Burcon Nutrascience Corporation

Good afternoon, ladies and gentlemen, and welcome to the Bercon NutriScience Corporation fiscal year end 2025 conference call. At this time, all lines are in 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. Please be advised that this call is being recorded today, Wednesday, June 25th, 2025. I would now like to turn the conference over to Kip Underwood. Please go ahead.

Thank you, operator. Good morning, good afternoon, and good evening to those around the world on the call today, and thank you for attending our quarterly review. These are certainly exciting times at Percon. We have strong customer interest, good progress at our manufacturing facility in Galesburg, Illinois.

Capital market momentum, certainly exciting times that we will review with you all here today. We'll start with our safe harbor statement. I'll let you all look at that for a few moments. So, as I mentioned today, we'll go through recent milestones, a growing consumer market,

We'll touch on our differentiated portfolio, really the secret sauce that makes Verticon what it is. Exciting to, again, reiterate our direct route to market through our Galesburg manufacturing facility. Strong customer interest exhibited by our robust pipeline. And hopefully, for those who are going to call it today, what you see as a tremendous investment opportunity.

And then, obviously, we will close for Q&A. We have made significant progress over the last three months.

So, if we roll back to just prior to three months ago, you know, we closed our rights offering fundraise at $9.4 million. We worked with our alliance partner to acquire the manufacturing facility in Galesburg, again, giving Bercon a direct future market for our technology. We've announced the first commercial production. of our pea protein, our Pizzazz seed pea protein, very exciting, followed by part of our overall broader capital market strategy, executing a 20 to 1 share consolidation. And then recently announced that we've entered into a $6.8 million multi-year contract manufacturer agreement, a minimum of $1.4 million per year. We're going to this more in the future, but certainly exciting for us. It baseloads our facility and gives us a revenue stream from the very, very beginning.

So very impactful last three months for Berkut. We think it's important to start with the market, and we are certainly targeting a growing market.

In-consumers drive the activities of our customers. and end consumers are seeking proteins. In particular, they are seeking plant proteins. Consumers are seeking plant proteins both because they're healthier for them and they are healthier for our planet, which means we at Bercon are targeting a large growing market at the very beginning of its growth runway as more and more consumers transition from traditional proteins to plant proteins.

What's important for us is that is where our technology is tremendously differentiated, right?

We have a portfolio, sunflower, pea protein, canola protein. We've lost our hemp protein. These are proteins we've lost to the market where we upcycle, generally speaking, the bioplastic grain production to produce pure proteins with unmatched purity that fuels superior taste, superior color, and functionality. That is important because as those customers I talked about seek to meet those new consumer needs, they need to meet their needs with a product that tastes great, that delivers the benefits of protein, and that is where Bercon's products deliver truly best-in-class protein production performance.

We have our market. We have the technology.

The real unlock that occurred roughly three months ago was with our alliance partner acquiring the Galesburg, Illinois facility and giving Bercon a direct route to market. It's tremendously exciting for us and where we have spent, frankly, a considerable amount of our time over the last three plus months. To remind everybody, we have full operational control. The facility has the capability to produce our entire portfolio. The facility has the capacity for us to fully execute our business plan. It is a seven year agreement. Just tremendously exciting and I can vouch for I myself personally as well as many members of our team has spent considerable time in Galesburg. One of the things that made this site perfect for us was the existing workforce allows us to scale and produce faster. And I can say without a doubt that the integration of the team in Galesburg with the team from Bercon has truly been seamless and we are truly working as one team now to produce Bercon's best in class proteins.

The other key part of execution is sales.

Customer interest has been phenomenal in our products. They have been waiting patiently for us to deliver to them commercial-scale samples, samples produced from the Galesburg facility. And then it's important because what you see here is our funnel. Our project funnel mirrors the customer decision timeline. That timeline is to launch a new consumer food is 9 to 18 months. We have many customers that are in the last step of that process. And the last step of that process for them is to bring in and evaluate commercial scale production to ensure that technology performs a commercial scale both from us and in their in their manufacturing process. And we're excited to say we are at that last stage with many, many customers, particularly along P protein, where again, we announced previously, successful commercial scale production. I'd also again, like to highlight the $6.8 million multi year agreement that we have it as a contract manufacturing agreement. And a lot of people ask, how is that relevant? What does that mean? So this is we are performing a service for somebody producing their ingredients for them. And it does really three things for us. First and foremost, it gives us a revenue stream, which is vitally important. It also helps us produce our own products. We simply put manufacturing facilities that run more often than run better. So even the fact that we're doing this content manufacturing, it helps us produce our products better. It helps us scale our technology. It helps us be more efficient and helps us deliver more and better consistent quality. So really exciting customer pipeline. Many commercial scale samples currently under evaluation at the last stage in the customer decision process and the

Can't wait to communicate future news along these lines. We have the market, target growing market. We have the technology.

We have the ability to produce in a robust customer pipeline. You put that together and we believe we have a tremendous investment opportunity both for our existing shareholders as well as new shareholders. So we are in We are in phase one right now. We have communicated the markets. We expect $1.123 million of revenue in 2025. And as I've just went through, certainly very confident in that mark. We have communicated double digit 10 plus million revenue in calendar 26 and cash flow positive in calendar 26 as well. We are in phase one right now. That is producing and selling execution phase. Phase two is where we will scale to the capacity of Galesburg. And then phase three is tremendously exciting. It's where we look to scale the technology both ourselves, further growth, as well as look to licensing partners around the world. Again, it's a tremendous investment opportunity, we believe, for the market out there. We're at the very beginning of this growth curve and really exciting

our investors to go along this journey with us.

Looking ahead, the first thing I want to do is just look a little bit behind. It's very important to us to build our credibility. Our phrase is we say what we do and we do what we say. And we communicated a series of actions that was going to happen in the first half of 2025, and we have met everything we communicated to the market. Looking forward, we expect in the second half of 2025, production, ramping of our additional products, so the production of a sunflower, the production of canola protein, growing our sales, so communicating successful sales, successful customer supply contracts, That leads into 2026, again, where we have communicated 10 plus million in revenue for counter 26 and cash flow positive. These are certainly exciting times for us here at Bercon. Again, the tremendous unlock with our partner, Pro Man Alliance, to acquire the Galesburg facility and give us a path to bring our product, to bring our technologies to market robust customer pipeline, customers who are wanting to buy in the late stage evaluation process. And we certainly believe that the future is bright for Bercon and are excited for our investors to come along this journey with us.

Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. And if you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Dave Storms.

Please go ahead.

I wanted to start with a grab bag around revenue guidance. Just curious, does this include any additional wins on the horizon or any royalty revenues they might see as all that baked in? And then maybe additionally, is there any commentary around the pacing of that ramp of revenue?

Thanks, Dave. So, the near-term would be, near-term revenue would be driven by the future sale of our products, all right? almost entirely, the licensing conversations are always there. The key part of our strategy to get the real value of a license is to establish the price points and the customer in the marketplace before we go there. So for us, again, we've started production, completed commercial scale production of P, we'll be rolling that out to our other products, and then we expect those late stage customer projects I mentioned to turn into significant sales here for us in the back half of 25. Again, the communicated number of 1, 2, 3 million days.

Understood. And then now that Galesburg is up and running, I'm sure you have a little more visibility into how everything is moving through and including on your P&L. Any thoughts around what a margin profile at a stable run rate would look like

And what we've communicated is when we get to full scale capacity, we have gross margins north of 50% once we drive the capacity utilization. What I can say, what we've learned also over the last three months is, you know, having personally spent a significant amount of time there is, if anything on the ground level, We have full confidence that we can achieve the underlying financial assumptions, cost assumptions we have in our model. And if anything, we believe that as we look under the hood, there's additional opportunity for us in the future.

That's very exciting. Thank you.

And then just kind of switching gears here, now that you have, you know, done this consolidation, any thoughts on next priorities for your capital structure?

I think for us, again, we have a balance sheet that allows us to execute our plan. And I think we're really going to be focused on the basics of producing high quality products, turning that into sales with our customers, driving our top line, and then communicating that to the market so that the markets can then see our robust financial performance. So we feel pretty good about those. And then obviously, I wrapped around the capital markets will see a more robust communication strategy around that to be sure that we're getting the credit in markets for the business achievements that we're making.

So that makes a lot of sense. Last one for me here, more of a modeling question. It looks like you have a cash burn rate of about 1 to 2 million per quarter. This seems sustainable given your current cash position and, you know, the assumption that it would be cash flow positive by 2026. Does this seem reasonable to you? And then, additionally, do you have the shares outstanding number for year-round?

Yes, that's reasonable.

Again, if we, you know, us moving to a capital positive state is around, you know, ramping revenue, you know, really back half of this year going into next year. You know, strong underpinning of that, again, is the contract manufacturer piece we already announced of 1.4 million. dollars per year minimum. Outstanding shares right now, Dave, I can't give you the exact number, but 12.7 million is the current outstanding shares.

That's perfect. Thank you for the timing. Good luck in, you know, next quarter.

Thanks, Dave. Appreciate it.

Your next question comes from Bill Galbraith, private investor.

Good afternoon. Can you hear me?

Yes, Bill, I can.

Great, thanks very much. Last November, you announced in a news release collaboration with piratos in Belgium. And I'm just wondering, can you comment on on where on the status of that collaboration? And is there a prospect for for sales with piratos?

So what I can say is that collaboration is ongoing. That collaboration was really centered around the use of our canola protein into baking. One of the avenues for that is the use of canola protein to replace egg protein in baking goods. Think about if you bake a cake, you have an egg. At a commercial level, people add eggs for the same reason. Eggs are highly volatile from a price perspective and are those who want a more plant-based offering in goods. We're seeing real traction in the marketplace with our canola protein, as a potential ag replacement or the enabling of a plant-based positioning on a base good. And all of that really is underpinned by our work across. Okay. Thank you. Thanks, Bill.

Okay. So, as a reminder, if you wish to ask a question, please press star 1.

Okay. So, if there are no further questions at this time, I will now turn the call over to Paul Lam, Director of Investor Relations. Please continue.

Thanks, Operator. We have a question from our webcast. This is from . Has any consideration been given to applying the Burkham process equipment from the old Merritt plant? As it appears, the building is going to be repurposed. Kip, any comments on that?

Sure. So, yes, we are aware of that. And, you know, looking into the future, one of the reasons, many reasons long-term we're very excited about the Galesburg site is that we have the land and the building to allow us to increase capacity in the future in a very capital efficient manner. Certainly, as we look forward to doing that, we will be looking where there may be a good deal on equipment that fits our process. Certainly, we're well aware of the situation and are looking at what's available.

So far there aren't any further questions. If anyone else wants to ask a question, please type in the questions and we can answer them. Okay. I think we're good. Operator?

All right. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.