Annual Report
2015
www.medmira.com
Contents
Vision, Mission & Core Values
Message from the Chairman
Message from the CEO
p.1
p.2
p. 3
Management Discussion & Analysis
p. 5
Consolidated Financial Statements
p. 25
Investor Information
Corporate Information
p. 62
p. 63
www.medmira.com
Our Vision
To transform the rapid diagnostics industry by becoming the leading
brand known for fast, accurate, value-add testing products that
enhance human health and wellness and continually generate long
term value for our stakeholders.
Our Mission
To employ our one-of-a-kind, patented technology platform to
develop, market and sell high quality, easy-to-use, time and cost-saving
products that improve global healthcare and save lives.
Our 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 – It is the lifeblood of our Company and at the heart of
everything we do.
Excellence – We consistently embrace excellence in the disciplines of
quality science, business, and manufacturing.
Collaboration – We build relationships 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 our
entire team operates.
Passion – Our team has an intense passion for science, diagnostics, and
technology, which shines through in the quality healthcare solutions we
deliver.
Results-oriented – We are focused on delivering high quality on-time
results to drive growth and profitability.
According to Donate Life America,
more than 1 million tissue
transplants are performed each year
and the surgical need for tissue has
been steadily rising. Every day
donated donor tissue is discarded
after testing positive for hepatitis B,
C and/or HIV in the lab. To reduce
the impact that can have on their
tissue recovery resources, tissue
banks are integrating MedMira
multiplex rapid tests as part of their
donor suitability assessment at the
time of collection. With the
integration of rapid pre-screening
tests in the field, some customers
have decreased discard rates by
approximately 5%. This represents a
significant saving of time and costs,
as well as protecting their supply
chain and also their recovery
technicians from potential exposure
to infectious agents.
1
A Message from MedMira’s Chairman
Dear Shareholders,
MedMira focused on differentiating our offering in the marketplace in 2015, with the core element driving this
market diversity being the MedMira Rapid Vertical Flow (RVF) Technology platform. Our technology team is
committed to the evolution of RVF Technology, bringing additional high value functionality and performance to
the platform and creating a robust pipeline of products with distinctive capabilities.
The MedMira team continued to deliver on our vision of helping people
know… meeting major milestones in bringing new products through
the regulatory approvals process and on to the market. These activities
included multi-center clinical trials for Reveal G4, Reveal HBsAg, and
Multiplo HBc/HIV/HCV in the United States to support FDA approval and
fulfill customer requirements. The FDA approval of Reveal G4 just a few
weeks ago is another demonstration of the performance and capabilities
of RVF Technology platform which has been the backbone of MedMira’s
FDA-approved rapid HIV test and business in the U.S. for more than 12
years.
The Reveal G4 point-of-care test
This year MedMira dedicated resources to the ongoing profile building and brand awareness campaigns in key
focus markets, including the United States, Asia, and Latin America. The Company participated in a number of
broader strategic industry events as well as niche sector conferences focused on military healthcare and tissue
banking. MedMira engaged on new levels with customers and prospects, identifying opportunities for the RVF
Technology platform to be a part of world class collaborations, deliver novel rapid testing solutions to healthcare
providers and their patients, and provide researchers with a platform to continue to innovate and change the
dynamic of the rapid test landscape.
The Board and management continue to work together to sharpen a strategy focused on capitalizing on RVF
Technology. We go forward in to 2016, with the support and confidence of key investors and stakeholders, to
seize the opportunities for our technology platform, deepen our differentiation in the marketplace, and create
a higher value business for customers, employees, and shareholders.
Thank you Shareholders, for your continued support of MedMira.
Marvyn Robar
Chairman
2
A Message from Our Co-Founder & CEO
Dear Shareholders,
In 2015, our vision of helping people know… continued to drive
MedMira forward, bringing the value of Rapid Vertical Flow (RVF)
Technology to people around the world. MedMira technology enables
rapid testing solutions that deliver diagnostic answers to those who need
them, when they need results, wherever they may be – mobile hospitals
in Uzbekistan, cruise ships on the open sea, hospitals and laboratories in
California, tissue and eye banks in Illinois, just to name a few.
RVF Technology is changing the rapid diagnostics landscape with unmatched speed and multiplexing capabilities.
Those designing and building infrastructure and programs are reimagining the potential they can deliver with
RVF Technology, including workflow efficiencies, higher throughput of people being tested, and operations
savings. Our team is constantly looking at the dynamics of healthcare around the world and at the Company to
assess how MedMira products and technology are meeting the needs of rapid test users in the best way possible.
We enhanced our customer listening and engagement programs to gain greater understanding of how they use
rapid testing tools, their future needs, so we can build the right tools for them. This year, we focused our Miriad
product line initiatives on tissue banks in the United States. Tissue banks are using Miriad to improve their
bottom line, streamline the tissue collection process, and reduce the risk of exposure to infectious diseases for
their technicians. The multiplexing and speed capabilities of RVF Technology garnered an overwhelming amount
of positive attention in this sector in 2015 and MedMira has been called “an industry partner” for our willingness
to work with tissue banks to address some of the unique challenges they face in integrating rapid testing in their
processes.
Global awareness of MedMira RVF Technology also continued to grow and resulted in a deal with an alliance
which included UNAIDS and the World Health Organization, positioning the multiplexing abilities of RVF
Technology on the world stage. While the sale of $100,000 was not insignificant, the opportunity to demonstrate
the performance capabilities of our rapid testing technology to international aid agencies, funding agencies,
healthcare NGOs, and others was an important step in building awareness of our offering within this community.
Going forward the MedMira team will continue to engage with more of these world class organizations to ensure
RVF Technology ramps up its position as a key player in global healthcare.
Going forward in 2016, we will build on the momentum we created this year, moving RVF Technology and our
robust product development pipeline forward to bring new solutions to customers, with our partners and
collaborators. Our technology team is prioritizing the vast number of new rapid test applications and
combinations – including infectious, sexually transmitted, and tropical diseases, chronic health conditions,
cancers, and prenatal screening and monitoring – that can be created using RVF Technology to ensure our
pipeline of new solutions answers the needs of the market.
3
Following excellent results in our most recent FDA site inspection, with no 483 or written
observations, and buoyed by the recent FDA approval of Reveal G4, 2016 will mark the
beginning of significant advancement in the U.S. MedMira’s market footprint will
expand with the new whole blood POC applications and build towards the launch of
additional multiplexing products for hepatitis and HIV.
We look forward to 2016 with an energized focus on helping people know…across a
broad range of sectors and testing settings. The possibilities of where RVF Technology
will enable rapid testing to take place in 2016 are limitless, perhaps only confined by our
imaginations, and we are excited to see where we can take it.
On behalf of management and the entire MedMira team, thank you for your continued support.
Hermes Chan
Co-Founder & CEO
4
MedMira Inc.
Management’s Discussion & Analysis
For the year ended July 31, 2015
5
Management’s Discussion & Analysis
July 31, 2015
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 interim financial statements, affect 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, 2015 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 (TSX-V) under the symbol MIR.
The patented MedMira Rapid Vertical Flow (RVF) Technology platform is the basis for the Company’s line of rapid tests.
Diagnostic applications based on this distinct technology are highly accurate, easy-to-use, and produce instant results – a
strong advantage over most other rapid diagnostics on the market today. These features are enhanced further with the
unique competitive advantage of enabling multiplex results on one test device with just one drop of specimen. The
Company has created a new generation of rapid tests that are based on its customers’ need to provide swift answers
without increasing costs.
MedMira’s technology and growing portfolio of diagnostic tools demonstrate excellence in performance and quality in the
highly competitive diagnostics industry. More than $30 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 (U.S Food and Drug Administration (FDA)), Canada
6
Management’s Discussion & Analysis
July 31, 2015
(Health Canada), the notified body in the European Union (CE Mark), and China (CFDA – formerly known as SFDA) and in a
number of countries in Latin America, Africa, and Asia. The Company is also ISO 9001:2008 and ISO 13485:2003 certified.
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. The Company launched its Miriad product line in 2014 to create new
opportunities in the high value technology licensing sector. This business allows the Company to monetize its award
winning technology and core capabilities, including R&D, product development, and regulatory proficiency. Miriad provides
access to MedMira RVF Technology for researchers, developers, and biotech companies on a license basis to facilitate the
creation of new rapid tests or the transition of existing tests to this unique platform. Infiltrating new and different core
sectors of the diagnostic industry, such as veterinary and environmental, with the Company’s technology, enables MedMira
to build a higher degree of global awareness, generate new revenue streams, and provide a superior diagnostic platform to
the market.
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 Vertical Flow Technology and the methodology behind its rapid
diagnostics includes the following:
Patent #
Title
Jurisdiction
9,164,087
Rapid Diagnostic Device, assay and multifunctional Buffer
United States
9,086,410
Downward or vertical flow diagnostic device and assay
United States
8,025,850
Rapid Diagnostic Device, Assay and Multifunctional Buffer
United States
8,287,817
Rapid Diagnostic Device, Assay and Multifunctional Buffer
United States
8,586,375
Rapid Diagnostic Device, Assay and Multifunctional Buffer
United States
7,531,362
Rapid Diagnostic Device, Assay and Multifunctional Buffer
United States
D706945
Diagnostic Device
D706466
Diagnostic Device
EP1417489
Rapid Diagnostic Device and Assay
EP1328811
HCV Mosaic Antigen Composition
ZL02819646.5
Rapid Diagnostic Device and Assay
United States
United States
Europe
Europe
China
2,493,616
Rapid Diagnostic Device, Assay and Multifunctional Buffer
Canada
The Company has other patents pending patents in the U.S. as well as two design patents in force or pending in eight
markets.
The Company’s corporate and product brand names are protected by trademarks in the U.S. and Canada.
7
Management’s Discussion & Analysis
July 31, 2015
Corporate update
In Fiscal Year 2015, MedMira received a total of CAD $2.2 million in equity investments from a new, arm’s length investor
from Asia and OnSite Lab Holding AG (OnSite Lab). These investments fueled the Company’s progressive sales and
marketing initiatives in the significantly strategic U.S. market, as well as ongoing research and development and
commercialization activities to expand product lines and meet increasing customer demand for high quality, multiplex rapid
diagnostics.
MedMira’s development and commercialization projects with the U.S. military for Reveal HBsAg and Multiplo HBc/HIV/HCV
advanced as planned during this fiscal year with all major milestones being met and the multi-center clinical trials entering
the final phase as the year came to a close. The Company completed the first in a series of planned submissions to the FDA
with a supplement to the existing Premarket Approval for the FDA approval of the next generation of its Reveal rapid HIV
test. The supplement requested approval of Reveal G4 Rapid HIV-1 Antibody Test (Reveal G4) which adds detection of HIV
antibodies in fingerstick and venipuncture whole blood to its intended use. These capabilities extend the Reveal product
line into point-of-care settings, where demand for rapid HIV testing on the rise. HIV testing is now a part of routine medical
care and is increasingly being conducted in community-based settings where convenience and accessibility increase the
likelihood of people getting tested. Subsequent to year end the Company received FDA approved for Reveal G4.
The Company’s R&D and commercialization units continued to examine market conditions for new rapid diagnostic
opportunities in infectious, sexually transmitted, and tropical diseases as well as other healthcare challenges where fast,
accurate results can improve patient outcomes and the provider’s bottom line. In 2015, the MedMira development and
commercialization pipeline was fully engaged with new concepts, prototypes, and collaborative efforts on new RVF rapid
tests. Additionally, the evolution of the RVF Technology platform continued to ensure that it maintains its position as a
superior product engine for next generation rapid diagnostic solutions.
MedMira’s sales and marketing activities focused on expanding market knowledge and understanding of the Company’s
RVF Technology platform and promoting its rapid diagnostic solutions. With one of the key strategic markets being the
U.S., the Company established MedMira US Inc. as a wholly-owned subsidiary to support customer service, sales channel
expansion, and logistics. The office is strategically situated in Atlanta, GA to easily access global markets, and potential
collaborators at the Centers for Diseases Control and Prevention (CDC), the FDA, the Carter Center, among others.
Building on the introduction of the research-focused Miriad product line in the previous year, the Company concentrated
efforts on the tissue bank sector where the number of customers evaluating or considering the implementation of Miriad
HBc/HIV/HCV in their tissue collection procedures increased significantly in 2015. Miriad garnered much attention in the
tissue bank space in Fiscal 2015 with two American Association of Tissue Banks (AATB) webinars focused on rapid testing,
which featured customers presenting their experiences and results in using Miriad HBc/HIV/HCV to screen tissue at the
point of collection. Subsequent to the year end the Company made its debut at the AATB Annual Meeting, where the
MedMira exhibit featured branding and messaging centered on the Company’s core positioning statement helping people
know… and Miriad - the Know in Go/No Go messaging. An independent presentation on field results and user experiences
with Miriad HBc/HIV/HCV test was also given by two customers during the event.
Market building activities in the U.S. in 2015 were capped off with the Company’s participation in American Association for
Clinical Chemistry (AACC) Annual Meeting and Clinical Lab Expo, the world’s largest gathering for laboratory science.
Attendees from around the world were able to see firsthand the speed and simplicity enabled by RVF Technology during
demonstrations at the Company’s AACC exhibit. Further market education took place as participants in the AACC OEM
Lecture Series learned about how RVF Technology is powering next generation multiplexed diagnostics for point-of-care
settings. The Company also presented a poster on the development of a multiplex rapid test for syphilis during AACC 2015.
8
Management’s Discussion & Analysis
July 31, 2015
While much of the attention focused on the U.S, there was also growing international interest in the multiplex capabilities
of MedMira RVF Technology and rapid diagnostic solutions. The Company landed a $100,000 deal for Multiplo
HBc/HIV/HCV and Multiplo TP/HIV tests from a coalition of UNAIDS, the World Health Organization, and the Government
of the Russian Federation. The tests were ultimately destined for use in a mobile health initiative in Uzbekistan. While this
deal was financially significant, it more importantly increased the awareness of the Company’s multiplex rapid diagnostics
on the international stage, providing exposure to international aid agencies including UNICEF, the World Bank, and United
Nations agencies working to improve global health.
In Fiscal 2015 the Company appointed Robyn Cook as the Company’s Chief Corporate Officer to focus on organizational
alignment and prioritization of corporate strategy, implementation of industry best practices, and maximizing excellence
across all MedMira business units. The Company re-elected all Board members at the Annual General Meeting in January
2015. Subsequent to the close of year end, the Company’s controlling shareholder OnSite Lab appointed Dr. Philippe Dro
to replace Dr. Michael Sidler as its Board of Directors representative.
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, 2015 consolidated financial statements.
9
Management’s Discussion & Analysis
July 31, 2015
Selected quarterly information (in thousands of dollars except per share amounts)
Income statement
Revenue
Cost of sales
Gross profit
Operating expenses
Other expenses (gains)
Net earnings (loss) before tax
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Total shareholders deficiency
Total liabilities and equity
Q4 2015
$
1,463
1,028
435
548
186
(298)
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
$
1,345
1,114
231
904
179
(852)
$
723
403
320
1,261
96
(1,037)
$
521
327
194
939
297
(1,042)
$
898
678
220
1,044
(462)
(362)
$
639
428
211
1,213
216
(1,218)
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
$
1,520
264
1,784
6,993
2,495
9,888
(7,704)
1,784
$
991
291
1,282
5,765
2,923
8,688
(7,406)
1,282
$
925
313
1,238
5,754
3,159
8,214
(7,676)
1,238
$
1,352
335
1,687
5,061
3,265
8,327
(6,640)
1,687
$
1,484
358
1,842
4,286
4,246
8,532
(6,690)
1,842
$
1,411
373
1,784
3,456
4,842
8,298
(6,514)
1,784
Q2 2014
$
519
316
203
1,358
261
(1,417)
Q2 2014
$
3,216
378
3,594
3,792
5,097
8,890
(5,296)
3,594
Q1 2014
$
473
332
141
727
252
(838)
Q1 2014
$
5,392
336
5,728
4,354
5,253
9,607
(3,879)
5,728
Net earnings (loss) per share
(0.001)
(0.001)
(0.002)
(0.002)
(0.001)
(0.002)
(0.003)
(0.002)
10
Management’s Discussion & Analysis
July 31, 2015
Fourth quarter analysis
The following table compares the results of operations for the three months ended July 31, 2015 to the three months
ended July 31, 2014.
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
For the three months ended
31-Jul-15
$
31-Jul-14
$
Better (worse)
$
159,428
-
(52,431)
106,997
313,825
10,900
(147,553)
177,172
(154,397)
(10,900)
95,122
(70,175)
1,303,805
(975,160)
328,645
573,255
(529,115)
44,140
730,550
(446,045)
284,505
330,932
(160,514)
(159,869)
(558,624)
(548,073)
170,891
(226,449)
(188,239)
(800,801)
(1, 044,598)
160,041
65,935
28,370
242,177
496,523
Operating (expense) income
(112,433)
(823,286)
710,853
Non-operating expenses
Financing (expense) income
Net Loss
Product revenue and gross margin
(185,879)
(298,312)
462,648
(360,638)
(648,527)
62,326
The Company recorded revenue from product sales and royalties in the quarter ended July 31, 2015 of $159,428 as
compared to $324,725 for the same period last year. The decrease in revenue was due to the management’s focus on high
profit and low volume markets, which increased the overall gross profit margin. Gross profit for the quarter was $106,997
(67.1%) compared to $177,172 (54.6%) in the same period in 2014. The cost of product sales was $52,431 during the three
months ended July 31, 2015 (July 31, 2014– $147,553).
Service revenue and gross margin
The Company recorded revenue from service sales of $1,303,805 in the three months ended July 31, 2015 (July 31, 2014 -
$573,255) with a related gross margin of $328,645 (July 31, 2014 - $44,140). The Company earned revenue and gross margin
on two research contracts with the United States military. The current year gross margin on services was in line with the
management’s expectations. The increase of the profit margin was due to the strong USD in FY2015.
11
Management’s Discussion & Analysis
July 31, 2015
Operating expenses
Total operating expenses decreased to $548,073 in the quarter ended July 31, 2015, compared to 1,044,598 during the
same period in 2014.
− Research and development recovery for the quarter ended July 31, 2015 were $330,932, compared to $145,905 for
the same period last year.
−
Sales and marketing expenses for the quarter ended July 31, 2015 was $160,514 compared to $226,449 for the same
period last year.
− Other direct costs for the three months ended July 31, 2015 were $159,869 compared to $188,239 for the same period
last year.
− Administrative expenses were $558,624 for the quarter ended July 31, 2015, compared with $800,801 for the same
period in 2014. The decrease of 30.2% was due to the cost restructuring measures implemented during FY2015.
Non-operating income and expenses
−
The Company had a financing expenses of $185,879 in comparison to the gain of $462,648 in FY2014, which was due
to the re-measurement of the royalty provision and the long-term debt.
12
Management’s Discussion & Analysis
July 31, 2015
Year to date analysis
The following table compares the results of operations for the year ended July 31, 2015 to the year ended July 31, 2014.
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
For the year ended
31-Jul-15
$
1,130,419
753
(443,002)
688,170
2,921,169
(2,428,973)
492,196
(604,143)
(503,535)
(623,742)
(1,920,421)
(3,651,841)
31-Jul-14
$
Better(worse)
$
843,568
10,900
(436,406)
418,062
286,851
(10,147)
(6,596)
270,108
1,673,711
(1,316,978)
356,733
1,247,458
(1,111,995)
135,463
(294,425)
(1,086,328)
(609,513)
(2,353,152)
(4,343,418)
(309,718)
582,793
(14,229)
432,731
691,577
Operating (expense) income
(2,471,475)
(3,568,623)
1,097,148
Non-operating expenses
Financing (expense) income
Net Loss
Product revenue and gross margin
(758,090)
(3,229,565)
(266,716)
(3,835,339)
(491,374)
605,774
The Company recorded revenue from product sales in the year ended July 31, 2015 of $1,131,172 as compared to $854,468
for the same period last year. Gross profit on product sales for the year was $688,170 compared to $418,062 in the same
period last year. The increase in gross profit margin was due to higher sales in high margin markets, which was in line with
the management’s focus strategy. Current year gross profit was in line with management expectations.
Service revenue and gross margin
The Company recorded revenue from service sales in the year ended July 31, 2015 of $2,921,169 as compared to $1,673,711
for the same period last year. The Company earned revenue and gross margin on two research contracts with the United
States military. The current year margin on services was in line with management expectations.
13
Management’s Discussion & Analysis
July 31, 2015
Operating expenses
Total operating expenses decreased by $691,577, from $4,343,418 for the year ended July 31, 2014 to $3,651,841 for the
year ended July 31, 2015.
− Research and development expenses for the year ended July 31, 2015 were $604,143 compared to $294,425 for the
year ended July 31, 2014. Actual research expenses in July 31, 2015 for the year were $3,033,116 (July 31, 2014 –
$1,910,445 which was offset by reimbursements of research costs (July 31, 2014 – $299,042) and allocation of
$2,428,973 to cost of sales (July 31, 2014 – $1,316,978). The comparative increase in research costs was directly
attributable to greater activity related to the United States military contracts and new product developments.
−
Sales and marketing expenses for the year ended July 31, 2015 were $503,535 compared to $1,086,328 for the same
period last year. The decrease of the Sales and Marketing expenditure has been in line with the management’s vision
to focus on high margin markets only.
− Other direct costs for the year ended July 31, 2015 were $623,742, compared to $609,513, for the same period last
year.
− General and administrative expenses were $1,920,421 for the year ended July 31, 2015, compared to $2,353,152 for
the same period in 2014. The decrease in administrative expense was due to the cost restructuring implemented in
FY2015.
Non-operating income and expenses
Total other losses were $758,090 in the year ended July 31, 2015, compared to a loss of $266,716 during the same period
in 2014.
−
Financing expenses, including interest expense, were $758,090 for the year ended July 31, 2015 in comparison to
$266,716 in the same period last year.
14
Management’s Discussion & Analysis
July 31, 2015
Geographic information
The Company organizes and records the sales and distribution of its products and services based on major geographical
territories around the world. The table below provides the three month and annual geographic breakdown of revenue.
Product and service revenue
For the three months ended
Product and service revenue
For the year ended
31-Jul-15
$
1,452,193
-
6,273
4,518
-
-
294
1,463,233
31-Jul-14
31-Jul-15
31-Jul-14
$
$
$
748,373
60,344
13,996
75,267
-
-
-
897,980
3,591,649
111,721
27,130
82,138
238,663
791
294
4,052,341
2,206,708
142,225
19,045
160,201
-
-
-
2,528,179
North America
Latin America and the Caribbean
Europe
Asia Pacific
West Asia
Middle East
Other
Total revenue
Liquidity and capital resources
Cash and working capital
The Company had a cash reserve of $262,392 on July 31, 2015, as compared to $162,458 on July 31, 2014. The Company’s
net working capital position as of July 31, 2015 was a deficit of $5.5 million compared to the July 31, 2014 working capital
deficit of $2.8 million. The Company has incurred losses and negative cash flows on a cumulative basis since inception. For
the year ended July 31, 2015, the Company incurred a net loss from operating activities of approximately $2.5 million and
negative cash flow of $2.3 million, compared to a net loss from operations of $3.6 million and negative cash flow from
operations of $4.7 million for the same period in 2014. In September 2015, subsequent to year-end, the Company
successfully raised an additional investment of $5 million from OnSite Lab to fund the required operating activities.
Operating activities
MedMira generated negative cash flows from operations of $2.3 million for the year ended July 31, 2015, compared to
negative cash flows of $4.4 million for the year ended July 31, 2014.
Financing activities
Net cash inflows from financing activities was $2.4 million for the year ended July 31, 2015, compared to $4.9 million for
the same period in 2014.
Investing activities
Cash outflow from investments decreased to $-nil during the year ended July 31, 2015, compared to $96,288 for the same
period in 2014.
Debt
As at July 31, 2015, the Company had loans payable with a carrying value of $7.0 million compared to $6.2 million at July
31, 2014. The increase in the carrying value of loans payable from July 31, 2014 to July 31, 2015 is due to an increase in
short term loans and two loans were in default due to ongoing debt re-negotiations. The Company’s loans have an average
payment term of 3 years.
15
Management’s Discussion & Analysis
July 31, 2015
Further discussions on liquidity and capital resources can be found in the Liquidity Risk section of this document, under
Need for Additional Capital in the Risk and Uncertainties section in this document and in Notes 2 and 11 of the Company’s
July 31, 2015 condensed interim consolidated financial statements.
Equity/Shares
The Company is authorized to issue an unlimited number of common shares without nominal par value. During fiscal year
2015 the company issued 44,000,000 common shares. The number of issued and outstanding common shares on July 31,
2015 was 558,364,320. The Company is also authorized to issue an unlimited number of Series A preferred shares
redeemable at $0.001 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,
2015.
The Company had 2,921,875 outstanding stock options on July 31, 2015. The outstanding stock options have a weighted
average exercise price of $0.10 per share and a weighted average remaining term of 1.6 year. The number of outstanding
warrants on July 31, 2015 was 306,100,000. The outstanding warrants have a weighted average exercise price of $0.10 per
share.
Off balance sheet arrangements
The Company was not party to any off balance sheet arrangements as of July 31, 2015.
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 following classifications:
Financial assets
− Cash and bank balances: Classified as loans and receivables and recorded at amortized cost using the effective interest
method.
−
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 long-term debt, accounts payable and accrued liabilities: 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.
16
Management’s Discussion & Analysis
July 31, 2015
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, 2015, the Company realized a net loss of approximately $3.6 million (July 31, 2014 – $3.8 million),
consisting of a net loss from operations of approximately $2.5 million (July 31, 2014 – $3.6 million), and other non-operating
losses of approximately $0.8 million (July 31, 2014 – profit of approximately $0.3 million). Negative cash flows from
operations were approximately $2.6 million (July 31, 2014 – $3.5 million). As at July 31, 2015, the Company had an
accumulated deficit of approximately $78.0 million (July 31, 2014 – $75.0 million) and a negative working capital position
of $5.7 million (July 31, 2014 – $2.8 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 $4.7 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.
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 Company derives approximately 83% (July 31, 2014—85%) of its revenue from
three (July 31, 2014—two) main customers and, for these customers, assesses the recoverability of each account on a
regular basis. As of July 31, 2015, 99% of the accounts receivable balance is due from two customers (July 31, 2014—92%
due from three customers) and no other customers account for more than 10% of the accounts receivable balances as at
July 31, 2015.
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 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 promissory notes.
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.
Interest rate risk
The Company is not exposed to interest rate risk as it borrows funds at fixed rates.
17
Management’s Discussion & Analysis
July 31, 2015
Related party transactions
The following transactions occurred with related parties during the year ended July 31, 2015:
• A short term loan totalling $180,000 bearing 5% interest was received from OnSite Lab. During the year $419 in interest
was accrued against this loan (2014 - $478,920 and $1,998 in interest).
•
Short term loans totalling $78,952 bearing 5% interest were received from the Chief Financial Officer. During the year,
$2,356 in interest was accrued against these loans (2014 - $119,730 and $5,892 in interest).
• A royalty agreement was entered into with OnSite Lab In exchange for $270,000, OnSite Lab received a 10% royalty on
all future US sales of Reveal G4 product for a five year period commencing on the day of the first full payment of CAD
$100,000 worth of product (2014 – nil).
• Director fees totalling $13,750 were incurred (2014 - $24,367).
•
Short term loan totalling $350,000 bearing interest at 5% was received from Andurja (2014 - $0)
The following balances with related parties were outstanding at July 31, 2015:
• Accounts payable totalling $10,543 was due to directors (2014 – $8,292).
• Accounts payable totalling $193,629 was due to officers (2014 - $0).
• A short term loan totalling $180,419 was due to OnSite Lab (2014 – $480,918).
• A short term loan totalling $229,585 was due to the Chief Financial Officer (2014 – $125,622).
• A royalty provision was owed to OnSite Lab of $260,000 (2014 – $260,000)
• A short term loan totalling $78,291 was due to an employee (2014 - $0)
• A short term loan totalling $354,123 was due to Andurja (2014 -$0)
Summary Compensation Table – Officers
Name and
Principal
Position
Hermes Chan
CEO
Sing Chan
COO
Robyn Cook
CCO
Markus Meile
CFO
Period
Paid
Compensation
($)
Accrued
Compensation
($)
Paid
Compensation
related to
previous fiscal
years ($)
Share- and
Option-based
Awards*
($)
All other
compensation
($)(1)
Total
Compensation
($)
Fiscal
2015
Fiscal
2015
Fiscal
2015
Fiscal
2015
96,000
92,000
132,000
101,941
-
-
-
-
-
-
-
-
-
188,000
132,000
679
25,000
127,620
32,443
113,241
18,347
-
-
198,696
18
Management’s Discussion & Analysis
July 31, 2015
Note:
(1) All other compensation include, pension fund contributions and/or bonuses paid out.
*The Company makes certain estimates and assumptions when calculating the fair value of option-based awards. The
Company uses an option-pricing model which includes significant assumptions including estimates of the expected
volatility, expected life, expected dividend rate and expected risk-free rate of return. Changes in these assumptions may
result in a material change to the amounts recorded for the issuance of stock options.
Summary Compensation Table – Directors
Name
Designation
Position(s)
Period
Paid
Compensation
($)
Accrued
Compensation
($)
Share- and
Option-based
Awards
($)*
Paid
Compensation
related to
previous fiscal
year
($)
Total
Compensation
($)
Fiscal
2015
Fiscal
2015
Fiscal
2015
Fiscal
2015
Fiscal
2015
Hermes Chan
Director
Romano Robusto
Director/Audit
Committee Chair
Member of
Nomination and
Compensation
Committee
Michael Sidler
Director
Marvyn Robar
Director/Chairman of
the Board/Member of
Audit and Nomination
& Compensation
Committee
Colin MacGillivray
Director/Nomination
& Compensation
Committee
Chair/Member of
Audit Committee
-
-
6,793
-
6,793
2.500
2,500
5,094
5,276
15,370
-
6,793
6,793
1,250
3,750
4,840
2,945
12,785
1,250
2,500
3,566
2,411
9,727
*The Company makes certain estimates and assumptions when calculating the fair value of option-based awards. The
Company uses an option-pricing model which includes significant assumptions including estimates of the 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 amounts recorded for the issuance of stock options.
Subsequent events
In September 2015, the Company completed a $5 million equity investment from its controlling shareholder OnSite Lab.
Under the terms of the deal, the investor acquired 100,000,000 equity units at $0.05 per unit. Each equity unit consists of
19
Management’s Discussion & Analysis
July 31, 2015
one common share and one common share purchase warrant and is subject to a four month hold period which expires on
January 31, 2016. Each full warrant entitles the investor to purchase one common share of MedMira at $0.10 per share
exercisable over four years.
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, 2015.
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
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, the following:
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.
20
Management’s Discussion & Analysis
July 31, 2015
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’s 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 U.S. 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.
21
Management’s Discussion & Analysis
July 31, 2015
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 such as
HIV and Hepatitis C 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-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 FDA, the CFDA, CE Mark 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 CFDA 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.
22
Management’s Discussion & Analysis
July 31, 2015
Ability to retain and attract key management and other experienced personnel
Since its inception, the Company has been, and continues to be, dependent 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 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.
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, CE, CFDA 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
attempts 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.
23
Management’s Discussion & Analysis
July 31, 2015
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 United States, Canada, China, and other foreign countries relating to various
aspects of its rapid diagnostic platform, processes, reagents, and equipment. Although it is management’s belief 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.
24
MedMira Inc.
Consolidated Financial Statements
July 31, 2015 and 2014
25
November 24, 2015
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) Markus Meile
Chief Financial Officer
26
Deloitte LLP
1969 Upper Water Street
Suite 1500
Purdy's Wharf Tower II
Halifax NS B3J 3R7
Canada
Tel: (902) 422-8541
Fax: (902) 423-5820
www.deloitte.ca
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of MedMira Inc.:
We have audited the accompanying consolidated financial statements of MedMira Inc. (“MedMira” or “the
Company”), which comprise the consolidated statements of financial position as at July 31, 2015 and July 31,
2014, and the consolidated statements of operations and comprehensive loss, consolidated statements of changes
in equity, and consolidated statements of cash flows for the years then ended, and a summary of significant
accounting policies and other explanatory information.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We
conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the consolidated financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis
for our audit opinion.
27
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position
of MedMira Inc. as at July 31, 2015 and July 31, 2014, and its financial performance and its cash flows for the
years then ended in accordance with International Financial Reporting Standards.
Emphasis of Matter
We draw attention to Note 2 in the consolidated financial statements which indicates the existence of a material
uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. Our
opinion is not qualified in respect of this matter.
Chartered Professional Accountants
November 24, 2015
Halifax, Nova Scotia, Canada
28
MedMira Inc.
Consolidated statements of financial position
As at July 31, 2015 and July 31, 2014
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
Notes
31-Jul-15
$
31-Jul-14
$
5
6
7
10
12
10
8
8
8
262,392
769,698
38,627
149,000
299,928
1,519,645
264,005
2
264,007
1,783,652
4,720,878
2,265,005
7,311
6,993,194
260,000
2,234,825
2,494,825
9,488,019
162,458
778,345
48,270
193,000
301,770
1,483,843
358,082
2
358,084
1,841,927
2,234,870
1,847,946
203,100
4,285,916
260,000
3,986,078
4,246,078
8,531,994
60,211,178
8,202,394
1,311,597
595,770
(78,025,306)
(7,704,367)
1,783,652
59,018,425
7,207,647
1,283,832
595,770
(74,795,741)
(6,690,067)
1,841,927
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
29
MedMira Inc.
Consolidated statements of operations and comprehensive loss
For the years ended July 31, 2015 and July 31, 2014
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 administrative
Total operating expenses
Operating loss
Non-operating expense
Financing expense
Net and comprehensive loss
Basic loss per share
Diluted loss per share
Notes
31-Jul-15
$
31-Jul-14
$
4
4
5
4
14
14
19
9
9
1,130,419
753
(443,002)
688,170
843,568
10,900
(436,406)
418,062
2,921,169
(2,428,973)
492,196
1,673,711
(1,316,978)
356,733
(604,143)
(503,535)
(623,742)
(1,920,421)
(3,651,841)
(294,425)
(1,086,328)
(609,513)
(2,353,152)
(4,343,418)
(2,471,475)
(3,568,623)
(758,090)
(3,229,565)
(266,716)
(3,835,339)
(0.006)
(0.006)
(0.007)
(0.007)
The accompanying notes are an integral part of these consolidated financial statements.
30
MedMira Inc.
Consolidated statements of changes in equity
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, 2013
55,658,683
2,500
4,493,647
1,099,202
595,770
(70,960,402)
(9,110,600)
Net and comprehensive loss
Issuance of common shares for cash
Issuance of common shares for debt
Share issuance costs
Issuance of stock options
-
3,097,536
293,464
(33,758)
-
-
-
-
-
-
-
2,479,113
234,887
-
-
-
-
-
-
184,630
-
-
-
-
-
(3,835,339)
-
-
-
-
(3,835,339)
5,576,649
528,351
(33,758)
184,630
Balance at July 31, 2014
59,015,925
2,500
7,207,647
1,283,832
595,770
(74,795,741)
(6,690,067)
Net and comprehensive loss
Issuance of common shares for cash
Share issuance costs
Issuance of stock options
-
1,205,253
(12,500)
-
-
-
-
-
-
994,747
-
-
-
-
-
27,765
-
-
-
-
(3,229,565)
-
-
-
(3,229,565)
2,200,000
(12,500)
27,765
Balance at July 31, 2015
60,208,678
2,500
8,202,394
1,311,597
595,770
(78,025,306)
(7,704,367)
The accompanying notes are an integral part of these consolidated financial statements.
31
MedMira Inc.
Consolidated statements of cash flows
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
Cash from operating activities
Loss for the year ending July 31
Adjustments for:
Depreciation
Provision for royalty
Stock based compensation
Accretion expense
Net cash from operating activities
Movements in working capital:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
(Increase)/decrease in prepaids
(Increase)/decrease in current tax assets
(Increase)/decrease in trade and other payables
(Increase)/decrease in deferred revenue
Net cash used operating activites
Cash flow from investing activities
Payments to acquire capital assets
Net cash used in investing activities
Cash flow from financing activites
Proceeds from the issuance of common shares
Payment for share issue costs
Proceeds from borrowings
Repayment of borrowing
Net cash from financing activities
Net increase (decrease) in cash
Cash at the beginning of the year
Cash at the end of the year
The accompanying notes are an integral part of these consolidated financial statements.
Notes
31-Jul-15
$
31-Jul-14
$
(3,229,565)
(3,835,339)
6
8
8
94,078
-
27,765
475,994
(2,631,728)
8,647
1,842
9,644
44,000
417,057
(195,789)
(2,346,327)
-
-
2,200,000
(12,500)
1,073,805
(815,044)
2,446,261
99,934
162,458
262,392
83,262
(479,817)
184,630
524,766
(3,522,498)
(458,092)
(96,770)
21,833
12,489
(712,057)
99,778
(4,655,317)
(96,288)
(96,288)
6,105,000
(33,758)
481,056
(1,659,177)
4,893,121
141,516
20,942
162,458
32
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
1.
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
(OnSite Lab) 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, 2015 and 2014, 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.
2. Basis of preparation
a. Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS).
The consolidated financial statements were authorized for issue by the Board of Directors on November 24, 2015.
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, 2015, the Company realized a net loss of approximately $3.2 million (July 31, 2014 – $3.8
million), consisting of a net loss from operations of approximately $2.5 million (July 31, 2014 – $3.6 million), and other
non-operating losses of approximately $0.8 million (July 31, 2014 – $0.3 million). Negative cash flows from operations
were approximately $2.6 million (July 31, 2014 – $3.5 million). As at July 31, 2015, the Company had an accumulated
deficit of approximately $78.0 million (July 31, 2014 – $75.0 million) and a negative working capital position of $5.7
million (July 31, 2014 – $2.8 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 $4.7 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, 2015 are provided in Note 20.
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
33
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
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 statement of financial position 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.
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 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 royalty provision, which includes judgements about the expectation and timing of future sales, and
estimates of discount rate, price and cost of production;
− Determination of operating segments.
− Determination of the fair value 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.
34
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
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-15
100
100
100
100
100
Canada
Canada
Canada
Switzerland
United States
%
31-Jul-14
100
100
100
100
-
MedMira Inc.
MedMira Laboratories Inc.
Maple Biosciences Inc.
MedMira International AG
MedMira (US) 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
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.
35
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
c. Financial instruments
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.
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.
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.
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 has the following other liabilities: long term debt, provision for royalty and accounts payable and accrued
liabilities. 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.
36
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
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 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. For warrants issued for cash or to settle debt, the Company determines the fair value of the warrants
using the Black-Scholes option pricing model. All such warrants are classified in a warrant reserve within equity.
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
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
37
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
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
5 years
Depreciation methods, useful lives, and residual values are reviewed at each financial year end and adjusted if
appropriate.
e.
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.
38
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
Other intangible assets
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:
Intellectual properties/product technology
10 – 20 years
f.
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.
g.
Inventories
Raw materials inventory consists of chemicals, plastic components and packaging materials. Work in process inventory
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.
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.
Inventory cost includes expenditures 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 process, cost includes an appropriate share of production overhead based on normal operating capacity.
h.
Impairment
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
39
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
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.
i.
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.
40
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
j.
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
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.
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 as allowable costs eligible for reimbursement are incurred, as this
is the point at which revenue can be measured reliably, it is possible that the economic benefits associated with the
transaction will flow to the Company and the cost incurred for the transaction can be measured reliably.
41
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
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.
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. 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.
n. 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. Deferred tax assets are recognized for the
carry forward of unused tax losses to the extent that it is probably that future taxable profit will be available against
which the unused tax losses can be utilized
o. New and amended standards
The following standards and amendments to standards are effective for annual periods beginning on or after January
1, 2014.
IAS 32 – Financial Instruments Presentation: the IASB published amendments to IAS 32, on December 16,
2011, to clarify the application of the offsetting requirements.
42
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
IFRIC 21, Levies: IFRIC 21 provides guidance on accounting for levies in accordance with IAS 37, Provisions, Contingent
Liabilities and Contingent Assets.
IAS 36 - Impairment of Assets (IAS 36) was amended by the IASB in May 2013. The amendments require the
disclosure of the recoverable amount of impaired assets when an impairment loss has been recognized or reversed
during the period and additional disclosures about the measurement of the recoverable amount of impaired assets
when the recoverable amount is based on fair value less costs of disposal, including the discount rate when a present
value technique is used to measure the recoverable amount.
The Company adopted these standards as of August 1, 2014 and has determined that they have no material impact
on the Company’s financial results.
p. New standards issued by not yet effective
The following standards and amendments to standards are effective for annual periods beginning on or after January
1, 2015 or later, with earlier adoption permitted.
Disclosure Initiative (Amendments to IAS 1) - On December 18, 2014, the IASB issued Disclosure Initiative
(Amendments to IAS 1) as part of its major initiative to improve presentation and disclosure in financial reports. The
amendments to IAS 1 relate to (i) materiality; (ii) order of the notes; (iii) subtotals; (iv) accounting policies; and (v)
disaggregation and are designed to further encourage companies to apply professional judgment in determining what
information to disclose in their financial statements. For example, the amendments make clear that materiality
applies to the whole of financial statements and that the inclusion of immaterial information can inhibit the
usefulness of financial disclosures. Furthermore, the amendments clarify that companies should use professional
judgment in determining where and in what order information is presented in the financial disclosures. The standard
is effective for annual periods beginning on or after January 1, 2016. Earlier adoption is permitted.
IFRS 9 - Financial Instruments - A finalized version of IFRS 9 which contains accounting requirements for financial
instruments, replacing IAS 39 Financial Instruments: Recognition and Measurement has been issued and is effective
for annual periods beginning on or after January 1, 2018. The standard contains requirements in the following areas:
classification and measurement, impairment, hedge accounting and derecognition. This new standard supersedes all
prior versions of IFRS 9.
IFRS 11 - Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11).
The standard is effective on or after January 1, 2016 and has been amended to require an acquirer of an interest in a
joint operation in which the activity constitutes a business (as defined in IFRS 3 Business Combinations) to: apply all of
the business combinations accounting principles in IFRS 3 and other IFRSs, except for those principles that conflict
with the guidance in IFRS 11 and disclose the information required by IFRS 3 and other IFRSs for business
combinations. The amendments apply both to the initial acquisition of an interest in joint operation, and the
acquisition of an additional interest in a joint operation (in the latter case, previously held interests are not re-
measured).
IFRS 15 - Revenue from Contracts with Customers. This standard is effective from fiscal years beginning on or after
January 1, 2018 and provides a single, principles based five-step model to be applied to all contracts with customers.
Guidance is provided on topics such as the point in which revenue is recognized, accounting for variable
43
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
consideration, costs of fulfilling and obtaining a contract and various related matters. New disclosures about revenue
are also introduced. This standard has been tentatively deferred until January 1, 2018.
IAS 16 - Property, Plant and Equipment - Clarification of Acceptable Methods of Depreciation and
Amortization (Amendments to IAS 16). The amendments are effective for annual periods beginning January 1, 2016
and clarify that a depreciation method that is based on revenue that is generated by an activity that includes the use
of an asset is not appropriate for property, plant and equipment.
The Company is currently evaluating the potential impact, if any, of these standards.
4. Revenue
Product sales
Royalties
Service revenue
Total revenue
31-Jul-15
$
1,130,419
753
2,921,169
4,052,341
31-Jul-14
$
843,568
10,900
1,673,711
2,528,179
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
West Asia
Middle East
Other
Total revenue
31-Jul-15
$
3,591,649
111,721
27,130
82,138
238,663
791
249
4,052,341
31-Jul-14
$
2,206,708
142,225
19,045
160,201
-
-
-
2,528,179
44
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
5.
Inventories
As at July 31, 2015, there were no valuation allowances against inventory (July 31, 2014 – $nil).
During the year ended July 31, 2015, inventory valued at $383,132 was expensed as a cost of goods sold
(July 31, 2014 – $328,003).
Raw materials and consumables
Work in process
Finished goods
Total inventories
31-Jul-15
$
227,723
58,895
13,310
299,928
31-Jul-14
$
248,584
45,908
7,278
301,770
45
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
6. Property, plant and equipment
During the years ended July 31, 2014 and 2013, 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,
2015 (July 31, 2014 – $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, 2013
Additions
Disposals
Balance at July 31, 2014
Additions
Disposals
Balance at July 31, 2015
Accumulated depreciation and impairment losses
Balance at July 31, 2013
Depreciation expense for the year
Disposals
Balance at July 31, 2014
Depreciation expense for the year
Disposals
Balance at July 31, 2015
Carrying amounts
At July 31, 2013
At July 31, 2014
At July 31, 2015
820,271
(6,137)
814,134
-
-
814,134
585,137
52,657
(3,069)
634,725
50,613
-
685,338
235,134
179,409
128,796
39,686
11,275
50,961
-
-
50,961
25,503
3,735
-
29,238
5,405
-
34,643
14,182
21,723
16,318
Total
$
1,312,793
109,133
(14,352)
1,407,574
-
-
174,394
34,185
208,579
-
-
278,442
63,673
(8,215)
333,900
-
-
208,579
333,900
1,407,574
172,180
4,859
-
177,039
7,399
-
184,438
184,917
25,078
(1,506)
208,489
30,661
-
239,150
967,737
86,329
(4,575)
1,049,491
94,078
-
1,143,569
2,214
31,540
24,141
93,525
125,411
94,750
345,056
358,083
264,005
46
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
7.
Intangible assets
Cost or deemed cost
Balance at July 31, 2013
Balance at July 31, 2014
Balance at July 31, 2015
Accumulated amortization and accumulated impairment losses
Balance at July 31, 2013
Balance at July 31, 2014
Balance at July 31, 2015
Carrying amounts
At July 31, 2013
At July 31, 2014
At July 31, 2015
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
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. Accumulated impairment charges at July 31, 2015 total $1,693,046
(July 31, 2014 – $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.
47
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
b. Share capital issued
Number of
Common shares
Preferred shares
Balance at July 31, 2013
392,264,320
5,000,000
Issued for cash
Issue to repay debt
Share issuance costs
111,532,973
10,567,027
-
-
-
-
Common shares
$
55,658,683
3,097,536
293,464
(33,758)
Value of
Preferred shares
$
2,500
-
-
-
Total share capital
$
55,661,183
3,097,536
293,464
(33,758)
Balance at July 31, 2014
514,364,320
5,000,000
59,015,925
2,500
59,018,425
Issued for cash
Share issuance costs
44,000,000
-
-
-
1,205,253
(12,500)
-
-
1,205,253
(12,500)
Balance at July 31, 2015
558,364,320
5,000,000
60,208,678
2,500
60,211,178
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 Company closed a CAD $1.1 million equity
investment with an arm’s length investor from Asia in October 2014. Under the terms of the deal, the investor
acquired 22,000,000 equity units at $0.05 per unit that were issued for cash. The Company also closed a CAD $1.1
million equity investment with OnSite Lab. Under the terms of the deal, OnSite Lab acquired 22,000,000 equity units
at $0.05per unit that were issued for cash.
The Series A preferred shares had a stated capital of $2,500 at July 31, 2015 (July 31, 2014 – $2,500).
c. Warrants
Balance at July 31, 2013
Issued for cash
Issued to repay debt
Expired warrants
Balance at July 31, 2014
Issued for cash
Expired warrants
Balance at July 31, 2015
Number of
warrants
196,119,500
111,532,973
10,567,027
(6,119,500)
312,100,000
44,000,000
(50,000,000)
Warrant
reserve
$
4,493,647
2,479,113
234,887
-
7,207,647
994,747
-
306,100,000
8,202,394
48
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
The total warrants outstanding at July 31, 2015 are shown below.
Issued
Number
Exercise price
$
Expiry date
January 31, 2012
June 11, 2012
September 30, 2013
October 2, 2014
March 27, 2015
20,000,000
120,000,000
122,100,000
22,000,000
22,000,000
306,100,000
0.10
0.10
0.10
0.10
0.10
January 31, 2016
June 11, 2016
September 30, 2017
October 2, 2018
March 27, 2019
49
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
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 2,921,875
common shares (July 31, 2014 – 5,990,000) at an exercise price of $0.10. The options expire between March 2, 2016
and April 12, 2018. During the year ended July 31, 2015, 1,021,875 options were issued (July 31, 2014 – 2,850,000). All
options outstanding at July 31, 2015 were exercisable.
The total options outstanding from July 31, 2013 to July 31, 2015 are shown below.
Options outstanding July 31, 2013
Options issued
Options expired/forfeited
Options outstanding July 31, 2014
Options issued
Options expired/forfeited
Options outstanding July 31, 2015
Weighted
average
exercise price
$
0.10
0.10
0.10
Equity reserve
$
1,099,202
184,630
-
0.100
0.100
0.100
1,283,832
27,765
-
Number
4,530,000
2,850,000
(1,390,000)
5,990,000
1,021,875
(4,090,000)
2,921,875
0.100
1,311,597
Options were priced using the Black Scholes option pricing model using the following assumptions:
Grant date share price
Exercise price
Expected volatility
(based on historical volatility over the past three years) 124%
Option life
Dividend yield
Risk-free interest rate
3 years
$0.00
2%
$0.095
$0.10
The weighted average fair value of the options granted during the year ended July 31, 2015 was $0.10 (2014 –$0.07)
and the weighted average remained contractual life is 1.58 years (2014 – 0.99 years). The amount of compensation
cost recognized in the consolidated statement of operations and comprehensive loss was $5,240 (2014 - $35,982).
50
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
9. Loss per share
Net loss attributable to common shareholders
Diluted loss
Issued common shares
Weighted average number of common shares
Weighted average number of warrants
Weighted average number of options
Weighted average number of diluted shares
Basic loss per share
Diluted loss per share
31-Jul-15
$
(3,229,565)
(3,229,565)
31-Jul-14
$
(3,835,339)
(3,835,339)
558,364,320
514,364,320
558,364,320
514,364,320
-
-
-
-
558,364,320
514,364,320
(0.006)
(0.006)
(0.007)
(0.007)
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, 2015, as the Company had a net loss and the exercise
of potentially dilutive instruments would be anti-dilutive.
51
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
10. Loans and borrowings
a. Loans
Short term loans
Loan 1
Loan 2
Loan 3
Loan 4
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-15
31-Jul-14
Contract value
$
1,045,111
1,054,167
1,300,000
13,000
78,291
917,019
3,016,000
97,390
7,520,978
Carrying value
$
1,045,111
1,054,167
1,300,000
12,398
78,291
748,105
2,649,096
68,535
6,955,703
2,234,825
4,720,878
Contract value
$
605,470
1,054,167
1,300,000
26,000
-
1,163,191
3,016,000
97,390
7,262,218
Carrying value
$
605,469
1,054,167
1,110,034
23,660
-
924,712
2,441,946
60,960
6,220,948
4,030,313
2,190,635
The required annual principal repayments on loans and borrowings are as follows:
2016
2017
2018
Less: unamortized imputed interest
Carrying value
Short term loans
$4,720,878
1,432,891
1,349,333
(547,399)
$6,955,703
The Company has a five short terms loans with 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 5%. The loans were
not in default at July 31, 2015.
Trade invoice financing facility
During the year, the Company entered into a trade invoice financing facility whereby the Company may offer insured
accounts receivable having payment terms not longer than 60 days in an aggregate amount not greater than
USD$1,000,000 to the bank for purchase at a discount. As the Company has not transferred the significant risks and
rewards relating to the receivables, it has not derecognized the accounts receivable and has recorded the facility in
short term loans. At July 31, 2015, the carrying amount of accounts receivable that have been transferred but not
derecognized amounted to $287,543 and the carrying amount of the associated short term loan is $254,983.
52
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
Loan 1
Loan established October 31, 2012, bearing 5% interest with monthly interest only payments until November 30, 2013,
followed by monthly principal payments and accrued interest for five additional years ending November 30, 2018. The
loan is secured by interest on intellectual property and on the step-up technology. The loan was in default as of July
31, 2015 and thus has been classified as a current liability.
Loan 2
Loan established July 31, 2012, bearing 5% 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 was in default as of July
31, 2015 and thus has been classified as a current liability.
Loan 3
Loan established July 31, 2012, bearing 5% interest with monthly principal payments of $1,000, in addition to accrued
monthly interest ending September 30, 2016. The loan was not in default at July 31, 2015.
Loan 4
Loan established February 11, 2015, bearing 5% interest. The loan is fully payable on or before December 1, 2016. The
loan was not in default at July 31, 2015.
Atlantic Canada Opportunities Agency (ACOA) loans
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 was renegotiated in July 2014, bearing no interest with a monthly principal payment of $24,234 in August 2014
followed by 40 monthly payments of $27,800 starting on February 1, 2015 and one monthly payment of $26,975 at the
end of the loan. The loan is secured by all present and after acquired personal property, excepting consumer goods.
The loan was not in default at July 31, 2015.
Nova Scotia government loan 1
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 was
renegotiated in July 2014 to be repaid in 1 monthly payment of $41,000 on September 1, 2015 and 25 monthly
payments of $85,000 commencing on October 1, 2015. 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, 2015.
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, 2015.
53
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
11. Capital management and financial risks
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, 2015 (July 31, 2013 – $nil). The Company is not anticipating paying out dividends during the year
ended July 31, 2016.
The Company’s capital is summarized in the table below.
Total debt
Less: Cash
Net debt
Shareholders' deficiency
Total capital
31-Jul-15
$
6,955,703
(262,392)
6,693,311
31-Jul-14
$
6,220,948
(162,458)
6,058,490
(7,704,367)
(1,011,056)
(6,690,067)
(631,577)
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
31-Jul-15
31-Jul-14
Carrying Value
Fair Value
Carring Value
Fair Value
$
$
$
$
262,392
769,698
262,392
769,698
162,458
778,345
162,458
778,345
Financial assets
Amoritized Cost
Cash
Trade and other receivables
Financial liabilities
Amoritized cost
Accounts payable and accrued liabilties
Current portion of long term debt
Long term portion of long term debt
2,265,005
4,720,878
2,234,825
2,265,005
4,720,878
2,234,825
1,847,946
2,234,870
3,986,078
1,847,946
2,234,870
3,986,078
54
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
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
Trade and other receivables
Prepaid expense
Accounts payable and accrued liabilities
Debt
31-Jul-15
US$
126,380
511,960
2,756
848,602
196,458
31-Jul-14
US$
20,840
462,009
3,450
584,333
-
A one cent change in the US dollar exchange rate would result in approximately a $16,862 (2014 – $2,900 ) impact on
the statement of financial position and consolidated statement of operations.
d.
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 $760,050 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.
f.
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, 2015, the Company does not
have sufficient cash to meet all of its continuing 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.
55
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
The Company’s contractual maturities for its financial liabilities are outlined in the table below.
For the year ended July 31, 2015
Loans
Accounts payable and accrued liabilities
Total debt
For the year ended July 31, 2014
Loans
Accounts payable and accrued liabilities
Total debt
Total
$
6,955,703
2,265,005
9,220,708
Less than 1 year
$
4,720,878
2,265,005
6,985,883
Total
$
7,262,218
1,847,946
9,110,164
Less than 1 year
$
2,234,870
1,847,946
4,082,816
1 to 3 years
$
2,234,825
-
2,234,825
1 to 3 years
$
5,027,348
-
5,027,348
4 to 5 years
$
After 5 years
$
-
-
-
-
-
4 to 5 years
$
After 5 years
$
-
-
-
-
-
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. Royalty provision
The Company entered into a promissory note with OnSite Lab on January 10, 2011 in the amount of $260,000, which
stipulated that if the debt was not repaid by January 31, 2011, that the Company would be obligated to pay a 15%
royalty on all future US sales of the Hepatitis B- Anti-Core test product (the “Royalty Provision”). Management’s best
estimate of the Royalty Provision was determined using certain assumptions including: 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.
In 2013, Management estimated its Royalty Provision to be $739,817 based on a five year projected cash flow of future
sales for the period 2014 to 2018 which assumed that there would be a viable working product in late 2013. Due to
delays in the registration and trial processes experienced in fiscal 2014 the sales did not materialize as expected,
impacting the Company’s investment in the project and timeline. Given the uncertainties surrounding the future cash
flows associated with Hepatitis B- Anti-Core test, Management has adjusted their best estimate of the Royalty Provision
to the original contractual value of the promissory note of $260,000.
During March 2015, the Company entered into a royalty agreement with OnSite Lab whereby OnSite Lab would receive
a 10% royalty on all future US sales of the Reveal G4 product for a five year period commencing on the day of the first
full payment of at least CAD $100,000 worth of product. In exchange, OnSite Lab provided MedMira with $270,000 to
fund costs required to complete product development and obtain US Food and Drug Administration (FDA) pre-market
approval, which has been deducted from Research and development for the year ending July 31, 2015. As at July 30,
56
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
2015, no provision has been recorded as MedMira does not have an obligation to OnSite Lab until G4 Reveal obtains
FDA approval and is commercialized.
13. Related parties
The following transactions occurred with related parties during the year ended July 31, 2015:
• A short term loan totalling $180,000 bearing 5% interest was received from OnSite Lab. During the year $419
•
in interest was accrued against this loan (2014 - $478,920 and $1,998 in interest).
Short term loans totalling $78,952 bearing 5% interest were received from the Chief Financial Officer. During
the year, $2,356 in interest was accrued against these loans (2014 - $119,730 and $5,892 in interest).
• A royalty agreement was entered into with OnSite Lab (Note 12).
• Director fees totalling $13,750 were incurred (2014 - $24,367).
•
Short term loans totalling $350,000 bearing interest at 5% was received from Andurja ( 2014 -$0).
The following balances with related parties were outstanding at July 31, 2015:
• Accounts payable totalling $10,543 was due to directors (2014 – $8,292).
• Accounts payable totalling $193,629 was due to officers (2014 - $0).
• A short term loan totalling $180,419 was due to OnSite Lab (2014 – $480,918).
• A short term loan totalling $229,585 was due to the Chief Financial Officer (2014 – $125,622).
• A short term loan totalling $78,291 was due to an employee (2014 - $0).
• A short term loan totalling $354,123 was due to Andurja (2014 - $0).
• A royalty provision was owed to OnSite Lab of $260,000 (2014 – $260,000).
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
31-Jul-15
$
347,330
27,086
374,416
31-Jul-14
$
234,475
36,892
271,367
57
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
14. Research and development
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, 2015,
$2,428,973 of the research costs incurred were recognized in service cost of sales (July 31, 2014 – $1,316,978).
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
15. Income taxes
a. Reconciliation of total tax expense
31-Jul-15
$
3,033,116
2,428,973
-
604,143
31-Jul-14
$
1,910,445
1,316,978
299,042
294,425
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.
Loss before income tax
Income tax rate
31-Jul-15
$
(3,229,565)
31.0%
31-Jul-14
$
(3,835,339)
31.0%
Income tax recovery at the combined statutory income tax rate
(1,001,165)
(1,188,955)
Non-taxable portion of other (gains) and losses
Non-deduction expense accretion
Non-deductible stock-based compensation
Non-deductible interest
Expired losses
Change in unrecognized temporary differences
Financing fees recorded in equity
Other
Income tax recovery
154,039
147,558
8,607
-
1,173,818
(451,115)
(3,875)
(27,867)
-
-
97,789
11,154
14,196
-
973,497
-
92,319
-
58
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
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
Share issuance costs
Variable liability
Unrealized foreign exchange
Cumulative eligible capital
Property and equipment
Total
31-Jul-15
$
31-Jul-14
$
28,175,173
6,195,675
21,150
260,000
-
281,465
2,082,092
37,015,555
30,564,742
5,477,784
26,400
260,000
18,925
281,645
1,988,015
38,617,511
Investment tax credits
1,819,957
1,687,524
The Company has available $28,324,173 in non-capital losses that can be used to reduce taxable income and that expire
between the years ended July 31, 2016 and July 31, 2035. The Company also has available $1,819,957 in investment
tax credits that can be used to reduce taxes payable and that expire between the years ended July 31, 2019 and July
31, 2035.
At July 31, 2015, the Company has no unrecognized deferred tax liability (July 31, 2014 – $nil) for taxes that would be
payable on the unremitted earnings of certain of the Company’s subsidiaries.
59
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
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
Gain/loss of royalty provision
17. Operating segments
31-Jul-15
$
11,100
(353,358)
(2,252,588)
(94,078)
(108,969)
(416,839)
(2,140,628)
(177,416)
(806,220)
(173,720)
(769,190)
-
-
-
(7,281,906)
31-Jul-14
$
14,175
(211,054)
(2,530,415)
(83,262)
(98,688)
(464,893)
(845,862)
(250,391)
(1,529,546)
(82,691)
(760,708)
-
-
479,817
(6,363,518)
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, 2016
For the year ending July 31, 2017
For the year ending July 31, 2018
For the year ending July 31, 2019
For the year ending July 31, 2020
Thereafter
Lease commitment
$
232,826
243,920
244,928
244,928
256,021
792,510
60
MedMira Inc.
Notes to the Consolidated Financial Statements
For the years ended July 31, 2015 and July 31, 2014
In Canadian dollars
19. Financing
A breakdown of the income (expenses) allocated to the financing line on the consolidated statements of operations
and comprehensive loss is provided in the table below.
Investment Income
Finance costs
Gain/(loss) on remeasurement of royalty provision
Total financing income (expense)
20. Subsequent events
31-Jul-15
$
11,100
(769,190)
-
(758,090)
31-Jul-14
$
14,175
(760,708)
479,817
(266,716)
In September 2015, the Company completed a $5.0 million equity investment with OnSite Lab. Under the terms of the
deal, OnSite Lab acquired 100,000,000 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 the investor 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. As a result, OnSite Lab ownership of MedMira
common shares increases to 72% with this transaction and could increase to 75.7% if all warrants related to this
transaction are exercised.
61
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 29, 2016
62
Senior Management
Mr. Hermes Chan, Chief Executive Officer
Mr. Markus Meile, Chief Financial Officer
Mr. Sing Chan, Chief Operating Officer
Ms. Robyn Cook, Chief Corporate Officer
Board of Directors
Mr. Marvyn Robar, Chairman
Mr. Hermes Chan
Dr. Philippe Dro (effective August 7, 2015)
Dr. Colin MacGillivray
Mr. Romano Robusto
Dr. Michael Sidler (until August 7, 2015)
Corporate Information
Auditors
Deloitte LLP
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
Markus Meile, Chief Financial Officer
MedMira Inc.
Suite 1, 155 Chain Lake Drive
Halifax, Nova Scotia, B3S 1B3
T: 902 450 1588
www.medmira.com
E: ir@medmira.com
63
MedMira Inc.
155 Chain Lake Drive, Suite 1
Halifax, NS CANADA B3S 1B3
www.medmira.com