Mr. Ash Guglani reports

NEXE INNOVATIONS ANNOUNCES QUARTERLY Q2 2024 FINANCIAL RESULTS FOR THE THREE-MONTH PERIOD ENDED NOVEMBER 30, 2023

Nexe Innovations Inc. has released its financial results for the three-month period ended Nov. 30, 2023 (Q2 2024).

As a company building from the ground up with an innovative new product, the company is in an exciting phase where the company believe it is building strong foundations with its B2B (business-to-business) clients. In Q2 2024, the company continued to engage with well-established coffee companies and distributors, and the company's innovative compostable single-serve pods have been well received, leading to repeat orders.

"It's important to remember that establishing these relationships takes time. Our clients carefully evaluate our operations and plan how to introduce our products, often starting with smaller orders and gradually increasing," stated Ash Guglani, president and co-founder of Nexe. "Our revenues might not follow a straight line but ebb and flow as these relationships solidify and grow. This is a normal part of the journey for a start-up like ours, and these fluctuations are steps towards building a robust, sustainable business."

Highlights:

The company believes the fundamentals for the business remain strong and are supported by macro trends, including the changing regulatory environment around plastic bans and related health risks. Management believes that Nexe is well positioned to leverage these trends, particularly:

• Nexe has a strong cash position to execute its strategy over the next two years. At the end of Q2 2024, the company's total cash position is $11.4-million (including GICs and term deposit). Nexe is also expected to receive a government cash refund of $2-million and, in the event a purchaser agrees to acquire the company's non-core asset, the Surrey facility, with potential proceeds of at least $5.0-million. The total expected cash position for Nexe, including if the Surrey facility is sold, is about $18-million.
• Nexe has minimal debt. The current debt outstanding is $834,019, related to a government loan. Nexe's commitments at the end of the quarter were $2.1-million, and minimal capex (capital expenditure) is expected over the next two years.
• The book value per share at the end of Q2 2024 was 37 cents (based on outstanding shares of 97.3 million shares), including 12 cents per share of cash. Adjusting for the additional cash expected and market values for the Windsor facility and equipment, the value per share is estimated at 46 cents. The current market share price close on Jan. 29, 2024, was 26 cents.

Nexe's primary target group is B2B customers, such as private label opportunities, coffee roasters and brands. As the company continues its discussions with customers in the company's pipeline, the company will implement targeted sales and marketing strategies to market its compostable coffee pod, build brand awareness and educate the market. The company will also continue building the Nexe team, adding to key areas, including the company's in-house coffee expertise.

Fiscal Q2 2024 results

During the three months ended Nov. 30, 2023, the company had a net loss of $1,610,871 or 1.6 cents per share, compared with a net loss of $349,887 or 0.4 cent per share for the comparable period last year. The change in net loss was predominantly a result of the following:

• Revenue was $33,729 (Nov. 30, 2022 -- $9,301), and cost of goods was $88,060 (Nov. 30, 2022 -- $25,908). The cost of goods included non-cash expenses, such as production machinery and equipment depreciation. Depreciation in the cost of goods sold increased as new equipment has come on line.
• Selling, general and administrative expenses decreased to $929,130 (Nov. 30, 2022 -- $951,161) due to lower overhead costs, lower consulting fees and lower compensation. The company benefited from consolidating operations to its Windsor facility. The management team continues to maintain a disciplined approach to allocating resources.
• A non-cash share-based compensation expense of $151,062 (Nov. 30, 2022 -- $191,954) was recorded for stock options granted to directors, officers and employees.
• Interest and accretion expense decreased to $47,335 (Nov. 30, 2022 -- $66,286) due to declining balances of the government loan and the elimination of the lease liability.
• Interest income decreased to $24,854 (Nov. 30, 2022 -- $201,597) primarily from the GIC deposits.
• Depreciation increased to $373,394 (Nov. 30, 2022 -- $213,472) due to additional equipment purchased.
• Research and development expenses increased to $76,749 (Nov. 30, 2022 -- $56,918) as the company continues to develop new technology and formulations.

Nexe has a working capital of $15.4-million and a strong balance sheet to help execute its plans over the next two years. Nexe has also consolidated all of its operations to its Windsor facility from Surrey, positively impacting costs.

The company's Q2 2024 financial statements and related management's discussion and analysis are available on Nexe's SEDAR+ profile and the company's website.

About Nexe Innovations Inc.

Nexe Innovations is focused on providing innovative compostable material solutions and packaging to the B2B (business-to-business) 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. The company's flagship product, the Nexe Pod, a BPI-certified compostable coffee pod, showcases the company's 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.

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