Mirion Annual Report 2013

← All annual reports

FY2013 Annual Report · Mirion

Loading PDF…

Annual Report

2013

www.medmira.com

Contents

Vision, Mission & Core Values

Message from the CEO

p.1

p. 2

Management Discussion & Analysis

p. 5

Consolidated Financial Statements

p. 23

Investor Information

Corporate Information

p. 58

p. 59

www.medmira.com

Vision

To deliver leading edge diagnostic products.

Mission

To deliver accurate, efficient diagnostic products by advancing our
unique, value-add technology platform through expansion of product
development, partnerships and licensing.

Core Values

Our Company is built on a set of core shared values that form a
consistent base for how we operate and interact with our customers,
employees, shareholders, and partners.

Innovation – the lifeblood of MedMira and at the heart of everything
we do

Excellence – in the disciplines of quality science, manufacturing and
business

Collaboration – with like-minded partners, alliances and team
members, to foster new opportunities and continued innovation

Integrity – doing the right thing is a standard principle by which the
entire team operates

Passion – for science, diagnostics and technology which shines through
in the quality healthcare solutions we deliver

Results-oriented – delivering high quality results on time to drive
growth and profitability

The Reveal Rapid HIV Antibody Test
for point-of-care testing

Dear Shareholders,

For MedMira, 2013 was a year of strategic building. Our team worked
vigorously to set the stage and generate momentum for positive and
significant growth across key areas of our business in the coming year.
During much of 2013 the focus was on ensuring that we strengthened our
financial position; evolved our brand to a position of leadership in key global
markets; aligned internal and external resources for success; and moved
new products forward in the commercialization pipeline for launches
beginning in 2014. Despite challenges along the way, I am pleased to report
that, with many of our initiatives implemented and a solid partner network
in place, we are well positioned to capitalize on the opportunities before us.

Critical to the Company’s strategic programs, particularly business
development and product commercialization, was continued improvement
of the Company’s overall operating position and financial stability. Early in
the year we concluded our debt restructuring program which in total
eliminated nearly $13 million in debt. At year end our revenues had
increased by over $1 million compared to 2012. Building on this stability,
MedMira received $6.105 million in new equity financing from its largest
and majority shareholder, OnSite Lab Holding AG, subsequent to the year
in the global market
end, further demonstration of their belief
opportunities for our patented rapid flow-through technology and testing
products.

In December 2013, Jelle Kuypers joined MedMira as Chief Financial Officer,
bringing to MedMira international experience in finance, strategic and
operational planning, from previous senior financial roles in Canada,
Switzerland and the Middle East. Jelle’s expertise in developing and
implementing strong
financial and organizational platforms and
information systems is fully aligned with our strategy for streamlining
processes for increased efficiency across our organization.

As our financial position continued to stabilize, it enabled the advancement
of our sales, marketing and business development programs on a global
basis. Expansion in this area of our business began with the launch of an
evolved brand for MedMira early in the year. MedMira’s new brand clearly
illustrates what is at the core of our Company, our patented rapid flow-
through technology. Our technology is what truly sets our rapid testing
solutions apart from the competition and uniquely positions us to offer our
customers something very different and advantageous to their testing
programs.

Hermes Chan
Co-Founder & CEO
MedMira Inc.

We are primed for a major sales and marketing push into the United States.
In September, Kevin Jones joined the Company as Senior Director, Global
Sales & Marketing. With over 20 years of significant industry experience,
Kevin is leading our rapid expansion in the U.S. market as we boost our sales
and distribution channels with a new strategic partner in preparation for
product launches in 2014. We will introduce new products for the research
and education market under the Miriad product range as well as a new
rapid HIV test to answer the demand for increased routine HIV screening
for all people aged 15-65. Also joining the sales, marketing, and business
development team is Markus Meile in the role of Senior Director,
International Markets. In this capacity, Markus focuses on the continual
development of our strategic relationships with global health organizations
such as the World Health Organization, the United Nations, and other
NGOs, aid agencies, and government agencies working to bring quality
diagnostics to every region of the world.

Our ongoing global sales initiatives will come to the forefront in 2014. In
significant emerging markets such as China and India, we have solidified key
distribution channels, collaborations, and a strategic partner network that
will enable us to push product into these markets and expand our market
presence in 2014. In the Middle East/North Africa region, our strategic
partners are making significant progress in acquiring new business in
several different countries and have secured many in-country registrations
in preparation for full-scale launches in 2014. Key Middle East target
markets will be the public health sector where governments are ramping
up spending on infrastructure and programs, as well as the enormous
expatriate population coming to the region for work, as they must first
undergo screening tests as part of their visa processing.

Our product commercialization team is on track to turn out new products
in 2014, further enhancing our diagnostics portfolio. The Company’s major
thrust in product commercialization is focused on bringing three new
products to the U.S. market, two of which are being developed under
contract with the U.S. Army. The Multiplo HBc/HIV/HCV and Reveal HBsAg
projects are moving along on pace, meeting all major milestones.
Subsequent to the year end, our contract with the U.S. Army expanded by

The Multiplo Rapid HBc/HIV/HCV
Antibody Test reactive for
Hepatitis B, HIV and Hepatitis C

The Multiplo Rapid Syphilis/HIV
Antibody Test a key tool in
combatting the mother-to-child
transmission of syphilis and HIV
through preventative screening
programs

USD$1.917 million. This funding facilitates parallel clinical trial testing
which will enable complementary label claims and further expand the utility
of the product in additional settings. The third major product we are
bringing to the U.S. market is an advanced Reveal rapid HIV test, which
includes whole blood applications and CLIA-waived status. While the U.S.
is the initial target with these products we anticipate quickly rolling them
out in other major global markets such as Europe, Asia, and the Middle East.

Driving our product commercialization activities is the core engine of our
business, our rapid flow-through technology. As our product portfolio
continues to expand based on this platform, so does the interest in the
technology itself. Its unique advantages of speed and multiplexing, which
deliver superior benefits to the user and are unmet by alternative
technologies, have captured the attention of a broad spectrum of audiences
worldwide. Organizations such as the United States Food and Drug
Administration now see multiplex rapid testing as a critical sub-sector in
diagnostics, realizing the exponential benefits multiplexing can bring to
both patient care and the providers bottom line. The World Health
Organization, a leader in global health matters, understands that multiplex
rapid tests present a “golden opportunity” to screen for multiple diseases
under an integrated testing program model. Earlier this year, at their
invitation, we submitted our Multiplo TP/HIV rapid test for WHO evaluation
and the process is moving along on track. This year our technology was
recognized by the Canadian Manufacturers and Exporters as Innovative
New Technology and we continue to work with world class collaborators
and organizations like the National Research Council of Canada to further
expand our technology platform.

The ongoing transformation of our Company will continue to generate
positive momentum, increase our productivity and efficiency across all
areas of the business, contribute to the successful launch of new products
in global markets, and deliver substantial growth and shareholder value in
2014. With this in mind, I hope that you share in our excitement about the
future of MedMira. Thank you to all of our stakeholders, customers,
partners, employees, and shareholders, for your continued support.

Hermes Chan
Co-Founder & CEO

MedMira Inc.

Management’s Discussion & Analysis
For the year ended July 31, 2013

Forward looking statements

This document contains forward looking statements, such as statements regarding future sales opportunities in various
global regions and financing initiatives that are based on current expectations of management. These statements involve
uncertainties and risks, including MedMira Inc.’s (MedMira or the Company) ability to obtain and/or access additional
financing with acceptable terms, and delays in anticipated product sales. Such forward-looking statements should be given
careful consideration and undue reliance should not be placed on these statements.

The preparation of Management’s Discussion and Analysis (MD&A) may require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the
reported amount of revenue and expenses during the reporting period. Management bases estimates and judgments on
historical experience and on various other factors that are believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying value of assets and liabilities. Actual results may differ
from these estimates under different assumptions or conditions. Management believes the accounting policies, outlined in
the Significant Accounting Policies section of its consolidated financial statements, describe its more significant judgments
and estimates used in the preparation of its consolidated financial statements.

Introduction

The following MD&A for the three months and year ended July 31, 2013 has been prepared to help investors understand
the financial performance of MedMira in the broader context of the Company’s strategic direction, the risk and
opportunities as understood by management, and the key metrics that are relevant to the Company’s performance. The
Audit Committee of the Board of Directors has reviewed this document and all other publicly reported financial information
for integrity, usefulness, reliability, and consistency.

Annual references are to the Company’s fiscal years, which end on July 31. All amounts are expressed in Canadian dollars
(CAD) unless otherwise noted.

Additional information about MedMira, this document, and the related quarterly financial statements can be viewed on
the Company’s website at www.medmira.com and are available on SEDAR at www.sedar.com.

About MedMira

MedMira is a biotechnology company engaged in the development and commercialization of rapid diagnostics and
technology platforms. The Company is headquartered in Halifax, Nova Scotia, Canada and is listed on the TSX Venture
Exchange under the symbol MIR.

MedMira’s patented rapid flow-through technology platform is the basis for the Company’s current line of rapid diagnostics
for infectious diseases. Diagnostic applications based on this technology platform are highly accurate, easy-to-use, and
produce instant results – a strong advantage over most other rapid diagnostics on the market today.

MedMira’s technology and growing portfolio of diagnostics demonstrate excellence in performance and quality in the highly
competitive diagnostics industry. More than $20 million has been invested in perfecting MedMira’s core technology, which
has proven itself time and time again with its excellent clinical performance and its success in rigorous evaluations and
inspections, leading to regulatory approvals in the United States, Canada, European Union, and China, as well as ISO
9001:2008 and ISO 13485:2003 certifications. MedMira’s rapid HIV test is the only rapid flow-through HIV test in the world
to be approved by all of these major health regulators.

MedMira sells its rapid tests through a worldwide network of medical distributors and strategic business development
partners with customers in all sectors of the healthcare industry, including laboratories, hospitals, point-of-care facilities,
governments, and public health agencies.

Intellectual property

The Company strives to protect its intellectual property in established and emerging markets around the world as warranted.
MedMira’s intellectual property portfolio for its rapid flow-through platform and the methodology behind its rapid
diagnostics includes the following:

Patent #

8,025,850

7,531,362

Title

Jurisdiction

Rapid Diagnostic Device, Assay and Multifunctional Buffer

United States

Rapid Diagnostic Device, Assay and Multifunctional Buffer

United States

EP1417489

Rapid Diagnostic Device and Assay

EP1328811

HCV Mosaic Antigen Composition

ZL02819646.5

Rapid Diagnostic Device and Assay

The Company has 3 pending patents.

Europe

China

The Company’s corporate and product brand names are protected by trademarks in the United States and Canada.

Corporate update

During Fiscal Year 2013, MedMira improved its overall operating position by establishing greater financial stability early in
the year which enabled many of its planned business development and product commercialization activities to advance on
schedule throughout the remaining quarters.

In the first quarter, MedMira completed the final phase of its debt restructuring initiative which began in 2012, making debt
settlement arrangements with the Company’s debt holders and moving to a position where it was no longer in default on
any of its loans. In total this program eliminated $12,856,095 in debt and created a stable financial platform on which the
Company continued to operate on for the remainder of 2013.

MedMira continued the expansion of its sales, marketing and business development activities around the globe, taking up
initiatives focused in various major, emerging and development markets. These activities were supported by the launch of
an evolved brand identity and redesigned corporate website during the second quarter. The Company undertook a re-
branding initiative to clearly illustrate its innovative mindset and its core focus on technology and high quality testing
solutions. MedMira’s new icon identifies with the Company name, the unique vertical flow-through technology that sets it
apart, and the advanced multiplex capabilities of its testing solutions that deliver three results on a single platform. Brand
building continued during the remainder of the year with full integration into all marketing communications vehicles and
the launch of an extranet tool to support the Company’s international strategic partner network of collaborators, agents,
and distributors.

The Company’s major market focus was the United States and the expansion of its product lines and related sales, marketing
and business development activities in this market. During the second quarter, MedMira’s development and

commercialization work with the US military expanded with the addition of a second rapid test for transfusion transmitted
diseases under a consolidated contract. MedMira was awarded a United States Army Medical Research Acquisition Activity
(USAMRAA) contract in July 2011 and a second contract in July 2012. To create greater operational efficiencies as the
projects move forward in parallel, the work is now combined under a single concerted effort which involves the
development and commercialization of two rapid tests – Multiplo Rapid HBc/HIV/HCV Antibody Test (Multiplo
HBc/HIV/HCV) and Reveal Rapid Hepatitis B Surface Antigen Test (Reveal HBsAg). The Company continues to build on its
portfolio of business within the military sector through sales and marketing initiatives like the Military Health System
Research Symposium, which draws an international audience of military healthcare experts and decision makers focused
on the unique needs of the military combatant.

Beyond the military sector, market research indicates that there are significant applications for the Multiplo HBc/HIV/HCV
and Reveal HBsAg testing solutions as HIV and hepatitis infection rates continue to rise in the US and globally. Multiplo and
Reveal will be the first FDA-approved rapid tests for Hepatitis B and all three diseases in combination. These testing
solutions will have a major impact on public health initiatives like the CDC’s education campaign “Know More Hepatitis”
aimed at the 3 million Americans infected with Hepatitis C and 1.4 million infected with Hepatitis B. Rapid testing solutions
like Multiplo and Reveal enable an increased number of people to be tested, know their status, access treatment, and
prevent the further spread of these diseases.

In addition to Multiplo HBc/HIV/HCV and Reveal HBsAg, the Company moved its whole blood rapid HIV test for the for US
market toward FDA submission and approval. The addition of MedMira’s whole blood rapid HIV test in the US market will
enable the Company to meet the growing demand for point-of-care rapid HIV tests spurred by the US Preventative Services
Task Force new guidelines calling for the routine HIV screening for everyone aged 15 to 65 years old and all pregnant
women. MedMira’s whole blood rapid HIV test can be used in physician offices, convenience care clinics, mobile testing
vehicles, and large scale public health programs where the vast majority of this screening will take place.

The Company’s product lines continue to expand as does the interest in its patented rapid flow-through technology
platform. The unique advantages, including multiplex testing capabilities, which this technology brings to clinical users and
researchers is unmet by other rapid diagnostic platforms. During the third quarter, Company representatives attended a
US FDA public workshop on the advances in multiplex rapid testing. The purpose of this workshop, organized by the
American Association of Blood Bankers (AABB), Advanced Medical Technology Association (AdvaMed), America’s Blood
Centers, Department of Health and Human Services Offices of the Assistant Secretary of Health and the National Heart,
Lung and Blood Institute (NIH), was to discuss the research and development as it relates to multiplex tests and the use of
these tests in blood donor screening and blood cell antigen typing.

In emerging markets, predominantly China and India, the Company continued to advance various business development
initiatives towards continued product sales, collaborations, and distribution partnerships. In India, work continues to
establish solid distribution channels to the private healthcare market. During the third quarter, the Company participated
in the Hong Kong International Medical Devices and Supplies Fair, which drew over 7,000 visitors from 64 different countries
and regions. MedMira’s participation in this event was supported by the Canadian Trade Commissioner Service which
organized various business development meetings and an event for selected companies, which included MedMira, to meet
with members of the media from around the world.

Sales, marketing and business development activities continued in developing markets, particularly Latin America and the
Caribbean, where distribution partners in Panama and Colombia continued to gain market traction. Sales of Reveal HIV in
Belize increased with further orders through Pan American Health Organization (PAHO) while the Company’s distributor in
Panama was successful in winning a tender for Multiplo HBV/HIV/HCV. MedMira and its strategic partners continue to
pursue business in other developing markets including the Middle East and Africa, however, timelines on the successful
conclusion of these activities remain uncertain due to various economic and political influences in these regions.

Business development initiatives with a global focus continued with procurement and industry stakeholder organizations
such as the CDC and the World Health Organization (WHO). The Company’s Reveal HIV is in the final stages of the WHO
prequalification process. During the third quarter, the WHO presented MedMira with a letter of invitation to submit the
Multiplo Syphilis/HIV rapid test for prequalification. The WHO, a leader in global health matters, includes the elimination
of mother-to-child transmission of both Syphilis and HIV as one of its key focus areas and it recommends that all pregnant
women be screened for these diseases. Rapid tests are a key part of this equation and includes the Multiplo Syphilis/HIV
dossier was submitted to the WHO during the fourth quarter. Relationships with procurement agencies and NGOs is key
to generating product sales in developing markets where healthcare infrastructure is limited or not yet mature enough to
conduct thorough evaluations of diagnostic tools for large scale testing needs.

MedMira remains focused on the advancement of its patented rapid flow-through technology. Rapid diagnostics continue
to grow as a mainstream healthcare solution for both developed and developing regions of the world. During 2013, the
Company conducted in-house research and development work and undertook collaborative research opportunities with
various researchers and organizations to further explore the potential applications of its technology and testing solutions.
During the second quarter, MedMira was honored with the Canadian Manufacturers and Exporters award for Innovative
New Technology (Atlantic Canada/Nunavut) for its development and commercialization work on the new test platform that
will capture both antigens and antibodies and provide an earlier HIV diagnosis.

Financial results

Basis of preparation and significant accounting policies

The basis of financial statement preparation and the significant accounting policies of MedMira are described in Notes 2
and 3 of the Company’s July 31, 2013 consolidated financial statements.

Selected quarterly information (in thousands of dollars except per share amounts)

Revenue
Cost of sales
Gross profit

Operating expenses
Other expenses (gains)
Net earnings (loss) before tax

Q4 2013
$
595
343
252

Q3 2013
$
327
277
50

659
353
(760)

781
128
(859)

Q2 2013
$
534
374
160

715
(1,629)
1,074

Q1 2013
$
545
377
168

641
(616)
143

Q4 2012
$
272
167
105

707
(8,769)
8,167

Q3 2012
$
187
58
129

679
1,062
(1,612)

Q2 2012
$
274
63
211

685
864
(1,338)

Q1 2012
$
235
88
147

684
1,310
(1,847)

Net earnings (loss) per share

(0.001)

(0.002)

0.003

0.001

0.024

(0.006)

(0.007)

Selected annual information

Total assets

Current liabilities
Non-current liabilities
Shareholders' deficiency
Total liabilities and shareholders' deficiency

Revenue
Cost of sales
Gross profit
Operating and other income (expenses)
Net gain (loss) before tax

31-Jul-13
$
1,166,845

4,853,959
5,423,485
(9,110,600)
1,166,844

2,001,464
(1,370,689)
630,775
(1,033,076)
(402,301)

For the year ended

31-Jul-12
$
2,970,239

11,049,292
629,246
(8,708,299)
2,970,239

970,631
(376,395)
594,236
2,778,066
3,372,304

31-Jul-11
$
1,492,123

20,345,822
260,000
(19,113,699)
1,492,123

909,869
(493,914)
415,955
(5,345,138)
(4,929,183)

Net gain (loss) per share

(0.001)

0.012

(0.023)

Fourth quarter analysis

The following table compares the results of operations for the three months ended July 31, 2013 to the three months
ended July 31, 2012.

Product

Product sales
Royalties
Product cost of sales
Gross margin on product

Services

Service sales
Service cost of sales
Gross margin on services

Operating expenses

Research and development
Sales and marketing
Other direct costs
General and administrative

Total operating expenses

Operating (expense) income

Non-operating expenses

Financing

Net loss

For the three months ended

31-Jul-13
$

244,289

-
(59,439)
184,850

351,826
(289,237)
62,589

138,295
(88,257)
(96,345)
(621,068)
(667,373)

31-Jul-12
$

257,644
14,995
(167,232)
105,407

-
-
-

(5,686)
(109,643)
(80,754)
(683,137)
(879,220)

(419,936)

(773,813)

Better(worse)
$

(13,354)
(14,995)
107,793
79,443

351,826
(289,237)
62,589

143,981
21,387
(15,591)
62,068
211,847

353,877

(338,770)
(758,706)

8,941,193
8,167,380

(9,279,963)
(8,926,086)

Product revenue and gross margin

The Company recorded revenue from product sales in the three months ended July 31, 2013 of $244,289 as compared to
$257,277 for the same period last year. Gross profit on product sales for the year was $184,850 compared to $105,407 for
the same period in 2012. Gross profit increased as a greater portion of product sales were made in North America where
the margins are typically higher than in other regions of the world.

Services revenue and gross margin

The Company recorded revenue from service sales of $351,826 in the three months ended July 31, 2013 (July 31, 2012 –
$nil) with a related gross margin of $62,589 (July 31, 2012 – $nil). The Company earned revenue and gross margin on a
research contract with the US Army. The current year gross margin on services was in line with management’s expectations.

Operating expenses

Total operating expenses decreased by $211,847, from $879,220 for the three months ended July 31, 2012 to $667,373 for
the year ended July 31, 2013.

− Research and development expenses for the three months ended July 31, 2013 was a gain of $138,295 compared to
an expense of $5,686 for the same period in 2012. The gain was the result of provisioning for tax credits associated
with research work.

−

Sales and marketing expenses for the three months ended July 31, 2013 was $88,257 compared to $109,643 for the

same period in 2012.

− Other direct costs for the three months ended July 31, 2013 were $96,345, compared to $80,754 for the same period

in 2012. Fewer labour costs were allocated to cost of sales in the current quarter.

− General and administrative expenses were $621,068 for the three months ended July 31, 2013, compared to $683,137
for the same period in 2012. The three month ended July 31, 2012 had an increase in regulatory and professional fees.

Non-operating expenses

−

Total other losses were $338,770 in the three months ended July 31, 2013, compared to a gain of $8,941,193 during
the same period in 2012. The majority of the gain in the three months ended July 31, 2012 was due to a gain on the
forgiveness of debt of $10,042,826.

Year to date analysis

The following table compares the results of operations for the year ended July 31, 2013 to the year ended July 31, 2012.

Product

Product sales
Royalties
Product cost of sales
Gross margin on product

Services

Service sales
Service cost of sales
Gross margin on services

Operating expenses

Research and development
Sales and marketing
Other direct costs
General and administrative

Total operating expenses

Operating (expense) income

Non-operating expenses

Financing

Net (loss) income

For the year ended

31-Jul-13
$

829,438
35,360
(435,409)
429,389

1,136,666
(935,280)
201,386

(133,304)
(262,271)
(299,209)
(2,101,361)
(2,796,145)

31-Jul-12
$

938,356
32,275
(376,395)
594,236

-
-
-

(199,022)
(223,632)
(329,142)
(2,207,080)
(2,958,876)

(2,165,370)

(2,364,640)

Better(worse)
$

(108,918)
3,085
(59,014)
(164,847)

1,136,666
(935,280)
201,386

65,718
(38,639)
29,933
105,719
162,731

199,270

1,763,069
(402,301)

5,736,944
3,372,304

(3,973,875)
(3,774,605)

Product revenue and gross margin

The Company recorded revenue from product sales in the year ended July 31, 2013 of $829,438 as compared to $938,355
for the same period last year. Gross profit on product sales for the year was $429,389 compared to $594,235 in the same
period in 2012. Decreases in product revenue and gross profit were attributed to decreased sales in Asia Pacific and Latin
America. Current year gross profit was in line with management expectations.

Services revenue and gross margin

The Company recorded revenue from services sales for the first time in the year ended July 31, 2013 of $1,136,666 with a
related gross margin of $201,386. The Company earned revenue and gross margin on a research contract with the US Army.
The current year gross margin on services was in line with management expectations.

Operating expenses

Total operating expenses decreased by $162,731, from $2,958,876 for the year ended July 31, 2012 to $2,796,145 for the
year ended July 31, 2013.

− Research and development expenses for the year ended July 31, 2013 were $133,304 compared to $199,022 for the
year ended July 31, 2012. Actual research expenses in July 31, 2013 for the year were $1,211,546 (July 31, 2012 –
$530,114) which was offset by reimbursements of research costs of $142,962 (July 31, 2012 – $331,092) and allocation
of $935,280 to cost of sales (July 31, 2012 – $nil). The comparative increase in research costs was directly attributable
to greater activity related to the US military research contracts.

−

Sales and marketing expenses for the year ended July 31, 2013 were $262,271 compared to $223,632 for the same
period last year as the Company began to expand its sales and marketing efforts in the United States.

− Other direct costs for the year ended July 31, 2013 were $299,209, compared to $329,142 for the same period last
year. The decrease was due to increased allocation of labour costs to inventory produced during the year, along with
an increased allocation of labour costs to product and services cost of sales.

− General and administrative expenses were $2,101,362 for the year ended July 31, 2013, compared to $2,207,080 for

the same period in 2012.

Non-operating expenses

Total other gains were $1,763,069 in the year ended July 31, 2013, compared to a gain of $5,736,944 during the same period
in 2012.

−

Financing costs including interest expense decreased to $734,604 in the year ended July 31, 2013, compared to
$4,239,863 for the same period last year. The decrease was the result of successful renegotiations of the company’s
debt to lower interest rates in the quarters ended October 31, 2012 and July 31, 2012.

− During the year ended July 31, 2013, management renegotiated some of the outstanding loans which resulted in

substantially different terms from the original agreements. These were treated as an extinguishment of the original
liability and the recognition of a new liability. These debt arrangements were valued using a rate of approximately
11.8%, representing a reasonable exit price for the liabilities. This resulted in a gain of $2,027,442.

−

In the year ended July 31, 2013, the Company completed its debt settlement negotiations. As a result, the company
had a one-time gain on the forgiveness of debt of $715,689 (July 31, 2012 – $10,042,826).

Geographic information

The Company organizes and records the sales and distribution of its products based on major geographical territories
around the world. The table below provides the three month geographic breakdown of revenue.

North America
Latin America and the Caribbean
Europe
Asia Pacific
Middle East
Total revenue

Product revenue

For the three months ended

Service revenue
For the three months ended

31-Jul-13
$
223,563
19,243
1,483
-
-

244,289

31-Jul-12
$
151,888
53,113
5,528
59,703
2,040
272,272

31-Jul-13
$
351,826

-
-
-
-

351,826

31-Jul-12
$

-
-
-
-
-
-

The table below provides the annual geographic breakdown of revenue.

Product revenue
For the year ended

Service revenue
For the year ended

31-Jul-13
$
518,891
92,274
10,039
240,617
2,977
864,798

31-Jul-12
$
588,417
132,830
8,098
239,246
2,040
970,631

31-Jul-13
$
1,136,666

-
-
-
-

1,136,666

31-Jul-12
$

-
-
-
-
-
-

North America
Latin America and the Caribbean
Europe
Asia Pacific
Middle East
Total revenue

Liquidity and capital resources

Cash and working capital

The Company had a cash reserve of $20,942 on July 31, 2013, as compared to $2.4 million on July 31, 2012. The Company’s
net working capital position as of July 31, 2013 was a deficit of $4.0 million compared to the July 31, 2012 working capital
deficit of $8.1 million. The Company has incurred operational losses and negative cash flows on a cumulative basis since
inception. For the year ended July 31, 2013, the Company incurred a net loss from operating activities of approximately
$2.2 million and negative cash flows from operations of $2.1 million, compared to a net loss from operations of $2.4 million
and negative cash flows from operations of $2.2 million for the same period in 2012.

Operating activities

MedMira generated negative cash flows from operations of $2.1 million for the year ended July 31, 2013, compared to
negative cash flows of $2.2 million for the year ended July 31, 2012. Higher payments to suppliers and employees were
offset by higher receipts from customers.

Financing activities

Cash flows from financing activities were $58,493 for the year ended July 31, 2013, compared to $3.6 million for the same
period in 2012. The higher cash flow in 2012 was due primarily to cash proceeds from share issuance activity.

Investing activities

Cash outflow from investments increased to $366,986 during the year the ended July 31, 2013, compared to $5,708 for the
same period in 2012. The increase in investing cash outflow was the result of investments in facility upgrades.

Debt

As at July 31, 2013, the Company had loans payable with a carrying value of $6.9 million compared to $7.4 million at July
31, 2012. The decrease in the carrying value of loans payable from July 31, 2012 to July 31, 2013 is due to a fair value
adjustment to the carrying amount of the loans. The Company’s loans have an average payment term of 6 years. As at July
31, 2013, none of the Company’s loans were in default.

Further discussion on liquidity and capital resources can be found in this document in the Liquidity Risk section, Risk and
Uncertainties section, as well as in the notes for the Company’s July 31, 2013 audited consolidated financial statements.

Equity/Shares

The Company is authorized to issue an unlimited number of common shares without par value. The number of issued and
outstanding common shares on July 31, 2013 was 392,264,320. The Company is also authorized to issue an unlimited
number of Series A preferred shares redeemable at $0.01 per share after March 31, 2010, convertible into an equal number
of common shares upon the Company meeting certain milestones. There were 5,000,000 Series A preferred shares issued
and outstanding on July 31, 2013.

The Company had 4,530,000 outstanding stock options on July 31, 2013. The outstanding stock options have a weighted
average exercise price of $0.10 per share and a weighted average remaining term of 1 year. The number of outstanding
warrants on July 31, 2013 was 196,119,500. The outstanding warrants have a weighted average exercise price of $0.10 per
share and a weighted average remaining term of 2.45 years.

Off balance sheet arrangements

The Company was not party to any off balance sheet arrangements as of July 31, 2013.

Financial instruments – fair value

The Company recognizes financial instruments based on classification. Depending on the financial instruments’
classification, changes in subsequent measurements are recognized in net loss or other comprehensive loss. The Company
has implemented the classifications listed below.

Financial assets

− Cash and bank balances: Classified as available for sale and recorded at fair market value. Changes in fair value for the

year are recorded in net income or net loss.

−

Trade and other receivables: After initial fair value measurement, trade and other receivables are measured at
amortized cost using the effective interest method.

Financial liabilities

−

Total bank indebtedness and current portion of debt, deferred income, trade and other payables, provision for royalty:
After initial fair value measurement, these financial liabilities are measured at amortized cost using the effective interest
method.

Management believes the carrying value of accounts receivable, bank indebtedness, and accounts payable and accrued
liabilities approximate fair value at the year-end due to their short-term nature.

Fair value estimates are made at a specific point in time based on relevant market information. These estimates involve
uncertainties and matters of significant judgement and cannot be determined with precision. Change in assumptions and
estimates could significantly affect fair values.

Financial instruments – risk factors

MedMira has exposure to the following risks from its financial instruments: liquidity risk, credit risk, currency risk, and
interest rate risk. Senior management monitors risk levels and reviews risk management activities as necessary.

Liquidity risk

The Company manages liquidity by forecasting and monitoring operating cash flows and through the use of revolving credit
facilities and share issuances.

The Company has incurred losses and negative cash flows from operations on a cumulative basis since inception. For the
year ended July 31, 2013, the Company realized a net loss of approximately $0.4 million (July 31, 2012 – net income $3.4
million), consisting of a net loss from operations of $2.2 million (July 31, 2012 – net loss $2.4 million), a gain on forgiveness
of debt of $0.7 million (July 31, 2012 – $10.1 million), a valuation gain on renegotiation of debt of $2.0 million (July 31, 2012
– $nil) and other non-operating losses of $1.0 (July 31, 2012 – $4.5 million). Negative cash flows from operations were
approximately $2.1 million (July 31, 2012 – $2.2 million). As at July 31, 2013, the Company had an accumulated deficit of
approximately $71.0 million (July 31, 2012 – $70.6 million). In addition to its on-going working capital requirements, the
Company must secure sufficient funding for its research and development programs for existing commitments, including
its current portion of loans of approximately $2.2 million. These circumstances lend significant doubt as to the ability of
the Company to meet its obligations as they come due and, accordingly, the appropriateness of the use of accounting
principles applicable to a going-concern.

Management is pursuing other financing alternatives to fund the Company’s operations so it can continue as a going-
concern. Management plans to secure the necessary financing through new equity and debt arrangements. Nevertheless,
there is no assurance that this initiative will be successful.

Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the
Company. The Company mitigates this risk by requiring a 50% down payment on most orders at the time of purchase, and
the remaining 50% prior to shipment. The Company derives approximately 62% (July 31, 2012—82%) of its revenue from
two (July 31, 2012—two) main customers and, for these customers, assesses the recoverability of each account on a regular
basis. As of July 31, 2013, 85% of the accounts receivable balance is due from two customers (July 31, 2012—78% due from
three customers) and no other customers account for more than 10% of the accounts receivable balances as at July 31,
2013.

Currency risk

MedMira receives most of its revenues in foreign currencies and incurs expenses in US and Canadian currencies. As a result,
the Company is subject to uncertainty as foreign exchange rates fluctuate. The Company’s US dollar (USD) denoted debt is
approximately US$5,000 plus accrued interest payable of approximately US$255,604 at July 31, 2013. The exchange
fluctuations from year to year have accounted for a significant portion of the company’s exchange gain and loss. Most sales
are in USD, however, they are recorded at the exchange rate prevailing on or near the transaction date and collected in a
timely manner.

The Company also experiences currency exposure resulting from balance sheet fluctuations of US-denominated cash,
accounts receivable, accounts payable and US-denominated liabilities.

MedMira mitigates this currency risk by maintaining a balance of USD currency which is used to pay down US-denominated
liabilities and replenishes the balance through US-denominated revenues.

A one cent change in the USD/CAD exchange rate would have an estimated impact on revenue of $500.

Interest rate risk

The Company is not exposed to interest rate risk as it borrows funds at fixed rates.

Related party transactions

The following transactions occurred with related parties during the year ended July 31, 2013:

• A short term loan totalling $523,000 bearing 3% interest was received from Onsite Lab Holding AG. During the

•

year $3,460 in interest was accrued against this loan.
Short term loans totalling $106,973 bearing 3% interest were received from a director. During the year, $805
in interest was accrued against these loans.
• Director fees totalling $16,250 were incurred.
•

Consulting fees totalling $82,233 were incurred.

The following balances with related parties were outstanding at July 31, 2013:

• A receivable balance of $8,630 was owed to MedMira by a company which is presided over by a director (July

31, 2012 – $8,630).

• Accounts payable totalling $37,244 was due to directors (July 31, 2012 – $24,181).
• A short term loan totalling $526,460 was due to OnSite Lab Holding AG (July 31, 2012 – $nil).
• A short term loan totalling $107,778 was due to a director (July 31, 2012 – $nil).
• A royalty provision was owed to OnSite Lab Holding AG of $739,817 (July 31, 2012 – $401,443).

Subsequent events

In September 2013, the Company completed a $6.105 million equity investment from OnSite Lab Holding AG (OnSite Lab).
Under the terms of the deal, Onsite Lab acquired 122,100,000 equity units at $0.05 per unit. Each equity unit consists of
one common share and one common share purchase warrant. Each full warrant entitles Onsite Lab to purchase one
common share of MedMira at $0.10 per share for a four year period. The common shares and the warrants are subject to
a four month hold period that expires four months from the day of share issuance. With the completion of this transaction,
Onsite Lab now owns 68.5% of the undiluted common shares in Medmira.

Internal control systems and disclosure controls

To ensure the integrity and objectivity of the data, management maintains a system of internal controls comprising of
written policies, procedures and a program of internal reviews which provides reasonable assurance that transactions are
recorded and executed in accordance with its authorization that assets are properly safeguarded and that reliable financial
records are maintained.

Management is currently updating existing standardized processes to improve internal controls and reduce compliance
costs. The updated controls will help improve timeliness and accuracy of financial records as well as continue to ensure that
the Company’s assets are properly safeguarded.

Disclosure controls and procedures within MedMira have been designed to provide reasonable assurance that all relevant
information is identified to the Disclosure Committee to ensure appropriate and timely decisions are made regarding public
disclosure.

Management, under the supervision of the Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the Company’s internal control over financial reporting and based on this evaluation, has concluded that
internal control over financial reporting was effective as of July 31, 2013.

Due to inherent limitations, internal control over financial reporting and disclosure controls can provide only reasonable
assurances and may not prevent or detect misstatements. Furthermore, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

The Audit Committee of the Board of Directors of MedMira reviewed this MD&A, and the consolidated financial statements
of MedMira for July 31, 2013 and MedMira’s Board of Directors approved these documents prior to release.

Risk and uncertainties

The Company’s base of activity has expanded to manufacturing products for distribution in international markets, making
it difficult to accurately predict future operating results. Actual future results may differ significantly in any forward-looking
statements. Currently, the Company is not making sufficient sales to be self-sustaining. As a result, the Company’s financial
condition, business and operations, and intellectual property are exposed to a variety of risk factors. These risks include,
but are not limited to, those listed below.

Risks and uncertainties related to the Company’s financial condition

Need for additional capital

Cash generated from operations is insufficient to satisfy working capital and capital expenditure requirements, and the
Company is operating with a substantial working capital deficit. The Company will need to secure additional financing in the
near term in order to continue as a going concern which may include the sale of additional equity or debt securities or
obtaining additional credit facilities. In recent quarters, the Company has relied on temporary funding advanced from key
investors. There can be no assurance that this source of funding will continue to be available on acceptable terms, and
additional capital may not be available on satisfactory terms, or at all. Management is pursuing other financing alternatives
to fund the Company’s operations so it can continue as a going-concern.

The Company intends to continue to explore opportunities to enter into supply agreements, joint venture relationships,
and other special purpose vehicles with third parties from time to time in order to continue to commercialize its patent
pending technology and other intellectual property. Such arrangements may include the issuance of equity or debt
securities of the Company, subject to compliance with the applicable requirements of the Canadian securities regulatory
authorities and the TSX-V.

Any additional equity financing may result in the dilution of shareholders, and debt financing, if available, may include
restrictive covenants. MedMira’s future liquidity and capital funding requirements will depend on numerous factors
including:

−

the extent to which new products and products under development are successfully developed, gain market
acceptance and become and remain competitive;

the costs and timing of further expansion of sales, marketing and manufacturing activities and facility needs;

the timing and results of clinical studies and regulatory actions regarding potential products; and

−

the costs and timing associated with business development activities, including potential licensing of technologies
patented by others.

Continued operations will be contingent on generating sufficient revenues or raising additional capital or debt financing.
There is no assurance that these initiatives will be successful.

Fluctuations in revenue

The Company’s quarterly and annual revenues may fluctuate due to several factors, including seasonal variations in demand,
competitive pressure on average selling prices, customer order patterns, the rate of acceptance of the Company’s products,
product delays or production inefficiencies, regulatory uncertainties or delays, costs and timing associated with business
development activities, including potential licensing of technologies, international market conditions and variations in the
timing and volume of distributor purchases. The healthcare industry traditionally is not impacted by seasonal demand. The
impact of one or a combination of several of these factors could have a significant adverse effect on the operations of the
Company. In addition, changes in existing collaborative relationships, as well as the establishment of new relationships,
product licensing and other financing relationships, could materially impact the Company’s financial position and results
from operations.

Effects of inflation and foreign currency fluctuations

A significant portion of the Company’s revenue and expenses are in U.S. dollars, and therefore subject to fluctuations in
exchange rates. There is a risk that significant fluctuations in exchange rates may impact the Company’s ability to sell its
products and, thereby, have a material adverse impact on the Company’s results of operations.

Possible volatility of share price

The stock market has from time to time experienced significant price and volume fluctuations that may be unrelated to the
operating performance of the Company. In addition, the market price of the Company’s common shares, like the share
prices of many publicly traded biotechnology companies, has been highly volatile. Announcement of technology innovations
or new commercial products by the Company or its competitors, developments or disputes concerning patent or proprietary
rights, publicity regarding actual or potential medical results relating to products under development by the Company or
its competitors, regulatory developments in both the United States and foreign countries, public concern as to the safety
of biotechnology products and economic and other external factors, as well as period to period fluctuations in financial
results may have a significant impact on the market price of the Company’s common shares. It is likely that in some future
quarter the Company’s operating results will be below the expectations of the public market analysts and investors. In such
event, the price of the Company’s common shares would likely be materially adversely affected.

Risks and uncertainties related to the Company’s business and operations

Lack of market acceptance

MedMira’s ability to market its diagnostic products will, in part, depend on its or its partners’ ability to convince users that
these products represent viable and efficacious diagnostic tests. There can be no assurance that MedMira will be successful
in this regard.

Competition

The in vitro diagnostics market in which the Company participates is highly complex and competitive. It is comprised of both
large healthcare companies that have substantially greater financial, scientific, and other resources than MedMira and a
variety of international companies producing diagnostic products of varying quality. In the developed regions of the world
with strong healthcare infrastructures, the in vitro diagnostics market for serious and emerging infectious diseases has been
focused on diagnostic tests using instrument based platforms designed for clinical laboratories. Diagnostic products
designed for use in non-laboratory settings at the point-of-care or for use in laboratories or public health clinics using non-
19

instrument based platforms for the screening and diagnosis of infectious diseases are becoming more mainstream in both
the developed and developing regions of the world. Competition in this sector of the market is intense and is expected to
increase. Many of the companies have substantially greater resources available for development, marketing and
distribution of these products than does MedMira.

Significant development effort required

Products currently under development by MedMira require additional development, testing and investment prior to any
final commercialization. There can be no assurance that these products or any future products will be successfully
developed, prove to be safe and effective in clinical trials, receive applicable regulatory approvals, be capable of being
produced in commercial quantities at reasonable costs or be successfully marketed. The long-term success of MedMira
must be considered in light of the expenses, difficulties and delays frequently encountered in connection with the
development of new technology and the competitive and highly regulated environment in which MedMira operates.

Uncertainties in sales cycles in target markets

MedMira markets and distributes its products to both developed and developing regions of the world. Sales cycles in
developed regions of the world are somewhat conventional, however, timing of registrations and other activities
surrounding the sale of product into a specific market are unpredictable and highly dependent on third party and
government organizations to complete certain processes before a sales transaction can take place. In developing regions of
the world where MedMira and its strategic partners are working to close deals, the sales cycle timing is highly uncertain
given a number of factors including political and economic turmoil, as well as bureaucratic processes necessary to do
business in these regions.

High degree of regulation

MedMira operates in a highly regulated industry and is subject to the authority and approvals of certain regulatory agencies,
including Health Canada, the US Food and Drug Administration (FDA), the State Food and Drug Administration (SFDA) in
China, the Notified Body in the European Union and applicable health authorities in other countries, with regard to the
development, testing, manufacture, marketing and sale of its products. The process of obtaining such approvals can be
costly and time consuming, and there can be no assurance that regulatory approvals will be obtained or maintained. Any
failure to obtain (or significant delay in obtaining) or maintain Health Canada, FDA, Notified Body or SFDA approvals (or, to
a lesser extent, approval of applicable health authorities in other countries) for MedMira’s new or existing products could
materially adversely affect MedMira’s ability to market its products successfully and could therefore have a material
adverse effect on the business of MedMira.

Ability to retain and attract key management and other experienced personnel

Since its inception, the Company has been, and continues to be, dependant in its ability to attract and maintain key scientific
and commercial personnel upon whom the Company relies for its product innovations and commercialization programs.
Loss of key personnel individually or as a group could have significant adverse impact on the Company’s immediate and
future achievement of operating results.

Limited sales and marketing resources and reliance on key distributors to market and sell the Company’s product

Any revenues received by the Company will be dependent on the efforts of third parties and there can be no assurance that
such efforts will be successful. Failure to establish sustainable and successful sales and marketing programs with effective
distributor support programs may have a material adverse effect on the Company.

Commercialization of the Company’s products is expensive and time consuming. In the United States, a relationship has
been established with My Care Solution to support the logistics and distribution of the Company’s products. The Company

will rely on the joint efforts of My Care Solution and distributors Cardinal Health, a Fortune 100 company, and VWR
International to distribute MedMira’s Reveal™ G3 Rapid HIV-1 Antibody Test product line.

Outside the United States, the Company pursues collaborative arrangements with established pharmaceutical and
distribution companies for marketing, distribution, and sale of its products.

In China, MedMira has formed a strategic partnership with Triplex to market and distribute the Company’s rapid HIV test
within the assigned territory. This strategic partnership also encompasses the assembly and packaging of final product
components.

In Africa, MedMira works with a number of strategic partners covering various regions and sectors of Sub-Saharan Africa,
North Africa, and the Middle East.

If any of the Company’s distribution agreements are terminated and the Company is unable to enter into alternative
agreements, or if the Company elects to distribute new products directly, additional investment in sales and marketing
resources would be required which would increase future selling, general and administrative expenses. The Company has
limited experience in direct sales, marketing and distribution of its products. A failure of the Company to successfully market
its products would have a material and adverse effect on the Company.

Manufacturing capabilities and scale-up

The Company must manufacture its products in compliance with regulatory requirements, in sufficient quantities and on a
timely basis, while maintaining product quality and acceptable manufacturing costs. If it is unable to manufacture or
contract for such capabilities on acceptable terms for its products under development, MedMira’s plans for
commercialization could be materially adversely affected.

MedMira’s manufacturing facilities are, or will be, subject to periodic regulatory inspections by the FDA, Notified Body,
SFDA and other regulatory agencies and these facilities are subject to Quality System Regulations requirements of the FDA
and other standards organizations. MedMira may not satisfy such regulatory or standards requirements, and any failure to
do so would have a material adverse effect on the Company.

In addition, production and scale-up of manufacturing for new products may require the development and implementation
of new manufacturing technologies and expertise. Manufacturing and quality control problems may arise as the Company
attempt to scale-up manufacturing and such scale-up may not be achieved in a timely manner or at commercially
reasonable cost, or at all.

Rapidly changing technology

The in vitro diagnostic testing field as a whole is characterized by rapidly advancing technology that could render MedMira’s
products obsolete at any time and thereby adversely affect the financial condition and future prospects of the Company.

Uncertainties regarding healthcare reimbursement and reform

The future revenues and profitability of diagnostic companies as well as the availability of capital may be affected by the
continuing efforts of government and third party payers to contain or reduce costs of healthcare through various means.
For example, in certain foreign markets, pricing or profitability is subject to government control. In the US, there has been,
and the Company expects that there will continue to be, a number of federal and state proposals to implement similar
government controls. While the Company cannot predict whether any such legislative or regulatory proposals will be
adopted, the announcement or adoption of such proposals could have a material adverse effect on the Company’s results
of operations.

Product liability

MedMira may be subject to claims of personal injury and could become liable to clinical laboratories, hospitals and patients
for injuries resulting from the use of its products. MedMira could suffer financial loss due to defects in its products and such
financial loss together with litigation expenses could have a material adverse effect on its operations. MedMira has obtained
product liability insurance to protect against possible losses of this nature. However, no assurance can be given that such
insurance will be adequate to cover all claims or that MedMira will be able to maintain such insurance at a reasonable cost.

Risks and uncertainties related to the Company’s intellectual property

No assurance of patent protection

MedMira has filed patent applications in the US, Canada, China, and other foreign countries relating to various aspects of
its rapid diagnostic platform, processes, reagents, and equipment. Although MedMira’s management believes that the
patents for which the Company applied may be issued, there can be no such assurance, nor can MedMira assure that
competitors will not develop functionally similar or superior diagnostic testing devices. Moreover, there is a question as to
the extent to which biotechnology discoveries and related products and processes can effectively be protected by patents.
The law regarding the breadth or scope of biotechnology patents is new and evolving. No assurance can be given that, if a
patent issued to MedMira is challenged, it will be held valid and enforceable or will be found to have a scope sufficiently
broad to cover competitors’ products or processes. The cost of enforcing MedMira’s patent right, if any, in lawsuits that it
may bring against infringers may be significant and could limit MedMira’s operations.

Possible patent infringement

The extent to which biotechnology discoveries and related products and processes can be effectively protected by patents
and be enforceable is uncertain and subject to interpretation by the courts. The technologies, products, and processes of
MedMira may be subject to claims of infringement on the patents of others and, if such claims are successful, could result
in the requirement to access such technology by license agreement. There can be no assurance that such licenses would be
available on commercially acceptable terms. If MedMira is required to acquire rights to valid and enforceable patents but
cannot do so at reasonable cost, MedMira’s ability to manufacture or market its products would be materially adversely
affected. The cost of MedMira’s defence against infringement charges by other patent holders may be significant and could
limit MedMira’s operations.

MedMira Inc.

Consolidated Financial Statements
July 31, 2013 and 2012

November 28, 2013

Management’s responsibility for financial reporting

The accompanying consolidated financial statements of MedMira Inc. (MedMira or the Company) are the responsibility of
management and have been approved by the Board of Directors. The consolidated financial statements have been prepared
by management in accordance with International Financial Reporting Standards (IFRS). The consolidated financial
statements includes amounts and assumptions based on management’s best estimates which have been derived with
careful judgement.

In fulfilling its responsibilities, management has developed and maintains a system of internal accounting controls. These
controls are designed to ensure that the financial records are reliable for preparation of the consolidated financial
statements.

The Board of Directors of the Company is responsible for ensuring that management fulfils its responsibilities for financial
reporting and is ultimately responsible for reviewing and approving the consolidated financial statements and the
accompanying management’s discussion and analysis. The Board of Directors carries out this responsibility principally
through its Audit Committee.

The Audit Committee is a subcommittee of the Board of Directors. It is responsible for oversight of the internal control and
financial matters assisting the Company’s management and independent auditors to ensure that the integrity of the
financial reporting process is maintained.

The Company’s independent auditors are appointed by the shareholders to conduct an audit in accordance with Canadian
generally accepted auditing standards and their report follows.

(signed) Hermes Chan

Chief Executive Officer

(signed) Daniel Frid

Chief Financial Officer

MedMira Inc.

Consolidated statements of financial position
As at July 31, 2013 and July 31, 2012

In Canadian dollars

Assets
Current assets

Cash
Trade and other receivables
Prepaid expenses
Current tax assets
Inventories

Total current assets

Non-current assets

Property, plant and equipment
Intangible assets

Total non-current assets
Total assets

Liabilities
Current Liabilities

Current portion of debt
Accounts payable and accrued liabilities
Deferred revenue
Total current liabilities

Non-current liabilities
Provision for royalty
Long term portion of debt
Total non-current liabilities
Total liabilities

Equity

Share capital
Warrant reserve
Stock based compensation reserve
Equity reserve
Accumulated deficit

Total shareholders' deficiency
Total liabilities and equity

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

Approved on behalf of the Board of Directors

(signed) Hermes Chan, Director

(signed) Romano Robusto, Director

Notes

31-Jul-13
$

31-Jul-12
$

6
7

12
10

8
8
8

20,942
320,253
70,103
205,489
205,000
821,787

345,056
2
345,058
1,166,845

2,190,635
2,560,003
103,322
4,853,960

739,817
4,683,668
5,423,485
10,277,445

55,661,183
4,493,647
1,099,202
595,770
(70,960,402)
(9,110,600)
1,166,845

2,416,809
164,292
98,097
46,307
225,854
2,951,359

18,878
2
18,880
2,970,239

7,184,916
3,290,151
574,225
11,049,292

401,443
227,803
629,246
11,678,538

55,661,183
4,493,647
1,099,202
595,770
(70,558,101)
(8,708,299)
2,970,239

MedMira Inc.

Consolidated statements of operations and comprehensive (loss) income
For the years ended July 31, 2013 and July 31, 2012

In Canadian dollars

Product

Product sales
Royalties
Product cost of sales
Gross margin on product

Services

Service sales
Service cost of sales
Gross margin on services

Operating expenses

Research and development
Sales and marketing
Other direct costs
General and administrive

Total operating expenses

Operating loss

Non-operating income (expenses)

Financing

Net (loss) income

Basic (loss) earnings per share
Diluted (loss) earnings per share

Notes

31-Jul-13
$

31-Jul-12
$

4
4
5

4
14

9
9

829,438
35,360
(435,409)
429,389

1,136,666
(935,280)
201,386

(133,304)
(262,271)
(299,209)
(2,101,361)
(2,796,145)

938,356
32,275
(376,395)
594,236

-
-
-

(199,022)
(223,632)
(329,142)
(2,207,082)
(2,958,878)

(2,165,370)

(2,364,642)

1,763,069
(402,301)

5,736,944
3,372,302

(0.001)
(0.001)

0.012
0.008

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

MedMira Inc.

Consolidated statements of changes in equity attributable to equity holders of the Company

In Canadian dollars

Share capital

Common shares Preferred shares Warrant reserve

Stock based
compensation
reserve

Equity reserve

Accumulated
deficit

Shareholders'
deficiency

Balance at July 31, 2011

50,982,750

2,500

2,205,330

1,030,354

595,770

(73,930,403)

(19,113,699)

Net and comprehensive income
Issuance of common shares for cash
Issuance of common shares for debt
Share issuance costs
Issuance of stock options

4,320,752
390,931
(35,750)
-

-
-
-
-
-

2,110,313
178,004

-
-

-
-
-
-
68,848

-
-
-
-
-

3,372,302

-
-
-
-

3,372,302
6,431,065
568,935
(35,750)
68,848

Balance at July 31, 2012

55,658,683

2,500

4,493,647

1,099,202

595,770

(70,558,101)

(8,708,299)

Net and comprehensive loss

(402,301)

Balance at July 31, 2013

55,658,683

2,500

4,493,647

1,099,202

595,770

(70,960,402)

(9,110,600)

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

MedMira Inc.

Consolidated statements of cash flows
For the years ended July 31, 2013 and July 31, 2012

In Canadian dollars

Cash from operating activities

Cash receipts from customers
Cash paid to suppliers and employees

Net cash from operating activities

Cash from investing activities

Payment to acquire property, plant and equipment

Net cash from investing activities

Cash from financing activities

Cash proceeds from share issuance
Share issuance costs
Cash proceeds from interest
Cash proceeds from new debt
Cash payment on existing debt
Cash payment of interest

Net cash from financing activities

Net (decrease) increase in cash
Cash at the beginning of the period
Effects of exchange on the foreign currency cash balances
Cash at the end of the period

Notes

31-Jul-13
$

1,876,677
(3,964,514)
(2,087,837)

31-Jul-12
$

820,553
(2,988,753)
(2,168,200)

(366,986)
(366,986)

(5,708)
(5,708)

-
-
4,991
1,182,330
(721,009)
(407,819)
58,493

(2,396,330)
2,416,809
463
20,942

6,431,065
(35,750)
-

139,007
(2,447,848)
(523,220)
3,563,254

1,389,346
1,026,763
700
2,416,809

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

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

Reporting entity

Nature of operations

MedMira Inc. (MedMira or the Company) is a biotechnology company headquartered in Canada. The address of the
Company’s registered office is 155 Chain Lake Drive, Suite 1, Halifax, Nova Scotia, B3S 1B3. OnSite Lab Holdings AG
owns the majority of MedMira’s shares and is the controlling shareholder. The consolidated financial statements of the
Company as at and for the years ended July 31, 2013 and 2012, comprise the Company and its subsidiaries. MedMira,
through its subsidiaries, is engaged in the business of research, development and manufacturing of rapid diagnostics
and technologies. The Company invests in research in order to maintain and expand its position in the global
diagnostics market. MedMira’s research is focused on specific areas of the broader diagnostics market, namely the
rapid, point-of-care, and in vitro sectors. These financial statements include the accounts of the Company’s subsidiaries.

2. Basis of preparation

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and interpretations of the IFRS
Interpretations Committee.

The consolidated financial statements were authorized for issue by the Board of Directors on November 28, 2013.

b. Going-concern

The accompanying consolidated financial statements have been prepared on the basis of IFRS applicable to a going-
concern, which contemplates the realization of assets and liquidation of liabilities during the normal course of
operations. However, certain adverse conditions and events cast significant doubt upon the validity of this assumption.

The Company has incurred losses and negative cash flows from operations on a cumulative basis since inception. For
the year ended July 31, 2013, the Company realized a net loss of approximately $0.4 million (July 31, 2012 – net income
$3.4 million), consisting of a net loss from operations of $2.2 million (July 31, 2012 – net loss $2.4 million), a gain on
forgiveness of debt of $0.7 million (July 31, 2012 – $10.1 million), a valuation gain on renegotiation of debt of $2.0
million (July 31, 2012 – $nil) and other non-operating losses of $1.0 (July 31, 2012 – $4.5 million). Negative cash flows
from operations were approximately $2.1 million (July 31, 2012 – $2.2 million). As at July 31, 2013, the Company had
an accumulated deficit of approximately $71.0 million (July 31, 2012 – $70.6 million) and a negative working capital
position of $4.0 million (July 31,2012 – $8.1 million). In addition to its on-going working capital requirements, the
Company must secure sufficient funding for its research and development programs for existing commitments,
including its current portion of loans of approximately $2.2 million. These circumstances cast significant doubt as to
the ability of the Company to meet its obligations as they come due and, accordingly, the appropriateness of the use
of accounting principles applicable to a going-concern.

Management is pursuing other financing alternatives to fund the Company’s operations so it can continue as a going-
concern. Management plans to secure the necessary financing through new equity and debt arrangements.
Nevertheless, there is no assurance that this initiative will be successful (additional details on financing subsequent to
July 31, 2013 are provided in note 21).

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

The Company is subject to risks associated with early stage companies, including but not limited to, dependence on
key individuals, competition from substitute services and larger companies, and the requirement for the continued
successful development and marketing of its products and services. The Company’s ability to continue as a going-
concern is dependent upon its ability to generate positive cash flow from operations and secure additional financing.
These financial statements do not reflect the adjustments to carrying values of assets and liabilities and the reported
expenses and balance sheet classifications that would be necessary were the going-concern assumption not
appropriate. These adjustments could be material.

c. Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis with the exception of certain
financial instruments, which are measured in accordance with the policy described in note 3, and inventory, which is
measured at the lower of cost and net realizable value.

d. Functional and presentation currency

The consolidated financial statements are presented in Canadian dollars, which is the functional currency of the
Company and its subsidiaries. All financial information is presented in Canadian dollars unless explicitly stated.

e. Use of estimates and judgements

The preparation of the consolidated financial statements in conformity with IFRS requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates. These include but are not
limited to:

− Amounts recorded for depreciation, impairment and reversals of impairment of property, equipment and
intangible assets which depend on estimates of net recoverable amounts based on expected economic lives
and future cash flows from related assets;

− Amounts recorded for investment tax credits recoverable which are calculated based on the expected
eligibility and tax treatment of qualifying scientific research and experimental development expenditures
recorded in the Company’s consolidated financial statements;

− Contingencies that are accrued on an undiscounted basis when it is probable that a liability for past events
exists and the liability can be reasonably estimated. In determining whether a liability exists, the Company is
required to make judgements as to the probability of future events occurring;

−

The allocation of proceeds between common shares and warrants, determined by valuation of warrants which
includes assumptions regarding the volatility and risk free rate;

The fair value calculation of promissory notes, convertible debt, and long-term debt, which includes
assumptions of the market rate and expected cash flows;

The fair value calculation of royalty liabilities, which includes determination of an appropriate discount rate,
estimation of future sales, and estimation on price and cost of production;

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

The fair value calculation of stock-based compensation, including determination of appropriate volatility and risk free
rate;

−

The fair value allocation of consideration for multiple element revenue arrangements, including timing of
revenue recognition and allocation of cost; and

− Determination of operating segments.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimates are revised and in any future periods affected.

3. Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated
financial statements and to the Company’s subsidiaries.

The Company and its significant subsidiaries are shown below.

Country of incorporation

Ownership interest

31-Jul-13

100

Canada

31-Jul-12

100

MedMira Inc.

MedMira Laboratories Inc.

Maple Biosciences Inc.

a. Basis of consolidation

Subsidiaries

Subsidiaries are entities controlled by the Company. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control commences until the date that control ceases. The
accounting policies of subsidiaries have been changed when necessary to align with the policies adopted by the
Company.

Transactions eliminated on consolidation

Intra-company balances and transactions, and any unrealized income and expenses arising from intra-company
transactions, are eliminated in preparing the consolidated financial statements.

b. Foreign currency transactions

Transactions in foreign currencies are translated to Canadian dollars, the functional currency of the Company and its
subsidiaries, at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

currencies at the reporting date are translated to the functional currency at the exchange rate at that date. The foreign
currency gain or loss on monetary items is the difference between the amortized cost in the functional currency at the
beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in the
foreign currency translated at the exchange rate at the end of the reporting period.

c. Financial instruments

Non-derivative financial assets

The Company initially recognizes loans, receivables, and deposits on the date of origination. All other financial assets
are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the
instrument.

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially
all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets
that is created or retained by the Company is recognized as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position only when the
Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle
the liability simultaneously.

The Company classifies loans and receivables as non-derivative financial assets. Loans and receivables are financial
assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially
at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables
are measured at amortized cost using the effective interest method, less any impairment losses. Loans and receivables
comprise trade and other receivables.

The Company also classifies cash as non-derivative financial assets. Cash is comprised of cash balances and bank
overdrafts that are repayable on demand and form an integral part of the Company’s cash management for the purpose
of the statement of cash flows. Cash is classified as loans and receivables.

Non-derivative financial liabilities

The Company initially recognizes debt securities issued and subordinated liabilities on the date of origination. All other
financial liabilities are recognized initially on the trade date at which the Company becomes a party to the contractual
provisions of the instrument. The Company derecognizes a financial liability when its contractual obligations are
discharged, cancelled or expired.

The Company has the following non-derivative financial liabilities: loans and borrowings, royalty provisions and trade
and other payables. Such financial liabilities are recognized initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the
effective interest method.

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

Share capital

Common shares

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and share
options are recognized as a deduction from equity, net of any tax effects.

Preferred shares

Preferred share capital is classified as equity if it is non-redeemable, or redeemable only at the Company’s option, and
any dividends are discretionary. Dividends thereon are recognized as distributions within equity.

Preferred share capital is classified as a liability if it is redeemable on a specific date or at the option of the shareholders,
or if dividend payments are not discretionary. Dividends thereon are recognized as interest expense in profit or loss as
accrued.

Stock purchase warrants

The fair value of these warrants is determined at the time the services are received by the Company and the expense
is recognized in the statement of operations and comprehensive income (loss). The fair value of the warrants is the fair
value of the services received where this can be estimated reliably by comparable services by independent parties. In
such circumstances where the fair value of the services received cannot be estimated reliably, the fair value is measured
indirectly by reference to the fair value of the equity instrument granted, measured at the date the entity receives the
relevant services. All such warrants are classified in a warrant reserve within equity.

Compound financial instruments

Compound financial instruments issued by the Company comprise convertible debentures that can be converted to
share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair
value.

The liability component of a compound financial instrument is recognized initially at the fair value of a similar liability
that does not have an equity conversion option. The equity component is recognized initially at the difference between
the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any
directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial
carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized
cost using the effective interest method. The equity component of a compound financial instrument is not remeasured
subsequent to initial recognition.

Interest, dividends, losses and gains relating to the financial liability are recognized in profit or loss. Distributions to
the equity holders are recognized in equity, net of any tax benefit.

d. Property, plant and equipment

Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses. Cost includes any expenditure that is directly attributable to the acquisition of the asset. Gains and
losses on the disposal of an item of property, plant and equipment are determined by comparing the proceeds from
33

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

disposal with the carrying amount of property, plant and equipment, and are recognized net within other income in
profit or loss.

Subsequent costs

The cost of replacing a part of an item of property, plant and equipment is recognized in the carrying amount of the
item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost
can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day
servicing of property, plant and equipment are recognized in profit or loss as incurred.

Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for
cost, less its residual value.

Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component
of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future
economic benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term.

The estimated useful lives for the current and comparative periods are as follows:

−

office equipment and furniture

5 years

leasehold improvements

lower of 7 years and length of lease

manufacturing equipment

laboratory equipment

5 years

Depreciation methods, useful lives, and residual values are reviewed at each financial year end and adjusted if
appropriate.

Intangible assets

Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and
understanding, is recognized in profit or loss as incurred.

Development activities involve a plan or design for the production of new or substantially improved products and
processes. A development expenditure is capitalized only if development costs can be measured reliably, the product
or process is technically and commercially feasible, future economic benefits are probable, and the Company intends
to, and has sufficient resources to, complete development and to use or sell the asset. The expenditure capitalized
includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its
intended use, and borrowing costs on qualifying assets for which the commencement date for capitalization is on or
after August 1, 2010. Any other development expenditure is recognized in profit or loss as incurred.

A capitalized development expenditure is measured at cost less accumulated amortization and accumulated
impairment losses.

Other intangible assets

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

Other intangible assets that are acquired by the Company and have finite useful lives are measured at cost less
accumulated amortization and accumulated impairment losses.

Subsequent expenditure

A subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific
asset to which it relates. Any other expenditure, including an expenditure on internally generated goodwill and brands,
is recognized in profit or loss as incurred.

Amortization

Amortization is calculated over the cost of the asset, or other amount substituted for cost, less its residual value.

Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets
from the date that they are available for use, since this most closely reflects the expected pattern of consumption of
the future economic benefits embodied in the asset. The estimated useful lives for the current and comparative periods
are as follows:

Patents and trademarks

10 – 20 years

Leased assets

Leases with terms in which the Company assumes substantially all the risks and rewards of ownership are classified as
finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value
and the present value of the future minimum lease payments. Subsequent to initial recognition, the asset is accounted
for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and the leased assets are not recognized in the Company’s statement of financial
position.

Inventories

Raw materials inventory consists of chemicals, plastic components and packaging materials. Work in process inventory
(WIP) includes partially assembled tests, and any materials that have been modified, but not yet converted to finished
products. Finished product inventory includes completed diagnostics tests in a state ready for sale. The Company does
not carry inventory that would be considered long-term.

Inventories are measured 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.

During the year ended 2013, the Company transitioned from using the first-in first-out principle for inventory costing
to using the weighted average costing method. The use of average costing immediately factors in changes in material
cost into the cost of goods sold, providing more relevant costing information to management. The amount of the
adjustment did not have a material impact on the financial statements for the years ended July 31, 2012 and July 31,
2013.

Inventory cost includes expenditure incurred in acquiring the inventories, production or conversion costs and other
costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and
work in progress, cost includes an appropriate share of production overhead based on normal operating capacity.

Impairment

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

Financial assets (including receivables)

Financial assets, other than those at fair value through profit and loss, are assessed for indicators of impairment at the
end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as
a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future
cash flows of the investment have been affected.

Long-lived assets

The carrying amounts of the Company’s long-lived assets are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit (CGU) is the greater of its value in use and its fair value less
costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the
smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash
inflows of other assets or groups of assets (the CGU).

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable
amount. Impairment losses are recognized in profit or loss.

Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. 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.

Employee benefits

Short-term employee benefits

Short-term employee benefit obligations such as vacation and healthcare benefits are measured on an undiscounted
basis and are expensed as the related service is provided.

A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the
Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the
employee, and the obligation can be estimated reliably.

Share-based payment transactions

The grant date fair value of share-based payment awards granted to employees is recognized as an employee expense, with
a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards.
Under the Company’s current option plan, options vest at the date of issuance; therefore, the full value of options is recorded
as an increase in equity at the date of issuance.

Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. The unwinding of the
discount is recognized as finance cost.

Onerous contracts

A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract
are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the
present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the
contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that
contract.

k. Revenue

Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration
received or receivable, net of returns, trade discounts and volume rebates. Down payments are recognized as deferred
revenue until such time as the revenue associated with the sales order meets the criteria for revenue recognition.
Revenue is recognized when persuasive evidence exists, usually in the form of an executed sales agreement, that the
significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is
probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing
management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that
discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction of
revenue as the sales are recognized.

The timing of the transfers of risks and rewards varies depending on the individual terms of the contract of sale. For
sales of rapid diagnostics, transfer typically occurs when the product is shipped from the Company’s warehouse;
however, for some international shipments, transfer may occur when goods are received.

When two or more revenue generating activities or deliverables are sold under a single arrangement, each deliverable
that is considered to be a separate unit of account is accounted for separately. The allocation of consideration from a
revenue arrangement to its separate units of account is based on the relative fair values of each unit. If the fair value
of the delivered item is not reliably measurable, then revenue is allocated based on the difference between the total
arrangement consideration and the fair value of the undelivered item.

Services

The Company’s service revenue consists primarily of research and development contracts with the US Military. Revenue
from services rendered is recognized in profit or loss in proportion to the stage of completion of the transaction at the
reporting date. The stage of completion is assessed by reference to surveys of work performed.

Royalties and licence fees

Revenue from royalties and licences is recognized when the terms of the royalty or licence agreement are met, payment
is reasonably assured, and payment can be reliably measured. Licences subject to attaining milestones are recognized
as milestones are reached. Non-refundable up-front license fees are recognized when no uncertainty about collection
exists. It is recognized on a basis that reflects the timing, nature and value of the benefits provided.

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

Deferred revenue

All deferred revenue is classified as current and consists of customer advances for product that has not yet been
shipped or the conditions required to account for payments as revenue have not yet been met.

l. Government grants

Government grants are recognized initially as deferred revenue at fair value when there is reasonable assurance that
they will be received and the Company will comply with the conditions associated with the grant. Grants that
compensate the Company for expenses incurred are recognized in profit or loss as a reduction in expense on a
systematic basis in the same periods in which the expenses are recognized.

The Company also receives government loans with below market interest rates. These loans are classified as
government grants. The benefit from the grant is determined based on the difference between the amount received
and the fair value of the loan and is recognized in profit or loss as a reduction in expense on a systematic basis in the
same periods in which the expenses are recognized.

m. Lease payments

Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the
lease. Lease incentives received are recognized as a part of the total lease expense, over the term of the lease.

n. Finance income and finance costs

Finance costs comprise interest expense on borrowings. Borrowing costs that are not directly attributable to the
acquisition, construction or production of a qualifying asset are recognized in profit or loss using the effective interest
method.

o. Deferred income taxes

The Company uses the liability method of accounting for income taxes. Under this method, current income taxes are
recognized for the future income tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using the substantively enacted tax rates that will be in effect when the differences are expected to reverse
or when losses are expected to be utilized. The effect on deferred income tax assets and liabilities of a change in tax
rates is recognized in operations in the year in which the change occurs.

p. Earnings and loss per share

Basic earnings/loss per share (EPS) amounts are calculated by dividing net profit/loss for the year attributable to
common equity holders of the parent by the weighted average number of common shares outstanding during the year.

Diluted EPS is determined by adjusting the net profit/loss attributable to common shareholders and the weighted
average number of common shares outstanding. Diluted EPS is equal to the basic EPS in periods of a net loss as the
exercise of options and warrants would be anti-dilutive. During profitable periods, net income is adjusted by adding
back the after-tax effect of any interest expense on dilutive convertible debentures, weighted average common shares
outstanding is adjusted to include the effects of the additional shares that would be issued upon conversion of
debentures, as well as the addition of shares that would be issued on exercise options or warrants.

q. Fair value of stock options and warrants

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

The Company makes certain estimates and assumptions when calculating the fair values of stock options and warrants
granted. The Company uses an option pricing model, which includes significant assumptions including estimate of expected
volatility, expected life, expected dividend rate and expected risk-free rate of return. Changes in these assumptions may
result in a material change to the expense recorded for the issuance of stock options and warrants.

Investment tax credits

The Company is eligible for investment tax credits on qualifying expenditures under the Federal Scientific Research and
Experimental Development (“SR&ED) Tax Credit. The SR&ED refundable tax credits are recognized as receivables based
on the provision for the tax credit in the year. The SR&ED refundable tax credits are treated as other income.

s. New standards and interpretations not yet adopted

A number of new standards, and amendments to standards and interpretations, were not yet effective for the year
ended July 31, 2013, and have not been applied in preparing these consolidated financial statements. None of these
new standards or amendments is expected to have a significant effect on the financial results of the Company.

Accounting standards issued but not yet applied:

IFRS 9, “Financial Instruments”: IFRS 9 requires all recognized financial assets that are within the scope of IAS 39
Financial Instruments: Recognition and Measurement to be subsequently measured at amortized cost or fair value. The
IASB has issued an amendment to IFRS 9 Financial Instruments (“IFRS 9”), which changes the effective date of IFRS 9
(2009) and IFRS 9 (2011), so that IFRS 9 is required to be applied for annual periods beginning on or after January 1,
2015, with early application permitted. This amendment was released in connection with IFRS 7 Financial Instruments:
Disclosures – Transition Disclosures (“IFRS 7”) which outlines that, with the amendments to IFRS 9, entities applying
IFRS 9 do not need to restate prior periods but are required to apply modified disclosures. The Company continues to
asses the impact of IFRS 9 on its consolidated financial statements.

IFRS 10, “Consolidated Financial Statements”: The IASB issued IFRS 10, “Consolidated Financial Statements”, effective
for annual periods beginning on or after January 1, 2013. IFRS 10 replaces portions of IAS 27, “Consolidated and
Separate Financial Statements”, that addresses consolidation, and supersedes Standing Interpretations Committee
(SIC) SIC-12 in its entirety. The objective of IFRS 10 is to define the principles of control and establish the basis of
determining when and how an entity should be included within a set of consolidated financial statements. IAS 27 has
been amended to reflect the issuance of IFRS 10 and retains guidance only for separate financial statements. The
Company continues to asses the impact of IFRS 10 on its consolidated financial statements.

IFRS 11, “Joint Arrangements”, effective for annual periods beginning on or after January 1, 2013 with early adoption
permitted, requires a venturer to classify its interest in a joint arrangement as a joint venture or joint operation. Joint
ventures will be accounted for using the equity method of accounting whereas for a joint operation the venturer will
recognize its share of the assets, liabilities, revenue and expenses of the joint operation. Under existing IFRS, entities
have the choice to proportionately consolidate or equity account for interests in joint ventures. IFRS 11 supersedes IAS
31, Interest in Joint Ventures and SIC-13, Jointly Controlled Entities - Non-monetary Contributions by Venturers.
Management anticipates that this standard will be adopted in the Company’s consolidated financial statements for the
period beginning August 1, 2013. The Company continues to assess the impact of IFRS 11 on the consolidated financials
statements of the Company.

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

IFRS 12, “Disclosure of Interests in Other Entities”: The IASB issued IFRS 12, “Disclosure of Interests in Other Entities”,
effective for annual periods beginning on or after January 1, 2013. IFRS 12 requires extensive disclosures relating to a
company’s interests in subsidiaries, joint arrangements, associates, and unconsolidated structured entities. IFRS 12
enables users of the financial statements to evaluate the nature and risks associated with its interests in other entities
and the effects of those interests on its financial position and performance. The Company continues to assess the
impact of IFRS 12 on the consolidated financials statements of the Company.

IFRS 13, “Fair Value Measurement”, effective for annual periods beginning on or after January 1, 2013 with early
adoption permitted, defines fair value, set out in a single IFRS framework for measuring fair value and requires
disclosures about fair value measurements. IFRS 13 does not determine when an asset, a liability or an entity’s own
equity instrument is measured at fair value. Rather the measurement and disclosure requirements of IFRS 13 apply
when another IFRS requires or permits the item to be measured at fair value. Management anticipates that this
standard will be adopted in the Company’s consolidated financial statements for the period beginning August 1, 2013.
The Company does not expect that the new standard will have a material impact on the Company’s financial
statements.

Amendments to standards

IAS 19, “Employee Benefits”, has been amended effective for annual periods beginning on or after January 1, 2013. The
revised standard requires immediate recognition of actuarial gains and losses in other comprehensive income,
eliminating the previous options that were available. A number of other amendments have been made to recognition,
measurement and classification. Currently, this standard has no impact on the consolidated financial statements of the
Company.

IAS 1, “Presentation of Financial Statements”, has been amended effective for annual periods beginning on or after July
1, 2012. The revised standard requires an entity to group items presented in the Statement of Comprehensive Income
on the basis of whether they may be reclassified to earnings subsequent to initial recognition. For those items
presented before taxes, the amendments to IAS 1 also require that the taxes related to the two separate groups be
presented separately. Currently, this standard has no impact on the consolidated financial statements of the Company.

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

4. Revenue

Product sales
Royalties
Service revenue
Total revenue

31-Jul-13
$
829,438
35,360
1,136,666
2,001,464

31-Jul-12
$
938,356
32,275
-

970,631

Service revenue is generated from research work on a contract with the US Army. The costs associated with research
conducted to earn this revenue have been recognized as a service cost of sales (see note 14).

The Company organizes and records revenue based on major geographical territories around the world. The table
below provides the geographic breakdown of revenue.

North America
Latin America and the Caribbean
Europe
Asia Pacific
Middle East
Total revenue

Inventories

31-Jul-13
$
1,655,557
92,274
10,039
240,617
2,977
2,001,464

31-Jul-12
$
588,417
132,830
8,098
239,246
2,040
970,631

As at July 31, 2013, there were no valuation allowances against inventory (July 31, 2012 – $nil).

During the year ended July 31, 2013, inventory valued at $338,594 was expensed as a cost of goods sold (July 31, 2012
– $271,402).

Raw materials and consumables
Work in process
Finished goods
Total inventories

31-Jul-13
$
133,034
65,975
5,991
205,000

31-Jul-12
$
95,476
98,192
32,186
225,854

During the year ended July 31, 2013 the Company transitioned inventory costing from first in first out (FIFO) to weighted
average costing. Additional details on this accounting policy change are provided in note 3.g – “Inventories”.

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

6. Property, plant and equipment

During the years ended July 31, 2013 and 2012, the Company did not identify any indicators of impairment. The
Company did not make any commitment to acquire property, plant and equipment during the year ended July 31, 2013
(July 31, 2012 – $nil).

The table below summarizes changes in property, plant and equipment.

Leasehold
improvements
$

Laboratory
equipment
$

Manufacturing
equipment
$

Office equipment
and furniture
$

Cost
Balance at July 31, 2011
Additions
Balance at July 31, 2012
Additions
Balance at July 31, 2013

Accumulated depreciation and impairment losses
Balance at July 31, 2011
Depreciation expense for the year
Balance at July 31, 2012
Depreciation expense for the year
Balance at July 31, 2013

Carrying amounts
At July 31, 2011
At July 31, 2012
At July 31, 2013

561,076

561,076
259,195
820,271

543,541
14,734
558,275
26,862
585,137

17,535
2,801
235,134

23,931
-
23,931
15,754
39,685

23,931
-
23,931
1,572
25,503

-
-
14,182

174,394

168,878
1,651
170,529
1,651
172,180

5,516
3,865
2,214

180,694
5,708
186,402
92,040
278,442

171,246
2,944
174,190
10,726
184,916

9,448
12,212
93,526

Total
$

940,095
5,708
945,803
366,989
1,312,792

907,596
19,329
926,925
40,811
967,736

32,499
18,878
345,056

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

Intangible assets

Cost or deemed cost
Balance at July 31, 2011
Balance at July 31, 2012
Balance at July 31, 2013

Accumulated amortization and accumulated impairment losses
Balance at July 31, 2011
Balance at July 31, 2012
Balance at July 31, 2013

Carrying amounts
At July 31, 2011
At July 31, 2012
At July 31, 2013

Intellectual
properties
$

Product
technology
$

Total
$

2,584,899
2,584,899
2,584,899

258,137
258,137
258,137

2,843,036
2,843,036
2,843,036

2,584,898
2,584,898
2,584,898

258,136
258,136
258,136

2,843,034
2,843,034
2,843,034

1
1
1

2
2
2

The Company acquired product technology and intellectual properties in 2000 through the acquisition of Precious Life
Savings Products Inc. and MedMira Laboratories Inc. In 2001, the Company recorded an impairment charge to write-
down these assets to a nominal value. There is no indication that this impairment has reversed.

During 2006, the Company acquired intellectual properties, in the form of patents and technology with a value of
$2,102,569 related to the acquisition of Maple Biosciences Inc. and the BAG-1 technology. During 2008, management
reduced its research and development efforts related to these intangible assets and recorded an impairment charge to
write-down these assets to a nominal value. Impairment charges at July 31, 2013 total $1,693,046 (July 31, 2012 –
$1,693,046). There is no indication that this impairment has reversed.

8. Capital and other components of equity

a. Authorized

The Company is authorized to issue an unlimited number of Series A preferred shares, non-voting, non-participating,
redeemable at the Company’s option at $0.001 per share after March 31, 2010, convertible into an equal number of
common shares upon the Company meeting certain milestones. The preferred shares earn no dividends.

The Company is authorized to issue an unlimited number of voting common shares without nominal or par value.

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

b. Share capital issued

Number of

Common
shares

Balance at July 31, 2011
Issued to repay debt
Issued for cash
Share issuance costs

252,264,320
11,378,704
128,621,296

Preferred
shares

5,000,000

-
-
-

Common
shares
$
50,982,750
390,931
4,320,752
(35,750)

Value of

Preferred
shares
$
2,500
-
-
-

Total share
capital
$
50,985,250
390,931
4,320,752
(35,750)

Balance at July 31, 2012

392,264,320

5,000,000

55,658,683

2,500

55,661,183

Balance at July 31, 2013

392,264,320

5,000,000

55,658,683

2,500

55,661,183

The total common shares issued and outstanding includes 4,064,464 common shares held in escrow scheduled to be
released when the Company obtains positive operating cash flow.

The Series A preferred shares had a stated capital of $2,500 at July 31, 2013 (July 31, 2012 – $2,500).

c. Warrants

Balance at July 31, 2011
Issued to repay debt
Issued for cash

Balance at July 31, 2012
Expired warrants

Balance at July 31, 2013

The total warrants outstanding at July 31, 2013 are shown below.

Issued

Number

Exercise price
$

Expiry date

December 22, 2008
December 8, 2010
July 18, 2011
January 31, 2012
June 11, 2012

6,119,500
20,000,000
30,000,000
20,000,000
120,000,000
196,119,500

0.10
0.10
0.10
0.10
0.10

December 22, 2013
December 8, 2014
July 18, 2015
January 31, 2016
June 11, 2016

Number of
warrants

96,119,500
11,378,704
128,621,296

Warrant
reserve
$
2,205,330
178,004
2,110,313

236,119,500
(40,000,000)

4,493,647

196,119,500

4,493,647

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

d. Stock based compensation

The Company has established a stock option plan for its employees, officers, and directors. All options vest immediately
upon issue and the Company is authorized to issue a maximum of 13,000,000 options annually upon approval by
shareholders. Options that have been issued and remain outstanding are exercisable into an equivalent of 4,530,000
common shares (July 31, 2012 – 5,840,000) at an exercise price of $0.10. The options expire between January 5, 2014
and October 13, 2014. During the year ended July 31, 2013, no options were issued (July 31, 2012 – nil). All options
outstanding at July 31, 2013 were exercisable.

The total options outstanding from July 31, 2011 to July 31, 2013 are shown below.

Options outstanding Jul 31, 2011
Options granted
Options expired/forfeited

Options outstanding Jul 31, 2012
Options expired/forfeited

Options outstanding Jul 31, 2013

Weighted
average
exercise price
$
0.13
0.10
0.10

Equity reserve
$
1,030,354
68,848
-

0.12
0.34

1,099,202

Number

3,845,000
3,290,000
(1,295,000)

5,840,000
(1,310,000)

4,530,000

0.100

1,099,202

The following table summarizes information about options outstanding and exercisable at July 31, 2013.

Range of exercise prices
0.10

Number outstanding and
exercisable
4,530,000

Weighted average exercise
price per share
0.10

Weighted average remaining
contractual life (years)
0.99

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

9. Earnings (loss) per share

Net (loss) income attributable to common shareholders
Interest expense on convertible debenture
Diluted (loss) income

Issued common shares

Weighted average number of common shares
Weighted average number of debenture dilutive shares
Weighted average number of warrants
Weighted average number of options
Weighted average number of diluted shares

Basic (loss) earnings per share
Diluted (loss) earnings per share

31-Jul-13
$
(402,301)

(402,301)

31-Jul-12
$
3,372,302
58,500
3,430,802

392,264,320

-
-
-

392,264,320

278,985,631
3,581,267
122,840,811
6,296,434
411,704,143

(0.001)
(0.001)

0.012
0.008

The diluted weighted average number of common shares outstanding is the same as the basic weighted average
number of common shares outstanding for the year ended July 31, 2013, as the Company had a net loss and the exercise
of potentially dilutive instruments would be anti-dilutive.

10. Loans and borrowings

a. Loans

Short term loans
Loan 1
Loan 2
Loan 3
Loan 4
Loan 5
ACOA loans
Nova Scotia government loan 1
Nova Scotia government loan 2
Total loan principal

Long term portion of principal
Current portion payable of principal

31-Jul-13

31-Jul-12

Carrying value
$
714,191
919,380
1,223,342

Contract value
$
714,191
1,150,000
1,500,000

-
39,000
5,136
1,453,999
3,480,000
97,390
8,439,716

-
33,201
5,758
1,081,163
2,843,099
54,169
6,874,303

4,683,668
2,190,635

Carrying value
$

Contract value
$

650,000
1,468,716
189,803
50,000
75,218
1,498,982
3,480,000

7,412,719

227,803
7,184,916

During the year ended July 31, 2013, the Company renegotiated some of the outstanding debt (see note 10.b).

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

Short term loans

The Company has a number of short terms loans with related and non-related parties. These loans are utilised by the
Company for short term working capital requirements. Loans are payable on demand with interest rates ranging from
3% to 15%. The loans were not in default at July 31, 2013.

Loan 1

In the prior year, the $650,000 related to a convertible debenture with a coupon interest rate of 9% per annum, payable
monthly, maturing four years from the date of close. The principal was repayable in full on August 28, 2012. The
debenture was convertible in whole or in part into common shares at $0.1815. As at July 31, 2012, the debenture was
in default and was classified as a current liability. The loan was renegotiated October 31, 2012, bearing 3% interest with
monthly interest only payments until November 30, 2013, followed by equal monthly principal payments for five
additional years ending November 30, 2018. The loan interest will be set to 5% in the event the Company secures at
least $1.5 million in additional equity financing. The loan is secured by interest on intellectual property and on the step-
up technology. The loan was not in default at July 31, 2013.

Loan 2

Loan established July 31, 2012, bearing 3% interest with monthly interest only payments until July 31, 2013, followed
by equal monthly principal payments for five additional years ending July 31, 2018. The loan interest will be set to 5%
in the event the Company secures at least $1.5 million in additional equity financing. The loan was not in default at July
31, 2013.

Loan 3

During the year ended July 31, 2013, the Company entered into an agreement to settle the loan with a single payment
of $156,790, resulting in the forgiveness of $33,621 of principal and accrued interest.

Loan 4

Loan established July 31, 2012, bearing 3% interest with monthly monthly principal payments of $1,000, in addition to
accrued monthly interest ending September 30, 2016. The loan interest will be set to 5% in the event the Company
secures at least $1.5 million in additional equity financing. The loan was not in default at July 31, 2013.

Loan 5

Loan established August 24, 2011, bearing no interest payable in equal monthly payments of US$5,000. The loan was
not in default at July 31, 2013.

Atlantic Canada Opportunities Agency (ACOA) loan(s)

In the prior year, the ACOA loans consisted of four separate loans bearing no interest with varying payment terms. As
at July 31, 2012, the loans were in default and classified as current liabilities. The loans were renegotiated October 30,
2012, bearing no interest with monthly principal payments of $3,747 until July 31, 2013, followed by equal monthly
principal payments of $24,234 for five additional years ending July 31, 2018. The loan is secured by all present and after
acquired personal property, excepting consumer goods. The loan was not in default at July 31, 2013.

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

Nova Scotia government loan 1

In the prior year this consisted of a loan payable to the Nova Scotia Government Department of Economic and Rural
Development and Tourism with interest bearing at the Province’s five year cost of funds plus 2%. The loan was payable
in 54 monthly instalments beginning June 1, 2010. As at July 31, 2012, the loan was in default and classified as a current
liability. The loan was renegotiated September 14, 2012, bearing 3% interest with monthly interest only payments until
July 31, 2013, followed by equal monthly principal payments for five additional years ending July 31, 2018. The loan is
secured by first interest on intellectual property and on the Maple Bio sensor technology. The loan was not in default
at July 31, 2013.

Nova Scotia government loan 2

Loan established September 14, 2012, bearing no interest with the balance due by August 31, 2018. The loan is secured
by first interest on intellectual property and on the Maple Bio sensor technology. The loan was not in default at July
31, 2013.

b. Renegotiation of debt

During the year ended July 31, 2013, management renegotiated some of the outstanding loans which resulted in
substantially different terms from the original agreements. These were treated as an extinguishment of the original
liability and the recognition of a new liability. These debt arrangements were valued using a rate of approximately
11.8%, representing a reasonable exit price for the liabilities. This resulted in a gain on renegotiated debt of $2,027,442.

c. Significant refinancing

During the year ended July 31, 2012, the Company negotiated the forgiveness and settlement of debt resulting in the
payment of $1,806,481 to settle $11,849,307 in principal and accrued interest. The difference between the settled
amount and the payment, $10,042,826, was booked as a gain on forgiveness of debt in the statement of operations
and comprehensive income and includes a gain on forgiveness of principal of $8,114,161 and gain on forgiveness of
accrued interest of $1,928,665.

11. Financial instruments

a. Capital management

The Company’s objectives when managing capital are to provide an adequate return to shareholders, safeguard its
assets, maintain a competitive cost structure and continue as a going-concern in order to pursue the development and
sale of its products. To maximize ongoing development and growth effort, the Company did not pay out dividends during
the year ended July 31, 2013 (July 31, 2012 – $nil). The Company is not anticipating paying out dividends during the year
ended July 31, 2014.

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

The Company’s capital is summarized in the table below.

Total debt
Less: Cash and cash equivalents
Net debt

Shareholders' deficiency
Total capital

31-Jul-13
$
6,874,303
(20,942)
6,853,361

(9,110,600)
(2,257,239)

31-Jul-12
$
7,412,719
(2,416,809)
4,995,910

(8,708,299)
(3,712,389)

To facilitate the management of its capital structure, the Company prepares annual expenditure operating budgets
that are updated as the input parameters change. Cash flow is monitored and updated daily.

b. Categories of financial instruments and fair value

Financial assets
Available for sale

Cash

Amortized cost

31-Jul-13

31-Jul-12

Carrying value
$

Fair value
$

Carrying value
$

Fair value
$

20,942

2,416,809

Trade and accounts receivable

320,253

164,292

Financial liabilities
Amortized cost

Accounts payable and accrued liabilities
Current portion of debt
Long term portion of debt

2,560,003
2,190,635
4,683,668

3,290,151
7,184,916
227,803

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

c. Foreign currency risk

Most of the Company’s sales are made in foreign currencies. The Company’s US dollar foreign currency denominated
monetary assets and monetary liabilities at the end of the reporting period are shown in the table below.

Cash and cash equivalents
Trade and other receivables
Prepaid expense
Accounts payable and accrued liabilities
Deferred income
Debt

31-Jul-13
US$
1,239
315,347
22,257
161,066
66,512
5,000

31-Jul-12
US$
25,930
44,901
-

165,422
523,541
75,000

A one cent change in the US dollar exchange rate would result in approximately a $1,000 (2012 – $7,000) impact on
the balance sheet and consolidated statement of income. The Company’s foreign exchange exposure to the US dollar
has decreased in the year ended July 31, 2013 due mainly to the settlement of US dollar denominated loans.

Interest rate risk

The Company is not exposed to interest rate risk as it borrows funds at fixed rates.

e. Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Company. The Company mitigates this risk by requiring a 50% down payment on most orders at the time of
purchase, and the remaining 50% prior to shipment. The receivables balance of $320,253 consists of trade receivables
from sale of the Company’s products and receivables on research initiatives. Historically, there have been few collection
issues and the Company does not believe it is subject to any significant concentration of credit risk.

Liquidity risk

Liquidity risk represents the possibility that the Company may not be able to gather sufficient cash resources, when
required and under reasonable conditions, to meet its financial obligations. As at July 31, 2013, the Company does not
have sufficient cash to meet all of its continual liabilities.

The Company also continues to have an ongoing need for substantial capital resources to research and develop,
commercialize and manufacture its products and technologies. The Company is not yet receiving a significant ongoing
revenue stream, nor can it be certain that it will receive significant revenue before additional cash is required. As a
result, there can be no assurance that the Company will have sufficient capital to fund its ongoing operations, develop
or commercialize its products without future financing.

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

The Company’s contractual maturities for its financial liabilities are outlined in the table below.

For the year ended July 31, 2013

Loans
Total debt

For the year ended July 31, 2012

Loans
Debentures
Total debt

Total
$
8,439,716
8,439,716

Less than 1 year
$
2,190,635
2,190,635

Total
$
6,762,719
650,000
7,412,719

Less than 1 year
$
6,534,916
650,000
7,184,916

1 to 3 years
$
3,057,616
3,057,616

1 to 3 years
$
99,922
-
99,922

4 to 5 years
$
3,133,966
3,133,966

4 to 5 years
$
89,921
-
89,921

After 5 years
$
57,499
57,499

After 5 years
$
37,960
-
37,960

The payments noted above do not include interest payments.

g. Fair value of financial instruments

Management has determined that the carrying amounts of financial assets and financial liabilities recognized in the
consolidated financial statements approximate fair value.

12. Fair value measurement of royalty liability

The Company adjusted a royalty contract with a significant shareholder from $494,359 to fair value of $739,817 during
the year ended July 31, 2013 based on the five year projected cash flow on future sales. The royalty liability represents
the discounted amount likely to be paid based on future sales. Management used an effective annual discount rate of
12.7% which it believes fairly represents the market rate for the time value of money and the risks specific to the
liability. During the year ended July 31, 2013, $92,916 in accretion was recorded on this liability (July 31, 2012 –
$75,422).

The calculation of fair value was based on management estimates that include: the likelihood and timing of completion
of the research and development of the product, the likelihood of obtaining regulatory approval, the demand for the
product at the time of completion, the price the Company will be able to sell the product for, and the cost of
manufacturing the product. The royalty liability is monitored and adjusted based on expected future sales.

Balance at July 31, 2011
Fair value remeasurment
Accretion
Balance at July 31, 2012
Fair value remeasurment
Accretion
Balance at July 31, 2013

Provision for Royalty
$
260,000
66,020
75,423
401,443
245,458
92,916
739,817

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

13. Related parties

The following transactions occurred with related parties during the year ended July 31, 2013:

• A short term loan totalling $523,000 bearing 3% interest was received from Onsite Lab Holding AG. During the

•

Consulting fees totalling $82,233 were incurred.

The following balances with related parties were outstanding at July 31, 2013:

• A receivable balance of $8,630 was owed to MedMira by a company which is presided over by a director (July

31, 2012 – $8,630).

The remuneration of directors and other members of key management personnel during the year is shown below.

Short-term benefits including salary
Share-based payments
Total remuneration

14. Research and development

31-Jul-13
$
331,838

331,838

31-Jul-12
$
328,947
40,806
369,753

The Company receives government grants to offset the cost of developing certain products. These grants are
recognized as a credit against the research expense in the period the expense is incurred. There are no unfulfilled
conditions regarding the grants.

In addition to grants, the Company receives revenue related to a contract with the US Army. Research expenses related
to the US Army contract are recognized in service cost of sales when the revenue is earned. During the year ended July
31, 2013, $935,280 of the research costs incurred were recognized in service cost of sales (July 31, 2012 – $nil).

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

The following table provides a summary of aggregate research costs and reimbursements.

Research and development expenses
Less: research and development expenses allocated to cost of sales
Less: reimbursed research and development expenses
Net research and development expense

31-Jul-13
$
1,211,546
935,280
142,962
133,304

31-Jul-12
$
530,114

331,092
199,022

15. Income taxes

a. Reconciliation of total tax expense

The effective rate on the Company’s loss before income tax differs from the expected amount that would arise using
the combined statutory income tax rates. A reconciliation of the difference is shown below.

Income (loss) before income tax
Income tax rate

31-Jul-13
$
(402,301)
31.0%

31-Jul-12
$
3,372,302
31.6%

Income tax expense (recovery) at the combined statutory income tax rate

(124,713)

1,066,491

Non-taxable portion of other (gains) and losses
Non-deductible stock-based compensation
Non-deductible interest
Non-recognition of deferred tax assets due to unused tax losses

and deductible temporary differences

Excess amortization over capital cost allowance
Scientific research and development expenditures
Non-deductible exchange rate losses (gains)
Other
Income tax recovery

(855,170)
13,132
302,518

351,807
12,651
266,224

-
33,552
-

(3,176,044)
37,992
102,844

1,663,428
6,113
66,297
260,380
(27,501)
-

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

b. Unrecognized deductible temporary differences, unused tax losses and unused tax credits

Deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax assets have
been recognized are listed below.

Non-capital losses
Scientific research and development costs
Investment tax credits
Share issuance costs
Variable liability
Unrealized foreign exchange
Cumulative eligible capital
Property and equipment
Total

31-Jul-13
$

31-Jul-12
$

27,120,237
4,606,341
1,483,779
48,455
479,817

281,645
1,901,686
35,921,960

30,506,035
3,986,048
1,287,974
80,791
141,443
98,274
281,645
1,860,876
38,243,086

The Company has available $27,120,237 in non-capital losses that can be used to reduce taxable income and that expire
between the years ended July 31, 2014 and July 31, 2032. The Company also has available $1,483,779 in investment
tax credits that can be used to reduce taxes payable and that expire between the years ended July 31, 2018 and July
31, 2032.

At July 31, 2013, the Company has no unrecognized deferred tax liability (July 31, 2012 – $nil) for taxes that would be
payable on the unremitted earnings of certain of the Company’s subsidiaries.

16. Expenses by nature

The following table provides the Company’s expenses listed by the nature of the expense.

Investment income
Change in inventory
Employee benefits
Depreciation
Distribution
Facility
Professional services
Lab supplies
Other expenses
Exchange gains (losses)
Finance costs
Gain on settlement of debt
Gain on fair value of debt
Loss on fair value of royalty

31-Jul-13
$
4,991
(285,376)
(1,802,091)
(40,809)
(59,090)
(430,298)
(327,930)
(431,272)
(617,449)
47,832
(959,945)
715,689
2,027,442
(245,458)
(2,403,764)

31-Jul-12
$

(186,765)
(1,770,047)
(19,329)
(61,083)
(441,279)
(344,879)
(99,732)
(216,194)
(720,155)
(3,781,691)
10,042,826

-
-

2,401,672

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

17. Operating segments

Management has determined that the Company has one reportable operating segment, rapid diagnostic products and
services. This segment accounts for all of the Company’s revenue, cost of sales and operating expenses. Determination
of the operating segment was based on the level of financial reporting to the Company’s chief decision maker.

18. Lease commitment

The Company has a ten year lease commitment for it office location at 155 Chain Lake Drive in Halifax, Nova Scotia.
The commitment for the next five years, including an estimate of operational costs based on current operational costs
is provided in the table below.

For the year ending July 31, 2014
For the year ending July 31, 2015
For the year ending July 31, 2016
For the year ending July 31, 2017
For the year ending July 31, 2018
Thereafter

Lease commitment
$
268,477
268,568
268,568
279,661
280,670
1,475,145

19. Financing

A breakdown of the income (expenses) allocated to the financing line on the consolidated statements of operations
and comprehensive income is provided in the table below.

Finance costs
Gain on settlement of debt
Gain on fair value remeasurement of debt
Loss on fair value remeasurement of royalty
Total financing income

31-Jul-13
$
(734,604)
715,689
2,027,442
(245,458)
1,763,069

31-Jul-12
$
(4,239,863)
10,042,826

-
(66,020)
5,736,944

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

20. Reconciliation of consolidated statement of operations and comprehensive income (loss) for July 31, 2012

The Consolidated Statement of Operations and Comprehensive Income (Loss) for July 31, 2012 has been presented in
these Consolidated Financial Statements for the years ended July 31, 2013 and 2012 in a functional format. Expenses
by nature have been presented in note 16. A reconciliation from the format used in the Consolidated Financial
Statements for the year ended July 31, 2012 to the functional format is provided in the table below.

Product

Product sales
Royalties
Product cost of sales
Gross margin on product

Operating expenses

Research and development
Sales and marketing
Other direct costs
General and administrative
Depreciation
Wages and salaries
Total operating expenses

Operating loss

Non-operating income (expenses)

Finance costs
Exchange rate losses
Gain on forgiveness of debt
Financing

Total non-operating income
Net income

Notes

21.a
21.a

21.b
21.b
21.c

21.c

21.d
21.c
21.d

Mixed
31-Jul-12

970,631

(376,395)
594,236

(199,022)
(33,323)
-

(979,714)
(19,329)
(1,523,311)
(2,754,699)

Adjustments

(32,275)
32,275
-
-

(190,309)
(329,142)
(1,227,368)
19,329
1,523,311
(204,179)

Functional
31-Jul-12

938,356
32,275
(376,395)
594,236

(199,022)
(223,632)
(329,142)
(2,207,082)

-
-

(2,958,878)

(2,160,463)

(204,179)

(2,364,642)

(3,789,906)
(720,155)
10,042,826

5,532,765
3,372,302

3,789,906
720,155
(10,042,826)
5,736,944
204,179

-
-
-

5,736,944
5,736,944
3,372,302

a.) Revenue in the functional presentation has been split into product sales and royalties.
b.) Depreciation and wages and salaries have been allocated to functions including general and administrative, sales

and marketing and other direct costs.

c.) $204,177 of exchange gains and losses was allocated to operational functions, the remaining $515,978 was

allocated to the financing function.

d.) Finance costs and the gain on forgiveness of debt were both allocated to the financing function.

MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2013 and July 31, 2012
In Canadian dollars

21. Subsequent events

In September 2013, the Company completed a $6.105 million equity investment from OnSite Lab Holding AG (OnSite Lab).
Under the terms of the deal, Onsite Lab acquired 122,100,000 equity units at $0.05 per unit. Each equity unit consists of
one common share and one common share purchase warrant. Each full warrant entitles Onsite Lab to purchase one
common share of MedMira at $0.10 per share for a four year period. The common shares and the warrants are subject to
a four month hold period that expires four months from the day of share issuance. With the completion of this
transaction, Onsite Lab now owns 68.5% of the undiluted common shares in Medmira. Certain loans will now carry
interest at 5% due to covenants regarding equity funding (see note 10).

Investor Information

Transfer Agent

Computershare Trust Company of Canada
1969 Upper Water Street
Purdy’s Wharf Tower II
Halifax, Nova Scotia B3J 3R7
T: 902 420 3553

Shares of MedMira Inc. trade on the TSX Venture Exchange
Stock Symbol: MIR
On NASDAQ, MedMira Inc. information can be found under the symbol:
MMIRF in the “Other OTC” category.

Annual General Meeting

MedMira Global Headquarters
Suite 1, 155 Chain Lake Drive
Halifax, Nova Scotia, B3S 1B3

10 am, Friday, January 24, 2014

Senior Management

Mr. Hermes Chan, Chief Executive Officer
Mr. Daniel Frid, Chief Financial Officer
Mr. Jelle Kuypers, Chief Financial Officer
(effective December 9, 2013)
Mr. Sing Chan, Chief Operating Officer

Board of Directors

Mr. Hermes Chan
Mr. Markus Meile
Mr. Romano Robusto
Dr. Michael Sidler
Dr. Shou-Ching Tang

Corporate Information

Auditors

Deloitte
Suite 1500
1969 Upper Water Street, Purdy's Wharf Tower II
Halifax, Nova Scotia B3J 3R7
T: 902 422 8541

Legal Counsel

Stewart McKelvey
Suite 900
1959 Upper Water Street
Halifax, Nova Scotia B3J 3N2
T: 902 420 3200

Global Headquarters

MedMira Inc.
Suite 1, 155 Chain Lake Drive
Halifax, Nova Scotia, B3S 1B3
T: 902 450 1588
www.medmira.com
E: info@medmira.com

Investor Relations

Andrea Young
MedMira Inc.
Suite 1, 155 Chain Lake Drive
Halifax, Nova Scotia, B3S 1B3
T: 902 450 1588
www.medmira.com
E: ir@medmira.com

MedMira Inc.
155 Chain Lake Drive, Suite 1
Halifax, NS CANADA B3S 1B3