MYXR.L Regulatory News (MYXR)

Not for release, publication or distribution directly or indirectly, in whole or in part, in or into or from the United States of America (including its territories and possessions, any state of the United States, and the District of Columbia), Canada, Australia, the Republic of South Africa, the Republic of Ireland or Japan, or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction.

This press release does not constitute or form a part of, and should not be construed as, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities in MyCelx Technologies Corporation ("MyCelx" or the "Company").

THE COMPANY'S COMMON SHARES HAVE NOT BEEN REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "US SECURITIES ACT") OR ANY STATE SECURITIES LAWS (THE "STATE ACTS") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS THE SECURITIES ARE REGISTERED UNDER THE US SECURITIES ACT AND ANY APPLICABLE STATE ACTS, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE US SECURITIES ACT AND ANY APPLICABLE STATE ACTS IS AVAILABLE.

MYCELX TECHNOLOGIES CORPORATION

(AIM: MYX)

Half Year Results Statement

For the six months ending 30 June, 2011

MyCelx, a clean water technology company providing patented solutions for commercial industrial markets worldwide, is pleased to announce its half year results for the six months ended 30 June, 2011.

Highlights

Financial

·; Revenues increased by 17.8% to $3.03 million (2010 H1: $2.57 million)

·; Equipment revenues increased by 54.8% to $1.41 million (2010 H1: $0.9 million)

·; Gross profits increased by 20.2% to $1.48 million (2010 H1: $1.23 million)

·; Gross profit margins increased to 48.9% (2010 H1: 47.9%)

·; Profit after tax was $188,000 (2010 H1: $402,000)

Operational

·; Signed a Master Services Agreement with Chevron

·; Received purchase order for system installation in the Gulf of Mexico

·; Received purchase order from SABIC for waste water treatment unit on rental basis

·; William (Bill) Donges appointed as Chief Operating Officer with effect 30 September 2011

Post period end

·; Raised gross proceeds of approximately $20 million through an initial public offering ("IPO") on AIM in August 2011

·; Issued 7,753,398 new common shares, including conversion of $1.5 million shareholder loan to 437,353 shares of common stock

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

"We are very pleased with our results for the first half of 2011. We achieved strong revenue growth, increased penetration with some of our largest customers, and reported a higher gross profit margin.

Our successful admission to AIM this year enables us to capitalize on the early commercial success we have experienced and to pursue our growth strategy of accelerating the Company's penetration of key markets. Our focus on geographic regions where the Company already has projects underway allows us to build on existing relationships and to continue to increase sales.

The successful early commercialization of MyCelx's patented solutions has left us well placed to benefit from trends in the produced water treatment market. With regulations becoming more stringent and production moving further offshore, with more demanding operational requirements, MyCelx is in a unique position to capitalize on this fast growing market."

Notes to Editors:

MyCelx Technologies Corporation is a clean water technology company that provides novel water treatment solutions to the oil and gas, power, marine and heavy manufacturing sectors. MyCelx invented and is the owner of the MyCelx polymer which is infused in the consumable media contained in equipment supplied by the Company. The technology produces treatment results that compare favourably to existing competition in effectiveness, cost and footprint. The MyCelx polymer and its use are protected by patents and other intellectual property rights. The defining difference of the MyCelx polymer as compared with alternative technologies currently available is that it is capable of permanently and reliably removing free, emulsified and dissolved hydrocarbons from water upon contact to levels between 0-10 parts per million (ppm) at any flow rate.

MyCelx equipment has been installed successfully at the facilities of leading industry operators around the globe. The focus of the Company is now directed at the commercial application of MyCelx solutions upstream and downstream oil and gas industry. Over the last three years, the Company has sold its products primarily in North America, Asia, Australia, Middle East and Europe. Customers include such oil and gas companies as BP, Anadarko Petroleum Corporation, SABIC, engineering, procurement and construction companies such as Mustang Engineering and global water treatment companies.

Further information on MyCelx Technologies Corporation can be found at www.mycelx.com.

Chairman's and Chief Executive Officer's Statement

We are delighted to announce our maiden half year results as a quoted company on the AIM market of the London Stock Exchange. The first half of 2011 saw MyCelx make significant progress towards becoming an industry leader in the area of clean water technology. The Company continues to be at the forefront of providing novel water treatment solutions to the oil, gas, and petrochemical industry, as well as power, marine and heavy manufacturing sectors. The Company's business model is centered on innovative solutions which combine equipment supplied by MyCelx with the use of consumable filtration media, also supplied by MyCelx, which must be replaced on a recurring basis. This consumable filtration media is infused with the patented MyCelx polymer.

As a provider to some of the world's largest oil and gas companies, MyCelx has shown how its water treatment solutions enable operators to meet company, industry and regulatory standards for discharge.

The first six months of the year has seen the Company make considerable operational progress. The system for future installation on the Jack/St. Malo platform in the Gulf of Mexico was successfully delivered in June. Two purchase orders were secured for systems to be installed in the Gulf of Mexico in the fourth quarter of 2011. Additionally, the Company received a purchase order for a quick-deploy rental system for downstream service in Saudi Arabia to be installed in August. In order to accelerate progress in Alberta, the Company began working closely with E&P companies to begin trials at specific sites in the fourth quarter of this year.

The Company also recorded a strong financial performance, with total revenue increasing by 17.8% for the first six months of 2011 to $3.03 million, compared to $2.57 million for the first six months of 2010. Revenues increased primarily as a result of increased business from some of the Company's largest customers. Gross profit was $1.48 million, compared to $1.23 million last year, an increase of 20.2%. Gross profit margins increased to 48.9% from 47.9% for the same period the previous year. Earnings per share were 0.03 cents, compared to 0.06 cents for the same period the previous year.

Total operating expenses increased by 65.9% to $1.32 million. The increase is primarily due to filling positions in sales management, sales and engineering travel costs, participation in trade shows and conferences, and professional and travel expenses associated with the IPO.

Finally, the Company achieved a profit before tax of $103,000, compared with a profit before tax of $431,000 for the same period the previous year.

Following the end of the six month period to June, MyCelx successfully completed its IPO on the AIM market of the London Stock Exchange raising approximately $20 million in gross proceeds. Executing on the growth plan, the Company has begun recruiting sales and engineering professionals in the Middle East and North America. The sales positions will target Saudi Arabia and Qatar in the Middle East, and Houston and the Gulf of Mexico in North America. The engineering positions will fill out the central engineering team in Gainesville and will support projects globally. The Company expects to hire several sales and engineering professionals by year end.

The Company has leased an office in the UK to support the sales and engineering initiatives in the United Kingdom and North Sea. Office and warehouse space is being identified for lease in Houston to staff personnel to expedite project flow in the Gulf of Mexico and South America as well as meet the demands of the global EPC companies located in Houston. We currently anticipate that the Houston office will be staffed by year end if not sooner.

MyCelx has contracted a marketing firm with global reach to create and implement a comprehensive marketing plan and facilitate brand awareness internationally. The roll-out is currently scheduled for the 4thQ 2011.

Operationally the Company has moved ahead with project installations that were contracted prior to June 30, 2011. Two systems have been delivered to the Gulf of Mexico and will be operational in October. A rental system has been installed and is operational in Saudi Arabia. It is performing well and providing a reference site for future business.

The Company is engaged in two trials in Alberta in upstream applications, and one trial in the Middle East in downstream application. Trials are a commitment on the part of the E&P or petrochemical companies and provide a faster path to the sale.

We are also pleased to report that William (Bill) Donges, a Non-executive Director who is also Chairman of the Audit Committee, has accepted the Board's invitation to take up the position of Chief Operating Officer of the Company with effect 30 September 2011, and accordingly will step down from the Board on that date. Bill joined the Board of MyCelx in 2008, and has significant experience in midsized manufacturing and material science companies and a thorough knowledge of MyCelx's systems and processes. Ian Johnson, an independent Non-executive Director of the Company, has been appointed as interim Chairman of the Audit Committee in his place with effect 30 September 2011.

In summary, we are extremely pleased with the progress the Company made in the first half of 2011 and post period end and the Company is on track to meet its revenue forecast for the full year. The market for clean water systems is very robust as the oil and gas sector continues to seek methods and technology to better manage the water associated with their production activities to meet internal and external goals. The Company expects this trend to continue well into the future.

Tim Eggar Connie Mixon

Chairman Chief Executive Officer

27 September 2011

For further information please contact:

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

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

The accompanying notes are an integral part of the financial statements

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

NOTES TO THE FINANCIAL STATEMENTS

1. Basis of presentation

These interim financial statements have been prepared using recognition and measurement principles of Generally Accepted Accounting Principles in the United States of America ("U.S GAAP"). The financial information as of and for the six months ended June 30, 2011 and 2010 is unaudited. The comparative financial information for the year ended December 31, 2010 has been derived from audited financial statements for that year, which the auditor's report was unqualified. These financial statements are filed with AIM, a division of the London Stock Exchange (AIM: MYX).

These interim financial statements include all adjustments that in the opinion of management are necessary for fair presentation of the results presented. All adjustments for this fair presentation are normal for the periods presented. The interim financial statements are not indicative of annual results.

The interim financial statements for the six months ended June 30, 2011 and 2010 have not been audited.

2. Summary of accounting policies

Nature of business - MyCelx Technologies Corporation ("MyCelx" or the "Company") was incorporated in the State of Georgia on March 24, 1994. The Company provides clean water technology equipment to the oil and gas, power, marine and heavy manufacturing sectors.

Basis of accounting - The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with U.S. GAAP

The accounting policies and methods of computation used in the preparation of these condensed interim accounts are consistent with those used in the 2010 annual accounts, except for the adoption of the revised standards, amendments and interpretations issued by the Financial Accounting Standards Board that are relevant to the Company's operations and mandatory for the annual periods beginning January 1, 2011.

Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates.

Cash and cash equivalents

Cash equivalents consist of short-term, highly liquid investments which are readily convertible into cash within ninety (90) days of purchase.

The Company maintains cash and cash equivalent balances at a financial institution in Gainesville, Georgia. Accounts at this institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At June 30, 2010 and December 31, 2010 the Company did not have any balances at financial institutions in excess of this FDIC limit. At June 30, 2011 the Company had excess bank balances of approximately $821,000 over the FDIC limit.

Trade accounts receivable - Trade accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company provides credit in the normal course of business to its customers and performs ongoing credit evaluations of those customers and maintains allowances for doubtful accounts, as necessary. Accounts are considered past due based on the contractual terms of the transaction. Credit losses, when realized, have been within the range of the Company's expectations and, historically, have not been significant. The allowance for doubtful accounts was $0 for the six months ended June 30, 2011 and 2010, and year ended December 31, 2010.

Inventories - Inventories consist primarily of materials and are stated at the lower of cost (first-in, first-out) or market value. Manufacturing work-in-process and finished products inventory includes all direct costs, such as labor and material, and those indirect costs, which are related to production, such as indirect labor, rents, supplies, repairs and depreciation costs.

Prepaid expenses and other current assets - Prepaid expenses and other current assets include non-trade receivables that are collectible in less than 12 months and various prepaid amounts that will be charged to expenses within 12 months. Non-trade receivables that are collectible in 12 months or more are included in long-term assets.

Property and equipment - All property and equipment are valued at cost. Depreciation is computed using the straight-line method for financial reporting over the following useful lives:

Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.

Intangible assets - Intangible assets are comprised of patents. Intangible assets are amortized over their estimated useful lives using the straight-line method.

Revenue recognition - The Company's revenue consists of media product and equipment sales. Revenues from media sales are recognized, net of sales allowances, when products are shipped and risk of loss has transferred to customers, collection is probable, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable. The Company offers customers the option to lease or purchase their equipment. Lease agreements are typically for three month periods and renewed at the end of each agreement, if necessary. The lease agreements meet the criteria for classification as operating leases. Revenue on lease agreements is recognized as income over the lease term.

Revenues on long-term contracts related to construction of equipment are recognized on the percentage-of-completion basis using costs incurred compared to total estimated costs. Costs are recognized and considered for percentage completion and revenues are not related to the progress billings to customers. Revenues are not related to the progress billings to customers. Revenues are based on estimates, and the uncertainty inherent in estimates initially is reduced progressively as work on the contract nears completion. A contract is considered complete when all costs except insignificant items have been incurred and customers have accepted the completed contract.

Contract costs include all direct labor and benefits, materials unique to or installed to the project, subcontractor costs, as well as general and administrative costs relative to contract performance. Provision for estimated losses on uncompleted contracts is made in the period in which such losses are determined. No such provisions have been recognized. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and income, which are recognized in the period in which the revisions are determined. Actual results could vary from estimates used in the financial statements.

Costs and estimated earnings in excess of billings on uncompleted contracts represent revenues recognized in excess of amounts billed (underbillings). Billings in excess of costs and estimated earnings on uncompleted contracts represent billings in excess of revenues recognized (overbillings). Contract retentions are recorded as a component of accounts receivable.

Impairment of long-lived assets - The Company accounts for long-lived assets in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360, Property, Plant and Equipment. Long-lived assets to be held and used, including property and equipment and intangible assets with definite useful lives, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss, if any, is recognized for the difference between the fair value and carrying value of the assets. Impairment analyses, when performed, are based on the Company's business and technology strategy, management's views of growth rates for the Company's business, anticipated future economic and regulatory conditions, and expected technological availability. For purposes of recognition and measurement, the Company groups its long-lived assets at the lowest level for which there are identifiable cash flows, which are largely independent of the cash flows of other assets and liabilities. No impairment charges were recorded in the six months ended June 30, 2011 and 2010, and the year ended December 31, 2010.

Shipping and handling costs - Consistent with FASB ASC 605-45-50 Shipping and Handling Fees and Costs, the Company classifies shipping and handling amounts billed to customers as revenue, and shipping and handling costs as a component of costs of goods sold.

Research and development costs - Research and development costs are expensed as incurred. Research and development expense for the six months ended June 30, 2011 and 2010, and the year ended December 31, 2010 was approximately $187,000, $108,000 and $248,000, respectively.

Advertising costs - The Company expenses advertising costs as incurred. Advertising expense for the six months ended June 30, 2011 and 2010, and the year ended December 31, 2010 was approximately $3,000, $8,000 and $32,000, respectively.

Rent expense- The Company records rent expense on a straight-line basis for operating lease agreements that contain escalating rent clauses. The deferred rent liability included in payroll and accrued expenses in the accompanying balance sheet represents the cumulative difference between rent expense recognized on the straight-line basis and the actual rent paid.

Income Taxes -Income taxes consist of taxes due plus deferred taxes related primarily to differences between the basis of depreciation, inventory capitalization, and net operating losses, and timing differences of research and development tax credits for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future taxable income and tax credits that are available to offset future federal income taxes. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. The Company has elected to use the reduced credit method, under section 280C, for calculating federal research and development tax credits. Under this method research and development costs are expensed as incurred. The Company recognizes interest accrued related to tax in interest expense and penalties in operating expenses. During the six months ending June 30, 2011 and 2010, and the year ended December 31, 2010 the Company recognized no interest or penalties. The Company's tax years 2007 through 2010 remain subject to examination by federal and state income tax jurisdictions.

Earnings per share - Basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and potentially dilutive shares outstanding during the period. Potentially dilutive shares consist of the incremental common shares issuable upon conversion of the exercise of common stock options. Potentially dilutive shares are excluded from the computation if their effect is antidilutive.

Fair value of financial instruments - The Company uses the framework in ASC 820, Fair Value Measurements and Disclosures to determine the fair value of its financial assets. ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value and expands financial statement disclosures about fair value measurements.

The hierarchy established by ASC 820 gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).

The three levels of the fair value hierarchy under ASC 820 are described below: 

·; Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

·; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

·; Level 3: Unobservable inputs for the asset or liability.

The Company's financial instruments as of June 30, 2011 and 2010, and December 31, 2010 include cash and cash equivalents, accounts receivable, accounts payable, the line of credit, and the note payable to the shareholder. The carrying values of these financial instruments approximate fair value due to the short term nature of those assets and liabilities.

A summary of the Company's assets and liabilities at fair value as of June 30, 2011, classified according to the levels used to value them, are as follows:

3. Accounts receivable

Accounts receivable and their respective allowance amounts at June 30, 2011 and 2010, and December 31, 2010 follow:

4. Inventories

Inventories consist of the following at June 30, 2011 and 2010, and December 31, 2010:

5. Property and equipment

Property and equipment consists of the following as of June 30, 2011 and 2010 and December 2010:

Depreciation expense for the six months ended June 30, 2011 and 2010, and the year ended December 31, 2010 was approximately $48,000, $20,000 and $43,000, respectively.

6. Intangible assets

During 2009, the Company entered into a patent rights purchase agreement with a shareholder. The agreement provided for the immediate payment of $28,000 in 2009 with the possibility of an additional $72,000 based on profits on the sales of a particular product. During 2010, the Company paid $22,000 based on profits on the sales of the product. The patent is amortized utilizing the straight-line method over a useful life of 17 years. Accumulated amortization on the patent was approximately $5,000, $2,000 and $3,000 as of June 30, 2011 and 2010, and December 2010 respectively.

Intangible assets as of June 30, 2011 and 2010, and December 31, 2010 consist of the following:

Approximate aggregate future amortization expense is as follows:

Amortization expense for the six months ended June 30, 2011 and 2010, and year ended December 31, 2010 was approximately $19,000, $19,000 and $37,000, respectively.

7. Employee loans and advances

In April 2010, the Company made advances to two employees in the total amount of $50,000 at an annual interest rate of 0.79%. Fifty percent of the employees' debt, principal and interest, will be forgiven on the first anniversary of the promissory note, provided the employee remains in full-time employment; the remaining balance will be forgiven on the second anniversary of the promissory note. In the event the employee ceases to be a full-time employee of the Company for any reason before the second anniversary of the promissory note, any remaining balance, principal and interest, will be due and payable within thirty days. The balance outstanding at June 30, 2011 and 2010, and December 31, 2010 was $25,000, $50,000, and $50,000 respectively.

In May 2010, the Company made a loan to an employee, who is also a minority shareholder, of approximately $33,000 at an annual interest rate of 0.59%. Payments of both principal and interest will be recognized through May 2014. The balance outstanding at June 30, 2011 and 2010, and December 31, 2010 was approximately $22,000, $33,000, and $25,000 respectively.

In February 2011, the Company made an interest-free loan to an employee in the amount of $3,500. In June 2011 the Company made an interest-free loan to another employee in the amount of $2,000. The combined outstanding balance at June 30, 2011 was $5,000.

These loans and advances were made as a courtesy to the employees and should not be considered to be at the market rate of interest or at arms-length. The Company believes any adjustment to impute interest would be immaterial to the financial statements.

8. Income taxes

Provisions for income tax include current and deferred taxes. Deferred income taxes and benefits are provided for differences between financial reporting and tax purposes arising from timing differences related to depreciation, inventory capitalization, customer deposits and a net operating loss.

The tax effects of significant items comprising the Company's deferred taxes are as follows:

At June 30, 2011 and 2010, and December 31, 2010, the Company has net operating loss carryforwards of approximately $4,108,000, $4,131,000, and $4,194,000 respectively, that may be offset against future taxable income through 2027. For the six months ended June 30, 2011 and 2010, and the year ended December 31, 2010, a deferred tax asset of approximately $1,550,000, $1,559,000, and $1,583,000, respectively, has been recognized for these prior carryforward items. A valuation allowance was applied to these assets in years prior to 2010. Prior to 2008, the Company had no assurance that future taxable income would be sufficient to fully utilize the net operating loss carryforwards and charitable contribution carryforwards. Beginning in 2008, a portion of the prior valuation allowances for these items were eliminated because current operations indicated that a partial realization of the related deferred tax assets was more likely than not.

The effective tax rate of the Company's provision for income taxes differs from the federal statutory rate as follows:

The 2010 and 2011 tax provisions differ from the amounts that would be obtained by applying federal rates to pretax income primarily because of prior year net operating losses. There were no current taxes payable because all of the taxable income for 2010 and 2011 was offset by the net operating loss carried forward from prior years.

Effective January 1, 2009, the Company implemented the accounting guidance for uncertainty in income taxes using the provisions of FASB ASC 740.

Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities. Such tax positions initially and subsequently need to be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns. It also believes that its accruals for tax liabilities are adequate for all open tax years after 2008 for federal and state based on an assessment of many factors including experience and interpretations of tax laws applied to the facts of the matter.

The Company has concluded that there are no significant uncertain tax positions requiring disclosure, and there are no material amounts of unrecognized tax benefits.

9. Line of credit debt

During 2010 and 2011, the Company had a bank line of credit that allowed for borrowings of up to $400,000. The line of credit is revolving and is payable on demand. The balance on the line of credit at June 30, 2011 and 2010, and December 31, 2010 was approximately $264,000, $180,000 and $314,000 respectively. The line of credit bears an interest rate of prime plus 0.50%. The interest rate at June 30, 2011 and 2010, and December 31, 2010 was 3.55%. The line of credit is guaranteed by a shareholder of the Company and collateralized by all assets of the Company. Interest expense related to this loan for the six months ended June 30, 2011 and 2010, and the year ended December 31, 2010 was approximately $5,000, $1,000 and $5,000 respectively.

10. Note payable

In April, 2011, the Company entered into a lending agreement with a shareholder in the original amount of $1,500,000, payable within 5 days after the Company receives at least $15,000,000 in cash proceeds from an equity offering. The note has an interest rate of 10%, and the Company issued the shareholder 50,000 warrants to purchase common stock of the Company with an exercise price of $0.01 per share. The shareholder may exercise his warrants until April 3, 2016. The shareholder agreed not to exercise this warrant on Issuance. The note is recognized net of a discount related to the stock warrant. The net balance of this note at June 30, 2011 was $1,426,000 and interest expense related to this loan was approximately $48,000 for the six months ended June 30, 2011.

11. Commitments and contingencies

Operating and Capital Leases - The Company has entered into capital lease agreements for equipment through 2014. Equipment under capital leases together with accumulated depreciation at June 30, 2011 and 2010, and December 31, 2010 is as follows:

The Company also entered into an operating lease for a commercial building on July 1, 2006. The lease was amended on August 19, 2009. The amended lease commenced December 2009, with monthly payments of approximately $6,000 through June 2011. The lease was amended on March 22, 2011 to extend the term through June of 2013 with monthly payments of approximately $6,000 beginning in July 2011. The amendment also grants a three-year option through June 2016 with monthly payments ranging from approximately $6,000 to $7,000. The Company has not yet determined whether it will execute the option.

Future minimum lease payments under the capital and operating leases, together with the present value of minimum lease payments as of June, 2011 are as follows:

Rent expense for the six months ended June 30, 2011 and 2010, and the year ended December 31, 2010 was approximately $48,000, $40,000 and $102,000, respectively.

12. Related party transactions

The Company holds a patent rights purchase agreement since 2009 with a shareholder as described in Note 6.

During 2010, the Company advanced funds in the amount of approximately $33,000 to a shareholder to be repaid over the course of three years as further described in Note 7. The balance outstanding at June 30, 2011 and 2010, and at December 31, 2010 was approximately $22,000, $33,000 and $25,000, respectively.

In April, 2011, the Company entered into a borrowing agreement with a shareholder in the original amount of $1,500,000, payable within 5 days after the Company receives at least $15,000,000 in cash proceeds from an equity offering. The note has a stated interest rate of 10%, and the Company issued the shareholder 50,000 warrants to purchase common stock of the Company, as further described in Note 10. The note is recognized net of a discount related to the stock warrant. The effective interest rate relating to this note is 17% with consideration of the discount on the issuance of the note. The balance of this note at June 30, 2011 was $1,426,000 and interest expense related to this loan was approximately $48,000 for the six months ended June 30, 2011.

13. Concentrations

At June 30, 2011, 63% of the accounts receivable totaling approximately $303,000 was due from two customers. During the six months ended June 30, 2011, the Company received 52% of its gross sales from four customers totaling approximately $1,583,000. During the same six month period, the Company purchased 27% of its raw materials from two vendors totaling approximately $936,000.

At June 30, 2010, 68% of the accounts receivable totaling approximately $384,000 was due from five customers. During the six months ended June 30, 2010, the Company received 29% of its gross sales from two customers totaling approximately $757,000. No purchase concentrations were apparent during this period. No vendor accounted for more than 10% of inventory purchases for the same six month period.

At December 31, 2010, 70% of the accounts receivable totaling approximately $225,000 was due from three customers. During 2010, the Company received 32% of its gross sales from two customers totaling approximately $1,378,000. Also during 2010, the Company purchased 78% of its raw materials from four vendors totaling approximately $908,000.

14. Subsequent Events

Management has evaluated subsequent events through September 16, 2011, the date the financial statements were available to be issued.

Authorized Shares and Shares Issuance

On July 11, 2011 the authorized share capital of the Company was increased to 100,000,000 Common Shares of $0.025 each. On August 4, 2011 the Company issued an additional 6,377,871 shares of common stock for $3.44 per share ("the Issuance"). The Company incurred costs in the Issuance of these shares through September 16, 2011 of approximately $3,415,000. The Company received proceeds of approximately $20,000,000.

Stock Options

On July 11 and 21, 2011, the Company's shareholders approved the Conversion Shares and the Directors' Shares, as well as, the Plan Shares and Omnibus Performance Incentive Plan ("Plan"). This included the termination of all outstanding stock incentive plans, cancellation of all outstanding stock incentive agreements, and the awarding of stock incentives and to directors and certain employees and consultants. The Company established the Plan to attract and retain directors, officers, employees and consultants. The Company reserved ten percent of the Common Shares issued and outstanding immediately following completion of the issuance of additional shares discussed above.

Upon the Issuance of these additional shares, an award of share options was made to the Directors and certain employees and consultants, and a single award of restricted shares was made to the Chief Financial Officer. The awards of stock options and restricted shares made upon the Issuance were in respect of 85 percent of the Common Shares available under the Plan, equivalent to 8.5 percent of the enlarged share capital. The total number of shares reserved for stock options under this Plan is 1,272,121, with 1,068,056 shares allocated as of August 4, 2011. The shares are allocated as 814,251 shares to non-executive directors and 253,805 shares to employees and executives.

The options granted to non-executive directors upon the Issuance have an exercise price equal to $0.86 per share. All other options granted under the Plan upon the Issuance have an exercise price equal to $3.44. Unless otherwise agreed, all options vest contingent on continuing service with the Company at the vesting date and compliance with the covenants applicable to such service.

Employee options vesting over three years vest a third on 1 January 2012, a third on 1 January 2013 and a third on 1 January 2014. Vesting accelerates in the event of a change of control. Options granted to non-executive directors vested partially on issuance and will vest partially one year later. All non-executive director options must be exercised during the course of the 2015 calendar year. Vesting accelerates in the event of a change of control.

Share Award

On August 5, 2011, the Company issued a restrictive share award to the Chief Financial Officer. This award consists of 153,063 shares of Common Stock in the Company. These shares were vested in full upon the Issuance. However, certain shares are subject to a number of restrictions and forfeiture provisions that continue for up to two to three years, based on performance, the achievement of certain financial milestones and continuity of service.

17,007 of the shares were transferred to the Chief Financial Officer without restrictions or forfeiture provisions effective at the time of the Issuance. 34,014 of the shares are subject to restrictions and forfeiture provisions that laps ratably each quarter over a 24 month period.

The Working Capital shares, consisting of 51,021 of the shares transferred, are subject to restrictions and forfeiture provisions that laps at the time the Company receives $15,000,000 in cash from additional investors during the 3 year period following the Issuance. The Business Goals shares, also consisting of 51,021 of the shares, are subject to restrictions and forfeiture provisions that laps on specific dates as the Company obtains certain prospective revenue amounts in its pipeline. Release of both the Working Capital and Business Goals shares are dependent upon the Chief Financial Officer's continued service with the Company.

Stock Warrants

On July 29, 2011 the Company and one of its consultants entered into a warrant agreement for the consultants assistance of issuing additional shares of stock on August 4, 2011. Pursuant to this agreement, the Company agreed to grant to the consultant a warrant to subscribe for Common Shares representing 1.5 percent of the additional shares issued. The warrant vested upon the Issuance. The exercise price of the warrant is $3.44. The warrant is exercisable in whole or in part at any time in the period between August 5, 2011 and August 5, 2016.

The warrant is exercisable, at the election of the consultant, without payment of the exercise price, for such number of Common Shares as is calculated in accordance with a formula set out in the warrant agreement. In summary, that formula operates by calculating the notional net gain that the shareholder would have made if it had exercised its warrant at the exercise price and then sold its shares at the current market value. The formula then uses the notional net gain to calculate such lesser number of Common Shares that the shareholder would need to acquire (at nil acquisition cost) in order to achieve the same notional net gain. In the event that the shareholder exercises the warrant (or any part of it) in this manner, the warrant is deemed to have been exercised in respect of such number of Common Shares as would have been required in order to achieve the same notional net gain had the warrant been exercised at the exercise price.

In addition, either the consultant or the Company may elect, in certain circumstances, including a merger or sale of substantially all of the assets of the Company, to receive or provide (as the case may be) a cash payment, in substitution for the warrant, calculated in accordance with a formula set out in the warrant agreement.

Shareholder Loan Repayment

As part of the Issuance, the note payable to a shareholder of $1,426,000 referred to in Notes 10 and 12, was paid by conversion to 437,353 shares of the Company's common stock.

Forward Looking Statements

This release contains certain statements that are or may be "forward-looking statements". These statements typically contain words such as "intends", "expects", "anticipates", "estimates" and words of similar import. All the statements other than statements of historical facts included in this announcement, including, without limitation, those regarding MyCelx's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to MyCelx's products and services) are forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and therefore undue reliance should not be placed on such forward-looking statements. There are a number of factors that could cause the actual results, performance or achievements of MyCelx or those markets and economies to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding MyCelx's present and future business strategies and the environment in which MyCelx will operate in the future and such assumptions may or may not prove to be correct. Forward-looking statements speak only as at the date they are made. Neither MyCelx nor any other person undertakes any obligation (other than, in the case of MyCelx, pursuant to the AIM Rules for Companies) to update publicly any of the information contained in this announcement, including any forward-looking statements, in the light of new information, change in circumstances or future events.