NEXE Innovations Inc (TSX-V:NEXE, OTC:NEXNF) said a key strategic focus for the current year is to grow the company's customer base, focusing on private label and co-manufacturing segments of the market.
Announcing its financial results for the second quarter to November 30, 2022, the company said it ended the period with working capital of $26.5 million and cash and Guaranteed Investment Certificates (GICs) of $21.7 million, which will help it weather increased volatility in the financial markets and execute its strategy.
During the quarter, NEXE was focused on transitioning to a vertically integrated manufacturing facility in Windsor, Ontario, which is close to production with the infrastructure and key equipment in place at the end of January.
"We are excited about our Windsor facility and the progress we have made with our vertically integrated manufacturing process that we can scale to producing ~500 million pods annually," said Ash Guglani, president, NEXE Innovations in the results statement. "The team is working on the final phases and have started to build an operations team in Windsor."
WATCH: Nexe Innovations aims to start production at Windsor facility in early 2023
During the three months ended November 30, 2022, the company had a net loss of $349,887 or $0.004 per share, on revenue of $9,301.
The quarter was impacted by NEXE’s focus on reducing inventories and limiting production of the composite NEXE Pods as it transitions to the injection-molded NEXE Pods which will be produced at Windsor, Ontario.
The company said the transition resulted in lower revenues in Q2 2023 compared to the previous quarter Q1 2023.
NEXE is in the process of acquiring BPI certification. As part of this process, the company submitted the new version of the injection-molded NEXE Pods to an independent third-party (approved by BPI) to conduct testing. The rigorous testing is now in the later stages, and once the third-party testing is complete, the results will be submitted to BPI for validation, it said.
The company noted that the BPI certification is not required to produce or sell its products and not all of its potential clients require these certifications.
NEXE said it is actively in discussions with several private label and co-manufacturing companies to secure large commercial contracts as the Windsor facility capacity comes online.
Based on the sales pipeline and inbound requests, it expects to receive more purchase orders over the next few months, noting, however, that there will be a lag between purchase orders and revenues booked.
In September 2022, the company announced its first US purchase order with Awaken Brands Ventures Ltd. The partnership with Awaken Brands is the first entry point for NEXE to sell its proprietary technology of fully-compostable NEXE Pods for the Keurig Brewing Systems into Awaken Brand's ecosystem and help companies to meet their sustainability goals.
NEXE is currently in the final stages of onboarding Awaken Brands, such as finalizing designs. The production for this purchase order is also being transitioned to the Windsor Facility.
The company said it expects there to be a rapid increase in demand for compostable alternatives, driven by the increased focus for companies and governments to reduce plastic waste.
It said its capacity and ability to set up a vertically integrated manufacturing process will strengthen its position in a growing market, adding that it expects it will be able to expand into different markets quickly and in a more cost-effective way.
NEXE Innovations is a leader in innovative compostable materials technology based in British Columbia, Canada. The first product developed by NEXE Innovations is one of the only patented, fully-compostable, single-serve coffee pods for use in existing major single-serve coffee machines.
Contact the author at jon.hopkins@proactiveinvestors.com