Microsaic Regulatory News (MSYS)

24 March 2021

Microsaic Systems plc

("Microsaic" or "Company")

Microsaic and DeepVerge plc sign three-year Technology and Commercial Agreement

Integrated "Lab to Sample" laboratory and "Point of Care" diagnostic tests

to transform healthcare and environmental health.

Microsaic, (AIM: MSYS) the micro-engineering, miniaturised chip-based mass spectrometry ("MS") developer for point-of-need analytical detection, announces that, further to its announcement on 15 February 2021, it has signed a multi-year, full technical and commercial agreement (the "Agreement") with DeepVerge plc's (AIM: DVRG, "DeepVerge") subsidiary, Innovenn UK Limited.

Summary of the Agreement

· Framework agreement for an initial term of three years.

· Microsaic will supply regulatory approved, CE mark, miniaturised mass spectrometry ("MS") equipment and services on a non-exclusive basis across DeepVerge's global sales, marketing and distribution channels, delivering portable solutions for healthcare diagnostic evaluation and environmental contamination detection of samples.

· Initial order by DeepVerge for three units with a total value of £100,000, plus a commitment of up to £150,000 (together, the "Orders") from DeepVerge for equipment and services to be installed at pilot facilities in DeepVerge's laboratories based in York.

· Microsaic will generate a margin on any future unit sales to DeepVerge, which DeepVerge will distribute to its underlying customers. The Directors confirm these terms are comparable to other distribution agreements the Company currently has in place.

· Current intellectual property will reside with each of Microsaic and DeepVerge, with any jointly developed intellectual property to be owned in equal share.

Collaboration with DeepVerge's technology

Healthcare diagnostic applications

DeepVerge will introduce Artificial Intelligence ("AI") data analytics to Microsaic's existing MS data capture capabilities to fast track the MicrotoxBT breathalyser, currently used for detecting the Spike Protein of the COVID-19 virus, SARS-CoV-2, to being able to deliver a "Point of Care" diagnostic solution at the GP's clinic. With biomarker binding agents capable of detecting up to 40 diseases on the human breath, many of which include types of cancer, neurodegenerative, respiratory and metabolic conditions, it has the potential to enable swift referral for serious conditions and at the same time reduce unnecessary doctor-to-hospital referrals and needless over-prescription of antibiotics, significantly lowering healthcare costs.

In addition, automated monitoring of remote "Lab to Sample" environmental health data creates a virtual laboratory at the site of detection in diversified chemical, biochemical, biofuel, biodegradable plastic, biologics, and waste-water treatment industries.

Environmental contamination detection

As announced in February, Microsaic has joined the ecowaterOS Consortium, an end-to-end water contamination detection and decontamination solutions provider network, for real-time monitoring and detection of contaminated water. Developed by the Rinocloud division of Deepverge, this is a consortium of partners operating a live dynamic water management system that supports the delivery of safe clear water from rivers to wastewater treatment plants, using AI to provide instant alerts from remote sensors direct to stakeholders.

In other collaborations, Microsaic and DeepVerge will:

· augment the Modern Water (a division of DeepVerge plc) front line water analysis portfolio by adding a new portable real-time sewage monitoring capability, particularly for monitoring "organics" such as drugs of abuse and active pharmaceutical ingredients ("APIs").

· collaborate on the detection of proteins and "bad actors", using Labskin's ground-breaking protein capture technology, and Microsaic's MS technology, which is ideally suited to bring the power of Mass Spectrometry to front line screening in Human and Environmental Health. To speed collaboration, Microsaic will be co-locating its science and applications capabilities within the enlarged 9,000 square foot Labskin facility in York, England.

Glenn Tracey, CEO of Microsaic, commented:

"Over 20 years, Microsaic has built the miniaturisation of microchip-based equipment, designed for point-of-need detection. This Agreement with DeepVerge brings Microsaic a direct route to established distribution channel partners, so that we can deepen our global access, where together, our vision is to solve real-world problems humanity is facing. Additionally, the collaborations represent a turning point in front line detection in a number of new application areas, which have remained unchallenged by today's MS technologies, and which gives rise to first mover advantage in these markets which we believe have a high demand for such solutions."

Gerard Brandon, CEO of DeepVerge plc (and ecowaterOS member) and Chair of Microsaic commented:

"The collaboration, cooperation and teamwork across both companies over the last two months has been incredible and has already contributed to cost reductions for both companies by hiring complementary new hires, removing duplication and increasing the revenue per client opportunities with new services from equipment that Microsaic already has approved for use. The combined result enables Labskin scientists to fully automate production of bacteria reagents and the Modern Water division can immediately add remote higher quality analysis for clients, eliminating the need for transportation of samples back to laboratories. We have an exciting three years ahead for both companies."

Longer term initiatives

Longer term, Microsaic will continue to expand the collaboration, cooperation and partnership model with several industry partners across a range of applications in diagnostics, therapeutic drug monitoring, food analysis, nutraceuticals, and extending cannabinoid testing for the rapidly expanding cannabis industry.

Microsaic's technology has a very small footprint, very low maintenance and is specifically designed for front line use. Under this Agreement, Microsaic and DeepVerge will combine micro-engineering, software and AI based data analytics to offer automated "Internet of Things" ("IoT") analytical solutions to drive important decisions at manufacturing industry "Point of Need" and help GP clinic doctors make a faster diagnosis at "Point of Care".

Related party transaction

The Agreement and the Orders constitute a related party transaction for the Company under Rule 13 of the AIM Rules for Companies, by virtue of Microsaic and DeepVerge having two directors in common. The Independent Directors, being Glenn Tracey and Bevan Metcalf, consider, having consulted with the Company's nominated adviser, that the terms of the Agreement and the Orders, are fair and reasonable insofar as the Company's shareholders are concerned.

Gerard Brandon and Nigel Burton, Non-executive Chairman and Non-executive Director respectively, are both directors of DeepVerge and have abstained from participating in the consideration of and entry into the Agreement by Microsaic.

About Microsaic (www.microsaic.com)

Microsaic floated on AIM in 2011 to develop and commercialise micro-engineering chip-based mass spectrometry equipment. Having invested c. £30m over 20 years of development, Microsaic has a robust and innovative patent portfolio in cutting-edge technology designed and developed for "Industry 4.0" application. Microsaic serves markets in Human Health, Environmental Health and Diversified Industries. Microsaic's system solutions enable analytical detection and characterisation at the point-of-need, whether within a conventional laboratory setting, or within a bioprocessing facility for continuous MS detection data at multiple steps in the process workflow.

Microsaic's products and systems are commercially available through global markets via a network of regional and local partners, targeting its core laboratory, manufacturing and point of need applications.

About DeepVerge plc (www.deepverge.com)

DeepVerge is an environmental and life science group of companies that develops and applies AI and IoT technology to analytical instruments and the data they generate, for the analysis and identification of bacteria, virus and toxins. DeepVerge is utilising AI data analytics to prove scientifically the impact of skincare product claims on the skin microbiome for clients including most of the top 20 global cosmetic companies and to detect remotely, and identify in real-time, dangerous pathogens in wastewater treatment plants, drinking water, rivers, lakes and reservoirs.