September 24, 2024 – H1 2024 Earnings Results

24 September 2024

MYCELX TECHNOLOGIES CORPORATION (AIM: MYX)

Half Year Results Statement

MYCELX Technologies Corporation ("MYCELX" or the "Company"), the clean water and clean air technology company established to transform the environmental impact of industry, is pleased to announce its unaudited interim results for the six months ended 30 June 2024.

Highlights

Financial

• Sale of Saudi Arabia business operations for a total consideration of $3.125 million at closing with up to $4.0 million deferred on a two year earn-out structure, allowing Company to focus resources on two core growth markets
• Reflecting the sale of the Saudi Arabia business operations, revenue of $3.5 million (2023 H1: $5.6 million)
• Gross profit margin of 28.2% (2023 H1: 45.2%)
• EBITDA* loss $1.1 million (2023 H1: loss $900,000)
• Net loss of $1.4 million (2023 H1: $1.5 million)
• Cash and cash equivalents $2.1 million at end of period

Operational

PFAS

• Completed a short-term, emergency PFAS remediation project treating Aqueous Film Forming Foam ('AFFF') contaminated water. Contracted by a global engineering company, MYCELX intends to leverage this success to win more AFFF clean-up projects and become a "go to" solution for AFFF remediation worldwide.
• Successfully completed a treatability study paving the way for inclusion in a multiple technology, four-month pilot trial treating PFAS contamination at a municipal wastewater treatment facility.
  o Post period end: the trial is expected to commence in Q1 2025, with the final outcome of the trial likely to determine the award of a long-term contract by the municipality which, industry-wide, are generally in excess of 15 years.
• Received first media order from an established Point of Entry/Point of Use commercial and residential water system supplier in the US, integrating the Company's PFAS media into their product line.
• Hired an experienced PFAS technical expert with nine years of industry experience from a global water equipment and solutions provider.

REGEN

• Delivered first REGEN retrofit package, which will enable MYCELX's enhanced oil recovery ('EOR') customer in the Middle East to change from traditional nutshell media to REGEN media.
• Received notification from a global product supplier that their testing concluded REGEN was the most effective technology to treat water during EOR production. The supplier intends to include REGEN in their project bids going forward.
• Continuation of a pilot trial with a global energy technology company showcasing REGEN media's superior capabilities over nutshell media to other producers.
• Commenced REGEN pilot trial with Canadian EOR producer.
• Hired an experience engineer to further strengthen the REGEN team.

Post Period Update

• Signed a Business Partnership Agreement with an 8a and HUBZone Certified Prime Contractor with the sole purpose of developing a mutually beneficial business relationship focused on the US Department of Defense (the 'US DoD') funded PFAS remediation projects.
• Made our second sale of an oil-polishing unit to an electric utility in Canada. Delivery expected in H1 2025.
• Continuation of pre-treatment system design for PFAS system for landfill leachate
• Successful installation of REGEN system at Middle East EOR producer
• Successfully completed an equity fundraise of ca.$0.9 million in September to accelerate the
  Company's progress in the PFAS and EOR markets. The fundraise enables MYCELX to purchase additional trial equipment so that more trials can be executed, which increases the chances of securing project bids going forward.

Outlook

Based on current robust trial and bidding activity, MYCELX is very optimistic about the PFAS, REGEN and EOR markets going into 2025 and beyond. Recognition that the PFAS remediation market is going to be a multi-billion dollar a year industry (as estimated by the US DoD) is starting to gain traction with operators and developers of remediation technologies. It is imperative the Company focuses on this division to capture its share of this long-term, lucrative opportunity. In the EOR market, two trials are currently underway with another potential opportunity before year end. The building momentum in MYCELX's technology is why the Company elected to successfully complete a ca.$0.9 million equity fundraise in September, as it will enable the Company to capitalise on these and future opportunities.

In terms of upcoming PFAS projects and opportunities that we expect to commence over the coming months, we have the landfill leachate trial with a global engineering company in the

second phase addressing the pre-treatment unit required to prevent fouling of the MYCELX system and PFAS removal media. Given the enlarged scope of work, the Company expects the project to move to 2025 with potential follow-on opportunities working with the engineering company. MYCELX's PFAS residential systems partnership is expected to launch by year end with expectations that while media sales per unit will be smaller than in the industrial markets, the sector will build over time into a volume play creating steady, predictable revenue. The Company signed an agreement with a preferred US DoD contractor who has water treatment experience at military sites. Together we are engaged with the US DoD and the EPA to identify upcoming PFAS remediation projects registered on the US government administered System for Award Management. Early in 2025 the Company will be one of a few technologies engaged in a municipal wastewater treatment trial. This market sector is a target for MYCELX in small to mid- size public utilities for PFAS water treatment. The Company is in discussions with an existing engineering company customer to treat AFFF laden with PFAS which would be our second project with them offering onsite, fast response systems to remediate PFAS.

The Company continues to see robust interest in the REGEN media for EOR production. We are continuing a pilot trial with a Canadian EOR producer that has moved into a second phase subsequent to a system upgrade. We expect this phase to prove the efficacy of our REGEN system and lead to either a purchase of the on-site equipment, or a new system. The Company recently installed and started up our REGEN Retro-fit package for an operator in the Middle East, which was shipped to the customer in the first half of 2024. We expect this project to lead to several more projects with this customer.

The Company recently provided updated revenue guidance for the full financial year following a change to a customer's project timeline. This meant that revenue expected to be recognised in December will shift into Q1 2025. Notwithstanding this, the Directors are pleased with the progress of the Company in the year to date and they look forward to delivering on the recently revised forecasts.

*See Financial Review for definition of EBITDA

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

"The Company's performance in H1 2024 is highlighted by a number of important trial projects and contract awards with existing and new customers were secured across our markets of focus, demonstrating that we continue to provide customers with a cost effective, high performance and environmentally sustainable product.

The sale of our Saudi Arabia business operations was a pivotal event for the business, as it allowed us to release capital that could be deployed into high margin and high growth industries, whilst also ensuring that, through our exclusive distribution agreement with the purchaser, we are still able to grow our proprietary media and product sales in Saudi Arabia, which is an important market for these applications.

Post period end, we were pleased to announce the successful closing of a ca.$0.9 million equity fundraise, which will enable us to deploy the funds into additional trial equipment, which will enable the Company to take part in more trials, which should lead to further contract wins.

We have several important trials operating with follow-on sites in both core markets which is cause for optimism for the remainder of 2024 and going into 2025. As recently announced, approximately $5.4 million of revenue from a significant project that we expected to recognise in December will be shifted to Q1 2025. We look forward to delivering our revised expectations for 2024 and we will be updating all our stakeholders on our progress over the coming period."

as well as marketing directly to end users. The Company successfully completed a short-term, emergency remediation project treating water contaminated with AFFF at a refinery, which saw us become the first-choice solution for AFFF remediation for the client, which is a global engineering company. We have worked hard to expand the applicability of MYCELX's PFAS remediation technologies to new markets and look forward to exploring the ever-growing remediation opportunities in the AFFF sector. The period also saw MYCELX successfully complete a treatability study which has led to the inclusion of our technology in a four-month long pilot trial treating PFAS contamination for a municipality at its wastewater treatment facility. If successful, the trial, which is expected to commence in Q1 2025, could lead to MYCELX being awarded a long-term contract by the municipality. The Company also secured a first media order from an established Point of Entry/Point of Use commercial and residential water system supplier in the US with plans to integrate MYCELX's PFAS media into its product line. Following the end of the first half of 2024, the Company was excited to announce its agreement with an 8a and HubZone certified contractor which will lead to an ongoing collaboration to provide PFAS remediation solutions for the US DoD. The Company looks forward to updating the market as this partnership develops further.

We continue to see strong interest in MYCELX's REGEN offering in the EOR market, evidenced by the delivery of the Company's first REGEN retrofit package for a client in the Middle East. The conclusion of this order demonstrates the growing demand for REGEN and MYCELX's ability to install and apply its EOR remediation technology to meet the changing needs of our global client base. Our REGEN technology also gained industry-leading recognition in the period after a global product supplier to the EOR market notified MYCELX that its technology was found to be the best of the technologies tested in treating EOR-produced water. The client also notified us that they intend to bid their products to include REGEN in the future. The Company also maintained its focus on pilot trials to demonstrate the applicability of its REGEN technology across the EOR market.

We were also pleased to further strengthen our senior leadership and management team during the period, hiring an experienced PFAS technical expert with nine years of experience in the sector, who previously worked for a global water equipment and solutions provider. In the REGEN team, MYCELX added an engineer with several years of experience to strengthen the division. Both additions have and will continue to allow us to improve our ability to meet demand from these growing addressable markets.

Financial Review

In February 2024, the Company sold its Saudi Arabia business operations, including equipment, inventory and contracts, for an acquisition price of up to $7.125 million which included $3.125 million paid at closing and up to $4 million deferred on a 24 month earn-out structure. The assets sold had a net book value of $2.2 million. The proceeds of the sale will enable the Company to focus on accelerating its marketing and sales plan for its unique technologies in the PFAS remediation and EOR markets while also supporting other working capital needs.

Due to the sale of the Saudi Arabia business operations, revenue decreased 37% to $3.5 million compared to $5.6 million in the first half of 2023. Revenue from equipment sales and leases decreased by 80% to $400,000 in the first half of 2024 (2023 H1: $2.0 million). Revenue from consumable filtration media and service decreased by 14% to $3.1 million (2023 H1: $3.6 million). The equipment sales are one off by nature, but there is longevity to the recurring media sales.

Gross profit decreased by 60% to $1.0 million in the first half of 2024, compared to $2.5 million in the first half of 2023, and gross profit margin decreased to 28% in the first half of 2024 (2023 H1:

45%) due to an inordinate amount of ancillary services provided in Saudi Arabia prior to the sale of the Saudi Arabia business operations.

Total operating expenses for the first half of 2024, including depreciation and amortisation, decreased by 18% to $3.1 million (2023 H1: $3.8 million). The largest component of operating expenses was selling, general and administrative expenses, which decreased by approximately 19% to $2.9 million in the first half of 2024 (2023 H1: $3.6 million) due to the elimination of overhead expenses associated with the branch office in Saudi Arabia. Depreciation and amortisation within operating expenses decreased by 8% to $107,000 (2023 H1: $116,000).

EBITDA was negative $1.1 million for the first half of 2024, compared to negative $900,000 for the first half of 2023. EBITDA is a non-U.S. GAAP measure that the Company uses to measure and monitor performance and liquidity and is calculated 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, and includes gains on sale of fixed assets (which includes gains from the sale of Saudi Arabia business operations - see Note 13). This non-U.S. GAAP measure may not be directly comparable to other similarly titled measures used by other companies and may have limited use as an analytical tool.

The Company recorded a loss before tax of $1.3 million for the first half of 2024, unchanged from the loss before tax of $1.3 million for the first half of 2023 despite the lower revenue in the period. Basic loss per share was 6 cents for the first half of 2024, compared to basic loss per share of 7 cents for the first half of 2023.

As of 30 June 2024, total assets were $8.7 million with the largest assets being inventory of $2.7 million, property and equipment of $1.1 million, and $2.1 million of cash and cash equivalents including restricted cash.

Total liabilities as of 30 June 2024 were $2.9 million and stockholders' equity was $5.8 million, resulting in a debt-to-equity ratio of 50%.

The Company ended the period with $2.1 million of cash and cash equivalents, including restricted cash, compared to $433,000 in total at 31 December 2023. The Company used approximately $550,000 cash in operations in the first half of 2024, compared to $100,000 used in operations in the first half of 2023. Due to proceeds from the sale of Saudi business operations, the Company generated $2.2 million in investment activities in the first half of 2024 (2023 H1: $172,000 used in investing) and there were no financing activities in the first half of 2024 or 2023.

Post the period end, the Company completed the closing of a Placing of 1,380,791 Common Shares at a price of US$0.68 (51.5 pence) per new share raising gross proceeds of ca.$0.9 million before expenses. The proceeds from the transaction will be used to purchase additional trial equipment so that more trials can be entered into, which increases the chances of securing project bids going forward.

Outlook

Following our performance in H1 2024, and the recently executed fundraise of ca.$0.9 million, we are well placed to capitalise on the market opportunity in front of us. We firmly believe that the PFAS remediation market will not be a winner-take-all industry, but that there will be a small handful of players that are able to deliver a sustainable, low-cost technology offering, that generates results for customers. Our aim is to be the leader of this group and we see it as our job to deliver on this objective.

Global energy companies remain keen to seek out environmentally friendly and capital efficient technologies that enable them to deliver operational and financial synergies along with environmental benefits to their businesses. We continue to believe that MYCELX offers all of these advantages to its customers, so we look forward to continuing with our growth plans over the remainder of 2024 and beyond, which will generate significant value for all our stakeholders.

The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements.

MYCELX TECHNOLOGIES CORPORATION Statements of Stockholders' Equity (USD, in thousands)

The accompanying notes are an integral part of the financial statements.