MYCELX Technologies : September 29, 2021 – H1 2021 Earnings Release

29 September 2021

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). This inside information is now considered to be in the public domain.

MYCELX TECHNOLOGIES CORPORATION (AIM: MYX)

Half Year Results Statement

MYCELX Technologies Corporation ("MYCELX" or the "Company"), the clean water and air technology company transforming the environmental impact of industry, is pleased to announce its unaudited interim results for the six months ended 30 June 2021.

Highlights

Financial

• Revenue of $4.2 million (2020 H1: $3.6 million)
• Gross profit margin of 45.6% (2020 H1: 45.3%)
• EBITDA of $1.2 million (2020 H1: negative $1.9 million), normalized EBITDA excluding sale of building negative $1.3 million
• Net profit of $435,000 (2020 H1: $2.8 million net loss)
• Sale of office building in Duluth, Georgia, yielded net proceeds of $2.8 million
• Net cash of $5.5 million at end of period
• Recovery in financial performance year-on-year primarily due to improving macro-outlook, but also the sale of the Company's building in Duluth, Georgia

Operational

• Middle East: two contract extensions signed in Q1 2021, valued at $2.4 million
• Nigeria: equipment sale valued at $0.7 million
• Australia: validation and capacity upgrade of Per and Polyfluoroalkyl Substances ("PFAS") system for Department of Defence
• MYCELX continues to pursue other opportunities which have the potential to generate further incremental revenues for the Company, including PFAS in the US market and Enhanced Oil Recovery ("EOR") applications

Post Period Update

• Significant new contract and two contract extensions in Saudi Arabia valued at a combined $3.9 million

• Other water treatment contract wins valued at $650K which includes the paid REGEN trial
• Seasoned business development hire to drive sales in North America

Outlook

MYCELX has made strong progress in H1 2021. New contracts and contract extensions have been signed in the core market of the Middle East and significant strides continue to be made in other target regions such as the US and Nigeria. The Company is actively involved in bidding activity globally, but especially in the Middle East, and will update the market further on material contract awards and extensions as appropriate.

In the US and Australia, the Company is actively pursuing the PFAS remediation market, a rapidly growing multi-billion dollar global sector. Recent validation and capacity upgrade at an Australian Defence location and at a global oil Company's site are evidence of our technology's increasing adoption in the PFAS market. MYCELX expects to commence trials in the US in the coming weeks leveraging its successful track record of PFAS water treatment in Australia since 2014. PFAS remediation is expected to become an increasingly important market for the business with respect to the scale of the human health and environmental crisis attributed to decades of use of PFAS in everyday products. PFAS remediation is another sector where MYCELX is delivering innovative technology to tackle one of the most serious environmental challenges.

Building on the REGEN product development in 2020 the Company expects to commence a paid trial in Q4 2021. The performance of the REGEN technology ensures consistent and reliable production and greatly reduces the number of costly well workovers.

Commenting on these results, Connie Mixon, CEO, said:

"I am pleased with the progress the Company has made in H1 2021. A number of contract extensions and new purchase orders have been awarded to us and we continue to actively bid on further opportunities to improve water treatment in the oil and gas sector. We are upbeat about our ability to win contracts due to our proven technology, operational performance and buoyant oil prices in the $65-$75 a barrel range. There will be challenges around the timing of project awards, but with the continued focus on corporates displaying strong ESG credentials, our patented technology supports their initiatives for reuse or discharge of clean water in their daily operations.

We are excited about our technology's success in the PFAS remediation market in Australia and are currently mobilizing for trials in the US. The need for innovative technology in this market is evident from cost, sustainability and waste reduction perspectives. MYCELX's solution has met these challenges in Australia and we look forward to the same success in the US.

As we see the global economy normalize, we will continue to stay close to our customers, and the markets we are focused on, which we believe will lead to further contract awards in due course."

For further information, please contact:

MYCELX Technologies Corporation

Kim Slayton, CFO

Canaccord Genuity Limited (Nomad and Sole Broker)

Celicourt Communications (Financial PR)

Chairman's and Chief Executive Officer's Statement

We are pleased to publish MYCELX's H1 2021 results today and to provide a wider update on the developments we have been working on since the start of the year.

We have seen a resurgence in bidding activity across the industries where we operate. We continued to prioritize the safety and welfare of our workforce, meaning that our employees were able to remain healthy, ensuring our business operations could continue uninterrupted, especially in the current COVID-19 environment. As documented earlier in the year, we are seeing green shoots start to emerge, and with the prevailing focus on improving environmental stewardship globally, we expect the applications for our technology will continue to grow through additional project wins in 2021 and beyond.

In H1, MYCELX delivered revenues of $4.2 million, resulting in a net profit of $435,000. This is up considerably from H1 2020, although we do still remain short of the numbers we produced prior to the pandemic in H1 2019. However, given the continued attention on operators behaving in an environmentally sustainable manner and our strong execution we are confident of achieving revenues that exceed the prior year.

On costs, our corporate G&A remains lower versus last year and the savings initiatives we implemented in light of the pandemic continue to generate results. We plan to maintain our strict approach to capital discipline for the foreseeable future, as we believe it to be in the best interests of all our stakeholders. As of 30 June 2021, the Company's total assets were down from $19.1 million at FY 2020 to $17.1 million. As of 30 June 2021, the Company had cash and cash equivalents of $5.5 million, up 45% from $3.8 million in FY 2020.

Operational Review

We continue to make advancements in two new product applications which will add to the current installed base of our technology. First, PFAS remediation technology opens opportunities for MYCELX in groundwater remediation projects. In the US, we progressed our offering in the PFAS market with the goal of securing pilot trials in Q4 2021 which will leverage the success we have experienced in the PFAS market in Australia. Second, optimizing our REGEN retrofit solution enables use of our technology on EOR as well as other industrial applications. We anticipate that the paid REGEN trial we expect to commence in Q4 will demonstrate REGEN's superior performance over other water treatment offerings which in turn will lead to accelerated uptake.

In the Middle East, we were awarded two contract extensions during the period with customers in the Kingdom of Saudi Arabia. The combined value of these awards to MYCELX was $2.4 million. These projects confirm the commercial attractiveness, performance, and acceptance of our offering as the preferred method to improve process water for reuse and compliant discharge. In Nigeria, we successfully delivered the equipment for our third sale in-country. Our technology has

gained significant recognition for reliable treatment of produced water for safe discharge in these regions.

In keeping with our cost saving measures, we announced the sale of our building in Duluth, Georgia, USA, to right-sizeour office space needs and provide working capital. The sale netted MYCELX a financial gain of approximately $2.5 million.

Financial Review

Building on the work done in 2020 to consolidate our position when the effects of the pandemic slowed, we saw revenue rise 17% to $4.2 million compared to $3.6 million in the first half of 2020. We also saw revenue from equipment sales and leases increase 58% to $1.9 million in the first half of 2021 (2020 H1: $1.2 million). Revenue from consumable filtration media and service was fairly consistent at $2.3 million (2020 H1: $2.4 million). Whilst the equipment sales are one off by nature, there is longevity to the media sales and on-going lease and service revenues.

Gross profit increased by 19% to $1.9 million in the first half of 2021, compared to $1.6 million in the first half of 2020, and gross profit margin remained at 45% in the first half of 2021 (2020 H1: 45%).

We reduced the total operating expenses for the first half of 2021, including depreciation and amortisation, by 10% to $3.8 million (2020 H1: $4.2 million). The largest component of operating expenses was selling, general and administrative expenses ('SG&A'), which decreased by approximately 7% to $3.7 million (2020 H1: $4.0 million) due to the continued impact of a series of company-wide cost saving measures implemented in 2020.

Depreciation and amortisation within operating expenses decreased by 31% to $113,000 (2020 H1: $163,000), primarily due to older equipment reaching the end of its useful life.

EBITDA was $1.2 million for the first half of 2021, compared to negative $1.9 million for the first half of 2020. Normalized EBITDA excluding the sale of building in Duluth, Georgia was negative $1.3 million. EBITDA is defined as net profit before interest expense, provision for income taxes, and depreciation and amortisation of fixed and intangible assets, including depreciation of leased equipment which is included in cost of goods sold. The Company recorded a profit before tax of $599,000 for the first half of 2021, compared to loss before tax of $2.6 million for the first half of 2020. The increase in net profit was due to the $2.5 million gain the Company recognised on the sale of its building. Basic profit per share was 2 cents for the first half of 2021, compared to basic loss per share of 14 cents for the first half of 2020.

In the first half of 2021, the Company completed the sale of its building in Duluth, Georgia, USA for a total consideration of $5.4 million. The Company recognised a financial gain of approximately $2.5 million on the sale of the property and net cash proceeds were approximately $2.8 million. The Note Payable and line of credit were paid in full and $500,000 of cash was reclassified from restricted cash. The sale enabled the Company to right-size its office space needs across its main operating locations and provided cash proceeds which will be used for working capital purposes to support the business needs.

As of 30 June 2021, total assets were $17.1 million with the largest assets being $5.5 million of cash and cash equivalents, inventory of $5.1 million, property and equipment of $3.5 million and $1.2 million of accounts receivable.

Total liabilities as of 30 June 2021 were $2.7 million and stockholders' equity was $14.4 million, resulting in a debt-to-equity ratio of 19%.

The Company ended the period with $5.5 million of cash and cash equivalents and no restricted cash, compared to $3.8 million in total at 31 December 2020, including restricted cash. The Company used approximately $1.4 million cash in operations in the first half of 2021, compared to $280,000 generated in the first half of 2020. The proceeds from the sale of the Company's property contributed to $5.4 million provided by investment activities compared to an outflow of $25,000 in the first half of 2020. In the first half of 2021, the Company's financing activities included net proceeds of $401,000 from a forgivable loan and $2.2 million paid towards debt.

Outlook

This has been a productive period for the Company, building on the product development achieved in 2020. The Company expects 2021 revenue to be in the region of 20% better than FY 2020, and we anticipate that the hard work the team has put in will yield further results in the near to medium term. The fundamentals of the business have not changed. We have a unique and patented offering that can deliver economic results and environmental improvement in active markets across a range of applications. We are excited about our acceleration into EOR and PFAS applications augmenting our established footprint in petrochemical process and oil and gas produced water. Application of MYCELX's suite of solutions ensures cleaner water which results in reduction of the impact of industry on the environment. These factors, combined with our geographic, technical and industry expertise, will play an important role in our success as we look to secure additional contract orders over the coming period.

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