation costs associated with onerous contracts
that were recognized in conjunction with the Corporation’s restructuring plans and cost containment initiatives announced in April
2020 (note 3a). Restructuring provisions as at December 31, 2019 related to certain unavoidable operation costs associated with
onerous leases that were recognized in conjunction with the Corporation’s restructuring plans announced in 2018.

d) FACILITY REMEDIATION

During the year ended December 31, 2020, the Corporation identified a property encroachment matter related to its real estate
in Cedar Park, Texas.  As such, the Corporation recorded a provision for $45 to fully remediate the matter.

The Corporation historically leased premises, which were required to be returned to the landlord at the end of the lease in
accordance with the terms of the lease agreement, including remediation of any deficiencies incurred as a result of carrying out
business activities. As part of a prior business divestiture, the Corporation indemnified the purchaser with respect to these leased
premises associated with the divestiture. Effective March 31, 2020, a release and settlement agreement was reached between the
Corporation, the purchaser and the landlord with respect to the leased premises.

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11. BORROWINGS

Changes in liabilities for which cash flows have been classified as financing activities in the consolidated statements of cash flows are
as follows:

as follows:
					US
	Senior	Senior			Paycheck
	Secured	Secured	Secured	Unsecured	Protection
	Term	Term	Promissory	Promissory	Program
	Loan I	Loan II	Note	Note	Loan	Total
	11(a)	11(b)	11(c)	11(d)	11(e)
	$	$	$	$	$	$
Balances at January 1, 2019	4,775	-	-	-	-	4,775
Proceeds of borrowings	-	-	3,161	-	-	3,161
Business combination	-	-	-	1,994	-	1,994
Deferred financing charges	-	-	(100)	-	-	(100)
Repayments of borrowings	(1,317)	-	-	-	-	(1,317)
Amortization of deferred charges	16	-	12	-	-	28
Foreign exchange adjustment	(263)	-	(42)	(46)	-	(351)
Balances at December 31, 2019	3,211	-	3,031	1,948	-	8,190
Proceeds of borrowings	-	3,172	-	-	2,660	5,832
Deferred financing charges	-	(151)	-	-	-	(151)
Repayments of borrowings	(1,281)	-	(3,172)	(1,921)	-	(6,374)
Amortization of deferred charges	21	14	88	-	-	123
Foreign exchange adjustment	(61)	(120)	53	(27)	(161)	(316)
Balances at December 31, 2020	1,890	2,915	-	-	2,499	7,304
Current, net of deferred charges	1,258	(35)	-	-	-	1,223
Non-current, net of deferred charges	632	2,950	-	-	2,499	6,081

Scheduled principal repayments under the borrowing arrangements calculated using foreign exchange rates in effect at December 31,
2020 are as follows:

2020 are as follows:
Senior Secured Term Loan I Senior Secured Term Loan II US Paycheck Protection Program Loan	Total
$ $ $ 2021 1,273 - - 2022 637 381 2,499 2023 - 1,526 - 2024 - 1,145 -	$
	1,273
	3,517
	1,526
	1,145
Total 1,910 3,052 2,499	7,461

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a) SENIOR SECURED TERM LOAN I

During the year ended December 31, 2018, the Corporation entered into a term loan agreement for $5,209 (USD$4.0 million).
The loan has a term of four years and is repayable in equal quarterly payments of principal, plus interest. Interest is calculated
at either LIBOR plus 5.05% or the US Prime Rate plus 3.55%, at the Corporation’s option. As at December 31, 2020, the applicable
rate was 5.88% (December 31, 2019 – 7.80%). Under the term loan agreement, the Corporation’s wholly owned subsidiary,
McCoy Global USA, Inc., provided a general security agreement over all present and after acquired personal property and
the Corporation provided a guarantee. There are no financial covenants associated with the term loan agreement. The
Corporation is subject to certain conditions under the term loan agreement, including a material adverse change clause.

b) SENIOR SECURED TERM LOAN II

In October of 2020, the Corporation entered into a term loan agreement for $3,172 (USD$2.4 million) to replace its existing
US$2.4 million promissory note due October 1, 2021 (note 11c) and support McCoy Global’s technology development program.
The term loan bears interest at US Prime Rate plus 4.95% per annum and is repayable in eight equal quarterly instalments
beginning on December 6, 2022. As at December 31, 2020, the applicable rate was 8.20%. The facility is subject to customary
conditions and is secured by certain assets of the Corporation and its subsidiaries, including certain real estate in Cedar Park,
Texas. Under the terms of the agreement, the Corporation is subject to a financial covenant minimum fixed charge coverage
ratio of 1:1 for the year ending December 31, 2021; and 1.25:1 for years ending thereafter; where the fixed charge coverage
ratio is calculated as earnings before interest, taxes, depreciation and amortization less capital expenditures over the sum of
interest expense, principal payment of indebtedness and lease payments made during the period. At December 31, 2020,
US$2.4 million was drawn against the new facility.  The Corporation incurred transaction costs of $151 in connection with
securing the loan, for net proceeds of $3,021.

c) SECURED PROMISSORY NOTE

During the year ended December 31, 2019, the Corporation entered into an US denominated loan agreement for $3,161
(USD$2.4 million) secured by certain of its US real estate assets. Interest was calculated at the US Prime Rate plus 7.00%, but
in no event to be less than 12.25%. The loan was repayable on or before October 1, 2021; however, the facility could be repaid
at any time without penalty. In October of 2020, the promissory note was repaid in full with proceeds from the Corporation’s
senior secured term loan II (note 11b).

d) UNSECURED PROMISSORY NOTE

In connection with the acquisition of DrawWorks LP in 2019, the Corporation entered into an US denominated promissory note
for $1,994 (USD$1.5 million). The note is repayable in equal quarterly payments of principal, plus interest over eighteen months.
The promissory note bears interest at 5.25%. During the year ended December 31, 2020, the promissory note was repaid in
full.

e) US PAYCHECK PROTECTION PROGRAM (PPP) LOAN

In April of 2020, the Corporation received approval and funding under its application for a PPP loan of $2,660 (US$1,963). The
loan bears interest at 0.98% and matures on April 16, 2022. A portion of the loan proceeds may be forgiven in accordance
with certain US Treasury guidelines. The Corporation estimates that, based on US Treasury Guidelines as applicable at
December 31, 2020, US$1,963 of the loan proceeds may be forgiven if the Corporation’s application for forgiveness is
approved.

f) CASH SECURED CREDIT FACILITY

During the year ended December 31, 2018, the Corporation entered into a $500 credit facility to support cash management.
The credit facility is secured by $500 in cash and cash equivalents, which is to be held under the Creditor’s authority as security.
In September 2020, the Corporation extended the facility from $500 to $900 to support the issuance of standby letters of credit
for customer orders and corresponding customer deposits. Upon expiration of certain of the standby letters of credit the facility
was reduced back to $500. The $500 of cash and cash equivalents held as collateral is presented as restricted cash on the
consolidated statements of financial position. As at December 31, 2020, $400 of the facility was committed.

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g) REVOLVING DEMAND FACILITY

In October 2020, the Corporation secured a US$2.5 million revolving demand facility with a Canadian chartered bank to
support working capital. The facility is subject to customary disbursement conditions including the satisfactory placement of a
general security agreement over the Corporation’s assets and final review by Export Development Canada under its Export
Guarantee Program. The revolving demand facility bears interest at Prime Rate plus 1.35% per annum and will be secured by
a general security agreement and assignment of US$0.6 million of term deposits. Subject to final review, the demand facility
will be guaranteed by Export Development Canada under its Export Guarantee Program and is subject to customary terms
and conditions. As at December 31, 2020, no amount was drawn against the facility.

12. LEASES

The Corporation recognizes lease liabilities in relation to contractual lease payments, measured at the present value of the remaining
lease payments, discounted using the Corporation’s incremental borrowing rate. The weighted average incremental borrowing rate
applied to the lease liability additions and modifications was 9.0% (2019 – range of 7.00% - 7.82%).

Note	2020 2019
Lease liability as at January 1 Finance charges on lease liabilities 18 Remeasurements 6 Principal elements of lease payments Payment of finance charges on lease liabilities Foreign exchange	$ $ 3,261 4,382 343 287 1,575 - (670) (941) (343) (287) (138) (180)
Lease liability as at December 31	4,028 3,261
Current	384 1,097
Non-current	3,644 2,164

13. DEFERRED TAXES

a) UNRECOGNIZED DEFERRED TAX ASSETS

Deferred tax assets have not been recognized in respect of the following items:

	2020 2019
Deductible temporary differences Tax losses	$ $
	4,647 4,599
	3,242 3,176
	7,889 7,775

Based on management’s current estimates of future taxable earnings, the recoverability of these items is indeterminable and as
such, deferred tax assets have not been recognized in respect of these amounts.

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b) TAX LOSSES CARRIED FORWARD

Unrecognized deferred tax assets derived from tax losses expire as follows:

2035 2036 2037 2038 2039 2040	2020 2019
	Gross amount Tax effect Gross amount Tax effect
	$ $ $ $
	27 6 - -
	4,046 972 4,111 1,111
	2,286 549 2,286 617
	710 157 723 170
	3,188 743 6,057 1,278
	3,668 815 - -
	13,925 3,242 13,177 3,176

Deferred tax assets have not been recognized in respect of capital losses of $25,130 (2019 - $23,845). It is not probable that future
taxable capital gains will be available against which the Corporation can utilize the benefits of these losses. These losses do not
expire.

14. SHAREHOLDERS’ EQUITY

a) SHARE CAPITAL

AUTHORIZED

(i)Unlimited number of common, voting shares

• (ii) Unlimited number of preferred, non-voting shares

b) REPURCHASE OF COMMON SHARES

During the year ended December 31, 2018, the Corporation announced a normal course issuer bid (“NCIB”). Under the NCIB, the
Corporation was permitted to purchase, for cancellation, up to a maximum of 1,379,041 common shares, equal to five percent of
the public float of 27,580,839 common shares as at May 23, 2018. The Corporation was also limited under the NCIB to purchasing
no more than 2,241 common shares on any given day, subject to the block purchase exemption under the TSX rules. The NCIB
continued until May 19, 2019. All shares purchased under the NCIB were cancelled.

On May 31, 2019, the Corporation announced the renewal of its NCIB. Under the current NCIB, the Corporation may purchase, for
cancellation, up to a maximum of 1,371,422 common shares, equal to five percent of the public float of 27,428,439 common shares
as at May 23, 2019. The Corporation is also limited under the NCIB to purchasing no more than 1,910 common shares on any given
day, subject to the block purchase exemption under the TSX rules. The NCIB continued until June 4, 2020. Purchases were made on
the open market through the TSX or alternative platforms at the market price of such shares. All shares purchased under the NCIB
were cancelled.

Transactions under the NCIB were as follows:

		2020 2019
Shares repurchased Weighted average cost Total cost	$ $	- 85,200
		- 0.80
		- 68

Total cost includes share repurchase amount and costs to implement the NCIB.

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15. SHARE-BASED COMPENSATION

a) EQUITY SETTLED SHARE-BASED COMPENSATION

The Corporation’s share option plan for employees is administered by the Human Resources, Compensation & Governance
Committee, which is a subcommittee of the Board of Directors. The Human Resources, Compensation & Governance Committee
designates eligible participants to be included under the plan and designates the number of options and share price of the
options, subject to applicable securities laws and stock exchange regulations.

The aggregate number of common shares issuable under the plan can be no greater than 10% of the common shares issued and
outstanding from time to time on a non-diluted basis when combined with shares issued under the restricted share plan as
described below. In addition, no more than 5% of outstanding shares may be reserved for options granted to any one person and
no more than 10% of outstanding shares may be reserved for options granted to insiders. The maximum term of options granted
under the plan is ten years and the vesting period of option grants is at the discretion of the Board of Directors. The options vest
evenly over the vesting period. The exercise price of options is determined by the Board of Directors, but cannot be lower than
the market price of shares on the last trading day preceding the grant date.

The following reflects activity under the employee share option plan:

	2020 2019
	Number of options Weighted average exercise price Number of options Weighted average exercise price
Outstanding, January 1 Granted Forfeited Expired	# $ # $
	1,985,000 1.59 1,355,000 2.57
	10,000 0.43 775,000 0.65
	(325,000) 1.97 (5,000) 2.05
	- - (140,000) 5.86
Outstanding, December 31	1,670,000 1.51 1,985,000 1.59
Exercisable, December 31	832,000 2.08 664,000 2.41

Options with the following exercise price ranges were outstanding as at December 31:

Exercise price range	2020 2019
	Options outstanding Weighted average remaining contractual life Options outstanding Weighted average remaining contractual life
< $1 $1 to $2 $2 to $3 $3 to $4	# years # years 735,000 9.96 775,000 10.96 530,000 6.99 650,000 7.85 205,000 7.02 360,000 7.75 200,000 5.21 200,000 6.21
	1,670,000 8.09 1,985,000 8.88

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The following weighted average assumptions were used in the Black-Scholes calculations for share options granted during the
years ended December 31:

ears ended December 31:
	2020 2019
Share price $ Exercise price $ Expected volatility Risk-free interest rate Annual dividend rate Expected life of options	0.43 0.65 0.43 0.65 64% 58% 1% 2% - - 7.0 years 7.0 years

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur.
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not be the actual
outcome.

The weighted average fair value of share options granted during the year, calculated under the Black-Scholes option pricing
model, was $0.30 per share option (2019 - $0.44 per share option) and there were no options exercised during the year (2019 –
no options exercised during the year).

b) CASH SETTLED SHARE-BASED COMPENSATION

The Corporation has a DSU plan for Directors of the Corporation who are designated as participants by the Human Resources,
Compensation & Governance Committee. The DSU plan has two components: an “appointment grant” and a “continuous grant.”
The appointment grant is provided to each newly appointed Director. The appointment grant fully vests on the third anniversary
of the grant date. The continuous grant provides for an annual issue of DSUs to eligible Directors. One-third of the continuous grant
vests annually on the anniversary of the grant date. The DSUs can only be exercised on exiting from the Board of Directors.

On exiting from the Board of Directors, the DSUs are redeemed for cash based on the market price of any vested DSUs at the
time of exit. The liability relating to the units accumulated under this plan has been included in trade and other payables on the
consolidated statements of financial position as disclosed in note 9.

onsolidated statements of financial position as disclosed in note 9.
	2020 2019
Outstanding, as at January 1 Granted	# # 223,661 176,785 153,453 46,876
Outstanding, as at December 31	377,114 223,661
Vested, as at December 31	183,402 152,009

The Corporation has an RSP for employees of the Corporation who are designated as participants by the Human Resources,
Compensation & Governance Committee. The aggregate number of common shares issuable under the plan can be no greater
than 10% of the common shares issued and outstanding from time to time on a non-diluted basis when combined with shares
issued under the share option plan. In addition, no more than 5% of outstanding shares may be reserved for any one person and
no more than 10% of outstanding shares may be reserved for insiders. The vesting arrangements under the plan are at the
discretion of the Board of Directors, however the term of the vesting cannot be longer than ten years.

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Upon vesting, the restricted shares are redeemed for cash based on the market price of any vested restricted shares at the time
of vesting. The liability relating to the shares accumulated under this plan has been included in trade and other payables on the
consolidated statements of financial position as disclosed in note 9.

onsolidated statements of financial position as disclosed in note 9.
	2020 2019
Outstanding, as at January 1 Granted Forfeited Redeemed or exercised	# # 230,250 492,000 410,000 - (58,750) (31,500) (171,500) (230,250)
Outstanding, as at December 31	410,000 230,250
Vested, as at December 31	- -

Restricted shares outstanding under the restricted share plan as at December 31, 2020 vest evenly over one year from the grant
date. During the year, the Corporation issued 171,500 (2019 – 230,250) shares from treasury to generate cash proceeds for the
purpose of redeeming restricted shares redeemed or exercised.

c) SHARE-BASED COMPENSATION EXPENSE

HARE-BASED COMPENSATION EXPENSE
	2020 2019
Equity settled share-based compensation Cash settled share-based compensation	$ $ 176 142 97 47
	273 189

Share-based compensation expense has been included in general and administration expense in the consolidated statements of
(loss) earnings and comprehensive loss.

16. REVENUE

6. REVENUE
	2020 2019
Sale of products, parts and consumables Rendering of services Rental revenue	$ $ 34,477 46,997 2,583 4,178 1,614 2,217
	38,674 53,392

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17. EXPENSES BY NATURE

7. EXPENSES BYNATURE
	2020 2019
Production costs to produce inventories and changes in inventories Employee compensation and benefit expense Facilities and other overheads Depreciation and amortization Writedown (recovery) of excess and obsolete inventory	$ $ 16,974 24,955 13,319 16,850 4,888 7,424 3,316 2,884 1,786 (506)
Total expenses	40,283 51,607
Allocated to: Cost of sales General and administration Sales and marketing Research and development	30,723 37,064 5,921 8,938 1,415 2,221 2,224 3,384
Total expenses	40,283 51,607

18. FINANCE CHARGES, NET

8. FINANCECHARGES, NET
	2020 2019
Interest on borrowings Finance charges on lease liabilities Amortization of deferred charges Finance income	$ $ 638 432 343 287 123 87 (94) (142)
	1,010 664

19. OTHER (GAINS) LOSSES, NET

9. OTHER(GAINS) LOSSES, NET
	2020 2019
Foreign exchange loss Non-recurring integration costs associated with business combination Gain on disposal of PPE Gain on lease remeasurement (Recovery) provisions related to previous business divestiture Government assistance	$ $ 315 226 196 240 (121) (154) (292) - (302) 576 (427) -
	(631) 888

a) PROCEEDS FROM PREVIOUS BUSINESS DIVESTITURES

During 2020, the Corporation received $302 of proceeds from funds held in escrow in relation to a previous business divestiture
that took place in 2014. The amounts held in escrow were previously in dispute and as a result the Corporation had recorded an
impairment provision against these amounts. During 2019, the Corporation recorded a provision related to facility remediation
costs associated with a separate previous business divestiture, as described in note 10(d).

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b) GOVERNMENT ASSISTANCE

During the year, the Corporation received $427 in government assistance payments under the Canadian Emergency Wage Subsidy
program.

20. INCOME TAX EXPENSE

a) RECONCILIATION OF INCOME TAX EXPENSE

Income tax expense varies from the amounts that would be computed by applying the domestic statutory rate of 24% (2019 -- 27%)
to loss before income taxes for the following reasons:

	2020 2019
(Loss) earnings before income taxes	$ $ (2,166) 233
Computed income tax (recovery) expense Tax effects of: Jurisdictional tax rate differences Non-deductible items Temporary differences for which no deferred tax asset was recognized Other items	(520) 63 (328) (1,204) 75 214 772 927 10 -
Income tax expense	9 -

b) INCOME TAX EXPENSE ON EARNINGS

INCOME TAX EXPENSE ON EARNINGS
	2020 2019
Current tax expense	$ $ 9 -
Deferred tax expense: Origination and reversal of temporary differences Temporary differences for which no deferred tax asset was recognized	(772) (841) 772 841
Total deferred tax expense	- -
Income tax expense	9 -

21. (LOSS) EARNINGS PER SHARE

	2020	2019
	Net loss Weighted average shares Per share amount Net earnings	Weighted average shares Per share amount
Basic (loss) earnings per share (Loss) earnings available to common shareholders	$ # $ $ (2,175) 27,702,690 (0.08) 233	# $ 27,517,369 0.01
Dilutive effect of options and restricted shares Diluted (loss) earnings per share (Loss) earnings available to common shareholders	- (2,175) 27,702,690 (0.08) 233	397,933 27,915,302 0.01

For the year ended December 31, 2020, the Corporation has excluded 1,670,000 share options and 410,000 restricted shares from the
computation of diluted loss per share because they are anti-dilutive for the period presented.

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For the year ended December 31, 2019, the Corporation has excluded 1,985,000 share options from the computation of diluted earnings
per share.

22. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

a) FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

The fair value of cash and cash equivalents, restricted cash, trade and other receivables, trade and other payables and current
provisions approximates their carrying value due to their short-term nature. The fair value of non-current other receivables
approximates the carrying amount as the receivables have been recorded using the effective interest rate method using a market
rate of interest. The fair value of borrowings approximates the carrying amount as the instruments carry interest rates that reflect
the current market rates available to the Corporation.

b) FINANCIAL RISK MANAGEMENT

The Corporation’s activities are exposed to a variety of financial risks of varying degrees of significance, which could affect the
Corporation’s ability to achieve strategic objectives. Overall, risk management programs focus on the unpredictability of financial
and economic markets and seek to minimize potential adverse effects on financial performance. Risk management is carried out
by financial management in conjunction with overall corporate governance. The principal financial risks to which the Corporation
is exposed are described below:

(i) MARKET RISK

Market risk is the risk changes in market prices, such as foreign exchange rates and interest rates, will affect the Corporation’s
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimizing return. The Corporation may use derivatives to
manage certain market risks.

• Foreign currency risk

The Corporation is exposed to foreign currency risk to the extent that there is a mismatch between the currencies in
which revenues, purchases and monetary assets and liabilities are denominated and the respective functional currency
of the Corporation’s subsidiaries. Foreign currency risk is primarily with the US dollar. The Corporation may use forward
exchange contracts to manage foreign currency risk.

The Corporation recognized a foreign currency exchange loss of $315 in other (gains) losses, net (2019 - loss of $226).
Based on the Corporation’s US dollar denominated monetary assets and liabilities, at December 31, 2020, the
Corporation estimates that a ten-cent change in the value of the US dollar would increase or decrease net earnings by
$292 (2019 - $448).

• Interest rate risk

Interest rate risk is the risk the value or future cash flows of a financial instrument will fluctuate as a result of changes in
market interest rates. In 2020 and 2019, the Corporation was primarily exposed to interest rate risk on cash and cash
equivalents and borrowings. The Corporation estimates that a change of 100 basis points in the interest rate as at
December 31, 2020 would have increased or decreased net earnings for the year ended December 31, 2020 by $50
(2019 - $64), arising from interest expense incurred on borrowings.

(ii) CREDIT RISK

• Impairment of financial assets

The Corporation’s trade receivables are subject to the expected credit loss model. While cash and cash equivalents are
also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial.

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• Trade and other receivables

Trade receivables include balances due from customers primarily operating in the oil and gas industry. The Corporation
manages credit risk by assessing the creditworthiness of its customers before providing products or services and
monitoring customer credit and balances on an ongoing basis. In some instances, the Corporation will take additional
measures to reduce credit risk including obtaining letters of credit or prepayments from customers.

As at December 31, 2020, the Corporation had three customers that accounted for $794 (21%) of total trade receivables
(2019 - four customers accounted for $1,411 (20%)).

As at December 31, trade receivables were classified as follows:

	2020 2019
Fully performing Past due but not impaired Indications of impairment	$ $ 1,167 3,143 2,083 4,203 504 1,004
Trade receivables	3,754 8,350

The Corporation applies the IFRS 9 simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been
grouped based on shared credit risk characteristics and the days past due. The loss provision is based on the timing of
the groups along with individual assessments on balances outstanding.

The credit quality of fully performing receivables is determined based on credit evaluations and management’s past
experience with the customers. Past due but not impaired trade receivables relate to a number of independent customers
for whom there is no recent history of default. Trade receivables with indications of possible impairment primarily relate
to receivables that may not be collectible. Management has applied judgment after taking into account the expected
credit loss model to determine impairment provisions of $504 (2019 - $1,004) are sufficient to cover credit risk.

The aging analysis of trade receivables is as follows:

The aging analysis of trade receivables is as follows:
As at December 31	2020 2019
0 to 30 days 31 to 60 days 61 to 120 days Over 121 days	$ $ 1,080 3,119 703 1,835 1,118 1,437 853 1,959
Trade receivables Loss allowance	3,754 8,350 (504) (1,004)
Trade receivables, net of loss allowance Other receivables	3,250 7,346 399 1,445
Total trade and other receivables	3,649 8,791

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The movement in the Corporation’s loss allowance for trade receivables is as follows:

For the years ended	2020 2019
Provisions for impairment, as at January 1 Allowance reversal, net or (impairment loss) recognized Amounts written off Change in estimate Foreign exchange	$ $ (1,004) (555) 346 (737) 158 157 - 78 (4) 53
Provisions for impairment, as at December 31	(504) (1,004)

The credit risk associated with cash and cash equivalents is minimized by ensuring these financial assets are held
primarily with Canadian chartered banks and Schedule I US financial institutions.

(iii) LIQUIDITY RISK

Liquidity risk is the risk the Corporation will not be able to meet its obligations with financial liabilities as they come due. The
Corporation maintains sufficient cash and cash equivalents to meet financial obligations. Based on the remaining contractual
maturities, the undiscounted cash flows for the Corporation’s financial liabilities, including interest payments in effect at
December 31, 2020, are as follows:

	Due in less than one year Due between one and two years Due between two and three years Due beyond three years Total
Trade and other payables Borrowings Lease liabilities Onerous contract provisions	$ $ $ $ $
	3,633 - - - 3,633
	1,606 3,819 1,721 1,214 8,360
	730 869 965 2,711 5,275
	190 - - - 190
Undiscounted cash flows for financial liabilities	6,159 4,688 2,686 3,925 17,458
Purchase commitments for inventory and operating services	2,607 480 473 - 3,560
As at December 31, 2020	8,766 5,168 3,159 3,925 21,018
Trade and other payables Borrowings Lease liabilities Onerous contract provisions	$ $ $ $ $ 5,584 - - - 5,584 3,247 5,474 680 - 9,401 1,287 1,292 749 302 3,630 97 - - - 97
Undiscounted cash flows for financial liabilities	10,215 6,766 1,429 302 18,712
Purchase commitments for inventory and operating services	2,006 1,122 123 2 3,253
As at December 31, 2019	12,221 7,888 1,552 304 21,965

As described in note 11c, the Corporation entered into a US$3.4 million term facility to extend maturity and support McCoy
Global’s 2020 technology development program As at December 31, 2020, there is US$1.0 million of undrawn availability
under the facility.

As described in note 11b, McCoy secured a US$2.5 million revolving demand facility with a Canadian chartered bank to
support working capital. The facility was undrawn as at December 31, 2020.

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c) CAPITAL MANAGEMENT

The Corporation’s objectives when managing capital are to safeguard its assets and continue as a going concern while, at the
same time, maximizing the growth of the business and return to shareholders. The Corporation views its capital as the combination
of borrowings as well as shareholders’ equity as follows:

f borrowings as well as shareholders’ equity as follows:
	2020 2019
Borrowings Shareholders’ equity	$ $ 7,304 8,190 35,504 37,850
Total capital	42,808 46,040

The Corporation sets the amount of capital in proportion to risk and makes adjustments to the capital structure in light of changes
in economic conditions and the risk characteristics of underlying assets. In order to maintain or adjust the capital structure, the
Corporation may issue or repay borrowings, issue or repurchase shares, pay dividends or undertake other activities as deemed
appropriate under the specific circumstances.

The Board of Directors reviews and approves any material transactions out of the ordinary course of business including proposals
on acquisitions or other major investments or divestitures, as well as annual capital and operating budgets.

23. RELATED PARTY TRANSACTIONS

KEY MANAGEMENT PERSONNEL

Key management personnel includes the Directors and senior corporate officers of the Corporation who are primarily responsible
for planning, directing and controlling the Corporation’s business activities.

Compensation awarded to key management personnel for employee services for the years ended December 31, 2020 and 2019
is as follows:

	2020 2019
Salaries and other short-term employee benefits Share-based compensation	$ $ 808 1,143 149 117
	957 1,260

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24. SEGMENT INFORMATION

GEOGRAPHIC INFORMATION

The Corporation’s operations, as described in note 1, are viewed as a single operating segment by the Corporation’s Executives
for the purpose of resource allocation and assessing performance.

	2020 2019
	Revenue PP&E, Intangibles & Goodwill Revenue PP&E, Intangibles & Goodwill
United States & Latin America Middle East & Africa Europe & Russia Asia Pacific Canada	$ $ $ $ 13,336 17,586 23,976 15,953 12,692 1,341 13,845 896 7,953 - 9,995 - 4,092 - 3,213 - 601 842 2,363 1,094
	38,674 19,769 53,392 17,943

Revenue is attributed to a geographical region based on the location of the customer invoiced, which may not necessarily reflect
the product’s final destination.

During the years ended December 31, 2020 and December 31, 2019, no individual customer accounted for greater than 10% of
total revenue.

25. CHANGES IN WORKING CAPITAL BALANCES

5. CHANGES INWORKINGCAPITALBALANCES
	2020 2019
Cash received from (used in) operating activities due to changes in non- cash working capital balances: Trade and other receivables Inventories Other current assets Other non-current receivables Trade and other payables Customer deposits Provisions, excluding restructuring and facility remediation	$ $ 5,262 3,092 6,901 4,993 (33) 41 286 142 (2,067) (4,621) (1,952) 546 (49) (34)
	8,348 4,159

Additions to rental fleet during 2020 and 2019 were comprised of equipment capitalized from inventory.

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