MedMira Inc.
Management’s Discussion & Analysis
For the year ended July 31, 2021
Management’s Discussion & Analysis
For the year ended July 31, 2021
1
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.
This MD&A contains statements that may constitute forward-looking statements about the Company’s objectives,
strategies, financial condition, results of operations, cash flows and businesses. These statements are “forward-looking”
because they are based on current expectations, estimates, assumptions, risks and uncertainties. These forward-looking
statements are typically identified by future or conditional verbs such as “outlook”, “believe”, “anticipate”, “estimate”,
“project”, “expect”, “intend”, “plan”, and terms and expressions of similar import. Such forward-looking statements are
subject to a number of risks and uncertainties that include, but are not limited to: cyclical downturn; competitive pressures;
dealing with business and political systems in a variety of jurisdictions; repatriation of funds or property in other
jurisdictions; payment of taxes in various jurisdictions; exposure to currency movements; inadequate or failed internal
processes, people or systems or from external events; dependence on key customers; safety performance; expansion and
acquisition strategy; regulatory and legal risk; corruption, bribery or fraud by employees or agents; extreme weather
conditions and the impact of natural or other disasters; shortage of specialized skills and cost of labour increases; equipment
and parts availability, reputational risk; cybersecurity risk; market price and dilution of common shares and environmental
regulation risk. Actual results could be materially different from expectations if known or unknown risks affect the business,
or if estimates or assumptions turn out to be inaccurate. The Company does not guarantee that any forward-looking
statement will materialize and, accordingly, the reader is cautioned not to place reliance on these forward-looking
statements. The Company disclaims any intention and assumes no obligation to update any forward-looking statement,
even if new information becomes available, as a result of future events or for any other reasons, except in accordance with
applicable securities laws.
Introduction
The Management’s Discussion and Analysis (MD&A) was issued and approved by the Board of Directors on November 29,
2021. The MD&A for the year ended July 31, 2021 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.
This document should be read in conjunction with the audited consolidated financial statements for the year ended July
31, 2021. 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 audited financial statements ended July 31, 2021
can be viewed on the Company’s website at www.medmira.com and are available on SEDAR at www.sedar.com.
The preparation of the 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
Management’s Discussion & Analysis
For the year ended July 31, 2021
2
assumptions or conditions. Management believes the accounting policies, outlined in the Significant Accounting Policies
section of its July 31, 2021 consolidated financial statements, affect its more significant judgments and estimates used in
the preparation of its consolidated financial statements.
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) Technologyä platform is the basis for the Company’s line of rapid tests.
Diagnostic applications based on this 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 ability to
deliver 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 the need to provide immediate answers without increasing costs.
MedMira’s technology platform 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 for rapid diagnostic solutions in the United States (U.S.
Food and Drug Administration), Canada (Health Canada), the notified body in the European Union (CE Mark), and China
(CFDA) and in a number of countries in Latin America, Africa, and Asia. The Company’s quality system is ISO 9001 and ISO
13485 certified.
MedMira sells its rapid tests through a network of medical distributors and strategic business development partners to
customers in all sectors of the healthcare industry, including laboratories, hospitals, point-of-care clinics, governments, aid
organizations, and public health agencies.
In addition to clinical diagnostics, the Company offers the Miriadä product line to create new opportunities in the high
value technology licensing sector. This business line 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’s
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 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
Management’s Discussion & Analysis
For the year ended July 31, 2021
3
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
United States
D706466
Diagnostic Device
United States
EP1417489
Rapid Diagnostic Device and Assay
Europe
ZL02819646.5
Rapid Diagnostic Device and Assay
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.
The Company has recorded an impairment charge in previous fiscal years to write-down its intangible assets to a nominal
value. There is no indication at the end of July 31, 2021 that this impairment has been reversed and thus the value of
intangible assets on the balance sheet on July 31, 2021 is $1 (July 31, 2020 - $1).
Corporate update
In the first two quarters of FY2021, MedMira continued to focus on its sales of its products such as the REVEALCOVID-19®
Total Antibody Test in the United States and Europe. Despite logistical challenges and increasing supply costs due to the
COVID-19 pandemic, the Company was able to meet its objectives and achieve its target gross profit margins while only
slightly increasing its fixed costs. These first financial quarters showcased the low threshold for MedMira to achieve break-
even and profitability.
During these two quarters, the Company further enhanced its product portfolio with the successful development of
REVEALCOVID-19® Nab-Y Neutralizing Antibody Test and Vyra™ CoV2 Antigen Test. With this new product, the Company is
able to provide all necessary rapid tests to detect either the virus or all antibodies. As a result, any customer is able to
benefit from using only one platform which decreases training time, enables faster testing and provides unyielding quality
which reduces overall costs. At the same time, the Company made the strategic decision to change its current application
in the United States in order to adapt to the regulatory changes set forward in December 2020, by introducing the
REVEALCOVID-19® Plus Total Antibody Test. With the new application, MedMira’s product focuses on the highly lucrative
and significant larger Point-of-Care and subsequent home test market. This change was fundamental to the future of the
Company’s product sales within the United States market. In January 2021, major changes within the regulatory framework
proved this to be the right step as significant changes to previous Emergency Use Authorizations (EUA) limited and impacted
sales of products authorized under the modern complex EUA.
In the third and fourth quarter of FY2021, MedMira continued to further enhance its claim by completing further studies
on its REVEALCOVID-19® product line such as the First WHO International Standard for its REVEALCOVID-19® Plus Total
Antibody Test and REVEALCOVID-19® Nab-Y Competitive Neutralizing Antibody Test [Nab-Y] with both tests achieving 100%
agreement. While in the application process for its COVID-19 product lines, the Company continued its efforts for the CLIA-
waiver for its already US FDA PMA approved G4 HIV Rapid Test. The additional approval (CLIA-waived) allows the Company
to access an approximately USD$ 350 million annual market. The G4 HIV Rapid Test is currently sold under the modern
Management’s Discussion & Analysis
For the year ended July 31, 2021
4
complex label claim which limits the overall sales potential to only USD$ 3 million per annum. With the additional approval,
its already current and well known G4 HIV Rapid Test will be sold through its existing sales partners in the United States.
Additional Corporate Update:
MedMira will provide a regulatory and corporate update on the 22nd of December 2021, in the event of any material
changes, these will be provided before that date. In addition, the Company further enhanced its technology by developing
a new production process for its colloidal gold immuno-conjugates. This will be launched in the coming months and further
enhances the ease-of-use and with it provides additional benefits to the end-users. Subsequent to the financial year end
2021, MedMira has successfully completed its latest FDA inspection of the Company’s biological medical device products.
In addition, the Company announces that it has completed the MDSAP audit and shall receive the MDSAP certification in
early December 2021. Furthermore, the Company received the registered trademark for its REVEALCOVID-19®.
The Company’s Finance team continued its fiscal constraints to maintain its low fixed costs with the aim to achieve
breakeven and subsequent profitability within a short period of time. During FY2021, the Company continued its efforts to
renegotiate its debt and achieved a forbearance agreement with MedMira’s largest debt holder which allows the Company
to defer principal and interest payments for 12 months. This may be extended further depending on the growth of the
Company. Subsequent to the financial year end 2021, MedMira entered into a financial package agreement pending on
regulatory approval which will provide the Company with additional cash to execute its clinical trials (G4 HIV CLIA-waived
Rapid Test), to continue its operations and to further invest into the manufacturing facility in Halifax. As an additional part
of this agreement, MedMira and its stakeholders will benefit from a significant debt reduction to further support the
Company’s going concern.
Management’s Discussion & Analysis
For the year ended July 31, 2021
5
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
audited
consolidated
financial
statements
for
the
year
ended
July 31, 2021.
Selected quarterly information (in thousands of dollars except per share amounts)
This quarterly information is unaudited but has been prepared on the same basis as the annual consolidated financial
statements. We discuss the factors that caused our results to vary over the past eight quarters throughout this MD&A.
The main highlights are:
•
The increase in revenue for fiscal 2021 compared to fiscal 2020 is the direct result of the Company’s sales of its
REVEALCOVID-19® Total Antibody Test. The slight increase in operating expenses of 2% for fiscal 2021 compared
to fiscal 2020 is a direct result of the work associated with the launch of the new product and the ramping up of
the Company’s manufacturing department.
•
The decrease of other expenses of approximately 9% for fiscal 2021 compared to fiscal 2020 is due to more
favourable currency exchange rates on interest payable on loans and wage subsidies provided by the government.
Income statement
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
$
$
$
$
$
$
$
$
Revenue
110
84
347
1,603
648
87
95
89
Cost of sales
(25)
(48)
(109)
(241)
(297)
(17)
(16)
(17)
Gross profit
85
36
238
1,362
351
70
79
72
Operating expenses
(697)
(233)
(497)
(479)
(403)
(603)
(511)
(355)
Other expenses (gains)
(24)
(141)
(158)
(168)
(218)
(160)
(182)
(185)
Net earnings (loss) before tax
(636)
(338)
(417)
715
(270)
(693)
(614)
(468)
Balance sheet
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
$
$
$
$
$
$
$
$
Current assets
1,576
1,342
1,610
2,123
911
656
344
130
Non-current assets
2,314
2,337
2,389
2,437
2,485
2,442
2,488
2,535
Total assets
3,890
3,679
3,999
4,560
3,396
3,098
2,832
2,665
Current liabilities
17,414
17,026
16,763
16,300
15,806
16,009
15,053
14,233
Non-current liabilities
2,199
2,239
2,484
3,107
3,152
2,381
2,379
2,417
Total liabilities
19,613
19,265
19,247
19,407
18,958
18,390
17,432
16,650
Total shareholders deficiency
(15,724)
(15,586)
(15,248)
(14,847)
(15,562)
(15,292)
(14,600)
(13,985)
Total liabilities and equity
3,889
3,679
3,999
4,560
3,396
3,098
2,832
2,665
Management’s Discussion & Analysis
For the year ended July 31, 2021
6
Fourth quarter analysis
Product revenue and gross margin
The Company recorded revenue from product sales in the three months ended July 31, 2021, of $106,480 as compared to
$317,485 for the same period last year. The decrease in revenue is solely due to the temporary halt of MedMira’s
REVEALCOVID-19® Total Antibody Test in the United States according to the regulatory guidelines set forward by the
regulators in early 2021.
Gross profit on product sales for the three months ended July 31, 2021, was $85,497 compared to $149,975 for the same
period in 2020. The Company’s gross profit decreased by approximately 43% in comparison to Q4 FY2020 which is only due
to the temporary halt of MedMira’s REVEALCOVID-19® Total Antibody Test in the United States. The Company’s gross profit
margin in Q4 FY2021 was 80% compared to a gross margin of 47% in the same quarter last financial year. The generated
gross margin is in line with management’s expectations and reflects MedMira’s standard gross profit. During FY2020, these
gross margins were lower only due to higher costs associated with the procurement of components which have been a
direct result of the COVID-19 pandemic.
Service revenue and gross margin
The Company recorded revenue from service sales in the three months ended July 31, 2021, of $3,859 compared to
$196,196 for the same period in 2020. The decrease of service sales was due to the specific projects awaiting regulatory
authorisation. There was no gross profit generated from service sales in Q4 FY2021 which has been expected by the
management for the above-mentioned reason.
For the three months ended
31-Jul-21
31-Jul-20
Better(worse)
$
$
$
Product
Product sales
106,480
317,485
(211,005)
Product cost of sales
(20,983)
(167,510)
146,527
Gross margin on product
85,497
149,975
(64,478)
Service
Service sales
3,859
196,196
(192,337)
Service cost of sales
(3,859)
(129,176)
125,317
Gross margin on service sales
-
67,020
(67,020)
Licensing fee
-
134,040
(134,040)
Operating expenses
Research and development
(142,776)
(4,687)
(138,089)
Sales and marketing
(697)
(11,515)
10,818
Other direct costs
(238,545)
(157,631)
(80,914)
General and administrative
(315,195)
(228,850)
(86,345)
Total operating expenses
(697,213)
(402,683)
(294,530)
Operating loss
(611,716)
(51,648)
(560,068)
Non-operating income (expenses)
Financing
(195,392)
(218,280)
22,888
Government Assistance
170,128
-
170,128
Net (loss) income
(636,980)
(269,928)
(367,052)
Management’s Discussion & Analysis
For the year ended July 31, 2021
7
Licensing fees
The Company recorded revenue from licensing fees in the three months ended July 31, 2021, of $0 compared to $134,040
for the previous year. In Q4 FY2021, the Company generated no licensing fees as previous projects were completed.
Operating expenses
Total operating expenses increased by $294,530 from $402,683 for the three months ended July 31, 2020, to $697,213 for
the three months ended July 31, 2021.
-
Research and development expenses for the three months ended July 31, 2021, were $142,776 compared to a $4,687
for the same period in 2020. The increase in research and development expenses were mainly due to additional work
for new products and additional technology components. In addition, in Q4 FY2020, the majority of MedMira’s research
and development work was externally funded which decreased the overall costs in the fourth quarter in FY2020.
-
Sales and marketing expenses for the three months ended July 31, 2021, were $697 compared to $11,515 for the same
period in 2020. The decrease of sales and marketing expenses were due to these activities being managed by
MedMira’s distributors and wholesale partners. This is in line with the MedMira’s B2B sales and marketing strategy to
allow the Company to focus on its expertise such as product development, manufacturing and research.
-
Other direct costs for the three months ended July 31, 2021, were $238,545, compared to $157,631 for the same period
in 2020. The increase in other direct costs is mainly due to wages for additional support staff and regulatory costs
associated with MedMira’s REVEALCOVID-19®, Vyra® and G4 HIV CLIA-waived products.
-
General and administrative expenses were $315,195 for the three months ended July 31, 2021, compared to $228,850
for the same period in 2020. The increase is mainly due to increase in insurance costs associated with MedMira’s growth
such as additional products (product liability insurance) and new equipment (breakdown insurance). In addition, legal
fees for patents, trademarks and other corporate matters contributed to this increase.
Non-operating expenses
-
Total non-operating expenses were $25,264 in the three months ended July 31, 2021, compared to $218,280 during
the same period in fiscal year 2020. The decrease is due governmental subsidy received and recognised in Q4 FY2021.
Management’s Discussion & Analysis
For the year ended July 31, 2021
8
Year to date Analysis
Product revenue and gross margin
The Company recorded revenue from product sales for the year ended July 31, 2021, of $2,060,497 as compared to
$588,836 for the same period last year. Gross profit on product sales for the year ended July 31, 2021, was $1,716,789
compared to $371,220 for the same period in 2020. The Company’s increased revenue is directly related to its additional
sales of its REVEALCOVID-19® Total Antibody Test. The Company’s gross margin was 83% for the twelve months ended July
31, 2021, in comparison to a gross profit margin of only 63% for the period ended July 31, 2020. The generated gross margin
is in line with management’s expectations and reflects MedMira’s standard gross profit. During FY2020, these gross margins
were lower only due to higher costs associated with the procurement of components which have been a direct result of the
COVID-19 pandemic.
Service revenue and gross margin
The Company recorded revenue from service sales in the three months ended July 31, 2021, of $83,973 compared to
$196,196 for the same period in 2020. These service sales were in relation to the MedMira’s REVEALCOVID-19® and Vyra®
product lines. The Company’s gross profit from service sales was $67,020 compared to $0 in the previous year. The
increase is mainly due to lower costs associated with the projects.
For the twelve months ended
31-Jul-21
31-Jul-20
Better(worse)
$
$
$
Product
Product sales
2,060,497
588,836
1,471,661
Product cost of sales
(343,708)
(217,616)
(126,092)
Gross margin on product
1,716,789
371,220
1,345,569
Service
Service sales
83,973
196,196
(112,223)
Service cost of sales
(79,020)
(129,176)
50,156
Gross margin on service sales
4,953
67,020
(62,067)
Licensing fee
-
134,040
(134,040)
Operating expenses
Research and development
(359,316)
(199,269)
(160,047)
Sales and marketing
(44,297)
(40,327)
(3,970)
Other direct costs
(1,011,769)
(461,327)
(550,442)
General and administrative
(490,592)
(1,171,514)
680,922
Total operating expenses
(1,905,974)
(1,872,437)
(33,537)
Operating loss
(184,232)
(1,300,157)
1,115,925
Non-operating income (expenses)
Financing
(681,693)
(745,229)
63,536
Government assistance
190,128
-
190,128
Net (loss) income
(675,797)
(2,045,386)
1,369,589
Management’s Discussion & Analysis
For the year ended July 31, 2021
9
Licensing fees
The Company recorded revenue from licensing fees in the three months ended July 31, 2021, of $0 compared to $134,040
for the previous year. The Company generated no licensing fees as previous projects were completed.
Operating expenses
Total operating expenses increased by $33,537 from $1,872,437 for the year ended July 31, 2020, to $1,905,974 for the
year ended July 31, 2021.
-
Research and development expenses for the year ended July 31, 2021, were $359,316 compared to $199,269 for the
same period in 2020. The increase of approximately 80% in research and development expenses were due to two
factors: First, the Company increased its research and development activities for additional products aimed for new
markets and completed work surrounding additional technology components to increase MedMira’s overall patent
portfolio. Furthermore, in FY2020 several research and development expenses were externally funded which resulted
in lower R&D costs for FY2020.
-
Sales and marketing expenses for the year end July 31, 2021, were $44,297 to $40,327 for the same period in 2020.
The increase of approximately 10% was due to additional marketing work for MedMira’s REVEALCOVID-19® Total
Antibody Test, REVEALCOVID-19® Nab-Y Neutralising Antibody Test and Vyra™ COVID-19 Antigen Test.
-
Other direct costs for the year ended July 31, 2021, were $1,011,769 compared to $461,327 for the same period in
2020. The significant increase of the Company’s other direct costs was caused by significant increase of MedMira’s
manufacturing activities. The Company was required to substantially increase its labour force to accommodate the high
demand for MedMira’s products. This included hiring of additional manufacturing and quality control technicians and
the necessary training to comply with the highest standards set forward by MedMira.
-
General and administrative expenses were $490,592 for the year ended July 31, 2021, compared to $1,171,514 for the
same period in 2020. The decrease in general and administrative expenses were mainly due to favourable exchange
rates of United States Dollar and Swiss Francs. In addition, during FY2020 MedMira had invested a significant amount
to upgrade its IT systems in order modernize its internal systems and to safeguard its servers, websites and
communication tools from any potential third-party threat. In FY2021, the Company had no such sizeable investments
and any other extraordinary costs.
Non-operating expenses
-
Total non-operating expenses were $491,565 in the year ended July 31, 2021, compared to $745,229 during the same
period in 2020. The decrease in non-operating expenses was due to governmental subsidy received.
Management’s Discussion & Analysis
For the year ended July 31, 2021
10
Geographic information
The Company organizes and records the sales and distribution of its products based on major geographical territories
around the world. The table below provides the three-month geographic breakdown of revenue.
Product and service revenue
Product and service revenue
For the three months ended
For the year ended
31-Jul-21
31-Jul-20
31-Jul-21
31-Jul-20
$
$
$
$
North America
78,094
78,257
1,846,096
850,104
Latin America and the
Caribbean
-
-
-
6,515
Europe
28,386
20,748
288,421
62,453
Asia Pacific
-
-
8,039
Other
-
-
1,914
-
Total revenue
106,480
99,005
2,144,470
919,072
Liquidity and capital resources
Cash and working capital
The Company had a cash reserve of $0 on July 31, 2021, as compared to $401,861 on July 31, 2020. The Company’s net
working capital position as at July 31, 2021 was a deficit of $15.8 million compared to the July 31, 2020 working capital
deficit of $14.9 million. The Company has incurred operational losses and negative cash flows on a cumulative basis since
inception. For the year ended July 31, 2021, the Company incurred a net loss from operating activities of approximately
$0.2 million and negative cash flows from operations of $0.5 million, compared to a net loss from operations of $1.3 million
and negative cash flows from operations of $0.3 million for the same period in 2020. The following table is a list of
commitments the Company has:
Operating activities
MedMira incurred negative cash flows from operations of approximately $0.5 million for the year ended July 31, 2021,
compared to negative cash flows of $0.3 million for the same period in 2020. The reason for this variance was mainly due
to additional investments in equipment, labour and training in order to accommodate the high demand for MedMira’s
products.
Financing activities
For the year ended July 31, 2021
Total
Less than 1 year
1 to 3 years
4 to 5 years
After 5 years
$
$
$
$
$
Debt
9,221,821
9,181,821
40,000
-
-
Accounts payable and accrued liabilities
6,724,521
6,724,521
-
-
-
Lease liabilities
2,303,653
144,311
499,370
394,641
1,265,332
Royalty provision
130,000
130,000
-
-
-
Total debt
18,379,995
16,180,653
539,370
-
-
Management’s Discussion & Analysis
For the year ended July 31, 2021
11
Cash inflows from financing activities were $0.1 million for the year ended July 31, 2021, compared to cash inflow of $0.7
million for the same period in 2020.
Investing activities
Cash outflows from investments were $0.04 million for the year ended July 31, 2021, compared to cash outflows of $0.1
for the same period in 2020.
Debt
As at July 31, 2021, the Company had loans payable with a carrying value of $9.2 million compared to $9.5 million at July
31, 2020. The increase in the carrying value of loans payable from July 31, 2020, to July 31, 2021, is due to additional short
term loans. During the past 36 months, the Company was in negotiations with all of its debt holders to ensure realistic debt
repayment plans, which shall enable the Company to use its working capital for its growth and ensure its future stability. In
order to complete these negotiations, MedMira requires proof of its development and financial stability mainly in relation
to its sales. At the time, MedMira is able to generate enough sales to fund its operations and meet any other essential
corporate expenses, the Company is able to present and finalize a secure repayment plan. As these negotiations are
ongoing, the Company must record these as in default until final agreements have been signed. The amount of all loans in
default due to non-payment of principal and interest was $9.1 million and therefore shows as a current liability on the
balance sheet.
Further discussion on liquidity and capital resources can be found in this document in the Liquidity Risk section, Risk and
Uncertainties section of this document and in Notes 2 and 12 of the Company’s consolidated financial statements for the
year ended July 31, 2021, and the audited consolidated financial statements for the year ended July 31, 2020.
Equity/Shares
The Company is authorized to issue an unlimited number of common shares without par value. During the year end July 31,
2021, the Company issued 3,011,496 common shares. The number of issued and outstanding common shares on July 31,
2021, was 661,375,816. The Company is also authorized to issue an unlimited number of Series A preferred shares
redeemable at $0.01 per share after March 31, 2010, convertible into an equal number of common shares upon the
Company meeting certain milestones. There were 5,000,000 Series A preferred shares issued and outstanding on July 31,
2021.
The Company had 0 outstanding stock options on July 31, 2021. The number of outstanding warrants on July 31, 2021, was
2,711,496.
Off balance sheet arrangements
The Company was not party to any off balance sheet arrangements as of July 31, 2021.
Financial instruments – fair value
(i)
Classification and measurement of financial assets and liabilities
A financial asset is classified as the following measurement categories: amortized cost; fair value through other
comprehensive income ("FVOCI") or fair value through profit or loss ("FVTPL"). The classification of financial assets is
generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics.
Management’s Discussion & Analysis
For the year ended July 31, 2021
12
Derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated.
Instead, the hybrid financial instrument as a whole is assessed for classification. The Company’s financial assets consist of
cash and cash equivalents FVTPL, and accounts receivable classified at amortized cost. The Company’s financial liabilities
consist of trade accounts payable and accrued liabilities, salaries and benefits payable, interest payable, lease liability and
long-term debt are classified at amortized cost.
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. Management monitors risk levels and reviews risk management activities as necessary.
Liquidity risk
The Company manages liquidity by forecasting and monitoring operating cash flows and 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, 2021, the Company realized a net loss of $0.7 million (July 31, 2021 - $2.0 million), consisting of a net
loss from operations of $0.2 million (July 31, 2020 - $1.3 million), and other non-operating losses of $0.5 million (July 31,
2020 - $0.7 million). Negative cash flows from operations were $0.5 million (July 31, 2020 - $0.3 million). As at July 31, 2021,
the Company had an accumulated deficit of $93.5 million (July 31, 2020 - $92.8 million) and a negative working capital
position of $15.8 million (July 31, 2020 - $14.9 million). In addition, as of July 31, 2021, $9.1 million of debt was in default.
The Company currently has insufficient cash to fund its operations for the next 12 months. 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 debt of approximately $9.1 million. These material uncertainties may
cast significant doubt about the Company’s ability to continue as a going concern.
The Company’s objectives in managing capital are to ensure it can meet its ongoing working capital requirements. The
Company must secure sufficient capital to support its capital requirements for research and development programs,
existing commitments, including its current portion of debt of approximately $9.1 million, as well as growth opportunities.
Management dedicates significant time to pursuing additional revenue generating alternatives that will fund the Company’s
operations and growth opportunities so it can continue as a going concern. Debt arrangements were also ongoing with
the Company’s major shareholder and other debt holders. Subsequent to the close of fiscal year 2021, MedMira has
generated additional revenues from product sales and product development fees which support the Company’s on-going
operating costs and provide funding for its product development activities. Management continues to work closely with its
main investor to support any additional cash requirements if needed. While there is no assurance that this initiative will be
successful for the future, subsequently to year end FY2021, the Company secured additional funding to continue its
operational activities with focus on product development.
The Company is subject to risks associated with early stage companies, including but not limited to, dependence on key
individuals, competition from substitute services and larger companies, and the requirement for the continued successful
development and marketing of its products and services. The Company’s ability to continue as a going-concern is dependent
upon its ability to generate positive cash flow from operations and secure additional financing and the continued support
of its lenders and shareholders. 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.
Credit risk
Management’s Discussion & Analysis
For the year ended July 31, 2021
13
The Company exposed to credit risk in relation to its trade accounts receivable. To mitigate such risk, the Company
continuously monitors the financial condition of its customers and reviews the credit history or worthiness of each new
customer. The Company mitigates this risk by requiring a 100% down payment for any orders received by new clients at the
time of purchase. The Company establishes an allowance for doubtful accounts based on specific credit risk of its customers
by examining such factors as the number of overdue days of the customers’ balance outstanding as well as the customers’
collection history. Since 94% of the Company’s sales are with five large international companies with which the Company
has distribution agreements since over 10 years, there is no significant concentration of credit risk.
Currency risk
MedMira receives most of its revenues in foreign currencies and incurs expenses in U.S. 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 U.S and CHF denominated
cash, U.S. accounts receivable, US and CHF denominated accounts payable and U.S. and CHF denominated promissory
notes.
MedMira mitigates this currency risk by maintaining a balance of USD currency which is used to pay down U.S.-denominated
liabilities and replenishes the balance through U.S.-denominated revenues.
Interest rate risk
The Company is not exposed to interest rate risk as it borrows funds at fixed rates.
Related party transactions
The following transactions occurred with related parties during the year ended July 31, 2021:
•
Short term loans totalling $26,884 was received from an officer (2020 - $55,888).
•
Short term loans totalling $56,346 were repaid to employees (2020 - $125,939).
•
Royalty payments of $28,397 were incurred and owed to MedMira Holding AG (2020 - $22,837).
•
Exercise of 300,000 stock options (2020 - nil) for $15,000 (2020 - $nil) by an officer.
The following balances with related parties were outstanding at July 31, 2021:
•
Salaries and benefits payable totalling $1,142,165 was due to officers (2020 - $1,024,970).
•
A long term loan totalling $207,792 and accrued interest of $33,178 was due to the Chief Financial Officer
(2020 - $222,087).
•
A royalty provision was owed to MedMira Holding AG of $130,000 (2020 - $126,186).
•
Short term loans totalling $5,000 and accrued interest of $502 were owed to employees (2020 - $61,346).
•
Short term loans totalling $1,650,120 and accrued interest of $296,362 are owed to Ritec AG (2020 -
$1,763,640).
•
Short term loans totalling $277,662 and accrued interest of $20,088 were owed to an officer (2020 - $265,420).
•
A short term loan totalling $343,775 and accrued interest of $36,563 was owed to MedMira Holding AG (2020
- $367,425).
•
Long term loans totalling $756,305 and accrued interest of $60,043 was owed to MedMira Holding AG (2020
- $808,335).
Adoption of new accounting policies
Management’s Discussion & Analysis
For the year ended July 31, 2021
14
The Company adopted IFRS 16 Leases on August 1, 2019, which introduces a new approach to lease accounting. The
Company adopted the standard using the modified retrospective approach, which does not require restatement of prior
period financial information, as it recognizes the cumulative impact on the opening balance sheet and applies the standard
prospectively. Accordingly, the comparative information in these unaudited interim consolidated financial statements is
not restated. At the inception of a contract, the Company assesses whether the contract is, or contains, a lease based on
whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. This policy is applied to contracts entered into, or modified, on or after August 1, 2019. Effective August 1,
2019, the IFRS 16 transition date, the Company elected to use the following practical expedients under the modified
retrospective transition approach.
Leases with lease terms of less than twelve months (short-term leases) and leases of low-value assets (less than $5,000 CAD
dollars) (low-value leases) that have been identified at transition were not recognized in the consolidated balance sheet:
• Right-of-use assets on transition were measured at the amount equal to the lease liabilities at transition, adjusted by the
amount of any prepaid or accrued lease payments;
• For certain leases having associated initial direct costs, the Company, at initial measurement on transition, excluded these
directs costs from the measurement of the right-of-use assets; and
• Any provision for onerous lease contracts previously recognized at the date of adoption of IFRS 16, has been applied to
the associated right-of-use asset recognized upon transition.
Where the Company is a lessee, a right-of-use asset representing the right to use the underlying asset with a corresponding
lease liability is recognized when the leased asset becomes available for use by the Company. The right-of use asset is
recognized at cost and is depreciated on a straight-line basis over the shorter of the estimated useful life of the asset and
the lease term on a straight-line basis. The cost of the right-of-use asset is based on the following:
• The amount of initial recognition of related lease liability;
• Adjusted by any lease payments made on or before inception of the lease;
• Increased by any initial direct costs incurred; and – decreased by lease incentives received and any costs to dismantle the
leased asset.
The lease term includes consideration of an option to extend or to terminate if the Company is reasonably certain to
exercise that option. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for
certain re-measurements of the lease liability.
Lease liabilities are initially recognized at the present value of the lease payments. The lease payments are discounted using
the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing
rate. Generally, the Company uses its incremental borrowing rate as the discount rate. In the situation where the implicit
interest rate in the lease is not readily determined, the Company uses judgment to estimate the incremental borrowing
rate for discounting the lease payments. The Company's incremental borrowing rate generally reflects the interest rate that
the Company would have to pay to borrow a similar amount at a similar term and with a similar security. The Company
estimates the lease term by considering the facts and circumstances that create an economic incentive to exercise an
extension or termination option. Certain qualitative and quantitative assumptions are used when evaluating these
incentives.
Subsequent to recognition, lease liabilities are measured at amortized cost using the effective interest rate method. Lease
liabilities are re-measured when there is a change in future lease payments arising mainly from a change in an index or rate,
if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or
Management’s Discussion & Analysis
For the year ended July 31, 2021
15
if the Company changes its assessment of whether it will exercise a purchase, renewal or termination option. The payments
related to short-term leases and low-value leases are recognized and included within selling, general and administrative
costs over the lease term in the unaudited interim consolidated statements of income.
Compensation summary
A) Officers for the year ended July 31, 2021
Name
and
Principal
Position
Paid
Compensation
($)
Accrued
Compensation
Current year
($)
Share- and
Option-
based
Awards*
($)
All other
compensation
($)
Total
Compensation
current year
($)
Paid
Compensation
related to
previous fiscal
years ($)
Accrued
Compensation
related to
previous fiscal
years ($)
Hermes
Chan
CEO
-
100,000
-
-
100,000
-
440,462
Markus
Meile
CFO
-
60,000
-
-
60,000
-
516,552
1 All other compensation includes 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.
B) Directors for year ended July 31, 2021
Name and Principal
Position
Paid
Compensation
($)
Accrued
Compensation
Current year
($)
Share-
and
Option-
based
Awards*
($)
Total
Compensation
current year
($)
Paid
Compensation
related to
previous fiscal
years ($)
Accrued
Compensation
related to
previous fiscal
years ($)
Hermes Chan,
Director
-
-
-
-
-
-
Steven Cummings,
Director
-
-
-
.
-
-
Jianhe Mao
Director
-
-
-
-
-
-
*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 amount recorded for the issuance of stock options.
Subsequent events
Management’s Discussion & Analysis
For the year ended July 31, 2021
16
Subsequent to the end of the financial year 2021, MedMira has negotiated a financial package which provides additional
funds for the Company’s product development activities and to complete the CLIA-waiver clinical trials for its already PMA
approved G4 HIV Rapid test in the United States. As part of the agreement, a significant debt reduction will be completed
to strengthen the MedMira’s financial position and to continue the Company’s aim to reduce its overall liabilities. MedMira
will issue a detailed statement after the regulatory approval.
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, 2021.
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
Management’s Discussion & Analysis
For the year ended July 31, 2021
17
investors. There can be no assurance that this source of funding will continue to be available on acceptable terms, and
additional capital may not be available on satisfactory terms, or at all. Management is pursuing other financing alternatives
to fund the Company’s operations so it can continue as a going-concern.
The Company intends to continue to explore opportunities to enter into supply agreements, joint venture relationships,
and other special purpose vehicles with third parties from time to time in order to continue to commercialize its patent
pending technology and other intellectual property. Such arrangements may include the issuance of equity or debt
securities of the Company, subject to compliance with the applicable requirements of the Canadian securities regulatory
authorities and the TSX-V.
Any additional equity financing may result in the dilution of shareholders, and debt financing, if available, may include
restrictive covenants. MedMira’s future liquidity and capital funding requirements will depend on numerous factors
including:
-
the extent to which new products and products under development are successfully developed, gain market
acceptance and become and remain competitive;
-
the costs and timing of further expansion of sales, marketing and manufacturing activities and facility’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
Management’s Discussion & Analysis
For the year ended July 31, 2021
18
biotechnology products and economic and other external factors, as well as period to period fluctuations in financial results
may have a significant impact on the market price of the Company’s common shares. It is likely that in some future quarter
the Company’s operating results will be below the expectations of the public market analysts and investors. In such event,
the price of the Company’s common shares would likely be materially adversely affected.
Risks and uncertainties related to the Company’s business and operations
Lack of market acceptance
MedMira’s ability to market its diagnostic products will, in part, depend on its or its partners’ ability to convince users that
these products represent viable and efficacious diagnostic tests. There can be no assurance that MedMira will be successful
in this regard.
Competition
The in vitro diagnostics market in which the Company participates is highly complex and competitive. It is comprised of both
large healthcare companies that have substantially greater financial, scientific, and other resources than MedMira and a
variety of international companies producing diagnostic products of varying quality. In the developed regions of the world
with strong healthcare infrastructures, the in vitro diagnostics market for serious and emerging infectious diseases 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
Management’s Discussion & Analysis
For the year ended July 31, 2021
19
a lesser extent, approval of applicable health authorities in other countries) for MedMira’s new or existing products could
materially adversely affect MedMira’s ability to market its products successfully and could therefore have a material
adverse effect on the business of MedMira.
Ability to retain and attract key management and other experienced personnel
Since its inception, the Company has been, and continues to be, 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 a number of distributors to support the logistics and distribution of the Company’s products. The
Company will rely on the joint efforts of Medline Industries 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.
Management’s Discussion & Analysis
For the year ended July 31, 2021
20
Rapidly changing technology
The in vitro diagnostic testing field as a whole is characterized by rapidly advancing technology that could render MedMira’s
products obsolete at any time and thereby adversely affect the financial condition and future prospects of the Company.
Uncertainties regarding healthcare reimbursement and reform
The future revenues and profitability of diagnostic companies as well as the availability of capital may be affected by the
continuing efforts of government and third party payers to contain or reduce costs of healthcare through various means.
For example, in certain foreign markets, pricing or profitability is subject to government control. In the US, there has been,
and the Company expects that there will continue to be, a number of federal and state proposals to implement similar
government controls. While the Company cannot predict whether any such legislative or regulatory proposals will be
adopted, the announcement or adoption of such proposals could have a material adverse effect on the Company’s results
of operations.
Product liability
MedMira may be subject to claims of personal injury and could become liable to clinical laboratories, hospitals and patients
for injuries resulting from the use of its products. MedMira could suffer financial loss due to defects in its products and such
financial loss together with litigation expenses could have a material adverse effect on its operations. MedMira has obtained
product liability insurance to protect against possible losses of this nature. However, no assurance can be given that such
insurance will be adequate to cover all claims or that MedMira will be able to maintain such insurance at a reasonable cost.
COVID-19 related uncertainties
Since January 31, 2021, the outbreak of COVID-19 (coronavirus) has resulted in governments worldwide enacting
emergency measures to combat the spread of the virus. These measures have caused material disruption to businesses
globally resulting in an economic slowdown, and global equity markets have experienced significant volatility. The duration
and impact of the COVID-19 outbreak is unknown at this time, as is the outcome of government and central bank
interventions. The Company has not recorded any major negative impacted at this time by the global pandemic expect
higher logistic costs and longer lead times during 2020 which have stabilised in 2021. Furthermore, the Company managed
to stay operational and continued its development and manufacturing activities throughout the various lock downs. In
addition, the Company was able to increase its work force and with the stringent safety measures put in place, recorded no
COVID-19 related cases. Despite this, the management and the board of directors of MedMira Inc. caution the market with
regard to the future and any potential negative impact the continuous spread of COVID-19 may have at the operational
stability of the Company. In management's estimation, these events have not had a material unrecorded impact on the
carrying value of assets and liabilities reported in these financial statements as at July 31, 2021. The duration and impact of
the COVID-19 pandemic remains unclear at this time. Therefore, it is not possible to reliably estimate the duration and
severity of these consequences, as well as their impact on the financial position and results of the company for future
periods.
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
Management’s Discussion & Analysis
For the year ended July 31, 2021
21
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.