MPXOF - MPX International Announces Second Quarter 2021 Financial Results

(TheNewswire)

TORONTO, ONTARIO – TheNewswire- May 28, 2021 – MPXInternational Corporation (“ MPX International ”, “ MPXI ” or the “ Corporation ”) (CSE:MPXI ) ; (CNSX:MPXI.CN); ( OTC:MPXOF), a multinational diversified cannabis company, has reported its financial results for itssecond fiscal quarter, the three and six month period ended March 31,2021. All figures are presented in Canadian dollars unless otherwiseindicated.

Second Quarter 2021 Financial Highlights

• - 173% net revenue growth over Q2 2020

  - YTD G&A reduced by 22% vs same period lastyear

  - YTD Gross margins at 68%

  - YTD Adjusted EBITDA improves by 49% compared to2020

  - Multiple new distribution channels for MPXI productsadded in Europe and Canada

Management Commentary

The Corporation is encouraged by some key developmentsas it pertains to MPXI’s growth trajectory and its realized costefficiencies.  Losses from operations prior to fair valueadjustments, amortization, share based compensation and otherincome/expenses for the three months ended March 31, 2021 of$2,281,309 represents an improvement of 29% over the comparable period(March 31, 2020 of $3,203,912).  Similarly, for the six months endedMarch 31, 2021, losses from operations prior to fair valueadjustments, amortization, share based compensation and otherincome/expenses were $3,629,810 versus $7,360,739 for the six monthsended March 31, 2020, representing a 51% improvement. The favourablerevenue growth combined with the implementation of a more sustainablecost structure has positioned the Corporation to be better able totake advantage of current opportunities.

Corporate Highlights for the Three Months Ended March31, 2021

MPX International Closed Seventh Tranche of theOffering

On February 11, 2021, the Corporation closed theseventh tranche (the “ SeventhTranche ”) of a non-brokered private placementoffering (the “ Offering ”) of units (the “ Units ”).

The closing of the Seventh Tranche resulted in theissuance of 125 Units at a price of US$1,000 ($1,360) for aggregategross proceeds of $170,000 (US$125,000). Nofinder’s fees were paid in connection with the SeventhTranche .

As of the date hereof, the Corporation has issued atotal of 7,500 Units for aggregate gross proceeds of $10,200,000(US$7,500,000) from the closing of all seven tranches of theOffering.

Each Unit consists of one 12% secured convertibledebenture of the Corporation (a “ Debenture ”) in the principal amountof US$1,000 (the “ Principal Amount ”) and 7,000 common share purchase warrants (each, a“ Debenture Warrant ”). The Debentures will have amaturity date of twenty-four (24) months from the date of issuance,subject to certain conversion privileges (the “ Maturity Date ”) as set forth in a debenture indenture (the “ Debenture Indenture ”), as amended,supplemented or otherwise modified from time to time, entered intowith AST Trust Company (Canada) (“ AST ”). Each Debenture will rank paripassu in right of payment of principal and interest with all otherDebentures issued under the Offering.

The Corporation used the proceeds from the Offering tofund product and facility development as well as for working capitaland other general corporate purposes.

Each Debenture bears interest at a rate of 12% perannum from the date of issue, payable quarterly in arrears on the lastday of March, June, September and December in each year (each, a“ Coupon Date ”).Currently, all accrued but unpaid interest as of each Coupon Dateshall be payable by the Corporation in cash and shall accrue interestat a rate of 12% per annum.

The Principal Amount is convertible, for no additionalconsideration, into common shares of the Corporation (the“ MPXI Shares ”) at theoption of the holder at any time prior to the earlier of: (i) 6:00p.m. (Eastern Standard Time) on the Maturity Date; or (ii) thebusiness day immediately preceding the date specified by MPXI forredemption of the Debentures at a conversion price equal to $0.12 perMPXI Share.

Each Debenture Warrant entitles the holder thereof topurchase one MPXI Share (each, a “ Debenture Warrant Share ”) at an exercise price of $0.20 (the “ Exercise Price ”) for a period oftwenty-four (24) months from the Closing Date (the “ Expiry Date ”). T he Corporation and AST entered into awarrant indenture (the “ WarrantIndenture ”), as amended, supplemented orotherwise modified from time to time, pursuant to which the DebentureWarrant Shares were created and issued.

MPXI announced the launch of European CBD E-CommercePlatform CBDetc .com

On February 23, 2021, the Corporation announced that itlaunched CBDetc.com (“ CBD etc ”) , aEuropean CBD e-commerce platform . CBD etc has beendesigned as a highly-curated, multiband e-commerce platform intendingto be Europe’s leading, reliable source for everything CBD.CBD etc will allow MPXI toincrease its penetration into the broader European CBD market.

CBD etc ,designed and built by the Corporation’s team in Switzerland,features a wide range of products including CBD oils, cosmetics,intimacy products, vape products, edibles, hemp-based clothing,accessories and much more. It lists MPXI’s Swiss made products,under the brand names “Holyweed” and “beleaf” as well as acarefully selected product range sourced from suppliers around theworld.

Canveda entered into a Supply Agreement with theOntario Retail Cannabis Corporation

On March 2, 2021, the Corporation announced theentering into of an agreement dated February 17, 2021 (as amended andsupplemented on April 16, 2021), between Canveda Inc. (“ Canveda ”) and the Ontario RetailCannabis Corporation, operating as the Ontario Cannabis Store for thesupply of cannabis under Canveda’s recreational brand, Strain Rec ™. The agreement willcontinue until April 16, 2023, unless terminated earlier and may beextended upon mutual agreement of the parties for an unlimited numberof successive two (2) year terms.

Canveda entered into a Supply Agreement with the BCLiquor Distribution Branch

On March 15, 2021, the Corporation announced theentering into of an agreement dated February 24, 2021 between Canvedaand the BC Liquor Distribution Branch, the sole wholesale distributorof non-medical cannabis in British Columbia for the supply of cannabisunder the Strain Rec ™brand. The agreement will continue until August 14, 2022, unlessterminated earlier and may be extended upon mutual agreement of theparties for an unlimited amount of successive two (2) year terms.

Subsequent Events

MPX International announced Short Term Bridge LoanFinancing

On April 16, 2021, the Corporation announced that ithas arranged for short-term loan financing (the“ Bridge Loan ”) of upto approximately $3,750,000 (US$3,000,000) from a group of currentinvestors.

The Corporation has drawn down on a total of $2,575,000(US$2,060) loan funds from both tranches as follows: (a) 1 st Tranche which closed on April 21,2021 - $1,312,500 (US$1,050,000); and (b) 2 nd Tranche which closed on April 30,2021 – $1,262,500 (US$1,010,000).  MPXI may raise up to anadditional principal amount of approximately $940,000 (US$1,175,000)under similar terms as set out herein in one or more tranches.

The Corporation will use the proceeds from the loan tofund product and facility development and for general corporate andworking capital purposes.

The Bridge Loan will mature 3 months from the date ofissuance (the “ Bridge Loan MaturityDate ”) and bear interest at a rate of 12% perannum calculated in arrears and payable in cash on the earlier of theBridge Loan Maturity Date or concurrently with the conversion of theBridge Loan into Units of the Offering pursuant to the DebentureIndenture and the Warrant Indenture.

Upon the entering into of both the 3rd supplementarydebenture indenture to the Debenture Indenture and the 3rdsupplementary warrant indenture to the Warrant Indenture, theprincipal amount of the Bridge Loan shall automatically convert in theOffering at a conversion premium equal to ten percent (10%) of theirprincipal amount.

Each Unit of the Offering will be issued on the sameterms as those previously announced, subject to certain amendments tothe Debenture Indenture and Warrant Indenture to be proposed toDebentureholders, at a price of $1,360 (US$1,000) per Unit.

The Corporation paid a non-refundable cash originationfee in the aggregate amount of $75,000 (US$60,000) to certain BridgeLoan lenders who advanced funds in the initial tranches of the BridgeLoan at the time of such advance.

The Corporation also issued an aggregate of 9,000,000common share purchase warrants (the “ BonusWarrants ”) to certain Bridge Loan lenders whoadvanced funds in the initial tranche of the Bridge Loan. Each BonusWarrant shall be exercisable for a period of sixty (60) months fromthe date of issuance and enable the holder thereof to purchase oneMPXI Share at an exercise price equal to $0.20 as well as theopportunity to acquire part of the Corporation’s interest in one ormore potential future transactions.

Each of the following events constitutes an event ofdefault: (a) the Corporation fails to pay when due, after anyapplicable grace periods, any outstanding principal amount hereunderor any accrued and unpaid interest on such principal amount; (b) theCorporation shall not have complied with its covenants; and (c) if anyrepresentation or warranty made by the Corporation pursuant to whichthe loan was issued was false or inaccurate in any material respectwhen made.

No finder fees have been paid in connection with theBridge Loan.

Insider Participation

The Bridge Loan can be considered a Related PartyTransaction for certain regulatory purposes. The participation bycertain insiders in the Bridge Loan is summarized as follows:

Notes:

1. (1) Mr. Boyes advanced funds tothe Corporation and received a cash origination fee of $1,820.39(US$1,4561.31), 218,447 Bonus Warrants entitling Mr. Boyes to purchasean MPXI Share at a price of $0.20 per MPXI Share for a period of 5years from the date of issuance as well as the opportunity to acquirepart of the Corporation’s interest in one or more potential futuretransactions. The loan will be convertible into the Offering as setout above. Mr. Boyes has a right to participate in a future tranche ofthe Bridge Loan up to his pro rata portion of the initial tranches ofthe Bridge Loan.

1. (2) Mr. Crawford advanced funds tothe Corporation and received a cash origination fee of $11,563.11(US$11,650.49), 1,747,573 Bonus Warrants entitling Mr. Crawford topurchase an MPXI Share at a price of $0.20 per MPXI Share for a periodof 5 years from the date of issuance as well as the opportunity toacquire part of the Corporation’s interest in one or more potentialfuture transactions. The loan will be convertible into the Offering asset out above. Mr. Crawford has a right to participate in a futuretranche of the Bridge Loan up to his pro rata portion of the initialtranches of the Bridge Loan.

MPXI Entered into a Licensing Agreement with BlackhawkGrowth Corporation for Innovative Edibles

On April 8, 2021, the Corporation announced that itentered into an IP licensing agreement (the“ Licensing Agreement ”)dated March 18, 2021 between MPXI and Blackhawk Growth Corporation(“ Blackhawk ”), aninvestment issuer in health sciences, cannabis and CBD industries inboth Canada and the United States. Pursuant to the LicensingAgreement, MPXI has been granted an exclusive, irrevocable license tomanufacture an innovative line of shelf stable cannabis edibles thatdo not require refrigeration, including infused cheesecake, sorbet andsoft chewables (the “ LicensedProducts ”).

Subsequently, Canveda entered into a manufacturingagreement dated March 22, 2021 with Canngroup Development Corp.(“ Canngroup ”), anotherLicense Holder, whereby Canngroup will manufacture the LicensedProducts on Canveda’s behalf. Specialized equipment has beeninstalled at Canngroup’s licensed facility in order to maximizeproduction while maintaining stringent quality standards.

The Licensed Products are expected to be sold under theCorporation’s recreational brand StrainRec ™ to the provincial authorities as well asthrough other distribution channels available to Canveda.

Board Changes

On April 16, 2020, the Corporation announced theresignation of Randall G. Stafford from the board of directors of MPXI (the “ Board ”) effective immediately to focus his efforts on other professionalopportunities and is replaced by Jeremy Blumer, Chief FinancialOfficer of the Corporation.

Stock Option Grant

The Corporation granted10,550,000 stock options to purchase MPXI Sharesat a price of $0.20 per MPXI Share to officers,directors, employees and consultants of the Corporation and itssubsidiaries at an exercise price of $0.20 per MPXI Share and expiringon April 16, 2026.

Under the Corporation’s Stock Option Plan (as definedbelow) 9.58% of the issued and outstanding MPXI Shares or 13,739,680MPXI Shares are reserved for issuance, including the above grant, andthe Corporation may grant an additional 599,285 options under the Planrepresenting 0.42% of the issued and outstanding MPXI Shares.

Outlook

The Corporation isfocused on developing and operating assets across the internationalcannabis industry with an emphasis on cultivating, manufacturing andmarketing products which include cannabinoids as their primary activeingredient.

In Canada, the Corporation is transitioning itsprincipal business model away from cultivation to one ofintermediation between buyers and sellers, accessing or facilitatingthe sale of cannabis products from other License Holders and arrangingor facilitating sales to medical cannabis consumers domestically or,increasingly, to international buyers. The recent announcementregarding the licensing and distribution of

edibles with Blackhawk is a case in point as Canveda isnow the exclusive Canadian distributor of multiple SKU’sof shelf stable cannabis edibles. This strategy reduces or eliminates the need for large capital investment, while generating fees andmargins with equivalent net returns to those generally available fromseed-to-sale operations. The Corporation is currently involved inlate-stage negotiations to facilitate several export opportunities toEurope and Australia and as noted above, processed its first shipmentto Israel.

Domestically, Spartan and the MCLN are currentlyworking together with several third-party Licence Holders to educateand market cannabinoid-based medicines to Canadian patients. Revenueis generated through transactional and/or hourly-based consulting feesfrom Licence Holders. The Spartan/MCLN platform acts as both atelemedicine medium providing patient access to medical practitionersfor advice and cannabis prescriptions and as a sales platform forCanveda and anticipates adding other third-party Licence Holders inthe coming months. The MCLN operates in much the same manner as Amazonor Shopify by providing on-line sales facilitation between medicalcannabis users and Licence Holders.

While it will continue to operate the Canveda Facility,and in consideration of the domestic oversupply conditions, MPXI hasshelved plans for any acquisition or expansion of additionalcultivation in Canada and will market its annual production at Canvedathrough its Spartan and MCLN channels as well as to various provincialcannabis distribution agencies. In December2019, the Corporation accelerated its option to acquire 100% of MCLN securing an exclusive, worldwide, perpetual,royalty free licence to the Medical Cannabis LearningNetwork . This private social network connectspatients with credible information on the use of medical cannabis,offers the ability to conduct virtual consultations with qualifiedmedical practitioners and acts as an order-entry tool for the purchaseof medical cannabis products from Canveda. MPXIis anticipating the addition of other third-party Licence Holders to the platform overthe next several months.

The MCLN and its integration with the Spartan platformwill play a significant role in our growth in Canada this year. Spartan is a leading medical cannabis clinicdedicated to assisting Veterans of the Canadian Forces, RCMP and firstresponders since 2017. Spartan has also expanded its services tohelping Canadians seeking medical cannabis education, prescriptions,and advice on a wide selection of reputable Health Canada approvedproduct offerings at its premier virtual clinic. Spartan prides itselfon its 3 key measures for aligning clients with reputable suppliers:(1) customer service s ; (2)product availability; and (3) product quality. Spartan attributes its continuedgrowth to its 4 Pillars of Success: (1) Honesty; (2) Integrity; (3)Respect; and (4) Giving Back to the Community.

Over 40 countries, including 24 in Europe, havelegalized cannabis in some form and medicinal use is by far the primary focus oflegalization. Success in the medical cannabis marketplace is largelydetermined by the number of patients being served and the MedicalCannabis Learning Network is a leading edge “patient acquisition”technology which can be adapted for use in many countries.

MPXI continues to explore opportunities to enter theretail (dispensary) arena in Canada and Switzerland. The first“HolyWeed” branded location was launched in Geneva in January 2020and has been consistently profitable, supported planned expansion ofretail outlets in Zurich and elsewhere in Europe. The Corporationintends to continue the creation of a retail footprint for itsproducts in Canada, Europe and elsewhere.

In Switzerland, MPXI has entered into leases for twofacilities in the Geneva area and while delayed by the advent of theCOVID-19 pandemic, both are being converted into extraction andprocessing facilities and initial production of high-quality CBDdistillate commenced in September with capacity expected to continueto expand during the next few months which offers the Corporation theability to sell its CBD distillate, and isolate into the globalmarket.

With the ultimate goal of creating a global supplychain of low-cost biomass, efficiently-scaled production of GMPquality cannabinoid products for sale into high-value markets, theCorporation will also continue to develop its projects in Malta andSouth Africa. While again plagued with COVID-19 induced delays, theCorporation still expects each of these projects to commenceoperations during calendar 2021.

In Australia, the opportunity to import products fromMalta, Canada and South Africa has prompted the Corporation to changeits focus from domestic production to developing an import anddistribution capability and now plans to import and introduce the Salus BioPharma brandedproducts to the Australian market. MPXI’sAustralian subsidiary is fully licensed for the import anddistribution of cannabis. As a result, MPX Australia has discontinuedits planned build-out of its cultivation facility in Tasmania.

Finally, the Corporation continues to investigate otherinternational expansion opportunities that can provide lower-costcultivation, new genetics, innovative production technologies and,most importantly, new markets for its products. In addition, and aspart of the aforementioned investigation, the Board, supported by itsmanagement team, regularly explores and evaluates potential strategicalternatives focused on maximizing shareholder value. Thesealternatives could include, among other things, the sale of part orall of the Corporation, financing certain business units of theCorporation through equity or debt, a sale of some of the assets ofthe Corporation , a merger or other businesscombination with another party, or other strategictransactions .

The business interruption created by the globalshutdowns and travel restrictions has had a negative impact on theprogress of the multiple domestic and international projects initiatedby the Corporation in late 2019 and early 2020. Unlike most othercannabis ventures, virtually all of MPXI’s operations were still inthe pre-revenue stage when COVID-19 emerged. As a result, theCorporation embarked on a plan of cost containment, including wagereductions, the cancellation of several consulting arrangements, thedelay of construction of facilities in Switzerland and South Africaand the abandonment of selected infrastructure projects in Canada andAustralia . MPXI will extend many of thesecost-saving initiatives in the post-COVID-19 period.

The international cannabis industry is evolvingrapidly. Regional reports prepared by the London-based cannabisresearch firm Prohibition Partners predicts that by 2028, the Europeanmarket for cannabinoid-based products will reach €120 billion(US$135 billion), the Oceania region will approach US$8.7 billion and,by 2024 Southeast Asia will achieve sales of US$8.5 billion (notinclusive of the huge CBD market in China). These potential revenuesmore than double the projected North American market for the sameperiod.

MPXI, with its access to best practises, productformulations, SKU variety and branding acquired from management’sprevious U.S. involvement, its management experienced in both the U.S.and international cannabis and financial markets, its access to globalcapital and its early mover entry into multiple geographic regions, isextremely well positioned to benefit from this exponential growth inthe international cannabis market.

Financial Overview for Q2 2021

Net Revenue

A summary of the Corporation’s quarterly net revenuesince June 30, 2019 is presented below:

For the three months ended March 31, 2021, MPXI postednet revenue of $2,185,268 (three months ended March 31, 2020 -$798,516). Revenue was mainly driven by sales in Spartan ($581,673),Canveda ($1,003,293), and HolyWeed ($599,373).In the comparative period, revenue was mainly driven by sales inSpartan ($574,597), Canveda ($84,134) and HolyWeed ($135,414).

The Corporation realized significant growth year overyear (increase of 173.7% vs. Q2, 2020) as well as compared to theprior quarter (increase of 14.4% vs. Q1, 2021).  Canveda andHolyworld SA (“ HolyWeed ”) revenue growth were primarily driven by more months ofoperations as well as expansion of those businesses. Conversely,Spartan’s revenues, given the nature of its business which relies ondealing directly with end customers, were negatively affected by theeffects of COVID-19 which resulted in limited growth year over year.

The Corporation has an aggressive growth plan includingdistribution across more provinces in Canada, additional,well-established suppliers to help deepen the product offerings andincrease both quality and inventory reliability as well as focusedsales and marketing efforts in Switzerland.  Accordingly, MPXI ispoised for significant sales growth over the mid-term, particularly asCOVID-19 restrictions begin to ease and consumer sales behaviourbegins to settle into both stronger and more reliable patterns andresults.

Cost of Sales

For the three months ended March31 , 2021, MPXI posted cost of sales of$1,061,634 (three months ended March31 , 2020 - $185,413). Cost of sales isexclusively driven by Canveda, Spartan and HolyWeed sales.  The yearover year increase is predominately related to having a full quarterof such activity versus being in various stages of coming online aswas the case in 2019. The Corporation expects cost of sales tocontinue to grow proportionately with sales activity as it continuesits ramp up.

For the six months ended March31 , 2021, MPXI posted cost of sales of$1,523,460 (six months ended March31 , 2019 - $250,117). The cost of sales of$1,523,460 was mainly driven by Holyweed and Canveda sales.

Gross Profit

Gross profit for the three months ended March 31 , 2021, before adjustment forthe unrealized gain in the fair value of biological assets was$1,123,634 representing a gross margin of 48.3%. The gross margin wasdriven by sales at Canveda, Spartan and HolyWeed. Gross profit afteradjustment for the unrealized gain in the fair value of biologicalassets was $1,406,975 calculated at 60.5% of sales. The unrealizedgain in fair value of biological assets relates to cannabis plants invarious growing stages at the Canveda Facility.

Gross profit for the three months ended March 31 , 2020, before adjustment forthe unrealized gain in the fair value of biological assets was$613,103 which represents a gross margin of 77.3%. The gross marginwas mainly driven by sales at Spartan which are commission based andhave minimal cost of sales. Gross profit after adjustment for theunrealized gain in the fair value of biological assets was $993,296calculated at 125.2% of sales. The unrealized gain in fair value ofbiological assets relates to cannabis plants at the Canveda Facilityand in Switzerland.

Gross profit for the six months ended March 31 , 2021, before adjustment forthe unrealized gain in the fair value of biological assets was$2,572,299, representing a gross margin of 54.9%. The gross margin wasdriven by sales at Canveda, Spartan and HolyWeed. Gross profit afteradjustment for the unrealized gain in the fair value of biologicalassets was $3,178,392 calculated at 67.8% of sales. The unrealizedgain in fair value of biological assets relates to cannabis plants invarious growing stages at the Canveda facility.

Gross profit for the six months ended March 31 , 2020, before adjustment forthe unrealized gain in the fair value of biological assets was$1,164,708 which represents a gross margin of 82.1%. The gross marginwas mainly driven by sales at Spartan which are commission based andhave minimal cost of sales. Gross profit after adjustment for theunrealized gain in the fair value of biological assets was $2,410,144calculated at 169.9% of sales. The unrealized gain in fair value ofbiological assets relates to cannabis plants at the Canveda facilityand in Switzerland.

The increase in gross profits quarter over quarter andyear over year are due to increased operational and sales activityacross the Corporation, particularly in Canada and to a lesser extentSwitzerland.  While representing a slightly lower gross marginpercentage, the material increases in volume more than mitigates thatdecrease.  The Corporation is starting to realize the benefits ofincreased efficiencies as well as more refined processes as theCorporation continues to take advantage of its experience andexpertise. Additionally, Canadian operations continue their movetowards distribution in multiple, Canadian jurisdictions, particularlycompared to the prior year, which will further increase sales andgross margin dollars.

Operating Expenses

Professional fees decreased to $312,163 for the threemonths ended March 31 ,2021 as compared to $444,216 in the comparable period. These feesinclude expenses related to audit, advisory, legal work, governmentand investor relations, consulting and costs associated with theBoard. The decrease is largely attributable to the significant costsavings initiatives the Corporation has undertaken. This has also beenhelped by the less complex nature of the quarter’s transactions whencompared to the same period last year, requiring less external,professional support.

Professional fees decreased to $539,511 for the sixmonths ended March 31, 2021 as compared to $1,289,267 in thecomparable period. The decrease is largely attributable to thesignificant cost savings initiatives the Corporation has undertaken.This has also been helped by the less complex nature of thequarter’s transactions when compared to the same period last year,requiring less external, professional support.

As part of the Corporation’s incentive stock optionplan (the “ Stock Option Plan ”), the Corporation recognized $3,806 share-basedcompensation for the three months ended March31 , 2021, as compared to $30,130 in thecomparable period.

As part of the Stock Option Plan, the Corporationrecognized $7,063 share-based compensation for the six months ended March 31 , 2021, ascompared to $70,302 in the comparable period. The Corporation grantedstock options to employees, directors, officers, and consultants ofthe Corporation under the Stock Option Plan on February 26, 2019, May29, 2019, September 19, 2019, February 11, 2020 and October 15, 2020and April 16, 2021.

The increase in amortization and depreciation for thethree and six months ended March 2021 relates primarily to thedepreciation of capital assets owned and utilized during the period,amortization of intangible assets, and amortization of right of useassets during the period.

While the Corporation has continued to invest incritical, capital assets, the Corporation has invested in morecost-effective packaging solutions and fulfillment equipment comparedto, for example, base extraction tools in the prior year which carrieda significantly higher price.  The Corporation has plans foradditional capital expenditures throughout the year with the intent ofensuring sufficient capacity to meet demand as well as more advancedtechnology to drive continued product development andinnovation.

General and administrative expenses for the three andsix months ended March 31, 2021, and 2020, are allocated asfollows:

The decrease in general and administrative expenses forthe six months ended March 31, 2021, as compared to the six monthsended March 31, 2020, was primarily due to decrease in occupancycosts, consulting fees, office and general expenses and sales andmarketing expenses.  More specifically, occupancy and office andgeneral costs have decreased in locations that are no longer part ofits cost base.  The decrease in consulting fees is result ofdecreased use of consultant resources relating to new businessinitiatives as well as M&A activities, as was the case in theprior year.  Sales and marketing expenses are also down due to theirnature as discretionary expenses and that the Corporation’s focus onmaintaining a lean structure as it moves toward profitability.  It isour expectation that these types of expenses are likely to increase asmore production and products come on-line.

The Corporation will continue to review its coststructure to ensure it operates in as an efficient a manner as ispossible.  While nothing specific is planned in this regard, it isthe Corporation’s intention to continue monitoring and adjusting itscost base as required, focusing on revenue and profit generatingactivities while minimizing the administrative overhead burden.

Other income and expenses

Foreign exchange for the three and six months endedMarch 31, 2021 of $1,274,685 and $1,257,783 respectively relates totransactions denominated in United States dollars, Swiss Francs,Euros, South African rand, and Australian dollars from theCorporation’s global activity.

Accretion expense for the three and six months endedMarch 31, 2021 of $495,420 and $874,751 respectively relates to theincrease in convertible debentures held at March 31, 2021 whencompared to the same period the prior year.

FMV change – option component for the three and sixmonths ended March 31, 2021 reflects a loss of $3,292,190 and relatesto the change in fair value of the option component of convertibledebt at March 31, 2021.  This amount can fluctuate quarter overquarter as a function of valuing the outstanding instrument.

Transaction costs for the three and six months endedMarch 31, 2021 of $23,888 and $236,896 relate primarily to professional services inconnection to the acquisition of MPXI Alberta Corporation, and Spartanfinancing.

Non-IFRS Measures

Adjusted EBITDA

Adjusted EBITDA for the six months ended March 31, 2021was ($4,072,056) compared to ($8,017,428) for the six months endedMarch 31, 2020, representing an increase of 49%.  The Corporation’ssales have continued to increase which is generally what is drivingthe higher adjusted EBITDA.  MPXI’s prospects continue to improvewith the current lean structure and continued trajectory for saleswhich is expected to continue throughout the year (notwithstanding thepotentially unpredictable business impacts of COVID-19).

Summary of Quarterly Results

A more detaileddiscussion of these and other metrics, as well as operational events,can be found in the Corporation’s Financial Statements andManagement Discussion & Analysis (“ MD&A ”) filed on www.sedar.com .

About MPX International Corporation

MPX International Corporation is a multinational diversified cannabis company focused on developing and operating assets across theinternational cannabis industry with an emphasis on cultivating,manufacturing and marketing products which include cannabinoids astheir primary active ingredient. With current operations spanning fourcontinents in Canada, Switzerland, South Africa, Malta and Australiaas well as evolving partnership and distribution opportunities inother jurisdictions, MPXI continues to position itself as an emergentglobal participant in the cannabis industry.

Cautionary Statement Regarding Forward-LookingInformation

This news release includes certain “forward-lookingstatements” under applicable Canadian securities legislation thatare not historical facts. Forward-looking statements involve risks,uncertainties, and other factors that could cause actual results,performance, prospects, and opportunities to differ materially fromthose expressed or implied by such forward-looking statements.Forward-looking statements in this news release include, but are notlimited to, MPX International’s objectives and intentions. Forward-looking statements are necessarily based on a number ofestimates and assumptions that, while considered reasonable, aresubject to known and unknown risks, uncertainties and other factorswhich may cause actual results and future events to differ materiallyfrom those expressed or implied by such forward-looking statements.Such factors include, but are not limited to: general business,economic and social uncertainties; litigation, legislative,environmental and other judicial, regulatory, political andcompetitive developments; delay or failure to receive board,shareholder or regulatory approvals; the Corporation’s ability toeffectively deal with the restrictions, limitations and health issuespresented by the COVID-19 pandemic; future cannabis pricing; cannabiscultivation yields; costs of inputs; its ability to market productssuccessfully to its anticipated clients; reliance on key personnel andcontracted relationships with third parties; the regulatoryenvironment in Australia, Canada, Malta, South Africa, Switzerland andother international jurisdictions; the ability to complete any futurepotential transactions and the terms and conditions thereof; theapplication of federal, state, provincial, county and municipal laws;and the impact of increasing competition; thoseadditional risks set out in MPX International’s public documentsfiled on SEDAR at www.sedar.com , including its audited annual consolidated financialstatements for the financial years ended September 30, 2020 and 2019,and the corresponding management’s discussion and analysis; andother matters discussed in this news release. Although MPXInternational believes that the assumptions and factors used inpreparing the forward-looking statements are reasonable, unduereliance should not be placed on these statements, which only apply asof the date of this news release, and no assurance can be given thatsuch events will occur in the disclosed time frames or at all. Exceptwhere required by law, MPX International disclaims any intention orobligation to update or revise any forward-looking statement, whetheras a result of new information, future events, or otherwise.

NOT FOR DISTRIBUTION TO NEWSWIRESERVICES IN THE UNITED STATES OR FOR DISSEMINATION IN THE UNITEDSTATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE AVIOLATION OF UNITED STATES SECURITIES LAWS.

For further information about MPXI,please contact:

MPX International Corporation

W. Scott Boyes, Chairman, President andCEO

T: +1-416-840-4703
info@mpxinternationalcorp.com

or visit one our websites:

https://mpxinternationalcorp.com

https://cbdetc.com

https://holyworld.ch/en /

https://spartannetwork.ca

https://strainrec.ca

https://canveda.ca

https://miracbd.ca

http://mpxi.tv

www.network.mothersmary.com

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