NEXE Innovations Announces Financial Results for the Three Months Ended November 30, 2024

Rhea-AI Summary

NEXE Innovations (NEXNF) reported financial results for Q2 2025 ended November 30, 2024. The company announced three strategic partnerships with ecoBeans, Bridgehead Coffee, and EKOCUPS, generating revenue of $70,754 from partial month production. The net loss was $1,645,655 ($0.017 per share) compared to $1,610,871 in the previous year.

The company maintains a strong financial position with $14.5 million in cash and minimal debt of $0.5 million. Operating expenses showed improvement with decreased selling, general and administrative costs to $906,001. NEXE is advancing its next-generation compostable Nespresso OriginalLine pods and expects 2025 revenues to exceed 2024 levels as new customers are onboarded.

Positive

• Revenue increased 109.8% YoY to $70,754 from $33,729
• Strong cash position of $14.5M with minimal debt of $0.5M
• Secured three strategic partnerships driving repeat orders
• Reduced SG&A expenses to $906,001 from $929,130
• Interest income increased to $118,083 from $24,854

Negative

• Net loss increased to $1,645,655 from $1,610,871
• Cost of goods sold increased to $226,050 from $88,060
• Gross margin remains negative
• Research and development expenses increased to $105,871 from $76,749
• Depreciation costs increased to $486,781 from $373,394

Insights

Financial Analyst

NEXE's Q2 2025 results reveal a company at an inflection point, with strategic partnerships beginning to materialize into revenue growth. The 109.8% YoY revenue increase to $70,754 represents just a partial month of production, suggesting significant growth potential as these partnerships fully ramp up.

The cost structure requires careful attention - with COGS of $226,050 significantly exceeding revenue, indicating current negative gross margins. However, this includes non-cash depreciation expenses and economies of scale could improve margins as production volumes increase. The SG&A expenses of $906,001 show disciplined cost management, decreasing YoY.

The company's financial position remains solid with $14.5M in cash and minimal debt. At the current quarterly cash burn rate of approximately $1.6M, this provides roughly 9 quarters of runway to achieve scale. The three new partnerships spanning retail, office coffee services and e-commerce channels provide diversified growth opportunities.

The breakthrough in proprietary resin technology could be a game-changer, potentially opening new verticals beyond coffee pods. The focus on R&D ($105,871 in Q2) demonstrates continued investment in innovation while maintaining cost discipline. The transition of existing customers from other compostable solutions to NEXE pods, as seen with Bridgehead Coffee, validates the product's competitive advantages.

The U.S. expansion through EKOCUPS is particularly noteworthy, targeting a market of ~40 million K-Cup compatible households. While quarter-to-quarter fluctuations are expected during the customer onboarding phase, the combination of expanding partnerships, technological advancement and strong balance sheet positions NEXE for potential acceleration in 2025.

WINDSOR, ON, Jan. 29, 2025 /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 November 30, 2025 ("Q2 2025").

Fiscal Q2 2025 was a milestone quarter for NEXE. In the quarter we announced three partnerships and since then, all three partnerships are driving repeat orders, with increasing order volumes reflecting strong market demand. The customer base spans multiple channels, including retail, office coffee services (OCS), and e-commerce, enabling us to reach distinct audiences and broaden our market penetration. Simultaneously, we are onboarding additional customers for our K-Cup-compatible products, which we believe will help ensure a robust pipeline for continued growth. We also remain focused on advancing our next-generation compostable Nespresso OriginalLine pods, with sampling efforts underway for two customers, and we anticipate rolling out these pods later this year.

The three partnerships were announced in the second half of November. The revenue generated in the quarter of $70,754 reflects a partial month of production. As we work with our new customers on transitioning SKUs to the NEXE BPI-certified compostable coffee pod, we expect that quarter-over-quarter results will fluctuate. However, we do expect annual 2025 revenues to be higher than 2024 as we onboard new customers and expand SKUs/offerings to existing clients. The sales cycle is long – and the initial outreach to the partnerships we announced in Q2 2025 started many quarters ago. The partnerships include:

1. ecoBeans: A West Coast brand available in retail locations and the Office Coffee Services space (OCS).
2. Bridgehead Coffee: An established premium coffee company in Ontario with over 40 years of history. This company transitioned from another compostable pod to our NEXE pod. Bridgehead works with well-known retail and grocery chains, including Costco, Whole Foods, Sobey's, and Farm Boy. Bridgehead has entered into a multi-period master manufacturing agreement with NEXE.
3. EKOCUPS: A high-volume online seller and Amazon retailer. This partnership will allow us to expand in the U.S. and build a strong foothold in the largest single-serve market. ~40 million U.S. households own a K-Cup compatible single-serve brewing system.

"This quarter marks a pivotal moment for NEXE as we believe our efforts are beginning to translate into tangible revenues, driven by increasing demand from our recently announced partnerships," stated Ash Guglani, President and Co-founder of NEXE, "We remain focused on scaling coffee and expanding our footprint by exploring new markets and verticals where we believe our proprietary resin can deliver sustainable solutions. The momentum from our partnerships, coupled with our ongoing R&D advancements, positions us to unlock additional revenue opportunities and drive long-term growth".

Through our R&D efforts to develop a compostable coffee pod that could withstand unique obstacles of withstanding heat, water, and pressure during the brewing process, resulted in an incredible breakthrough in our proprietary resin. In our view, this positions NEXE to potentially expand into industries where a sustainable solution would be the ideal replacement for plastic. We are exploring verticals with significant total addressable markets. To support these efforts, we are currently building prototypes that showcase our capabilities to key decision makers in specific industries. We believe these advancements may have the potential to open up new revenue-generating opportunities that we had not previously considered.

NEXE continues to be disciplined with managing its balance sheet. We have made the necessary capital investments to scale our proprietary resin across various form factors and believe minimal capital investments will be required in the short-term. We believe the fundamentals remain strong and have a strong financial position to execute the business plan, particularly:

1. NEXE has a strong cash position to execute its strategy and work with large-scale coffee companies and to start building on opportunities outside the coffee space. At the end of Q2 2025, our total cash position is $14.5 million.
2. NEXE has minimal debt. The current debt outstanding is $0.5 million, related to a government loan. NEXE's commitments at the end of the quarter were $1.3 million, with minimal capex expected over the next two years.

Q2 2025 Results:

During the three months ended November 30, 2024, the Company had net loss of $1,645,655 or $0.017 per share, compared to a net loss of $1,610,871 or $0.016 per share, for the comparable period last year.

The net loss is a result of the following:

1. Revenue was $70,754 (November 30, 2023 – $33,729) and cost of goods sold was $226,050 (November 30, 2023 – $88,060). The cost of goods included non-cash expenses, such as depreciation related to production machinery and equipment. Revenues reflect a partial month of production as partnerships were signed mid-November – late November.
2. Selling, General and Administrative expenses decreased to $906,001 (November 30, 2023 - $929,130) due to lower advertising and marketing, lower professional fees, and lower compensation.  The management team continues to maintain a disciplined approach to allocating resources.
3. A non-cash share-based compensation expense decreased to $24,582 (November 30, 2023 - $151,062) for stock options granted to directors, officers, and employees;
4. Interest and accretion expense decreased to $29,194 (November 30, 2023 - $47,335) as a result of declining balances of the government loan.
5. Interest income increased to $118,083 (November 30, 2023 - $24,854) primarily from the GIC deposits.
6. Depreciation increased to $486,781 (November 30, 2023 - $373,394) due to additional equipment purchased and assets becoming available for use which were not previously depreciated.
7. Research and development expenses decreased to $105,871 (November 30, 2023 ‐ $76,749). The Company will continue to invest in R&D to develop new products, technology and formulations. 

The Company's Q2 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.

Grant of Options, RSUs, and Cash Bonus Payments:

The Company also announces that it has granted 1,995,000 incentive stock options (the "Options") and 1,210,000 restricted share units ("RSUs") to certain directors, officers, consultants, and employees pursuant to its omnibus equity incentive plan. Each Option is exercisable into one common share of the Company at an exercise price of $0.44 per Option and expires five years from the date of grant.  The Options are subject to vesting in three equal installments: 1/3 after six months, 1/3 after 12 months, and the remaining 1/3 after 18 months from the grant date. Each RSU entitles the holder to receive one common share of the Company upon settlement which will occur 12 months from the date of grant, in accordance with the terms of the omnibus incentive plan.

*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

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, potential new revenue streams; the anticipated roll out of new products; expected timing for customer production and receipt of revenue, the Company's potential cash position; 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 for Q2 2025?

NEXE Innovations reported revenue of $70,754 for Q2 2025, representing a 109.8% increase from $33,729 in the same period last year.

How much cash does NEXE Innovations (NEXNF) have as of Q2 2025?

NEXE Innovations reported a cash position of $14.5 million at the end of Q2 2025.

What new partnerships did NEXE (NEXNF) announce in Q2 2025?

NEXE announced partnerships with ecoBeans, Bridgehead Coffee, and EKOCUPS in Q2 2025.

What was NEXE's (NEXNF) net loss for Q2 2025?

NEXE reported a net loss of $1,645,655 or $0.017 per share for Q2 2025.

What is NEXE's (NEXNF) current debt level?

NEXE has minimal debt of $0.5 million, related to a government loan.