VANCOUVER, BC, Canada – Nexe Innovations Inc., a compostable and innovative materials company, is pleased to announce its financial results for the three-month period ended February 28, 2023 (“Q3 2023”). During the quarter, the Company was focused on setting up its operations at its 54,000 square foot facility in Windsor, Ontario (the “Windsor Facility”).
Subsequent to the end of Q3 2023, the Company announced the Windsor Facility had been fully commissioned to produce food-grade components for its proprietary single-serve beverage pods and the final handoff from the vendors and contractors of its end-to-end systems is now complete.
The Company is currently in the process of completing and transferring various certifications from its Surrey, British Columbia facility to the Windsor Facility, including Organic, Kosher, and Fair Trade.
The end-to-end manufacturing facility is a key part of NEXE’s operating strategy, which is expected to lead to higher margins, protect our intellectual property, reduce supply chain risks, and provide the ability to scale and expand into additional markets faster.
The Windsor Facility is equipped for compounding resin, injection molding key components of NEXE’s proprietary single-use fully compostable pod, and dosing and sealing the pods for commercialization. NEXE also expects to provide roasting and grinding capabilities in order to provide a fully integrated coffee solution to potential clients.
Key Highlights
- Given the significant advancements made with the vertically integrated manufacturing process, NEXE decided not to continue running a parallel production of its current composite pod and started the transition to the new injection molded pod in Windsor ahead of its original second half of 2023 schedule. As a result of this transition, NEXE started to reduce its current composite pods inventories to prepare for the switchover. This resulted in lower revenues in Q3 2023 compared to the previous two quarters.
- NEXE is in the process of acquiring the BPI certification. The BPI certification is a third-party verification of ASTM D6400 and D6868 standards for compostable products. Being awarded the BPI certification means the product has gone through a rigorous testing process that confirms the Company has met the ASTM compostable standards. As part of the process, NEXE submitted the new version of the injection molded pods to an independent third-party (approved by BPI) to conduct testing. The independent third-party has issued a final report confirming the NEXE pod and associated components comply with international standards required for certification as compostable materials, including standards AS 4736 (Australia), ASTM D6400 (equivalent to European EN 13432), International standard ISO 17088, and ISO 18606. The results will be submitted by the third-party testing agency directly to BPI for validation and certification. Although the BPI certification is prominent in North America, it is not required to produce or sell our products.
- For the calendar year 2023, a key strategic focus is on growing the Company’s customer base, focusing on private label and co-manufacturing segments of the market. To date, samples for testing the NEXE single-use coffee pod have been sent to over 50+ potential clients across various channels, including medium sized artisanal/local brands, and large CPG companies. Multiple companies have indicated strong interest after testing and have entered into final sales discussions with NEXE, including conducting on-site due diligence.
“We are engaged in very productive conversations with potential clients,” stated Ash Guglani, President, NEXE Innovations, “as clients test and visit the Windsor Facility to conduct due diligence, they are impressed at what we have been able to accomplish to date. This is an exciting time for NEXE.”
Nexe Innovations: Financial Position
The Company continues to be very disciplined with deploying capital and keeping expenses at a minimum. The Company is also in the process of consolidating certain operations to Windsor. At the end of Q3 2023, the Company had a working capital of $24.9 million with cash and GICs of $18.1 million that will help weather increased volatility in the financial markets and with executing NEXE’s strategy.
NEXE expects there to be a rapid increase in demand for compostable alternatives. Recently it was announced that the EU commission is planning to make single-serve coffee pods mandatorily compostable as part of the Packaging and Packaging Waste Regulation (PPWR). NEXE’s expected capacity and end-to-end manufacturing capabilities will strengthen NEXE’s position in a large and growing market. The global single-use pod market currently stands at 60+ billion pods per year and is estimated to grow between 7-8% per year.
