MustGrow Biologics Corp.

Welcome to Musgro Biologics Q2 2026 earnings call with CEO Corey Giasson and COO Colin Bletsky. The financial statements and management discussion and analysis are available on CDAR+. Today's remarks may contain forward-looking statements. These statements involve known and unknown risks and uncertainties. Please refer to Musgro's filings on CDAR for more information. After management's remarks, we will open the call for questions. Participants may submit questions in the question and answer window. Welcome, gentlemen, and please begin your presentation.

Thank you, Martin. Good afternoon, everyone, and welcome to Musgrove's Q2 2026 earnings call and question and answer session. Before I begin, I'd like to draw your attention to our disclaimer. Forward-looking statements are going to be made in this presentation and the Q&A session at the end. Again, some of these statements will not come to fruition. This disclaimer can be read on our website at musgrove.ca. So last week we announced the Q2 2026 results. Terrasante sales revenue for the quarter was $75,000. Gross profit was a gross loss negative margin of about $17,000. That was due to us shipping product from Asia through air freight into the US and it's quite costly as you can see. licensing revenue. We were able to report in Q2 that we had earned licensing revenue of about $1.4 million and we made the announcement a couple of weeks ago that we'd received that portion of the cash. So in the Q2 financial statements, it reads as in accounts receivable. Our expenses continue to normalize without Nexus BioAg with about $900,000 quarterly of expenses. and Net Profit, which includes the discontinued operations of Nexus BioAg. We had a profit of about $300,000 versus a loss of about 1.1 million in Q2 of 2025. We have a strong cash position now with the capital raise that we completed in June. We're sitting on cash at the end of the quarter of about 4.4 million and a working capital of 5.2 million. So some comments on the results for 2026. Again, as we indicated in Q1's call in May, that we expected the first half of the year's sales to be slower than expected. This is due to manufacturing, specifically manufacturing issues. The new plants that have been brought online, they're having some hiccups and not being able to produce product uh enough product in a timely fashion for us to get into the market that's why we were focused on some of the product that they were able to produce to utilize air freight to get it into the market in time but we are starting to see some improvements in terms of manufacturing. And we did announce in this latest earnings news release sent out on Thursday that as of August 15th of this year, year to date sales are about $900,000, which is up about 46% compared to all of 2025. So we are starting to see some improvements in manufacturing. As we go forward, air freight being as costly as it is, We're looking to move the rest of the product for the remainder of the year and into 27 with ocean freight, which we should start to see our margins improve back to where we see in a Q1 of about 24% and potentially better. Going forward, our focus is to drive TerraSante sales. We continue to see an uptick in demand and Colin will get into some of that in the question and answer session. But we need to be able to have our manufacturers produce enough product in a timely manner for us to get the product into the market. And we're starting to see them do that. I'm very confident that they're going to continue to see improvements in manufacturing. And we are also assessing opportunities to supplement production here in Canada and potentially the US. We've seen a strong second start to the second half of the year as you've seen over 900,000 or about approximately $900,000 of sales year to date. And we expect the remaining four months of 2026 and going into 2027 to be even stronger. We're excited to receive our first milestone payment from Bayer. This continues to validate the efficacy of our technology and the need for it in the market. And we look forward to working with Bayer going forward, working our way towards doing the work and completing the tasks required for our second milestone payment.

So on that, I thought I'd go into just a reminder of what the Bayer commercial license is and what is around it and kind of the going forward with it. As you remember, back in 2023, we did sign a crucial exclusive agreement with Bayer for the biopesticide and bioherbicide, and that was all focused around Europe, Africa, and Middle East. and we don't need to really go into the why, the why still remains. European Union specifically and the regions around it are moving away from the synthetic chemistries. It's harder for a lot of these large organizations to get the registrations in place and get some of the synthetic chemicals and fertilizers into those markets. So the need is growing and continues to grow within that region right across where Bayer is working. And, you know, when we look at the commitment from Bayer, we always estimate, as Musgrove, that they'll be investing anywhere from $35 to $40 million to get that product registered. And right from day one, there is not a chance that we can go into that market without the regulatory expertise, without the investment, without the boots on the ground to really access that marketplace. When we look at what Bayer is potentially spending from R&D, market development, and then into the milestones, it is going to be between that $35 to $40 million mark, potentially through that period. And once we move to sales, once the product's registered after the registration process, that's when we'll move into more of a royalty and a cost plus on the active ingredient. So Bayer continues to move this forward, and I'll go through that a little bit later, but we're very excited about the first milestone. We're very excited to hit those technical advancements and really start driving this product to that next stage of registration and more market development, and really looking at working with them and excited to work with them in the next three to seven years. And then if you look at the size of that market, it is a significant opportunity for us right across Europe, Africa, and Middle East. And just a small amount of market share could generate a significant amount of dollars. And remember, Bayer would not be taking this forward if the product didn't work, if we weren't seeing efficacy, if they weren't able to get around some of these technical challenges and questions, but also they have to be profitable. And taking them and having them take this forward is very exciting for us.