Agreement signed with Integumen plc

AIM share code: MWG

18 March 2020

Modern Water plc

("Modern Water" or "Company")

Modern Water signs $3.75m estimated value three-year production agreement with Integumen plc

Modern Water, the global water crisis monitoring and solutions provider, announces that it has signed a three-year revenue sharing manufacturing agency agreement ("Agreement") with Integumen plc ("Integumen") to manufacture, and provide logistic support for, the supply of the Company's water monitoring reagent consumables to Monitoring Division clients on behalf of the Company. These supplies have historically been manufactured by the Company. The Agreement enables the Company to fulfil an order backlog of approximately $665,000 which it is not currently able to meet. The Agreement has an estimated value of $1.25m (£1.04m) per year for 3 years, worth a total of $3.75m (£3.12m), based on Modern Water's historic sales levels of reagent consumables, although is no guarantee that these revenue levels will be met. The revenue share split is 60% / 40% in favour of Modern Water, after costs, and is subject to rolling 12-month extensions thereafter.

Integumen has announced a further 100% expansion of its purpose-built product and development laboratories in York, UK, to 6,000 square feet, adding six more laboratory rooms to meet growing demand. Two of those laboratories will be allocated to the production of Modern Water's bacteria reagent. As part of the Agreement, a further three full-time laboratory technicians will be recruited to join Integumen's team of highly skilled scientific specialists in bacteria, virus and toxins.

Simon Humphrey, CEO of Modern Water, commented:

"This Agreement is a water-shed moment for Modern Water. We are moving from a self-contained production, sales, marketing and distribution company to a collaborative, cooperation and partnership business model. This immediately gives Modern Water access to state-of-the art laboratories in the UK without the need for capital expenditure. Integumen's superior development and manufacturing capabilities will enable us rapidly to grow our existing network of sales, marketing and distribution channels, delivering the quality of product we are synonymous with, whilst lowering operational costs."

Gerard Brandon, CEO of Integumen, commented:

"We are delighted to announce the continued expansion of our laboratories and to be able to provide European bacteria reagent manufacturing capacity and logistic support to Modern Water's sales, marketing and distribution in the US, EU, China and Japan. In addition to production of the bacteria reagents, our AI division is exploring options to develop data analytic tools for Modern Water's monitoring equipment, with the potential to add higher-value bolt-on real-time alert services leading to increased revenue per client."

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Notes:

Gerard Brandon is CEO, Executive Director and a 4.68% shareholder of Integumen and is Non-Executive Chairman and a 1.99% shareholder of Modern Water. As such Mr Brandon is not regarded as independent in relation to the Agreement and has taken no part in the Board's consideration of the terms of the Agreement or the decision to enter into the Agreement with Integumen. Simon Humphrey, Director, CEO and Nigel Burton, Non-Executive Director, are regarded as independent directors in relation to the Agreement.

About Modern Water

Modern Water was established in 2006 to develop and commercialise water recovery technologies to counter water crisis problems arising from climate change and a growing global population. Having invested £20m over the last 14 years, the results comprise a robust patent portfolio of cutting-edge technology, focused on monitoring of contaminated water and decontamination of wastewater, making recycling of water more efficient. Six countries across the world have legislated that Modern Water monitoring test systems are written into their environmental protection legislation.

About Integumen plc

Integumen is a scientific research and AI-as-a-Service company focused on production and analysis of bacteria, virus and toxins utilising artificial intelligent data analytics in regulatory technology, from scientifically proving the impact of skincare product claims on skin microbiome for top 10 global cosmetic company clients to remotely detecting water contamination in real-time.

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.