Announcement PDF Carbonxt Group Limited Appendix 4E Preliminary final report 1. Company details Name of entity: ABN: Reporting period: Previous period: Carbonxt Group Limited 59 097 247 464 For the year ended 30 June 2025 For the year ended 30 June 2024 2. Results for announcement to the market $ Revenues from ordinary activities up 7.1% to 16,195,340 Underlying Earnings Before Interest, Tax, Depreciation and Amortisation ('EBITDA') down 85.2% Loss from ordinary activities after tax attributable to the owners of Carbonxt Group Limited down 16.7% to (6,761,392) Loss for the year attributable to the owners of Carbonxt Group Limited down 16.7% to (6,761,392) (462,563) Dividends There were no dividends paid, recommended or declared during the current financial period. Comments The loss for the Group after providing for income tax amounted to $6,761,392 (30 June 2024: $8,118,499). The decrease in loss for the Group compared to prior year is primarily due to the increase in revenue by 7.1% and due to the $2,743,321 improvement in gross margins achieved from a concerted effort to increase prices across the portfolio and to operate the manufacturing plants on reduced shifts. Revenues increased 7.1% compared to prior year primarily due to the recovery in volumes to the Group's largest customer following unplanned outages at the customer's facility. Carbonxt Group Limited Appendix 4E Preliminary final report The directors consider Underlying Earnings Before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) and Underlying EBIT to reflect the core earnings of the Group. Underlying EBITDA and underlying EBIT are financial measures which are not prescribed by Australian Accounting Standards (‘AAS’) and represent the profit or loss under AAS adjusted for non-cash and significant items. The following table summarises key reconciling items between statutory loss after income tax and underlying EBITDA for the current and previous year period: Consolidated 2025 2024 $ $ Revenue 16,195,340 15,124,618 Gross margin Other income Shipping and distribution costs Operating expenses 8,480,998 268,697 (1,984,496) (7,227,762) 5,737,677 264,228 (1,797,357) (7,338,333) Underlying EBITDA Depreciation and amortisation (462,563) (2,275,195) (3,133,785) (2,369,736) Underlying Earnings before interest and tax ('EBIT') Net Interest expense Share-based payment expense Share in losses of joint ventures Net remeasurement (loss)/gain on royalty payables (2,737,758) (3,335,026) (103,811) (2,515) (582,282) (5,503,521) (2,893,655) (73,533) (32,198) 384,408 Loss before income tax expense (6,761,392) (8,118,499) For further commentary refer to 'Review of operations' section within the Directors' report of the Annual Report and the attached market announcement. 3. Net tangible assets Reporting period Cents Net tangible assets per ordinary security (0.55) Previous period Cents (0.68) The net tangible assets calculation does not include rights-of-use assets of $6,230,823 (30 June 2024: $7,328,237) but include the lease liabilities of $1,263,774 (30 June 2024: $3,353,324). 4. Control gained over entities Not applicable. 5. Loss of control over entities Not applicable. 6. Dividends Current period There were no dividends paid, recommended or declared during the current financial period. Carbonxt Group Limited Appendix 4E Preliminary final report Previous period There were no dividends paid, recommended or declared during the previous financial period. 7. Dividend reinvestment plans Not applicable. 8. Details of associates and joint venture entities Reporting entity's percentage holding Contribution to profit/(loss) (where material) Reporting period % Previous period % Reporting period $ 43.66% 35.48% - - Group's aggregate share of associates and joint venture entities' profit/(loss) (where material) Profit/(loss) from ordinary activities before income tax - - Income tax on operating activities - - Name of associate / joint venture NewCarbon Processing, LLC Previous period $ 9. Foreign entities Details of origin of accounting standards used in compiling the report: Not applicable. 10. Audit qualification or review Details of audit/review dispute or qualification (if any): The financial statements have been audited and an unqualified opinion has been issued with a paragraph addressing material uncertainty related to going concern. 11. Attachments Details of attachments (if any): The Annual Report of Carbonxt Group Limited for the year ended 30 June 2025 is attached. Carbonxt Group Limited Appendix 4E Preliminary final report 12. Signed As authorised by the Board of Directors Signed ___________________________ Warren Murphy Managing Director Sydney Date: 29 August 2025 Carbonxt Group Limited ABN 59 097 247 464 Annual Report - 30 June 2025 Carbonxt Group Limited Contents 30 June 2025 Corporate directory Chairman's letter Directors' report Auditor's independence declaration Consolidated statement of profit or loss and other comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements Consolidated entity disclosure statement Directors' declaration Independent auditor's report to the members of Carbonxt Group Limited Shareholder information 1 2 3 5 21 22 23 24 25 26 62 63 64 69 Carbonxt Group Limited Corporate directory 30 June 2025 Directors Matthew Driscoll - Chairman Warren Murphy - Managing Director David Mazyck - Director of Technology Nicholas Andrews – Non-Executive Director Company secretary Laura Newell Registered office Level 37, 180 George Street Sydney NSW 2000 Australia Tel: +61 2 8072 8271 Principal place of business Suite 111 3951 NW 48th Terrace Gainesville FL 32606 United States of America Share register Boardroom Pty Limited Level 8, 210 George Street Sydney NSW 2000 Australia Tel: +61 2 9290 9600 Auditor Ernst & Young 200 George Street Sydney NSW 2000 Australia Solicitors Thomson Geer Level 14 60 Martin Place Sydney NSW 2000 Australia Stock exchange listing Carbonxt Group Limited shares are listed on the Australian Securities Exchange (ASX code: CG1) Website www.cglimited.com.au Corporate Governance Statement The directors and management are committed to conducting the business of Carbonxt Group Limited in an ethical manner and in accordance with the highest standards of corporate governance. Carbonxt Group Limited has adopted and has substantially complied with the ASX Corporate Governance Principles and Recommendations (Fourth Edition) ('Recommendations') to the extent appropriate to the size and nature of its operations. The Group’s Corporate Governance Statement, which sets out the corporate governance practices that were in operation during the financial year and identifies and explains any Recommendations that have not been followed, and ASX Appendix 4G are released to the ASX on the same day the Annual Report is released. The Corporate Governance Statement and Corporate Governance Compliance Manual can be found on the Company’s website at www.cglimited.com.au 2 Carbonxt Group Limited Chairman's letter 30 June 2025 ` Dear Shareholders, FY25 has been a year of significant progress for Carbonxt – one that has seen the Company strengthen its operational foundations, advance a transformational growth project, and position itself to capitalise on powerful regulatory and market tailwinds in the years ahead. Kentucky Facility – Entering the Liquid-Phase Market Our flagship activated carbon facility in Kentucky, developed alongside our investment partners at Kentucky Carbon Processing via our jointly owned company NewCarbon Processing, is now in the final stages of construction. During the year we increased our ownership to 43.7% through an additional US$2.25 million investment, with two further tranches available at our discretion to reach 50%. Mechanical completion has been achieved and major electrical, control, and kiln works are now finalised, with kiln insulation set for completion in the coming weeks. The commencement of production will mark Carbonxt’s entry into the high-value liquid-phase activated carbon market – a sector several times larger than our current air-phase focus – and is expected to materially expand both revenue and margins from FY26 onwards. Operational Performance and Cost Discipline Our existing operations delivered solid results throughout the year, supported by strong Powdered Activated Carbon (PAC) sales under long-term contracts with ReWorld Waste and Wisconsin Public Service (WPS). These relationships underpinned stable volumes despite external market volatility. Activated Carbon Pellet (ACP) volumes rebounded in the second half following the resolution of operating issues at a key customer’s facility. This recovery, combined with ongoing cost optimisation – including a major lease restructure at our Black Birch PAC facility – contributed to a leaner cost base and positive EBITDA in each month of the second half of FY25. Operating cash outflows were reduced quarter-on-quarter, margins improved to 52%, and creditor levels have been brought now to the low end of historical ranges. These improvements provide a stronger financial footing as we move into FY26. Strategic Positioning – Regulatory and Market Tailwinds The U.S. EPA has reaffirmed strict maximum contaminant levels for key PFAS chemicals, with compliance deadlines in the next decade driving significant investment in water treatment infrastructure. Carbonxt, as a vertically integrated U.S. producer, is well-positioned to supply utilities and industrial clients seeking tariff-free, reliable supply chains. We continue to see growing engagement from water utilities and distributors, reflecting both the regulatory certainty around PFAS removal and the need for high-performance activated carbon products. Combined with a projected 5–9% CAGR in global activated carbon demand through 2030, these trends support a long-term growth runway for Carbonxt. Outlook for FY26 With three U.S. production facilities either operational or nearing commissioning, a reduced and more efficient cost base, and supportive market dynamics, FY26 is set to be a pivotal year. The focus will be on: • • • Bringing the Kentucky facility into full production and moving into the liquid-phase market. Leveraging our PAC and GAC capabilities to capture a larger share of the PFAS treatment segment. Maintaining operational discipline to sustain positive cash flow and profitability. On behalf of the Board, I would like to thank our shareholders for their continued support, our lenders at Pure Asset Management for their partnership, and most importantly our employees for their dedication and expertise. 3 Carbonxt Group Limited Chairman's letter 30 June 2025 FY25 has laid the groundwork for a period of material growth, and we look forward to updating you as we deliver on the opportunities ahead. Yours sincerely, Matthew Driscoll Chairman 29 August 2025 4 Carbonxt Group Limited Directors' report 30 June 2025 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of Carbonxt Group Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2025. Directors The following persons were directors of Carbonxt Group Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: Matthew Driscoll - Chairman Warren Murphy David Mazyck Nicholas Andrews Imtiaz Kathawalla (resigned 02 July 2025) Principal activities During the financial year the principal continuing activities of the Group consisted of the development and sale of specialised Activated Carbon ('AC') products, including Powdered Activated Carbon ('PAC') and AC pellets for the removal of pollutants and toxins in industrial processes. These products are used in industrial air purification, waste water treatment and other liquid and gas phase markets, primarily for the capture of mercury and sulphur in order to reduce harmful emissions into the atmosphere, as required by global regulations. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations The loss for the Group after providing for income tax amounted to $6,761,392 (30 June 2024: $8,118,499). The decrease in loss for the Group compared to prior year is primarily due to the increase in revenue by 7.1% and due to the $2,743,321 improvement in gross margins achieved from a concerted effort to increase prices across the portfolio and to operate the manufacturing plants on reduced shifts. Revenue for the year was $16,195,340 (before other income) and $16,464,037 (after other income) representing an increase of 7.1% and 7.0% respectively on the prior year's revenue of $15,124,618 (before other income) and $15,509,026 (after other income). In US dollars, revenue was US$10,497,810 (before other income) and US$10,671,988 (after other income) representing an increase of 5.9% and 5.8% respectively on the prior year’s revenue of US US$9,915,700 (before other income) and US$10,088,928 (after other income). Revenues increased 7.1% compared to prior year primarily due to the recovery in volumes to the Group's largest customer following unplanned outages at the customer's facility. 5 Carbonxt Group Limited Directors' report 30 June 2025 The directors consider Underlying Earnings Before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) and Underlying EBIT to reflect the core earnings of the Group. Underlying EBITDA and underlying EBIT are financial measures which are not prescribed by Australian Accounting Standards (‘AAS’) and represent the profit or loss under AAS adjusted for non-cash and significant items. The following table summarises key reconciling items between statutory loss after income tax and underlying EBITDA for the current and previous year period: Consolidated 2025 2024 $ $ Revenue 16,195,340 15,124,618 Gross margin Other income Shipping and distribution costs Operating expenses 8,480,998 268,697 (1,984,496) (7,227,762) 5,737,677 264,228 (1,797,357) (7,338,333) Underlying EBITDA Depreciation and amortisation (462,563) (2,275,195) (3,133,785) (2,369,736) Underlying Earnings before interest and tax ('EBIT') Net Interest expense Share-based payment expense Net remeasurement (loss)/gain on royalty payables Share in losses of joint ventures (2,737,758) (3,335,026) (103,811) (582,282) (2,515) (5,503,521) (2,893,655) (73,533) 384,408 (32,198) Loss before income tax expense (6,761,392) (8,118,499) Liquidity During the financial year ended 30 June 2025, the Group incurred a net loss after tax of $6,761,392 (30 June 2024: $8,118,499) and a cash outflow from operating activities of $4,752,205 (30 June 2024: inflow of $2,117,444). As at 30 June 2025, the Group had net assets of $9,222,494 (30 June 2024: $10,734,911), net current liability of $15,121,670 (30 June 2024: $12,687,391) and cash and cash equivalents of $480,687 (30 June 2024: $4,141,926). As a result of the loss incurred for the year ended 30 June 2025 and the liquidity at the reporting date, there is a material uncertainty on whether the Group can continue as a going concern. The directors consider that the Group will continue as a going concern, as explained in note 2 to the financial statements. Business risks The following is a summary of material business risks that could adversely affect the Group's financial performance and growth potential in future years and how the Group proposes to mitigate such risks: Climate Risk The Group takes climate risk into account in its investment decisions. There is the possibility that such decisions have underestimated the severity of climate change. The bio-char input at Black Birch is a renewable source and has a lower footprint than most Activated Carbon manufacturing facilities, but it is feasible that climate change affects the availability of the input source. Construction Risk The NewCarbon investment is in construction phase. As with all construction activities there is the possibility of delays to completion or issues during the start-up phase. Given the plant has operated for a number of years as a waste-toenergy plant that start-up risk is reduced, compared to a greenfields construction site, but nevertheless there is a potential for construction issues. Competition risk The Group operates in a dynamic AC market. There is a possibility that existing or new competitors may increase competitive pressure through technological advancements, volume increases or pricing and other strategies. Any significant advancements in technology for producing AC have the potential to change the competitive environment in which the Group operates. 6 Carbonxt Group Limited Directors' report 30 June 2025 Ability to retain existing clients or attract new clients The Group’s business depends on its ability to retain contracts with existing customers and to attract further business from existing customers or attract new customers. The loss of existing customers or the inability to attract new customers would have an adverse impact on the financial position of the Group. Regulatory risk The Group is heavily reliant on US environmental policies and regulation. Any change to or reversal of current legislation would have a significant negative effect on the Group’s business model and financial performance. Intellectual property risk The Group relies on its intellectual property (including technology, know how, trademarks, designs and patents) and there can be no assurance that competitors or other parties will not imitate or develop technology and know-how that challenges or competes with the Group or supersedes the Group’s intellectual property. In addition, any unauthorised use or disclosure of the Group’s intellectual property may also have an adverse effect on the Group's financial performance. Reliance on key personnel The Group employs, or engages as consultants, a number of key management and scientific personnel. The inability of the Group to retain and attract highly qualified and experienced personnel could have a material adverse impact on the Group’s business and financial performance. Safety and industrial accidents The manufacture and supply of the Group’s products are subject to safety related risks, which are managed carefully by the Group. Despite the relevant safety guards there is no guarantee a serious accident will not occur in the future, which may negatively affect the financial performance of the Group. Brand establishment and maintenance Establishing and maintaining its brand in the industry is critical to growing the Group’s customer base and product acceptance. Prior to entering into supply agreements, the Group is required to undertake vigorous testing of its Activated Carbon solutions. Any unsuccessful tests for potential customers could adversely affect the Group’s brand, and its business and operating results could be adversely affected. The Group must also maintain and support its existing customer relationships to maintain its brand and attract further customers. Offshore operations While the Group’s corporate management is in Australia, its operations are based in the United States. The global nature of the pollution control business may result in the Group's activities extending to other countries in the future. Geographic diversity adds risk to the ability of the Group to manage its operations and employees, and introduces additional risks relating to the general economic, regulatory, legal, social and political environment in the jurisdictions in which it intends to operate, which may in turn adversely affect the Group's business and financial condition. Exchange rate risk The Group is exposed to movements in exchange rates as the vast majority of the Group's revenue and expenses are denominated in USD. Adverse movements in the AUD/USD exchange rate may have an adverse effect on the reported financial performance and/or financial position of the Group. Product liability and uninsured risks The Group is exposed to potential product liability risks, which are inherent in the research and development, manufacturing, marketing and use of its products or products that are developed in the future. Whilst the Group has liability insurance to help manage such risks, the Group may not be able to maintain insurance for product or service liability on reasonable terms in the future and/or the Group’s insurance may not be sufficient to cover large claims, or the insurer could disclaim coverage on any such claims. Significant changes in the state of affairs Capital raising On 24 September 2024, the Company announced the completion of the share placement of 46,415,830 fully paid shares at $0.065 per share before issue costs with 23,207,919 options attached at a strike price of $0.10 per share. The shares were issued on 30 September 2024. 7 Carbonxt Group Limited Directors' report 30 June 2025 On 20 December 2024, the Company announced the completion of the share placement of 17,146,667 fully paid shares at $0.06 per share before issue costs with 8,573,333 options attached at a strike price of $0.10 per share. The shares were issued on 2 January 2025. During the year, the Group entered into an amended lease agreement for its existing facility. Pursuant to the agreement, the Group issued 7,862,900 at no cost on 17 March 2025. Under the agreement, the shares will be progressively sold down and the proceeds applied as future lease payments. On 8 April 2025, the Company issued 16,666,667 ordinary shares at $0.06 per share. On 11 April 2025, the Company announced the completion of the issuance of 5,650,000 ordinary shares at $0.06 per share. Borrowings The convertible notes totalling to 2,665,000 notes at $1 face value, have a 24-month term with an interest rate of 9.5% pa. Each convertible note can be converted to share capital at 8 cents per share. The convertible notes were issued in tranches as follows: (a) Tranche 1 - comprising of 500,000 convertible notes at an issue price of $1 per note raising a total of $500,000 which were issued on 27 February 2025. The convertible note has 1 attaching option with every 2 shares issued to the noteholders upon conversion; (b) Tranche 2(a) - comprising of 500,000 convertible notes at an issue price of $1 per note raising a total of $500,000 which were issued on 31 March 2025. The convertible note has 1 attaching option with every 2 shares issued to the noteholders upon conversion; (c) Tranche 2(b) - comprising of 665,000 convertible notes at an issue price of $1 per note raising a total of $665,000 which were issued on 10 April 2025. The convertible note has 1 attaching option with every 2 shares issued to the noteholders upon conversion; and (d) Tranche 3 - comprising of 1,000,000 convertible notes at an issue price of $1 per note raising a total of $1,000,000 which were issued on 13 June 2025. The convertible note has 1 attaching option with every 1 share issued to the noteholders upon conversion. Investment in NewCarbon The contribution to NewCarbon for the year totalled to $3,431,487 (US$2,250,000) which increased the ownership in NewCarbon to 43.66% as at 30 June 2025. There were no other significant changes in the state of affairs of the Group during the financial year. Matters subsequent to the end of the financial year On 22 August 2025, the Company announced a non-renounceable pro-rata entitlement offer to Eligible Shareholders of one (1) Option to acquire a fully paid ordinary share in the Company ('Loyalty Option') for every six (6) shares held by shareholders registered at 7.00pm (AEST) on 27 August 2025 ('Record Date') at an issue price of $0.01 and exercise price of $0.07 per Loyalty Option ('Entitlement Offer'). The Offer is fully underwritten by Chaleyer Holdings Pty Ltd, an existing shareholder of the Company. The Offer is expected to raise a total of $697,772 prior to the costs of the offer. No other matter or circumstance has arisen since 30 June 2025 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. Likely developments and expected results of operations The Group will continue to expand its industrial AC pellet business in vapour control, liquid solvent recovery and other specific industrial uses of pellets. In line with this expansion, the Group shall make the remaining contributions of US$2,250,000 in stages, subject to completion of milestones, to increase its ownership in NewCarbon to 50%. The expansion will significantly increase production capacity and gross margins and will allow existing capacity to be repositioned to produce more specialised technologies. 8 Carbonxt Group Limited Directors' report 30 June 2025 The Group will continue to provide its PAC solution for emission capture and wastewater treatment and will leverage the competitive advantage of its non-brominated PAC, that does not cause corrosion and damage to plant equipment. Furthermore, there is a renewed and continuing emphasis from a majority of US companies on ESG objectives. Carbonxt’s PAC products made at its Black Birch plant utilise renewable feedstock and thus would satisfy the needs of those who are seeking focus on renewable feedstocks. The Group’s current and prospective customers continue to emphasise a desire for US-made pellets. Carbonxt is the only activated carbon industrial pellet developer and producer located in the United States, and this is expected to continue to drive both revenue and margin growth. Environmental regulation The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law. Sustainability reporting AASB S1 ‘General Requirements for Disclosure of Sustainability-related Financial Information’ provides a set of disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term. AASB S2 ‘Climate-related Disclosures’ sets out specific climate-related disclosures and is designed to be used with AASB S1. AASB S1 and S2 apply to entities required to prepare and lodge a financial report with ASIC under Chapter 2M and are effective for annual reporting periods beginning on or after 1 January 2025 and will be gradually phased in for different entities based on size thresholds. ● ● ● Group 1 entities (meets two of the following: consolidated revenue of at least $500million, consolidated gross assets of at least $1 billion and at least 500 employees) are required to report in Dec 2025/June 2026. Group 2 entities (meets two of the following: consolidated revenue of at least $200million, consolidated gross assets of at least $500 million and at least 250 employees) are required to report in Dec 2027/June 2027. Group 3 entities (meets two of the following: consolidated revenue of at least $50million, consolidated gross assets of at least $25 million and at least 100 employees) are required to report in Dec 2028/June 2028. As at the reporting date, the Group has assessed that it does not meet the criteria for mandatory application of AASB S2 for the current or upcoming reporting period, based on the thresholds set out by the AASB relating to revenue, gross assets, and number of employees. The Group will continue to monitor its eligibility against the criteria in future reporting periods and will implement the necessary processes to comply with the standards if and when the thresholds are met. 9 Carbonxt Group Limited Directors' report 30 June 2025 Information on directors Name: Title: Qualifications: Experience and expertise: Matthew Driscoll Non-Executive Chairman BA, Dip Ed, Grad.Dip.App.Fin. SF Fin, MSAA, GAICD Matthew Driscoll is an agile, entrepreneurial thinker, with strong networks and significant experience across several industries, including manufacturing, online technologies, financial services, fintech, property and resources. Matthew has over 35 years’ experience in capital markets and the financial services industry, with major financial institutions. Accomplished company Director in roles with listed and private companies, undertaking leadership positions on the Board (as Chairman) and on various committees (including audit and risk committees). Significant experience in international business growth, mergers and acquisitions, equity and debt raisings and building strategic political, financial, and commercial alliances. Passionate about high growth, innovative businesses, committed to ethical, commercial, and consumer-based outcomes. Clear, concise communicator able to grasp and disseminate complex issues effectively. A serial investor and strong supporter of start-ups providing seed and expansion capital with unique skills bringing private companies to the listed environment. Other current directorships (last 3 Chair of Smoke Alarms Holdings Limited, the market leader in servicing smoke years): alarm rental properties in Australia, Chair of Workspace Australia a multi-regional business incubator network in Central Victoria, Chair, Energy Technologies Limited (EGY) an investment company focused on Australian based manufacturing businesses, Mayor-Mount Alexander Shire, Victoria. Former directorships (last 3 Chair, Tennant Minerals (TMS) years): Interests in shares: 3,276,962 ordinary shares Interests in options: 2,230,538 Name: Title: Qualifications: Warren Murphy Managing Director B.E. (Electrical and Electronic Engineering) (Hons), B.Com (Accounting and Economics) Experience and expertise: Warren was previously Co-Head of the