The following discussion of our financial condition and results of operations
should be read in conjunction with our unaudited condensed consolidated interim
financial statements, the notes to those financial statements and other
financial information appearing elsewhere in this document. In addition to
historical information, the following discussion and other parts of this
document contain forward-looking statements that reflect plans, estimates,
intentions, expectations and beliefs. Actual results could differ materially
from those discussed in the forward-looking statements. Factors that could cause
or contribute to such differences include, but are not limited to, those set
forth in the "Risk Factors" in Part II, Item 1A of this Quarterly Report.
The discussion provided in this Quarterly Report should be read in conjunction
with our Annual Report on Form 10-K for the year ended May 31, 2021, filed with
the United States Securities and Exchange Commission (the "SEC") on August 30,
2021.
Overview
We were incorporated as Plandel Resources, Inc. under the laws of the State of
Nevada on March 19, 2010. On March 24, 2014, we changed our name to Sports
Asylum, Inc. and on September 30, 2014, we changed our name to Cell MedX Corp.
to reflect our new business direction. On April 26, 2016, we formed a
subsidiary, Cell MedX (Canada) Corp., (the "Subsidiary") under the laws of the
Province of British Columbia.
We are a biotech company focused on the discovery, development and
commercialization of therapeutic and non-therapeutic products that promote
general health, pain relief, wellness and alleviate complications associated
with medical conditions including, but not limited to: diabetes, Parkinson's
disease, high blood pressure, neuropathy and kidney function. Our Subsidiary is
engaged in development and manufacturing of therapeutic devices based on our
proprietary eBalance® Technology, which harnesses power of microcurrents and
their effects on human body.
Current uncertainty with respect to continued expansion of the COVID-19 pandemic
We are cognizant of the continued expansion of the COVID-19 pandemic and the
resulting global implications. To date, we have experienced minor disruptions to
our day-to-day operations associated with delayed services resulting from
various COVID-19 restrictions and shortage of man power experienced by some of
our service providers. We caution that there continues to be a possibility for
increase of the restrictions currently in place, or addition of new restrictions
currently not known to us. The impact of these restrictions on our operations,
if implemented, is currently unknown but could be significant.
Recent Corporate Developments
The following corporate developments occurred during the quarter ended August
31, 2021, and up to the date of the filing of this report:
Private Placement Financing
On August 9, 2021, we closed our private placement financing and issued 400,000
shares for total gross proceeds of $100,000.
Exercise of Warrants
During the three-month period ended August 31, 2021, we issued 300,000 shares on
exercise of warrants to acquire shares at $0.20 per share for total proceeds of
$60,000.
Update on eBalance® Research and Development Activities
In September 2021, the Company submitted a premarket notification (510K) to the
U.S. Food and Drug Administration (FDA) for the eBalance® Home System and
eBalance® Pro System.
The eBalance® Pro System and eBalance® Home System, are microcurrent
electrotherapy systems intended to administer a specific variety of therapeutic
microcurrent algorithms for temporary relief of pain associated with sore/aching
muscles in the shoulders, waist, back, neck, upper extremities (arms) and lower
extremities (legs) due to strain from exercise or normal household- or
work-related activities, as well as for general relaxation.
--------------------------------------------------------------------------------
2
--------------------------------------------------------------------------------
The eBalance® Pro System is intended for use by professionals in the clinical
setting and the eBalance® Home System is intended for home use by laypersons.
In addition, on August 16, 2021, the Canadian Intellectual Property Office
approved the Company's EBALANCE trademark application number 1867918 and issued
certificate of registration number 1,104,935 registering the trademark EBALANCE
in the name of the Company.
The Company's applications to register EBALANCE as a trademark in the United
States, which the Company filed with the United States Patent and Trademark
Office on December 11, 2017, continue to be under review.
Results of Operations for the Three Months ended August 31, 2021 and 2020
Our operating results for the three-month periods ended August 31, 2021 and
2020, and the changes in the operating results between those periods are
summarized in the table below.
Three Months Ended
Percentage
August 31, August 31, Increase/
2021 2020 (Decrease)
Sales $ 1,197 $ 1,467 (18.4)%
Cost of goods (325) (369) (11.9)%
Gross margin 872 1,098 (20.6)%
Operating expenses
Amortization 540 736 (26.6)%
Consulting fees 64,814 76,940 (15.8)%
Distribution expenses - 261 (100.0)%
General and administrative expenses 134,089 32,780 309.1%
Research and development costs
35,841 85,137 (57.9)%
Total operating expenses 235,284 195,854 20.1%
Interest 4,940 6,446 (23.4)%
Net loss $ 239,352 $ 201,202 19.0%
Revenues
During the three-month period ended August 31, 2021, we recognized $1,197 in
revenue from monthly recurring revenue associated with the eBalance® treatment
packages. The cost attributed to this revenue was $325.
During the three-month period ended August 31, 2020, we recognized $1,467 in
revenue from monthly recurring revenue associated with the eBalance® treatment
packages. The cost attributed to this revenue was $369.
As of the date of this Quarterly Report on Form 10-Q, we continue research and
further development of our eBalance® Technology and devices based on this
technology. During the summer of 2020, Health Canada granted our eBalance® Home
and Pro Systems Class II medical device licenses, which allow us to market our
eBalance® devices for wellness and pain management. Our certification with U.S.
Food and Drug Administration (FDA) continues to be ongoing; at the time of this
Quarterly Report on Form 10-Q we have submitted a premarket notification (510K)
to the FDA for the eBalance® Home System and eBalance® Pro System, which, when
approved, will allow us to demonstrate that the eBalance® Home System and
eBalance® Pro System are at least as safe and effective as a legally marketed
device available on the market. Once this submission is approved, it will allow
us to start our commercial activity in the USA.
Operating Expenses
During the three-month period ended August 31, 2021, our operating expenses
increased by 20.1% from $195,854 we incurred during the three months ended
August 31, 2020, to $235,284 we incurred during the three months ended August
31, 2021. The most significant changes were as follows:
--------------------------------------------------------------------------------
3
--------------------------------------------------------------------------------
·During the three-month period ended August 31, 2021, our consulting fees
decreased by $12,126, or 15.8%, from $76,940 we incurred during the three-month
period ended August 31, 2020, to $64,814 we incurred during the three-month
period ended August 31, 2021.
·Our research and development fees for the three-month period ended August 31,
2021, decreased by $49,296, or 57.9%, from $85,137 we incurred during the
three-month period ended August 31, 2020, to $35,841 we incurred during the
three-month period ended August 31, 2021. The lower research and development
fees during the three-month period ended August 31, 2021, were associated with
our decision to suspend further development of the eBalance® devices until such
time that our 510(K) notification to the FDA is finalized and submitted.
·Our general and administrative fees for the three-month period ended August 31,
2021, increased by $101,309, or 309.1%, from $32,780 we incurred during the
three-month period ended August 31, 2020, to $134,089 we incurred during the
three-month period ended August 31, 2021. The largest two factors that
contributed to this change were associated with fluctuation in foreign exchange
rates, which, during the three-month period ended August 31, 2021, resulted in
$47,382 loss, as compared to $42,450 gain during the comparative period, and our
expenditures on corporate communications, which increased by $14,212 to $56,475
we recorded during the three-month period ended August 31, 2021, as compared to
$42,263 we incurred during the three-month period ended August 31, 2020. Other
factors that affected our general and administrative fees were associated with a
$1,500 increase to our management fees, which increased from $9,000 we incurred
during the three-month period ended August 31, 2020, to $10,500 for the
three-month period ended August 31, 2021; a $4,274 increase to our filing and
regulatory fees, which increased from $5,856 we incurred during the three-month
period ended August 31, 2020, to $10,130 for the three-month period ended August
31, 2021; and a $2,620 increase to our office expenses, which increased from
$1,554 we incurred during the three-month period ended August 31, 2020, to
$4,174 for the three-month period ended August 31, 2021.
These increases were in part offset by a $9,943 decrease to our professional
fees, as during the three-month period ended August 31, 2021, we did not incur
any legal fees, as compared to $9,943 we incurred during the comparative period;
a $511 decrease to our accounting and audit fees, which decreased from $5,011
we incurred during the three-month period ended August 31, 2020, to $4,500 for
the three-month period ended August 31, 2021; and to a smaller extent decreases
in bank fees, and travel and entertainment fees, which decreased to $281 and
$647 respectively.
Other Items
During the three-month period ended August 31, 2021, we accrued $4,940 (August
31, 2020 - $6,446) in interest associated with the outstanding notes payable. Of
this interest, $3,346 (August 31, 2020 - $805) represented interest we accrued
on the notes payable we issued to our related parties.
Liquidity and Capital Resources
Working Capital
As at As at Percentage
August 31, 2021 May 31, 2021 Change
Current assets $ 101,285 $ 51,047 98.4%
Current liabilities 1,655,962 1,628,300 1.7%
Working capital deficit $ (1,554,677) $ (1,577,253) (1.4)%
As of August 31, 2021, we had a cash balance of $63,772, a working capital
deficit of $1,554,677 and cash flows used in operations of $151,325 for the
period then ended. During the three-month period ended August 31, 2021, we
funded our operations with $100,000 received from our private placement
financing, $60,000 from exercise of warrants, and $34,000 we borrowed under a
loan agreement accumulating interest at 6% per annum, compounded monthly, and
due on demand.
We did not generate sufficient cash flows from our operating activities to
satisfy our cash requirements for the period ended August 31, 2021. The amount
of cash we have generated from our operations to date is significantly less than
our current debt obligations. There is no assurance that we will be able to
generate sufficient cash from our
--------------------------------------------------------------------------------
4
--------------------------------------------------------------------------------
operations to repay the amounts owing under the outstanding notes and advances
payable, or to service our other debt obligations. If we are unable to generate
sufficient cash flow from our operations to repay the amounts owing when due, we
may be required to raise additional financing from other sources. The outcome of
these matters cannot be predicted with any certainty at this time and raises
substantial doubt that we will be able to continue as a going concern.
© Edgar Online, source Glimpses