MPX International 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 its second fiscal quarter, the three and six month period ended March 31, 2021. All figures are presented in Canadian dollars unless otherwise indicated.

Second Quarter 2021 Financial Highlights

• 173% net revenue growth over Q2 2020

• YTD G&A reduced by 22% vs same period last year

• YTD Gross margins at 68%

• YTD Adjusted EBITDA improves by 49% compared to 2020

• Multiple new distribution channels for MPXI products added in Europe and Canada

Management Commentary

The Corporation is encouraged by some key developments as it pertains to MPXI’s growth trajectory and its realized cost efficiencies.  Losses from operations prior to fair value adjustments, amortization, share based compensation and other income/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 ended March 31, 2021, losses from operations prior to fair value adjustments, amortization, share based compensation and other income/expenses were $3,629,810 versus $7,360,739 for the six months ended March 31, 2020, representing a 51% improvement. The favourable revenue growth combined with the implementation of a more sustainable cost structure has positioned the Corporation to be better able to take advantage of current opportunities.

Corporate Highlights for the Three Months Ended March 31, 2021

MPX International Closed Seventh Tranche of the Offering

On February 11, 2021, the Corporation closed the seventh tranche (the “Seventh Tranche”) of a non-brokered private placement offering (the “Offering”) of units (the “Units”).

The closing of the Seventh Tranche resulted in the issuance of 125 Units at a price of US$1,000 ($1,360) for aggregate gross proceeds of $170,000 (US$125,000). No finder’s fees were paid in connection with the Seventh Tranche.

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

Each Unit consists of one 12% secured convertible debenture of the Corporation (a “Debenture”) in the principal amount of US$1,000 (the “Principal Amount”) and 7,000 common share purchase warrants (each, a “Debenture Warrant”). The Debentures will have a maturity 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 into with AST Trust Company (Canada) (“AST”). Each Debenture will rank pari passu in right of payment of principal and interest with all other Debentures issued under the Offering.

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

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

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

Each Debenture Warrant entitles the holder thereof to purchase one MPXI Share (each, a “Debenture Warrant Share”) at an exercise price of $0.20 (the “Exercise Price”) for a period of twenty-four (24) months from the Closing Date (the “Expiry Date”). The Corporation and AST entered into a warrant indenture (the “Warrant Indenture”), as amended, supplemented or otherwise modified from time to time, pursuant to which the Debenture Warrant Shares were created and issued.

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

On February 23, 2021, the Corporation announced that it launched CBDetc.com (“CBDetc”), a European CBD e-commerce platform. CBDetc has been designed as a highly-curated, multiband e-commerce platform intending to be Europe’s leading, reliable source for everything CBD. CBDetc will allow MPXI to increase its penetration into the broader European CBD market.

CBDetc, 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 a carefully selected product range sourced from suppliers around the world.

Canveda entered into a Supply Agreement with the Ontario Retail Cannabis Corporation

On March 2, 2021, the Corporation announced the entering into of an agreement dated February 17, 2021 (as amended and supplemented on April 16, 2021), between Canveda Inc. (“Canveda”) and the Ontario Retail Cannabis Corporation, operating as the Ontario Cannabis Store for the supply of cannabis under Canveda’s recreational brand, Strain Rec™. The agreement will continue until April 16, 2023, unless terminated earlier and may be extended upon mutual agreement of the parties for an unlimited number of successive two (2) year terms.

Canveda entered into a Supply Agreement with the BC Liquor Distribution Branch  

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

Subsequent Events

MPX International announced Short Term Bridge Loan Financing

On April 16, 2021, the Corporation announced that it has arranged for short-term loan financing (the “Bridge Loan”) of up to approximately $3,750,000 (US$3,000,000) from a group of current investors.

The Corporation has drawn down on a total of $2,575,000 (US$2,060) loan funds from both tranches as follows: (a) 1st Tranche which closed on April 21, 2021 - $1,312,500 (US$1,050,000); and (b) 2nd Tranche which closed on April 30, 2021 – $1,262,500 (US$1,010,000).  MPXI may raise up to an additional 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 to fund product and facility development and for general corporate and working capital purposes.

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

Upon the entering into of both the 3rd supplementary debenture indenture to the Debenture Indenture and the 3rd supplementary warrant indenture to the Warrant Indenture, the principal amount of the Bridge Loan shall automatically convert in the Offering at a conversion premium equal to ten percent (10%) of their principal amount.

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

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

The Corporation also issued an aggregate of 9,000,000 common share purchase warrants (the “Bonus Warrants”) to certain Bridge Loan lenders who advanced funds in the initial tranche of the Bridge Loan. Each Bonus Warrant shall be exercisable for a period of sixty (60) months from the date of issuance and enable the holder thereof to purchase one MPXI Share at an exercise price equal to $0.20 as well as the opportunity to acquire part of the Corporation’s interest in one or more potential future transactions.

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

No finder fees have been paid in connection with the Bridge Loan.

Insider Participation

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

 Notes:        

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

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

MPXI Entered into a Licensing Agreement with Blackhawk Growth Corporation for Innovative Edibles

On April 8, 2021, the Corporation announced that it entered into an IP licensing agreement (the “Licensing Agreement”) dated March 18, 2021 between MPXI and Blackhawk Growth Corporation (“Blackhawk”), an investment issuer in health sciences, cannabis and CBD industries in both Canada and the United States. Pursuant to the Licensing Agreement, MPXI has been granted an exclusive, irrevocable license to manufacture an innovative line of shelf stable cannabis edibles that do not require refrigeration, including infused cheesecake, sorbet and soft chewables (the “Licensed Products”).

Subsequently, Canveda entered into a manufacturing agreement dated March 22, 2021 with Canngroup Development Corp. (“Canngroup”), another License Holder, whereby Canngroup will manufacture the Licensed Products on Canveda’s behalf. Specialized equipment has been installed at Canngroup’s licensed facility in order to maximize production while maintaining stringent quality standards.

The Licensed Products are expected to be sold under the Corporation’s recreational brand Strain Rec™ to the provincial authorities as well as through other distribution channels available to Canveda.

Board Changes

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

Stock Option Grant 

The Corporation granted 10,550,000 stock options to purchase MPXI Shares at a price of $0.20 per MPXI Share to officers, directors, employees and consultants of the Corporation and its subsidiaries at an exercise price of $0.20 per MPXI Share and expiring on April 16, 2026.

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

Outlook

The Corporation is focused on developing and operating assets across the international cannabis industry with an emphasis on cultivating, manufacturing and marketing products which include cannabinoids as their primary active ingredient.

In Canada, the Corporation is transitioning its principal business model away from cultivation to one of intermediation between buyers and sellers, accessing or facilitating the sale of cannabis products from other License Holders and arranging or facilitating sales to medical cannabis consumers domestically or, increasingly, to international buyers. The recent announcement regarding the licensing and distribution of

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

Domestically, Spartan and the MCLN are currently working together with several third-party Licence Holders to educate and market cannabinoid-based medicines to Canadian patients. Revenue is generated through transactional and/or hourly-based consulting fees from Licence Holders. The Spartan/MCLN platform acts as both a telemedicine medium providing patient access to medical practitioners for advice and cannabis prescriptions and as a sales platform for Canveda and anticipates adding other third-party Licence Holders in the coming months. The MCLN operates in much the same manner as Amazon or Shopify by providing on-line sales facilitation between medical cannabis users and Licence Holders.

While it will continue to operate the Canveda Facility, and in consideration of the domestic oversupply conditions, MPXI has shelved plans for any acquisition or expansion of additional cultivation in Canada and will market its annual production at Canveda through its Spartan and MCLN channels as well as to various provincial cannabis distribution agencies. In December 2019, the Corporation accelerated its option to acquire 100% of MCLN securing an exclusive, worldwide, perpetual, royalty free licence to the Medical Cannabis Learning Network. This private social network connects patients with credible information on the use of medical cannabis, offers the ability to conduct virtual consultations with qualified medical practitioners and acts as an order-entry tool for the purchase of medical cannabis products from Canveda. MPXI is anticipating the addition of other third-party Licence Holders to the platform over the next several months.

The MCLN and its integration with the Spartan platform will play a significant role in our growth in Canada this year. Spartan is a leading medical cannabis clinic dedicated to assisting Veterans of the Canadian Forces, RCMP and first responders since 2017. Spartan has also expanded its services to helping Canadians seeking medical cannabis education, prescriptions, and advice on a wide selection of reputable Health Canada approved product offerings at its premier virtual clinic. Spartan prides itself on its 3 key measures for aligning clients with reputable suppliers: (1) customer services; (2) product availability; and (3) product quality. Spartan attributes its continued growth 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, have legalized cannabis in some form and medicinal use is by far the primary focus of legalization. Success in the medical cannabis marketplace is largely determined by the number of patients being served and the Medical Cannabis 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 the retail (dispensary) arena in Canada and Switzerland. The first “HolyWeed” branded location was launched in Geneva in January 2020 and has been consistently profitable, supported planned expansion of retail outlets in Zurich and elsewhere in Europe. The Corporation intends to continue the creation of a retail footprint for its products in Canada, Europe and elsewhere.

In Switzerland, MPXI has entered into leases for two facilities in the Geneva area and while delayed by the advent of the COVID-19 pandemic, both are being converted into extraction and processing facilities and initial production of high-quality CBD distillate commenced in September with capacity expected to continue to expand during the next few months which offers the Corporation the ability to sell its CBD distillate, and isolate into the global market.

With the ultimate goal of creating a global supply chain of low-cost biomass, efficiently-scaled production of GMP quality cannabinoid products for sale into high-value markets, the Corporation will also continue to develop its projects in Malta and South Africa. While again plagued with COVID-19 induced delays, the Corporation still expects each of these projects to commence operations during calendar 2021.

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

Finally, the Corporation continues to investigate other international expansion opportunities that can provide lower-cost cultivation, new genetics, innovative production technologies and, most importantly, new markets for its products. In addition, and as part of the aforementioned investigation, the Board, supported by its management team, regularly explores and evaluates potential strategic alternatives focused on maximizing shareholder value. These alternatives could include, among other things, the sale of part or all of the Corporation, financing certain business units of the Corporation through equity or debt, a sale of some of the assets of the Corporation, a merger or other business combination with another party, or other strategic transactions.

The business interruption created by the global shutdowns and travel restrictions has had a negative impact on the progress of the multiple domestic and international projects initiated by the Corporation in late 2019 and early 2020. Unlike most other cannabis ventures, virtually all of MPXI’s operations were still in the pre-revenue stage when COVID-19 emerged. As a result, the Corporation embarked on a plan of cost containment, including wage reductions, the cancellation of several consulting arrangements, the delay of construction of facilities in Switzerland and South Africa and the abandonment of selected infrastructure projects in Canada and Australia. MPXI will extend many of these cost-saving initiatives in the post-COVID-19 period.

The international cannabis industry is evolving rapidly. Regional reports prepared by the London-based cannabis research firm Prohibition Partners predicts that by 2028, the European market 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 (not inclusive of the huge CBD market in China). These potential revenues more than double the projected North American market for the same period.

MPXI, with its access to best practises, product formulations, SKU variety and branding acquired from management’s previous U.S. involvement, its management experienced in both the U.S. and international cannabis and financial markets, its access to global capital and its early mover entry into multiple geographic regions, is extremely well positioned to benefit from this exponential growth in the international cannabis market.

Financial Overview for Q2 2021

Net Revenue

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

For the three months ended March 31, 2021, MPXI posted net 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 in Spartan ($574,597), Canveda ($84,134) and HolyWeed ($135,414).

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

The Corporation has an aggressive growth plan including distribution across more provinces in Canada, additional, well-established suppliers to help deepen the product offerings and increase both quality and inventory reliability as well as focused sales and marketing efforts in Switzerland.  Accordingly, MPXI is poised for significant sales growth over the mid-term, particularly as COVID-19 restrictions begin to ease and consumer sales behaviour begins to settle into both stronger and more reliable patterns and results.

Cost of Sales

For the three months ended March 31, 2021, MPXI posted cost of sales of $1,061,634 (three months ended March 31, 2020 - $185,413). Cost of sales is exclusively driven by Canveda, Spartan and HolyWeed sales.  The year over year increase is predominately related to having a full quarter of such activity versus being in various stages of coming online as was the case in 2019. The Corporation expects cost of sales to continue to grow proportionately with sales activity as it continues its ramp up.

For the six months ended March 31, 2021, MPXI posted cost of sales of $1,523,460 (six months ended March 31, 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 for the unrealized gain in the fair value of biological assets was $1,123,634 representing a gross margin of 48.3%. The gross margin was driven by sales at Canveda, Spartan and HolyWeed. Gross profit after adjustment for the unrealized gain in the fair value of biological assets was $1,406,975 calculated at 60.5% of sales. The unrealized gain in fair value of biological assets relates to cannabis plants in various growing stages at the Canveda Facility.

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

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

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

The increase in gross profits quarter over quarter and year over year are due to increased operational and sales activity across the Corporation, particularly in Canada and to a lesser extent Switzerland.  While representing a slightly lower gross margin percentage, the material increases in volume more than mitigates that decrease.  The Corporation is starting to realize the benefits of increased efficiencies as well as more refined processes as the Corporation continues to take advantage of its experience and expertise. Additionally, Canadian operations continue their move towards distribution in multiple, Canadian jurisdictions, particularly compared to the prior year, which will further increase sales and gross margin dollars.

Operating Expenses

Professional fees decreased to $312,163 for the three months ended March 31, 2021 as compared to $444,216 in the comparable period. These fees include expenses related to audit, advisory, legal work, government and investor relations, consulting and costs associated with the Board. The decrease is largely attributable to the significant cost savings initiatives the Corporation has undertaken. This has also been helped by the less complex nature of the quarter’s transactions when compared to the same period last year, requiring less external, professional support.

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

As part of the Corporation’s incentive stock option plan (the “Stock Option Plan”), the Corporation recognized $3,806 share-based compensation for the three months ended March 31, 2021, as compared to $30,130 in the comparable period.

As part of the Stock Option Plan, the Corporation recognized $7,063 share-based compensation for the six months ended March 31, 2021, as compared to $70,302 in the comparable period. The Corporation granted stock options to employees, directors, officers, and consultants of the Corporation under the Stock Option Plan on February 26, 2019, May 29, 2019, September 19, 2019, February 11, 2020 and October 15, 2020 and April 16, 2021.

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

While the Corporation has continued to invest in critical, capital assets, the Corporation has invested in more cost-effective packaging solutions and fulfillment equipment compared to, for example, base extraction tools in the prior year which carried a significantly higher price.  The Corporation has plans for additional capital expenditures throughout the year with the intent of ensuring sufficient capacity to meet demand as well as more advanced technology to drive continued product development and innovation.

General and administrative expenses for the three and six months ended March 31, 2021, and 2020, are allocated as follows:

The decrease in general and administrative expenses for the six months ended March 31, 2021, as compared to the six months ended March 31, 2020, was primarily due to decrease in occupancy costs, consulting fees, office and general expenses and sales and marketing expenses.  More specifically, occupancy and office and general costs have decreased in locations that are no longer part of its cost base.  The decrease in consulting fees is result of decreased use of consultant resources relating to new business initiatives as well as M&A activities, as was the case in the prior year.  Sales and marketing expenses are also down due to their nature as discretionary expenses and that the Corporation’s focus on maintaining a lean structure as it moves toward profitability.  It is our expectation that these types of expenses are likely to increase as more production and products come on-line.

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

Other income and expenses

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

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

FMV change – option component for the three and six months ended March 31, 2021 reflects a loss of $3,292,190 and relates to the change in fair value of the option component of convertible debt at March 31, 2021.  This amount can fluctuate quarter over quarter as a function of valuing the outstanding instrument.

Transaction costs for the three and six months ended March 31, 2021 of $23,888 and $236,896 relate primarily to professional services in connection to the acquisition of MPXI Alberta Corporation, and Spartan financing.

Non-IFRS Measures

Adjusted EBITDA

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

Summary of Quarterly Results

A more detailed discussion of these and other metrics, as well as operational events, can be found in the Corporation’s Financial Statements and Management 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 the international cannabis industry with an emphasis on cultivating, manufacturing and marketing products which include cannabinoids as their primary active ingredient. With current operations spanning four continents in Canada, Switzerland, South Africa, Malta and Australia as well as evolving partnership and distribution opportunities in other jurisdictions, MPXI continues to position itself as an emergent global participant in the cannabis industry.

Cautionary Statement Regarding Forward-Looking Information

This news release includes certain “forward-looking statements” under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, MPX International’s objectives and intentions.  Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from 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 and competitive developments; delay or failure to receive board, shareholder or regulatory approvals; the Corporation’s ability to effectively deal with the restrictions, limitations and health issues presented by the COVID-19 pandemic; future cannabis pricing; cannabis cultivation yields; costs of inputs; its ability to market products successfully to its anticipated clients; reliance on key personnel and contracted relationships with third parties; the regulatory environment in Australia, Canada, Malta, South Africa, Switzerland and other international jurisdictions; the ability to complete any future potential transactions and the terms and conditions thereof; the application of federal, state, provincial, county and municipal laws; and the impact of increasing competition; those additional risks set out in MPX International’s public documents filed on SEDAR at www.sedar.com, including its audited annual consolidated financial statements for the financial years ended September 30, 2020 and 2019, and the corresponding management’s discussion and analysis; and other matters discussed in this news release. Although MPX International believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, MPX International disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

For further information about MPXI, please contact:

MPX International Corporation

W. Scott Boyes, Chairman, President and CEO

T: +1-416-840-4703
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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