Information to the shareholders

The spring and early summer has been busy in Lifecare. In addition to continued development of the Sencell technology, the activity during this period has included preparation and implementation of necessary organizational adjustments, including clarifications and negotiations related to Digital Diagnostics AG and the acquisition of Cantimed UG.   Lifecare's annual general meeting was held on 7 May 2021 and Kine Hereid started in the position as head of Investor Relations(IR) and controller on May 3rd, 2021. Until now, she has focused on the company's compliance with the rules of the EU’ Market Abuse Regulations (MAR), as well as structuring IR, complying with the company's obligations and being a key support function in our day-to-day administration. New Chairman Morten Foros Krohnstad was elected at the general meeting. Morten is a lawyer and partner in the law firm Schjødt, with many years of experience from various board positions.   Lifecare has been involved as one of the owners of the German company Digital Diagnostics AG (Digid), whose original purpose was to develop biomarkers for detecting different analytes – and herein digitalize the collection of information in a diagnostic perspective. The project was built on Lifecare's patented technology, as well as Lifecare's license for the production method of nanosensors detecting glucose. In addition, these technologies proved well suited to detect viruses. On this basis, Digid changed its main focus in Q2 2020 towards developing a covid-19 rapid test. At the end of March 2021, Digid's management-board considered the company to be insolvent, and the company's management filed for insolvency in German courts without any prior notice to the owners or the supervisory board.   This situation leads Lifecare to restructure the company’s processes for technology and product development. The existing agreement obligating Digid to finance the Sencell development and production-preparations until CE approval can no longer be fulfilled. We have negotiated with the insolvency trustee to enter into a service agreement with the estate,as well as buying-out Digid's assets from the estate. These negotiations stopped, as a German pension fund has received an acceptance for its bid on Digid's assets.   Subsequently, the process related to Digid is now limited to distribution of dividends from the bankruptcy estate, during which Lifecare will register financial claims deriving from the original joint venture agreement and in the capacity as a licensor, based on the license agreement. Lifecares position as a shareholder can affect the priority for distribution of dividends and hence it is unclear to what extent our claims can be expected to be reimbursed.   Lifecare has now reinforced the focus on development and production preparations of the Sencell technology until CE marking under its own control. To avoid misunderstandings, we emphasize that the IP (patent rights and license) that Lifecare had licensed out to Digid is not part of the assets of Digid’s estate. These IP rights have been terminated and revoked by Lifecare.   During the period of May/June 2021, Lifecare has signed several agreements of great importance for the continued technology and product development, and not least future business development.   We have extended our collaboration with the University of Bath (UK) and Professor Tony James to develop improved chemical fluids suitable for the Sencell technology to also measure more analytes but glucose. In this context, we have also engaged Dr. Jordan Edward Gardiner as a chemist on a consultancy basis. These agreements are important for the optimization of the chemical compositions for measuring glucose, in addition to developing chemical fluids suitable for detection of other analytes, such as lactate, fructose, calcium and several other carbohydrates etc. This work is important for the further development of the Sencell technology in connection with the new Sencell patent that is expected to be communicated from the European PatentOffice in near future.   Lifecare has also entered into an agreement with the University of Oldenburg (Germany) ensuring access to customized Scanning Electron Microscopes (SEM) suitable for processing and production of the MEMS and nanobiosensor components of Sencell for use in the upcoming clinical trials. We have now started a process to recruit personnel with relevant expertise in physics and the use of SEM to enhance our internal resources.   Furthermore, Lifecare has acquired the remaining 50% of the German company Cantimed UG from Nanoscale Systems, Nanoss GbmH (Nanoss). Lifecare previously owned 50% of Cantimed. We intend to develop Cantimed UG as a central operational unit in Germany, controlled by Lifecare.   The agreement with Nanoss acquiring Cantimed includes a license within the medical field of technology for 3Dprinting of nanobiosensors based on cantilevers, as used in Sencell. The technology is suitable for multiple other areas in medicine and medical products. The license agreement provides Cantimed with the technology rights to produce what may be the world's smallest pressure sensor. This technology is an important component to reduce the size of Sencell for glucose to the equivalent of a grain of rice.   In addition, through the acquisition of Cantimed, Lifecare has secured access to a licence covering the medical field as such and this entails a significant expansion of Lifecare's potential for business development. Lifecare has a number of plans for broadening the use of Sencell for further medical and lifestyle applications. The obtained nanosensor license provides Lifecare with exciting new business opportunities because many existing medical devices can be substantially improved in their functionality and/or safety by means of new sensing functionalities.   Clearly, Lifecare would rather have preferred to see Digid not filing for insolvency, but on the other hand, this situation has forced and led Lifecare to take direct control over all developments going forward. We believe this will be useful for the current and future development progress and will contribute to secure and increase future shareholder value.   We hereby wish all our shareholders a good summer!