NEXE Innovations Announces Financial Results for the Twelve-Month Period Ended May 31, 2024

WINDSOR, ON, Sept. 30, 2024 /PRNewswire/ - NEXE Innovations Inc. ("NEXE", the "Company", "we", "us" or "our") (TSXV: NEXE) (Frankfurt: NX5) (OTC: NEXNF), a compostable and innovative materials company, is pleased to announce its financial results for the twelve-month and three-month period ended May 31, 2024 ("Q4 2024").

During the quarter, the team continued to work with various potential business-to-business (B2B) customers and is currently in the final stages of negotiating master manufacturing agreements with multiple coffee companies. NEXE has procured a supply of certain long lead items/raw materials to fulfill purchase orders. In the interim period, revenues will fluctuate quarter over quarter as customers are at various stages of discussions, and revenues related to the master manufacturing agreements are expected to start in Q2/Q3 2025.

"We believe we are positioned for success and driving it with a strategic, forward-thinking approach to reshape the market. Our BPI-certified compostable products are already proven, and with our fully integrated, on-shored facility - where we manufacture our proprietary resin – in our view, we are setting a new benchmark in sustainable manufacturing. This is expected to not only make us cost-competitive with plastic but will ensure we deliver superior quality components to our customers," stated Ash Guglani, President and Co-founder of NEXE.

Fiscal 2023 Results:

For the year ended May 31, 2024, the Company recorded a net loss of $6,530,597, or $0.07 per share, compared to a net loss of $6,137,065, or $0.06 per share, for the twelve months ended May 31, 2023. The year-over-year differences are due to the following:

• Revenues increased to $149,264 (2023 - $49,758) and largely represent the sale to various companies, including low volume purchases by companies sampling the product as part of their decision making. NEXE is currently in the process of finalizing master manufacturing agreements with multiple companies for two-year terms. We expect to start processing some purchase orders related to these contracts in Q2 2025.
• Selling, General & Administrative expenses decreased to $3,646,171 (2023 - $4,453,682) primarily due to lower marketing, consulting, and professional fees. NEXE also decreased salaries and management fee expenses. This is the fourth year of decrease as the Company maintains a disciplined approach to managing expenses.
• Depreciation increased to $1,614,650 (2023 – $987,551) due to additional equipment purchased.
• The Company recorded a non-cash interest expense of $180,548 (2023 – $257,459) related to the accretion of interest associated with the interest-free Government loan from the Western Innovation program.
• Research and development expenses increased to $764,902 (2023 - $380,089) as NEXE invests in product development to stay ahead of the curve.
• A non-cash share-based compensation expense of $635,276 (2023 - $713,293) was recorded for stock options granted to directors, officers, employees, and advisors.

Outlook and Financial Position

NEXE believes the overall coffee industry is moving towards more sustainable solutions. Recently, the largest coffee pod makers, Keurig and Nespresso, unveiled strategies to move towards compostable solutions.1 This development highlights a continuing demand for compostable solutions, which NEXE expects will help shift the overall market and regulatory environment to accept these solutions. More importantly, with the largest players entering the compostable space, NEXE believes this is expected to increase investments in composting infrastructure. We are already seeing certain U.S. states move towards labeling laws that help consumers distinguish compostable products that can be composted and dispose of them properly - Colorado's new Compostable Product Labeling Act is a good example2. In our view, this will help consumers counter false claims and prevent contamination issues that can result in composting facilities.

In the U.S., single-cup brewing systems are owned by 45% of households and are the second most popular way of brewing a cup of coffee at home3. Keurig accounts for $4.1 billion2 of the market, and it is estimated that Nespresso accounts for ~$1.5 billion3. We believe this means an additional $2.8 billion of pods outside these two major players will be looking for more sustainable solutions. The overall market is expected to grow by over 26% by 20283, and given the current capacity in the market and the capital expenditures and other requirements to build a production facility – we expect demand for sustainable solutions will outstrip supply. In management's view, this would put NEXE in an opportunistic position with its vertically integrated facility that could be expanded to address such a supply shortfall.

In our opinion, there are limited options available in the market for sustainable coffee pod solutions, and NEXE is one of the very few hard-bottom, fully enclosed pods to be certified compostable by a third party—the BPI Institute. Based on the BPI Institute listing of certified products, most compostable pods are soft-bottom pods. The NEXE single-serve pod is:

• Compatible with leading single-serve coffee format machines.
• BPI-certified. The BPI certification is a third-party verification of ASTM standards for compostable products and is intended to protect consumers against false claims and greenwashing.
• Non-toxic and PFAS-free (one of the requirements for BPI certification).
• More volume capacity compared to standard single-serve pods/capsules. A key benefit for premium and bold-tasting coffee. The NEXE pod holds up to 13g of coffee.

NEXE is engaged in ongoing discussions for partnerships with coffee companies of various sizes. These companies have tested various samples, conducted their due diligence, and engaged in discussions with their end customers, including grocery chains and online distributors, to help forecast demand and contractual details. As of September 30, 2024, NEXE is finalizing master manufacturing contracts with coffee companies working with NEXE over the last several months. NEXE has already started to procure long lead items/raw materials to meet the requirements of purchase orders that these master agreements will cover. NEXE has also received approval from the proper certifying bodies to comply with food and beverage-related requirements.

At the end of fiscal 2024, NEXE had a working capital of $12.8 million with cash and cash equivalents that totaled $8.1 million, and investment in GICs of $3.0 million. The balance does not reflect the non-dilutive gross cash proceeds from the sale of its Surrey Facility of $5.7 million. The facility was debt-free, and the Company has minimal debt outstanding of $0.67 million. Management believes it is well-funded to execute its strategy.

The Company's Q4 2024 financial statements and related management's discussion and analysis are available on NEXE's SEDAR+ profile at www.sedarplus.ca and the Company's website at www.nexeinnovations.com.

*NEXE Innovations Inc. is not affiliated with, endorsed, or sponsored by Keurig®. Keurig® is a registered trademark of Keurig Dr Pepper Inc.

**NEXE Innovations Inc. is not affiliated with, endorsed, or sponsored by Nespresso®. Nespresso® is a registered trademark of Société des Produits Nestlé S.A

About NEXE Innovations Inc.

NEXE Innovations is focused on providing innovative compostable material solutions and packaging to the B2B segment to help businesses achieve their sustainability goals. NEXE Innovations has developed a proprietary and patented compostable material that can withstand heat, pressure, and water. Our flagship product, the NEXE Pod, a BPI-certified compostable coffee pod, showcases our material's durability and is an ideal substitute for plastic. The NEXE pod is compatible with major coffee brewing machines and is manufactured at NEXE's vertically integrated facility based in North America. Discover our innovative approach to sustainability at www.nexeinnovations.com and join our journey on social media @nexeinnovations. #compostablecoffeepods #sustainability #greentech

On behalf of the Company:
Ash Guglani
President & Director

For investor relations contact:
Kam Mangat
VP, Investor Relations & Corporate Strategy
invest@nexeinnovations.com
Office +1-604-359-4725
Mobile +1-604-359-4742

For media relations contact: media@nexeinnovations.com

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this release are forward-looking statements or information, which include, but are not limited to, statements in respect of the execution of master manufacturing agreements and expected timing of receipt of revenue under those agreements, indications of interest from potential clients, government regulations, potential receipt of government refunds, NEXE's potential cash position, consumer trends, Company's use of working capital, sale of property or assets of the Company, consolidation of operations and the Company's overall business strategy, increases in production and revenue, and the Company's long-term growth and development plans. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such information can generally be identified by the use of forwarding-looking wording such as "may", "expect", "estimate", "anticipate", "intend", "believe" and "continue" or the negative thereof or similar variations. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including but not limited to, the Company's ability to execute on its business strategy including the execution of master manufacturing agreements on terms acceptable to the Company, , and those risks set out in the Company's management's discussion and analysis for year ended May 31, 2024 under the headings "Risk and Uncertainties". Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the demand for its products, anticipated costs, and the ability to achieve goals. Factors that could cause the actual results to differ materially from those in forward-looking statements include receipt of necessary approvals and general economic, market or business conditions. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The reader is cautioned not to place undue reliance on any forward-looking information.

The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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SOURCE Nexe Innovations Inc.