Mr. Soroush Nazarpour reports

NANOXPLORE ANNOUNCES RECORD ADJUSTED EBITDA IN ITS THIRD QUARTER AND RAISES REVENUE OUTLOOK

Nanoxplore Inc. has released its financial results for the third quarter ended March 31, 2023.

All amounts in this press release are in Canadian dollars, unless otherwise stated.

HIGHLIGHTS

• Total revenues of $31.6 million in Q3, up 11% compared to Q3 last year
• Record gross margin on revenues from customers of 18.3% in Q3, a strong improvement from 9.7% in Q3 last year
• Record Adjusted EBITDA* totaling $0.5 million in Q3, an improvement of $2.8 million over Q3 last year
• Positive cash flow from operations of $1.6 million in Q3 and $0.8 million year-to-date
• Total liquidity of $47.8 million as at March 31, 2023, including cash and cash equivalents of $37.4 million
• Total long-term debt of $8.3 million as at March 31, 2023
• Raising revenue guidance to a range of $120-125 million from $115-120 million previously, for fiscal year ending June 30, 2023, implying revenue growth of 27-33%

OVERVIEW

Soroush Nazarpour, President and Chief Executive Officer, stated: "I am very proud of our performance in Q3 2023 and so far in Fiscal 2023. Despite economic uncertainties, we reported strong results and achieved record Adjusted EBITDA reflecting a favorable fundamental backdrop and continued strong execution by the entire team at Nanoxplore. In addition, our graphene business is performing well and our customer trials results have improved considerably which bodes well for the future. I am also very pleased with the outcome from the Federal and Provincial budgets which considerably increases our confidence in achieving our long-term strategic growth initiatives with a focus on deploying our capital efficiently. Our main objective is to manage our business for the long-term and build a strong, reputable and sustainable graphene franchise with the ultimate goal of creating significant value to shareholders for years to come."

Pedro Azevedo, Chief Financial Officer, stated: "Another solid quarter is behind us and our momentum to profitability continues. A third quarter in the last four of positive adjusted EBITDA demonstrates how Nanoxplore is improving and the first consistent signs that we will soon achieve profitability through the higher margins delivered by graphene. I am also pleased with the work done in recent quarters to optimize our working capital levels and keep as much cash in hand as possible to fuel our strategic initiatives."

Results of operations may include certain unusual and other items which have been separately disclosed, where appropriate, in order to provide a clear assessment of the underlying Corporation results. In addition to IFRS measures, management uses non-IFRS measures in the Corporation's disclosures that it believes provide the most appropriate basis on which to evaluate the Corporation's results.

A. RESULTS OF OPERATIONS VARIANCE ANALYSIS - THREE-MONTH PERIODS

Revenues from customers decreased from $31,417,369 in Q2 2023 to $31,125,291 in Q3 2023. This decrease is mainly due to lower tooling revenues.

Revenues from customers increased from $27,997,816 in Q3 2022 to $31,125,291 in Q3 2023. This increase is mainly due to a positive product mix including graphene enhanced products, higher volume, a positive FX impact and price increases partially offset by lower tooling revenues.

Other income increased from $307,753 in Q2 2023 to $455,269 in Q3 2023 and increased from $408,934 in Q3 2022 to $455,269 in Q3 2023. The increases are due to grants received from R&D programs.

Adjusted EBITDA

The adjusted EBITDA improved from -$2,384,227 in Q3 2022 to $451,705 in Q3 2023. The variation is mainly explained by higher gross margin on revenues from customers which increased by $2,972,466 compared to Q3 2022 due to higher revenues as describe above, higher margin product mix, improved productivity and cost control.

B. RESULTS OF OPERATIONS VARIANCE ANALYSIS - NINE-MONTH PERIODS

Revenues from customers increased from $64,253,741 in the last year period to $89,689,827 in the current period. This increase is mainly due to a positive product mix including graphene enhanced products, the acquisition of Canuck Compounders Inc. in December 2021, higher volume, a positive FX impact and price increases partially offset by lower tooling revenues.

Other income decreased from $1,772,942 in the last year period to $848,380 in the current period. The decrease is mainly explained by the end of the CEWS program set up by the Canadian Federal government to help businesses deal with the COVID-19 pandemic. The Corporation received $ nil under this program in the current period compared to $840,249 in the last year period as the program ended in October 2021.

Adjusted EBITDA

The adjusted EBITDA improved from -$9,283,659 in the last year period to -$1,384,027 in the current period. The variation is explained as follows:

Gross margin on revenues from customers increased by $9,760,339 compared to the last year period due to higher sales as describe above, higher margin product mix, improved productivity and cost control; and

Partially offset by higher administrative expenses (SG&A and R&D) of $1,597,382 mainly due to additional headcounts and higher wages, including higher accrued variable compensation.

C. OTHER

Additional information about the Corporation, including the Corporation's Management Discussion and Analysis for the three and nine-month periods ended March 31, 2023 and 2022 ("MD&A") and the Corporation's consolidated financial statements for the for the three and nine-month periods ended March 31, 2023 and 2022 (the "financial statements") can be found at www.nanoxplore.ca.

WEBCAST

Nanoxplore will hold a webcast tomorrow, May 11, 2023, at 8:30 am EDT to review its third quarter results ended March 31, 2023. Soroush Nazarpour, CEO and President of Nanoxplore, and Pedro Azevedo, Chief Financial Officer, will host the event. To access the webcast please click on the link https://edge.media-server.com/mmc/p/fgyva2y6 or you can access through our website in the Investors section under Events and Presentations. A replay of this event can be accessed via the above link or on our website.

ABOUT NANOXPLORE

Nanoxplore is a graphene company, a manufacturer and supplier of high-volume graphene powder for use in industrial markets. The Corporation provides standard and custom graphene-enhanced plastic and composite products to various customers in transportation, packaging, electronics, and other industrial sectors. Nanoxplore is headquartered in Montreal, Quebec with manufacturing facilities in Canada, the United States and Europe.

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