Mr. Eric Eyerman reports

CALIFORNIA NANOTECHNOLOGIES ANNOUNCES PRELIMINARY Q2 2024 RESULTS AND REVISED OMNI-LITE DEBT AGREEMENT

California Nanotechnologies Corp. expects revenues of approximately $675,000 (U.S.) for the second quarter ended Aug. 31, 2023. This is expected to represent another quarterly revenue record and a 148-per-cent increase over Q2 FY (fiscal year) 2023 revenues of $271,969 (U.S.). The company is also expected to continue to deliver strong profitability, with preliminary estimated EBITDA (earnings before interest, taxes, depreciation and amortization) (1) of approximately $240,000 (U.S.), compared with $49,437 (U.S.) in Q2 FY 2023, and preliminary estimated net income of approximately $175,000 (U.S.), compared with a net loss of $26,496 (U.S.) for the same period last year.

The preliminary financial results reported here are based on current preliminary estimates and shall be qualified in their entirety by the company's interim financial statements and MD&A (management's discussion and analysis) for the quarter ended Aug. 31, 2023, which are expected to be filed on SEDAR+ on or before Oct. 30, 2023.

"We are happy to see our hard work come together this quarter as we expect to deliver on our long-term growth objectives. Our team has been busy executing on several opportunities, including work with our 'green' steel cleantech customer, who is our largest account year to date. Across the board, we're observing growth prospects as more customers experience positive outcomes through our advanced material technologies in both spark plasma sintering and cryomilling," stated Eric Eyerman, chief executive officer of California Nanotechnologies.

Furthermore, California Nanotechnologies is pleased to announce it has amended certain terms of the loan agreement it has in place with Omni-Lite Industries Canada Inc. Omni-Lite, a founding shareholder of California Nanotechnologies, has an equity ownership position in California Nanotechnologies of approximately 19 per cent. At the time of advancement, the loan included a demand feature, which resulted in the loan being classified as a current liability on the company's balance sheet.

Omni-Lite and California Nanotechnologies have agreed to amend the loan agreement so as to eliminate demand provision in the loan agreement and include certain financial and negative covenants relating to leverage, change of control events, dividends and other matters. In addition, California Nanotechnologies will provide Omni-Lite with an immediate principal payment of $100,000 (U.S.) and continue monthly principal payments of $10,000 (U.S.). This $100,000 (U.S.) payment is in addition to the $120,000 (U.S.) accelerated debt prepayment made in Q4 FY 2023 that covered all required principal payments in FY 2024.

The interest rate on the loan remains at 7.5 per cent and maturity continues to be set at May 30, 2025. California Nanotechnologies believes that reducing and reclassifying its debt are in the best interests of shareholders and maintains the option to prepay all or a part of the loan at any time. The amendment to the loan agreement with Omni-Lite constitutes a related party transaction as defined under the policies of the TSX Venture Exchange and Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions. The company is relying on an exemption from the minority shareholder approval requirement applicable to this related-party transaction under Section 5.5(a) of MI 61-101, as neither the fair market value nor the consideration to be paid to Omni-Lite exceeds 25 per cent of the company's market capitalization.

"Cal Nano has significantly reduced its debt in recent years," stated Mr. Eyerman. "Since fully repaying our bank term loan in FY 2022, we've continued to reduce our Omni-Lite loan. Our debt is now approximately a third less than it was when we initially secured bank loans to purchase our SPS machine in FY 2017 and FY 2018. Our aim is to continue this path towards debt reduction from our balance sheet."

To strengthen California Nanotechnologies' balance sheet for future capacity expansion, the company also wishes to announce that it is considering a small equity financing in the near term. Any equity financing is expected to include participation from insiders of the company.

Lastly, California Nanotechnologies continues to execute on a growing backdrop of industry activity, which includes more manufacturing quotes and orders signed for its production services. To create additional awareness, the company will be attending several industry events in the next quarter, which include the MS&T23 Technical Meeting and Exhibition, World Congress on High Entropy Alloys (HEA 2023) and customer specific ones. California Nanotechnologies looks forward to providing updates on its business development and sales traction as developments occur.

(1) Non-IFRS (international financial reporting standards) measures

This news release contains non-IFRS financial measures; the company believes that these measures provide investors with useful supplemental information about the financial performance of its business, enable comparison of financial results between periods where certain items may vary independent of business performance and allow for greater transparency with respect to key metrics used by management in operating its business. Although management believes these financial measures are important in evaluating the company's performance, they are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with IFRS. These non-IFRS financial measures do not have any standardized meaning and may not be comparable with similar measures used by other companies. For certain non-IFRS financial measures, there are no directly comparable amounts under IFRS. These non-IFRS financial measures should not be viewed as alternatives to measures of financial performance determined in accordance with IFRS. Moreover, presentation of certain of these measures is provided for year-over-year comparison purposes and investors should be cautioned that the effect of the adjustments thereto provided herein have an actual effect on the company's operating results.

EBITDA and EBITDA margin are non-IFRS measures. The EBIDTA figure is defined as net income (loss), excluding interest, taxes, depreciation and amortization. EBITDA margin is calculated as EBITDA expressed as a percentage of total revenue. A full reconciliation of non-IFRS financial measures used herein to their nearest IFRS equivalents will be provided in the company's MD&A for the quarter ended Oct. 30, 2023.

About California Nanotechnologies Corp.

California Nanotechnologies envisions a world in which advanced technologies are used to help make the most innovative products on this planet and beyond. The company is trusted by global leaders to help push the boundaries of applied material science by utilizing its unique technical expertise and vision. Headquartered in Los Angeles, Calif., California Nanotechnologies hosts a complement of advanced processing and testing capabilities for materials research and production needs. Customers range from Fortune 500 companies to start-ups with programs spanning aerospace, renewable energy, defence and semiconductors.

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