Burcon Nutrascience Corporation

Good afternoon, ladies and gentlemen, and welcome to the Bercon NutraScience Corporation 2024 Investor Day Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator. This call is being recorded today, November 20, 2024. I would now like to turn the conference over to Kip Underwood, Chief Executive Officer. Please go ahead.

Thank you. Good morning, good afternoon, and good evening to our shareholders around the world. Thank you for your time today and for your investment and interest in Berkcon. Today is an exciting day for Berkcon. Over the past 18 months, we have cleared several milestones. We have validated our value propositions, validated their differentiation. We've received affirmation of the performance of our products from former customers, prospective customers, and industry peers. We have the technology. We have the demand. We have not been able to secure consistent, high-quality supply to the manufacturer of our products. This has been Berkhan's fundamental challenge since long before even I became CEO. Today, that changes. Today, we will cover our plans for a direct route to market, a potential to unlock tremendous value for Bercon and for our shareholders. As you all know, we are a publicly traded company, so our safe harbor statement. Our discussion topics today will include our retail market, as I mentioned, production and sales. We'll talk about an innovative capital structure and business operating model. And most importantly, maybe we'll talk about the investment opportunity for our shareholders, the opportunity to come along for us for the ride. I'm joined by Rob Peetz, our CFO, who will cover a few key pieces of our presentation today. And additionally, we will cover also a little update on Bercon, where we are today, and where we are going in the future. This is truly a transformative opportunity for burka mid-summer we hired a search firm to scout for additional capacity a potential new facility with the capability to produce our entire portfolio we quickly discovered a handful of viable sites and began thinking through funding options here a strategic buying group emerged led by one of our board members and the opportunity to leverage from our strategic buyer, our real estate financing approach, with a tried and true industry contract manufacturer business operating model. The combination of those gives us a unique opportunity to leverage our strategic partners' strength, for Bercon to have full control over the production and sale of our products, our technology, to accelerate our capital-light business model, and truly launch our entire portfolio, including our most exciting offering, sunflower protein. I mentioned an innovative business structure and a business approach. There are two aspects of this. First is, how do we fund the operation? So our strategic buying group, part of our alliance, will be responsible for the funding to acquire the production facility and to put in the capability and capacity needed to produce our portfolio. burkhan will then be the operator we will lease and operate the facility we will produce and sell our proteins several advantages of this approach again efficient use of capital as i've mentioned a direct route to market for our technology for our products the opportunity to scale and deliver better unit economics and assuming we hit our timelines the opportunity to be online with commercial production during the first half of 2025. Right now, with our alliance, with our partner, we are in late-stage discussion evaluating multiple sites, trying to determine which one has the best fit. Given where we are in these discussions, we believe the acquisition will close sometime during Q1 of 2025. As I mentioned, we announced a rights offering at the close of market today. I'll give you a few highlights now, and Rob will cover this in detail towards the end of the presentation. But again, we are seeking to raise up to $12 million. The offering is at a discount to the current market. The proceeds will be used to fund our operations at the new facility through to a cash flow positive state. So fund the operations, support our sales and marketing efforts, all things encompassing with operating facilities. We are doing the fundraise concurrent with our partners' efforts to acquire a facility. And this is critically important because as we land these things together, immediately the facility is acquired, then we are prepared to begin our efforts to produce and launch our proteins into the marketplace. A few things haven't changed. One is We are targeting an exciting market, the expanding protein, plant protein market. Our foundation is our revolutionary plant processing technology, proprietary platform with game changing protein ingredients. And as I mentioned, we are still driving a capital high margin business model with forecasted profitability in calendar of 2026. Let's talk about the market for a minute. As you can see by these headlines, at the consumer level, protein is hot. Protein is in demand. And in particular, plant protein is in demand, which is irrelevant to us. The headlines warp through industry groups, key brand owners seeking to deliver protein and or plant protein to their consumers. And they're doing that because their consumers are seeking protein in general, and consumers continue to seek plant proteins because they know they are both good for them, for their own health, as well as the health of our planet. This is why this market is fundamentally exciting, and it's why our differential technology is highly relevant. Our market opportunity, it is significant, right? Again, the opportunity we're discussing today will allow us to launch our entire portfolio. That'd be sunflower, pea, canola, soy, and hemp. Each of these proteins have unique strength. Each of these proteins have unique applicability in different types of food. Oftentimes, we'll have potential customers actually blend these proteins to end up with a better answer for their end consumers. What I want to highlight in particular really is sunflower protein. We believe, I in particular believe, that sunflower protein is our most disruptive technology. It has key attributes that food scientists, that food companies desire. First, it is white in color and very clean in flavor. Therefore, it gives a blank canvas to food technologies to create the foods that we all love and buy at the grocery store. Second, sunflower is the third largest oilseed crop in the world. What that means for us is a highly abundant, highly available raw material, critical to ongoing business success. And third, and maybe most importantly, from a halo perspective, from a positioning perspective, sunflower protein, it is protein from the sun. And I promise you brand owners around the world will be excited to position this to their end consumers. As many of you know, we have been in the market with our hemp and canola proteins. This is a look at our robust sales pipeline for hemp. There's a few key things to point out here. First is the applicability of canola across a variety of food applications, food types. That can be a ready-to-drink beverage. It can be a ready-to-mix or powdered beverage. It could be into plant-based foods or even into baked goods where our canola protein actually can deliver better results than traditional egg protein. It's not about a plant protein. It's just a better performing protein delivering cost and use to brand owners. This funnel right now is robust and in a place to deliver multimillion dollar growth for us in the future. On the right hand side, you see some quotes from our prospective customers. And these are the types of feedback you want to hear from food companies. You want to hear that it is easy to use. If you're a protein, you want to know that it has high protein quality. You want to know that it has great taste or the taste exceeds expectations. And you want to know that it has unique functional properties like foam stability, like creates a foam. This is the perfect feedback you want as potential customers receive our products, they test them in their labs, and give us the feedback that, wow, this product not only doesn't perform as expected, it actually exceeds my expectations. We are in a phased approach. So right now as Bercon, we are in phase one, the build phase. This is where we are building the capability to produce, launch, and sell our products. This is the focus for the next 18 to 24 months. Phase two is in that 12 to 36-month range. This is scale. How do we drive sales volume, drive production volume to get unit economies of scale, drive costs down, and validate unit economics? Once we get that piece, we move to the most exciting piece, which is phase three. Once Berkheim has proven our technology in the marketplace, proven customer demand, put ourselves on a strong financial footing, then we are in position to further leverage that technology through our licensing or technology sale approach for rapid scale around the world through partners. So very exciting, again, phase one today, phase three in the near future, exciting margin expansion when we get to phase three through the licensing and the sale of technology. With that, I will turn it over to Rob to talk through our financial expectations and the rights offering. Rob, please take it away.

Thanks, Kev. As Berkson grows and evolves over the coming years, so too are expected profit margins. And as Kip just outlined, Bergkahn expects to evolve our strategy over the coming years from the build to the scale to the license and sell tech phases that we just outlined, but phase one to two to three. And as we sort of built those different phases, we are seeking to optimize operations and at each stage of our development to both produce excellent products and commercial qualities, establish market credibility with our customers on the quality and availability of our proteins. And we have over 80 potential customers who are interested in our isolates, and we really need to provide them with the product that they deserve and want. But our focus on the long-term strategy is on the high-margin licensing strategy, which Kip just spoke about, and that you can see in Phase 3, really adding to the gross margin in the outer years. So to support this financing structure, we've got three immediate steps within the next two months, which will provide the foundation for really explosive growth for BertCon. Step one, we just closed our next tranche of $1 million in financing from our existing long-term note facility, which will provide us with near-term cash to go through the next couple of steps. For step two, we're working with our strategic partners to identify, procure, and prepare a facility which can support the multi-stage growth that we're currently targeting over the next coming years. And finally, step three, we're undertaking the right soft ring, which was just announced today, to provide working capital and to support the sales and marketing efforts as well as new product launches over the coming years. This was just announced today. and it will be closing on February the 12th. In greater detail, so the step one has been completed and the step two is currently in progress. The rights offering itself, as we announced it was just today, we're targeting up to $12 million in proceeds. This offering represents one right for each share that we will provide to shareholders. and will provide Bercon with the capital that we require to achieve the strategic plan we presented today. Not only the operational ramp-up plan, but also the sales and marketing efforts that include the launch of several new proteins, but also the collaboration with partners and customers in order to have broad and deep revenue opportunities with these groups. We already have participation commitments from a significant number of board members, large existing and new shareholders, and management. This financing should provide the necessary capital to support the aggressive growth that Bercon has over the coming years, right through the cash flow positive position and then through to the future. You can see on the right there are some key offering highlights that were announced in the letter today and the target of $12 million and priced at $0.085 per share. for that right to offering. And closing on February the 12th of next year. And with that, I'll turn it back to Kevin.