NEXE Announces Plans for Vertical Integration to Accelerate Growth

News
March 15, 2021

VANCOUVER, BC, March 15, 2021 /CNW/ - NEXE Innovations Inc. ("NEXE") (TSXV: NEXE), a leader in plant-based materials manufacturing, is pleased to announce its strategy to enhance vertical integration in its supply chain, in order to increase product margins, protect intellectual property (IP) and mitigate supply chain risk.

Using proven technologies developed by the Company in collaboration with leading experts in plant-based materials, the Company will now bring key manufacturing processes to commercial scale in-house.

"The COVID-19 pandemic has highlighted supply chain vulnerabilities around the globe, and by increasing vertical integration in our production, we can reduce or eliminate many uncertainties in production as NEXE scales up. NEXE also anticipates accelerated revenue growth, improved IP protection and higher operating margins as a result of these initiatives," said NEXE CEO, Darren Footz.  "Over the last 5 years, we have built our IP by investing in every step of the production process, and now we are bringing this same forward thinking to more aspects of our supply chain. Over the last six months we have begun acquiring sophisticated machinery to mold our proprietary capsules and produce our plant-based materials in-house."

NEXE has received substantial commercial interest for its single-serve beverage pods and anticipates that this interest will continue to grow, making manufacturing capacity and reliability of paramount importance. In addition to its current and planned high-speed assembly lines, the Company has begun upgrading its facility for the production of bio-based materials and bio-based parts.

The production of NEXE's compostable single-serve pod can be broken down into three key processes:

  1. Producing plant-based resin from readily renewable materials
  2. Converting this resin into parts that are used for capsule assembly
  3. Mechanical assembly of those parts into a finished capsule that can be filled with coffee and/or other ingredients

As numbered above, process 3 is currently handled in-house by NEXE, while 1 and 2 were previously handled by external partners. As of now, NEXE has commissioned equipment and personnel for all steps in this process for its facility.

The goals of this strategy are to:

  • Increase operating margins: By reducing reliance on external suppliers, NEXE anticipates being able to achieve higher gross margins on every beverage pod sold.
  • Strengthen IP portfolio: NEXE's proprietary product designs and biopolymer formulations will remain in-house as the Company expands its extensive patent portfolio.
  • Reduce supply chain risk: Vertical integration reduces the risk of supply chain disruptions at any one stage of manufacturing. Reduced shipping costs during the production process will also further improve margins.
  • Accelerate research and development: The ability to test biopolymer formulations, manufacture them into parts, and rapidly evaluate their performance in-house in functional products will greatly accelerate product development cycles.
NEXE's Current vs Future Manufacturing Process (CNW Group/Nexe Innovations Inc.)

"By upgrading plant operations to produce plant-based resins and parts in-house using proven technology, NEXE will have greater control over product development from conception to manufacturing. NEXE's upgraded facility will be fully devoted to the production of its compostable single-serve beverage pods including our upcoming XOMA Superfoods line, reducing the time needed to rapidly scale the technology," said Ash Guglani, President of NEXE. "This in-house expertise will also provide us with additional opportunities to leverage licensing opportunities with best-in-breed manufacturers in other verticals to further monetize our IP in plant-based materials."

The first example of interest in NEXE IP by third-party manufacturers was regarding the development of a compostable single-use mask (announced February 16, 2021). Further opportunities to licence NEXE's technology will be assessed as they arise, while the Company remains focused on execution in the single-serve beverage pod market.

About NEXE Innovations Inc.

NEXE Innovations Inc. (TSXV:NEXE) is a leader in plant-based compostable technology and advanced materials manufacturing based in British Columbia, Canada. The company has developed one of the only patented, fully compostable, plant-based, single-serve coffee pods for use in leading single-serve coffee machines. The proprietary NEXE pod is designed to reduce the significant environmental impact caused by single-serve pods,  >40 billion of which are discarded every year. With over $35M raised to date from equity and government funding and over five years of R&D, NEXE is well-positioned to meet the growing demand for environmentally friendly and sustainable products in the single-serve coffee sector and beyond.

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.

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Cautionary Note Regarding Forward-Looking Statements

Certain statements in this release are forward-looking statements or information, which include the proposed use of proceeds, commercialization of the NEXE PODs, including the NEXE Nespresso Compatible Pod, development of the NEXE Mask, and increase production capacity, create other environmentally friendly compostable packaging opportunities, development of technologies, the potential of the Company's technology, future plans, regulatory approvals and other matters. 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, business, economic and capital market conditions, the ability to manage operating expenses, consumer demand for and sentiment towards the Company's products, security threats, and dependence on key personnel. 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, failure to obtain regulatory approval, the continued availability of capital and financing, equipment failures, litigation, increase in operating costs, the impact of Covid-19 or other viruses and diseases on the Company's ability to operate, competition, failure of counterparties to perform their contractual obligations, government regulations, loss of key employees and consultants, 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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