NEXE Innovations Announces Financial Results for the Three Months Ended August 31, 2024

Rhea-AI Summary

NEXE Innovations reported Q1 2025 financial results with a net income of $2.29 million ($0.024 per share), compared to a net loss of $2.04 million in the previous year. The company sold its Surrey property for $5.7 million, resulting in a net gain of $3.7 million. Revenue was $3,147, down from $87,702 in the previous year. The company maintains a strong cash position of $15.6 million with minimal debt of $0.6 million. Operating expenses decreased across multiple categories, including SG&A and R&D. NEXE expects larger-scale customer production and revenue growth starting in Q2 2025.

Positive

• Strong cash position of $15.6 million
• Net income of $2.29 million vs previous year's loss
• Property sale generated $3.7 million net gain
• Reduced operating expenses across multiple categories
• Minimal debt of $0.6 million

Negative

• Revenue declined 96% to $3,147 from $87,702 year-over-year
• Cost of goods sold exceeded revenue ($11,425 vs $3,147)
• Increased depreciation expenses to $519,700 from $391,852

WINDSOR, ON, Oct. 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 three-month period ended August 31, 2024 ("Q1 2025").

NEXE has been working with several customers and expects larger-scale customer production to be on the horizon.  The revenues resulting from these contracts are expected to start in Q2 2025. We expect a solid growth rate in revenues in fiscal 2025.

"With our proprietary fully compostable resin, technology, and on-shored facility, we believe we are redefining what's possible. Larger-scale customer production is on the horizon, and in our view, we are positioned to drive transformative growth in the sustainable manufacturing space across different products and industries," stated Ash Guglani, President and Co-founder of NEXE.

Over the last two years, NEXE has invested in developing a compostable solution and strategically invested in onshoring and building a vertically integrated manufacturing facility. This investment has resulted in a cost-competitive product with plastic and aluminum pods. Onshoring and building a vertically integrated facility has several benefits, including protecting our IP and trade secrets, quality control, minimizing error rates, and economies of scale. Another key strategic benefit is our in-house tooling shop, which we expect will ensure minimal machine downtimes and the ability to build prototypes and molds faster. We believe this in-house capability will allow us to enter new markets quickly.

As we implemented our new business model and fully onshored strategy, the team was disciplined in maintaining a strong financial position and keeping costs minimal. We believe the fundamentals for the business remain strong and have a strong financial position to execute the business plan, particularly:

• NEXE has a strong cash position to execute its strategy and work with large-scale coffee companies. At the end of Q1 2025, our total cash position is $15.6 million (including GICs and term deposits).
• NEXE has minimal debt. The current debt outstanding is $0.6 million, related to a government loan. NEXE's commitments at the end of the quarter were $1.8 million, with minimal capex expected over the next two years.

Q1 2025 Results:

During the three months ended August 31, 2024, the Company had a net income of $2,292,733 or $0.024 per share, compared to a net loss of $2,040,355 or $0.021 per share for the comparable period last year. The change from net loss to net income was predominantly a result of the following:

• The Company owned property in Surrey, BC, Canada, sold on July 30, 2024, for gross proceeds of $5,700,000 million, resulting in a gain-on-sale of $3,848,348 less-cost-to-sell of $147,794 resulting in a net gain of $3,700,554.
• Revenue was $3,147 (August 31, 2023 – $87,702), and cost of goods sold was $11,425 (August 31, 2023 – $188,087). The cost of goods included non-cash expenses, such as production machinery and equipment depreciation.
• Selling, General, and Administrative expenses decreased to $757,754 (August 31, 2024 - $1,065,030) due to lower consulting fees, advertising and marketing, and compensation. The Company benefited from consolidating operations to the Windsor facility. The management team continues to maintain a disciplined approach to allocating resources.
• A non-cash share-based compensation expense decreased to $135,524 (August 31, 2023 - $250,972) for stock options granted to directors, officers, and employees.
• Interest and accretion expense decreased to $34,114 (August 31, 2023 - $51,277) due to declining government loan balances and the lease liability elimination.
• Interest income increased to $157,000 (August 31, 2023 - $133,564) primarily from the GIC deposits.
• Depreciation increased to $519,700 (August 31, 2023 - $391,852) due to additional equipment purchased and assets becoming available for use that were not previously depreciated.
• Research and development expenses decreased to $116,712 (August 31, 2023 ‐ $310,375). The Company will continue to invest in R&D to develop new products, technology, and formulations.

The Company's Q1 2025 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.

We also wanted to provide an update on our previously announced investor relations arrangements. From our strong cash position and working capital, we will be paying the fees associated with our investor relations arrangements with Clarkham Capital Ltd., Torque Capital Partners (SmallCapInvestor), Proactive Investors North American Inc. and Independent Trading Group (ITG) Inc. We also wanted to confirm that Chris Kaplan will be providing the market-making services pursuant to our market-making agreement with Independent Trading Group (ITG) Inc. We discussed the details of these arrangements in our corporate update news release issued on October 18, 2024.

 *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, expected timing for customer production and receipt of revenue, consumer trends, industry innovation, the Company's use of working capital, 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.

FAQ

What was NEXE Innovations (NEXNF) revenue in Q1 2025?

NEXE Innovations reported revenue of $3,147 for Q1 2025, compared to $87,702 in the same period last year.

How much cash does NEXE Innovations (NEXNF) have as of August 31, 2024?

NEXE Innovations had a total cash position of $15.6 million, including GICs and term deposits, as of August 31, 2024.

What was NEXE Innovations (NEXNF) net income for Q1 2025?

NEXE Innovations reported a net income of $2,292,733 ($0.024 per share) for Q1 2025, compared to a net loss of $2,040,355 in the previous year.

How much did NEXE Innovations (NEXNF) sell its Surrey property for in July 2024?

NEXE Innovations sold its Surrey property for gross proceeds of $5.7 million on July 30, 2024, resulting in a net gain of $3.7 million.