Good morning. Thanks for joining us for the Microbix Biosystems’ Q2 Earnings Webinar. With me I have CEO, Cameron Groome; who I'm muted, but I'm going to unmute now, who's going to do a run through of some points that he has on the quarter. And then we'll take Q&A for most of the sessions. So if you have any questions, feel free to put them in the Q&A box, or you can email them to me. As always, this presentation will contain forward-looking statements, you can check those out on the company's disclosure on their website. And that out of the way, hi, Cameron, nice to see you.

Good morning, Deborah. Thank you very much.

Nice quarter you’ve put out.

Thank you, thank you. We like record top line and record bottom line. So that's a good thing. We're very pleased with the results of Q2, it's really a demonstration of the sales, gross margins and earnings growth that Microbix can generate both now and in the future.

All right. Why don't you take a couple of minutes and walk through some of the points about the quarter, and then we'll open up for Q&A.

Absolutely. Delighted to. So each of our -- for the quarter, each of our sales generating areas, antigens, QAPs and VTM, they each performed well as demonstrated by the record sales number $4.35 million, which is an all time record. The strong gross margin of six -- of just under 60% for the quarter versus 46% for the prior year Q2 and there was also a doubling of the gross margin dollars resulting from our sales, those doubled to $2.6 million for the quarter versus $1.3 million of available gross margin dollars in the prior year. So additionally, we don't dwell on EBITDA, although we do, it's a non-IFRS measure. But I'll mention it here as well, it was excellent at $1.36 million for the quarter, 31% EBITDA margin. And that was accompanied by strong cash flow from operations of just under $1 million and strong net earnings of just over $800,000 versus a prior year loss. So very good numbers up and down the line in our estimation, and reflective of what we should look at going forward. We'll talk a little bit about what we'll look at going forward, which will be better steal. In terms of revenue composition and in Q2 antigens performed well at about $2.5 million in revenues with good margins, and that reflects strong yields of all of our antigen products, including those made in our -- that that product made in our bioreactors, which as you know, it's been a goal to optimize those yields and margins. QAPs growth continued to be quite strong with sales of $1.5 million for the quarter. And that was up 251% year-over-year, and from just under $1 million in prior quarter. So up sequentially as well as year-over-year strongly. And the balance of our revenues were from a VTM, Viral Transport Medium and royalties. And I should note that our record top line for Q2 was achieved without any sales of VTM to Ontario Procurement Authorities, those sales will started our fiscal Q3, the current quarter, which will end on June 30th. So very good results across the board, very pleased with those and thankful for our full team for -- and all our collaborators for helping us to deliver those. Perhaps I'll take a moment and talk about our sales outlook. It is quite strong. We have particularly good visibility over the balance of fiscal 2021. As you would expect, that these are nearer term, we're in the midst of Q3 now and q4. Of course, we're planning for and customers are providing their guidance on their expected ordering. So we're looking through that. We always tend to look at it from a very granular bottom up analysis as we build our budgets. And we should see a topline again through that very conservative lens that starts with at least to five in Q3, and at least is followed by at least a six in Q4. And those sorts of sales should result in a topline in the $18 million to $20 million range for the full year of fiscal 2021. That's the year ended September 30. And that's up quite considerably from the $10.5 million topline for fiscal 2020. And it provides for some very meaningful, meaningfully positive full year net earnings as a result of those sorts of numbers and certainly will keep driving forward on that basis into fiscal 2022. And just providing some perspectives on that, it does give us some very interesting valuation questions for analysts and investors to sort out and I'm not going to comment on those here. But we should shortly be trading at a relatively modest, we are trading effectively at a relatively modest price to earnings multiple and that's quite a rarity for a life sciences company. So in fact, we'll likely be trading at a -- if we stayed where we are at a fraction of the multiples of our peers. So, if Canadian shareholders don't start to appreciate that or ownership will soon start to transition to more international Microbix, which will have certainly interesting outcomes all around. Beyond the -- that more immediate outlook, I just like to comment a little bit on where we're going strategically with our quality assessment products and our VTM. We're starting very much to leverage the enormous expertise that we've acquired from over 30 years of making complex antigen biologicals. And this has enabled these new opportunities such as with -- specifically QAPs and VTM. And they enable others going forward as we identify tree action. There are more and more products that we're generating in the QAP side for example, and it's greatly enhancing our connectivity across the diagnostics industry, because it's really not a small thing to have those companies involved with us, they're seeing -- we are very good at what we do in providing these quality assessment products, the QAPs to support the accuracy of their diagnostic tests. And we're starting to see that in -- with companies such as Abbott, Becton Dickinson, Roche, Seegene, and others, citing Microbix controls as compatible quality products or even recommended quality products with their -- with their tests. And equally, it's great to have our QAPs being used very broadly and starting, our VTM starting to be used as well as well with targeting those products certainly Ontario for VTM right now is where it's been print -- being used principally, but our QAPs being used not just in Ontario, but also across Canada, and internationally through the network of 7 distributors that we've built, that is -- that are actively promoting and supporting our products across 30 different countries in VTM category. So, this is something we created over the past year or so. And we're now seeing the benefits of a lot of that work. In terms of the future of the industry, it's a very interesting time, coming out of the pandemic, we're seeing in the best estimates that we've been able to uncover and in speaking with players across the industry, we've seen a massive -- absolutely massive 10 or 20 fold increase in the overall PCR testing capacity. And that sort of molecular testing was always looked at -- it would be great if you know we could provide better and less expensive health care if we did more, more of this sophisticated diagnostic testing. But it was always well who's -- but who's going to invest the CapEx, the capital expenditures to build out that capacity? Well, now it's been built, it's in use. And right now, most of that use is -- effectively all of that use is consumed in testing for COVID. But as the pandemic eventually ebbs we're going to see that capacity redeployed more broadly in the healthcare system and that's really where -- I believe we're incredibly well positioned in being test and platform agnostic, but able to support a whole variety of these sorts of molecular PCR tests in help ensure their accuracy. And it doesn't matter to us, particularly, who is the most successful test maker because our quality assessment products are designed to work across everybody's tests, or at least the vast majority of people's tests. So as we see the redeployment of that capacity and our support of those sorts of products and that applies for QAPs and VTM. We see multiple collaborations with test developers and manufacturing OEMs, leading us to many more alliances such as those we've already announced, for example with speed the acts of Australia leading test -- PCR test developer and CG in Canada, who is deploying supporting our COVID variant molecular controls that to help ensure the accurate -- to ensure that tests will actually detect the COVID variants of concern. So these are some of the things we're doing. And this is why in large part, driving the growth that we are moving into is, why we decided to accept the bought deal offers from Blomberg industrial Alliance IA wealth. Such funds that we're bringing in by way of the private placement and by way of the public offering and concurrent private placement are going to enable us to scale our QAPs and VTM production to the levels required for some pretty massive growth. Keep in mind, we were moving and have already moved QAPs to run rate on the order of 5 million per year in fiscal 2021 as compared to just over a $1 million of QAP sales last year. And VTM has jumped up to that same sort of $5 million-ish range from zero in the previous year. So effectively, we've moved sales up $10 million in new products in a single year. And from here, we don't see that pausing we see moving to find other avenues of growth within the QAPs and certainly within our VTM as well as the rebound antigens as more as testing up for things other than COVID normalizes a little bit more. So, the uses of proceeds of the offering, I do urge everybody to read the prospectus, which final prospectus has been preceded by the Securities Commission, where we describe the Use of Proceeds. And the largest chunk being for facilities upgrades and capacity expansions about 2.5 million automation of VTM QAPs production to support these higher volumes about 1 million to increase commitment to new product development and QC, the necessary associated QC test development 1.1 million, and systems upgrades such as digitizing our quality management systems, and enhancing our enterprise resource planning capabilities, our ERP systems as well. So and then, we get to a little bit on -- what's going on with a trading, that's kind of fund and all. I'll make some comments about that just before we move into the question phase. I have some opinions on the trading. As some of you may know, I spent 16 years directly in capital markets in a variety of functions analyst and investment banking, followed by 14 years in leadership positions with public companies, so that 30 years in capital markets perhaps makes me a little qualified to have an opinion. But, we've seen a bit of that. I believe there's been some allocation of the bought deal offering to more trading oriented funds that that don't tend to hang around. They get chairs and keep the warrant trade the shares and the underwriters have to do that for the broader continuity of their business to help them to place shares quickly for different issuers. It gives some disruption to the otherwise normal trading flows in the short-term but that is very short-term and I suspect some of those trading-oriented funds are going to regret trading out of Microbix so quickly. And you should see some very interesting said, I filings as we close in a few days as a number of our executives and directors are certainly increasing their positions in Microbix, including myself. So, we remain very committed to the company. We remain justifiably optimistic about our prospects and are working hard and working smart to drive value. So with that, I'll leave it off. And those are my remarks, and happy to take any specific questions. A - Deborah Honig: Hi, Cameron, there's a couple. So let's start with an audience question. So, Israel is an interesting case study for COVID given its vaccination leadership. After reporting over 10,000 cases per day in January, Israel reported only one new case of one death yesterday. COVID has been decimated. How would such success affect Microbix’s VTM and COVID testing, if replicated in Canada and around the world?

For starters, I only wish the experience in Israel was being replicated in Canada. We’re, of course, very far behind the curve on getting two vaccines into our population, which is what we really need for optimal protection. I don't know the amount of cross-border traffic in Israel, but we are seeing a wide spectrum of opinions as to whether any variants will sort of escape the efficacy of the vaccines or not. To me, that's more about a product mix fluctuation, that question, because we're not -- we didn't pretzel Microbix into being COVID company. Our offerings are much broader than that. So going into 2020, we were actually driving very successfully to -- into products to support different forms of testing, for sexually transmitted infections is just one category where we're moving into. So as COVID slows, we're going to see our product mix shift, but not necessarily our sales growth or sales overall decline. We'll see a change in the in the mix between our different product offerings, and we're continuing to broaden out both COVID, for example, our COVID variant controls, respiratory testing, more broadly flu A, B, RSV, other viruses and bacterial respiratory infections and moving to be able to successfully support that the very large increase in overall PCR testing capacity. And with international travel and domestic situations, we certainly don't see respiratory disease testing going to zero anytime soon. And we see that capacity that's been built up being intelligently redeployed. I hope that addresses that question. If not, please, I asked to the submitter to come back. And we'll circle back to this in -- if need, for later.

Sure. I have a follow up question. So for VTM, what other uses are there? And are you pursuing any of them right now?

Yes. Anytime you are looking to preserve genetic material in a sample. And that can be DNA or RNA and it can be a virus, it can be a genetic test, it could be a bacterial infection test and anti microbial resistant or antibiotic resistant test. You need VTM to drive those tests. So our VTM, currently, we've driven it forward and formulated it such that it'll work for all of those uses, and see it continuing to be used on a -- going forward on a broad basis. We have to expand our regulatory file to prove those functions in those different areas in trans and evolve it quite quickly into a product that's validated, not just for COVID tests, but much more broadly, but we have every confidence that that is the case, because we formulated as such, we doubt just to need to generate the data to expand the labeled instructions for use.

So on VTM, let's just stay on the subject and keep it as thematic as we can, so not bouncing around from product line to product line. So can you comment on current VTM production levels and build the timeline relating to the Ontario grant and also with the financing? Do you expect all the volume to be consumed by Ontario alone?

We have, we've moved very quickly on the VTM production. So for example, the ordering, just the ordering timeline and fully automated lines, because everybody in the world want fully automated lines, for producing supplies of this that the other was very long. So we've started up on a semi-automated production basis where there's, several discrete steps that are machine aided, but require some manual intervention. And that's where, why we've been able to move so quickly in cooperation with Ontario and the grant. Thus far, we've kept production at the range of about 50,000 vials per week. We have trained staff to move that up to 100,000 vials per week, as may be required. And can go with a bit of, browse sweat to 150,000 a week. Our first shipment is gone out in May, to Ontario. Our second shipment will go out in June. And we'll be shipping in July and August as well. And then, we'll see what reorders looked like. There was a larger quotation approved for shipments to Ontario. But our first purchase order, which is what we've announced, is delivered in May, June, July and August. And we're certainly exploring and pursuing sales elsewhere, as was recorded in Q2, we had some sales to a private sector buyer for the assurance and our surveillance testing. These are people that are sick as symptomatic with COVID, but might need to be tested for travel or other purposes to one of the industry players. There we've incurred some sales in our second quarter. We may see that or third quarter. And additionally, we're opening dialogue with other provinces. And of course, the moment we announced that for sale to Ontario, everybody's like, well, what about other provinces? And we're like, well. It's a little, challenging to conclude discussions elsewhere, when our home province hadn't yet made a purchase. So this enables a more credible dialogue with other provinces with Ontario, buying very large quantities for us or for shipment, for example was on the order of 20 pallet loads of VTM. I'm not going to go into exact numbers on vials, but you can imagine that that's a significant quantity product. So I certainly hope nobody on this call, needs to go get tested. But if you do get tested in Ontario, you may get tested with some very good quality, Microbix viral transport medium and your quality control will be supported by all probably the flock swap, molecular control that you see behind.

All right, and I apologize, Cameron, if you just answered this, I was going through about the 12 questions that came in on once. Is the company selling all the VTM that's being manufactured, or is their inventory building happening right now?

We did build up a bit of inventory as we -- in the period from January 28th to April 26th when we announced the order from Ontario. We have sold through a satisfactory amount of that inventory and we'll be able to comfortably meet our June deliveries as well. So, no, we're not building up an overage of inventory. It's actually a comfortable flow at present.

Okay. Going back to VTM, there was a question, are the existing agreement exclusive or could you use multiple distributors and given territory assuming existing distributors are not carrying quotas?

Yes, we've typically designed our distribution agreements where we've agreed -- to we agree to a standstill period where in a new territory, we won't sign another distributor if they meet a specified quota of sales. If they don't perform to that level, then it shifts to a non-exclusive arrangement and we're able to bring on additional distributors for that territory at our discretion. So, that may happen in some of our markets. Others, we also have to recognize that there's a process involved people -- this is -- these are products going into a quality system. So, someone has to sample that product, they have to find a time in the middle of pandemic to start using that product, then validate its function, then write a protocol to incorporate into their quality system. And only after that is done, you start to see the reorders. So, there's a there's a lag time there. And we saw that, for example, we were only shipping the very first of the COVID molecular controls on the Copan FLOQ swabs, our RED FLOQ products that you see behind me in the latter part of June last year. And so in Q3, we saw the beginnings of orders. Q4, we saw the very first reorders, and that began to accelerate across Q1 and Q2.

My apologies. A follow-on question to a question in the chat, not one that had been asked. So, sorry about that Cameron. The original question was, now have seven distributors, can you comment on which other geographies you might focus on to expand this network and also drive additional revenue from your existing distributors?

Great question. We're certainly -- we started with Western Europe and Scandinavia and that was really driven by work we'd done pre the -- before the emergence of the pandemic, based on where molecular testing was most evolved for Human Papillomavirus testing and other STIs. So, we didn't slow down as a result of the pandemic and engage some of those initial distributors such as our BioPharm lab quality, D.I.D., and so forth. We've since moved to engage distributors to support the United States, Canada, and with one world accuracy through the continent of Africa, where we don't yet have the dark distribution built out is into Asia, we have Australia, New Zealand, but we don't have the broader Asia Pacific region covered. So I -- the next distribution agreements that we'll be looking to engage will be for Asia Pacific area.

Great progress during the quarter and congrats. Looking at cash and free cash flow during the quarter, can you share some insights as to why the Board felt it couldn’t raise additional funds for operational expansion now versus using cash and perhaps a combination of cash in term loans?

Our company -- we've been building out -- building out these capabilities on very little funding relative to a global scale. And our thinking certainly, management's and shared at the Board level is that we need to -- we need to be ahead of the demand. You don't just drop in equipment into -- take it off the pallet and create it and start using it the next day. There's a very involved process of qualifying new equipment for use. And they were also long lead times currently on ordering and receiving that equipment. So we're targeting very large monthly volumes of caps, so I'll put it in context for in the area of the FLOQ swab controls, the REDx™FLOQ, PROCEEDx™FLOQ controls. When we started with these products last year with sampling in Q3 and we’ve -- very beginnings of reorders in Q4. In the fiscal year, there were 10,000 units sold. We moved up this Q1 into the range of 20,000 units per month. So 24 times the past rate and we're now 30 to 40 times the prior year rate on our way to 60 times, and that's great. But let me tie it back to answer the question. Some of the large diagnostic OEMs with whom we're certainly having discussions, they would require potentially hundreds of 1000s of pieces of units per month, and that absolutely requires automation to meet. And none of us want to be in the position of saying, yes, we'd love to do business with you on that massive scale and support those huge orders. But can you wait 12 or 15 months for us to gear up, because we really didn't want to dilute too early? No, you've missed the boat at that time. So we really needed to get going on this. And with the global instability going on, doing that on increased that would have been a little bit too high risk in our reasoned judgment. And others might have taken a different approach, but we want our company to have some certainty in our ability to execute and the additional equity is helping us to provide that greater certainty.

Earlier you said, 5 million sales of QAP, what's your current capacity utilization upon completion of the expansion and particularly automation, what will your QAPs and VTM sales capacity be?

We'd like to get to well, in VTM with just thinking about VTM, automation of VTM, would let us do multiples of what we're doing per week on a daily basis. So it would enable very large capacity there. But importantly, it would also bring down our per unit cost, so that we're more certain to remain not just high quality, domestic and secure local supply, but price competitive with imports as well, which is good for the province, it's good for us. And then on QAPs, we're looking to go from 10s of 1,000s of units per month that we're currently adding to well into 100s of 1,000s. So fair to say, I would say at least 5x production on VTM capability, maybe up to 10x and at least 10x capacity on QAPs post-expansion. And for QAPs, we're -- we would be able to certainly do more in dollar terms than we've done this year pre-automation. So I wouldn't just apply a 10 multiple to five, it’s much greater than that.

And just to clarify that automation is being implemented in the current facility or requires a new facility?

We will be in are looking at a third site. The build out of our second site was designed with our quality assessment products in mind. The VTM is a much bulkier, much more units so far and the physical volume required is greater. So I would be comfortable saying we intend to lease and equip a third site in that certainly in the use of proceeds of the offerings as well.

And moving on VTM to some more general questions. Can you talk about currency exchange costs? Does Microbix have cash accounts in other countries?

We don't have any cash accounts in other countries. We do transact in other currencies. And we would have seen better results and even better results in fact in Q2, but we've had a substantial year-over-year appreciation of the Canadian dollar. The view of management and our Board has been that we're not foreign currency specialists. And frankly, we don't know who to trust in terms of managing currency risks. So we are not actively hedging anything at the current time. We're also seeing a greater portion of our revenues in Canadian dollars. Historically, virtually all of our revenues were either in US dollars or in euros. Now, with sales of QAPs to support Canadian testing efforts, which is very important to for us be able to help at home, as well as the sales of VTM we're seeing a much greater proportion of our sales in Canadian dollars, a meaningful proportion of them in Canadian dollars. So we're seeing that naturally balanced out a little bit. The other thing that we're seeing is your 34 QAPs have historically been about 10% of our sales, and those increased to 15% in fiscal 2021 for based on growth in Q3 and Q4. And they reached 30% of overall sales in Q1, 34% in Q2. And that means that relative proportion of antigen cells is going down. And we'll see that relative proportion break to 150% of our sales in Q3 and Q4. So we're seeing a diversification of customers, a diversification of product lines within those three units; antigens, QAPs and VTM, all of which are growing. But it reduces customer risk, and it reduces product risk. And I think it makes us a more investable business as well.

So you get I'm [Technical Difficulty]

You get -- I'm getting a bit of static on your mic, Deborah, but I can understand you.

[Technical Difficulty] Can you please explain the SpeeDx relationship?

Certainly. SpeeDx is a very leading edge developer of molecular diagnostic tests. So I don't want to name names in terms of SpeeDx’s customers. But they develop tests to go on to some of the leading instruments of major diagnostic industry players. So their business is developing assays, our business is developing controls for those assays. So what we’ve agreed is that we're going to work together on an exclusive basis to generate some of the best tests the industry has ever seen or – and brand new starting with tests for mycoplasma genitalium and anti-microbial therapy resistant Mgen as well. And we'll create -- they'll create the tests, we’ll create the controls and then it will be Microbix controls that ultimately go out in some fixed ratio in the test consumed -- with the test consumables, and those might be cartridges for a point-of-care, test for agents for a big instrument, automated instrument test, but those will come with Microbix controls, and it's those sorts of relationships that drive the expanding volumes requirements that we're expecting for our QAPs and that we're planning for. Deborah, I've lost the sound on your feed.

Slightly better?

Slightly better. You're breaking up a little bit though.

How about now?

Perfect.

Okay. Any preview of what we might see come out of the HPV conference at the end of the month related to Microbix?

Yes, I'll have to check with our team whether we're presenting any new data at that conference. I've had my head down on a few different business and financing matters, but we're certainly very involved there. We're broadening our product offerings to be able to support the full range of testing for high risk HPV variants and we're working, you know, hand in glove with the -- some of the best companies involved in that testing. So again, just can't over stress the breadth of our involvement is not just limited to COVID, but other areas as well. And the more we see COVID get under control, the more healthcare more broadly we'll get back to the business of keeping people healthy and we’ll benefit from that.

That's actually great answer to the question. Since the onset of COVID-19, the normal flu season has basically dropped off a cliff. Can you shed some light to any correlation between Microbix’s business and seasonal flu? Does it impact the business one way or another?

We've actually seen testing for respiratory pathogens not fall off as much, because any of the diagnostics companies that are paying attention are moving to multiplex testing, the syndromic or multiplex testing for respiratory. So we've actually -- that's been a brighter spot in our antigen business that was down overall. So while, the incidence of flu has gone down this past year, due to heightened vigilance by everyone, and perhaps some would have been a mild flu season anyway. We have not seen the testing volume for flu come down to any great extent. So that hasn't been an area of weakness and we've also seen the laboratory accreditation agencies that do the proficiency testing schemes have certainly wanted to make sure everybody is able to accurately test for flu, so the proficiency side of our business has not declined because of that either.

Okay. Do you deal with a WHO, and have they helped you in any way?

No and no. Actually not true, sorry. We just started to -- one of our distributors is actually just started to provide some products to WHO regional affiliates. So yes, that's just breaking news, though. So that we are starting to support some WHO programs with some QAPs products, but that's very new news.

Okay. And I had another question about your distributors, you spoke of getting -- you spoke about getting a distributor for Asia Pacific, what's the relative total addressable market compared to the rest of the world?

Difficult to say. The markets are evolving. The quality standards vary quite a bit geographically. And even within geographies, they're I'd say it's most evolved in Western Europe in terms of the quality standards and the enforcement of the quality standards, followed by the United States. And then there are scattered geographies where they're very sophisticated, and very diligent in applying quality standards, and there are others that are well-behind in terms of their practices, and I wouldn't put Canada anywhere near the top of the list in terms of the consistency or overall level of our quality management systems in laboratories, we are still evolving too.

Okay. I have a question about supply chain. As we all know, there's a lot of supply chain issues in a lot of industries in the world right now. With shortages in many sectors and prices rising on many products, does this affect you in any way in procuring what you need?

We've had to work very hard at that to make sure that we can procure everything and you can even see that in our composition of our inventory levels with a higher level of raw materials that we procured to try and insulate ourselves. Against supply chain disruptions we had one in Q3 of last year, as where a quality fault by one of our suppliers cost is about half a million dollars of top line and a bunch of margin as well. But we have not been unable to deliver on any product orders thus far, because of supply chain disruptions. But it's something we're watching very carefully. Everyone is seeing that globally. We're seeing disruptions in supply from a number of materials producing countries, and difficulties and getting materials out. We've made efforts to buy everything we can locally from secure high quality suppliers and in fact to become such a supplier of finished goods ourselves.

And its growth by acquisition is something that is being considered? And if so, which area or which country you focus on?

Well, we have, done some investigation of this. And, in fact, it was part of my board report for this quarter was we spoke to some of those matters. There are many opportunities that we could and will look at. That are associated with our expertise in our fields of specialty, So, yes, for example, in our quality assessment products, there are ways we can branch out there, there are ways we can branch out on our antigen products, and in fact, on our VTM. What we want to do is anything we did considered to acquire would be a logical outgrowth from one of those areas, one or more of those areas. And, we've got a healthy respect for the challenges of successfully integrating an acquisition and making sure you're not overpaying for an acquisition. So we will evaluate such opportunities very carefully. And say, is it better to build? Is it better to buy? Do we are -- are we better to develop this expertise internally or acquire it? So I think we'll go at that very prudently. And look at opportunities on a case-by-case basis. But historically, we didn't have much of a currency, in terms of our market capitalization. So that really limited our ability to transact. And as our market QAP starts to increase and our trading volumes go up then we have a more valuable share currency. And as we're generating cash, we can look and say, a blend of cash and shares in a prospering entity is a lot more attractive for a company, we might be acquiring. So it opens new fields for us. But we're going to look at it quite prudently.

And then, when you close, I believe, it's later this week, this will be the largest cash balance the company's ever had?

But by far, by far and that also helps us with business development discussions. Companies that are going to be relying on us for new tests typically last more or on the market more than a decade. So, somebody's wanting to say, should I hitched my wagon to my Chromebooks it, should be a lot more comfortable justifiably, that we have a stronger balance sheet, cash flow, positive, earnings positive consistently. I believe it'll really help us accelerate the growth of our business. And that's another reason not to try and ride the efficient frontier of not diluting or avoiding dilution, as has been said to me by many successful executives. Cash is always accretive if you have a good management team. So don't be too fixated on avoiding dilution.

And staying on [Indiscernible] can you provide an update on can Kinlytic?

I can. Kinlytic, because of the disruptions associated with the pandemic to many industries and including the number of in-hospital procedures and the -- our ability to do business development certainly has been has been challenged. It can be a lot easier if you can sit in a room with people and hash things out and go out to a nice dinner to get to know one another. That is not on during COVID. But we have still been continuing business development discussions, with respect to Kinlytic. We did write down the value of the asset because of the pandemic related uncertainties at the end of our fiscal 2020. So the quarter ended September 30. So our carrying value now is zero. But that doesn't in any way mean the true value of the asset is zero. It's just the conservative accounting approach and, of course, Ernst & Young, EY, our auditors. So we are continuing to advance that. We are -- we do have active discussions ongoing under confidentiality agreement and I'm optimistic that we will secure an alliance with regard to Kinlytic and bring that very important product back to market. So, of course, that's no assurance. That's an intention and a goal. But, but I am optimistic.

All right. I have an assortment of remaining questions. This one, I'm not sure, Cameron, as far as controlled medium products, the diagnostics company builds a machine that calls for a required cartridge, does Microbix produce the cartridge, are these types of sales considered white label? I'm not sure I fully understand that question. It’s the second last one in your Q&A.

Okay. I hadn't been looking at the Q&A feed Deborah. I'm just listening to you on the questions, just so I'm not too distracted. Yes. It’s okay. I'll speak to it. So what we're producing, when you see on television, this swab come out of somebody's nose or throat, and then it's snapped off and put in a tube of medium, we're making the tube of medium. So that's what we do. Now, an amount of that liquid that then contains the patient sample and is stabilized it, is then usually petted out and put into a test cartridge that is made by the diagnostics company or put into a well -- microtiter plate well for processing. So we're making the transport medium, literally, that transports the patient sample. Now -- so that's the extent of our involvement. Now for QAPs, what we may see, in some cases have already seen is that, a company, for example, shipping a new instrument will ship a box of Microbix QAPs with that new instrument to facilitate the training of the technician at the new site, the qualification of the instrument for use. And then our QAPs will be used on a regular basis to make sure that the instrument keeps working properly, that the technician isn't making errors that the consumables haven't spoiled. So that's the regular flow. And some, just as some customers of ours, who are purchasing products for that startup usage, some of them are looking and saying, you know, the best practice would be to include positive and the negative Microbix QAPs product control and put that in every box of 25 or 50 cartridges, test consumables to encourage the labs to hold to best practices, to make sure that everything's functioning smoothly. So that's the sort of inclusion and usage of our products. And you can imagine with the millions upon millions of diagnostic tests going on in the world, not just for COVID, if you start including Microbix controls in every box of 25 for example, the numbers start to become quite explosive. And it's for that, that we're undertaking the automation of QAPs to production.

Okay. And after the five to 10 year expansion in capacity, what would be the dollar value of the new capacity? And what's the timeline for third side going into production?

I'd like to see -- I think is five to 10-fold, rather than five to 10-year, but we're gearing up as fast as we can. I'd certainly like to see new space commissioned for QAPs automation and for VTM before the end of the calendar year. Some of that, of course is dependent on our ability to procure additional physical space equipment and do get permitted for construction build out, accomplish that, install and qualify new equipment. So, it'll be, I'd say calendar year and into through veterans or possibly through March 31 of next year, before we see that scale of additional capacity fully validated and operational.

Okay. And value tax loss carry forwards to provide a text trail for future sales.

We won't pay taxes for a little while yet. There's a reasonable number of tax loss carry forwards. I would not want to misspeak on the amount of those, but I would suspect, we will certainly not pay -- we will certainly see the benefit of those tax shields through the balance of fiscal '21, and through the entirety of fiscal '22. But I'd like -- I'd prefer to revert Deborah to reflect on that with Jim Currie and get a more precise answer to that question.

Okay. And in Q2, you produce $1 million of cash flow from operations, which is well above the TSX average of 23% of sales. Do you expect this high level of free cash flow to increase upon completion of your expansion automation?

Oh, yes, yes, definitely. And, we see that increasing even across Q3 and Q4, our cash generation as well.

Hey, I guess that all my questions that are remaining are still about guidance. And kind of I know you don't give formal guidance, but can you talk to you what sort of numbers actually can anticipate?

Well, I think in my comments, you know I -- we like to be certainly very conservative in any informal type guidance, but I would expect that Q3 and Q4, which are the quarters we have good visibility on or the best visibility on currently will comfortably and significantly exceed Q2 from both a topline and a bottom line perspective and all the attendant measures of EBITDA and cash flow from operations as well.

Okay. That's it. Just under the hour, so which leaves you one and a half minutes to give us your final thoughts and summaries, Cameron?

Well, you know, I would just like to thank everybody. I'd like to thank our board, our executive and each and every, each and every one working at Microbix for just superlative work through the pandemic. What -- the work we're doing is a very important helping public health in Ontario, across Canada and globally. And we're just delighted to be able to show an economic benefit and a and a societal benefit by doing the right thing. So doing great work from everyone. And it's -- we're delighted to have the support of the province of Ontario, the Ministry of Economic Development, job creation and trade has been superlative. And their support by the Ontario together program has helped us move VTM forward and, Health Canada and other stakeholders with regards to assist -- their assistance in helping us to help. So we thank -- we thank everybody at Microbix, we thank our suppliers, our customers, and our shareholders for their firm support as well. And it's great to have Bloomberg and IA private wealth step up and recognize what we're doing as well. So it's, it's easy to communicate good news that is not always the case. But this is the benefit of a lot of hard work and planning. And I'm hopeful we'll see the same for many quarters to come. So with that and thank you Deborah your -- you and your team are just been incredible help and couldn't have done it without, without this platform and recognition.

I need to do another webinar if I didn't get it done. That's not true. You say these type of words. So Cameron thank you its been such a pleasure working with you. And congrats on a great quarter and a great half year. It's really exciting times and we really transitioned the company through a difficult period. So congrats to you.

Thank you very much. It's -- we've got a great, incredibly talented team of people here. And the individual basis, they're fantastic and as a team, I think we're doing just great work. So, thank you, everybody.

Thank you. Have a great day.

Take care. Thanks. Bye.