Burcon NutraScience Corporation

Thank you, Marissa. Good morning, good afternoon and good evening, and thank you to all on the phone for your time, your interest and to many of you for your investment in Burcon.

If you have one takeaway from our discussion today is that we at Burcon have tremendous business momentum. Today, you'll hear about the successful commercialization of technology.

You will hear us discuss record production. You will hear us talk about subsequent to the quarter, significant recurring sales.

And at the end, as we announced later today, the desire to complete an additional funding round to accelerate our growth because we can see the customer demand coming. So again, exciting times for Burcon, great business momentum.

Our safe harbor statement. To walk through the business momentum I just discussed, we'll go through Q2 highlights.

We'll ground ourselves in our technology platform. We'll go back and we'll talk about the plant protein market dynamic growing.

We'll review our sales and production, talk about how we're investing for growth, our cash position, why we believe it is a great time to invest in Burcon and then look forward to what this 2026 look like. And then obviously, we will open it up for Q&A.

For Q2, on the operational side, I think if there was one word, I would say, is execution. So from an executional perspective, again, initial commercial sales, our pea protein and our canola protein.

Successful scale-up of pea protein, fava protein and canola protein. That is very difficult because we are both starting up a new facility with our partner and commercializing technology.

Both are hard independently. They are extremely difficult to do together.

Great customer engagement as evidenced by our customer pipeline, 200-plus projects. And inside of those projects, customers are progressing.

They continue to vote with their time. And the more time they vote with, the more validation that our products, our proteins are meeting, if not exceeding our expectations.

And then lastly, a great market outreach at IFT FIRST, one of the largest food trade shows in the world. Great opportunity to showcase Burcon's technology and interact with the entire industry.

That's the executional side. With that, I'll turn it over to Alex for the financial highlights.

Alex, please?

Thank you, Kip. In respect of financial highlights, what we're really seeing is the translation of the operational achievements made throughout calendar 2025 into our financial performance.

In Q2, specifically, we generated revenues of over $350,000, representing a nearly eightfold increase over the comparable year ago quarter. Further, subsequent to year-end, we've also seen strong sales momentum with orders received from October 1 to date in excess of $500,000, including multiple repeat commercial sales.

As we concentrate our efforts and our resources on production and sales, we have reduced our spending in research and development and in general and administrative expenses by 61% and 27%, respectively, over the second quarter in fiscal 2025. Lastly, we announced today the offering of convertible debentures, which will allow us to strengthen our balance sheet and support accelerated growth.

We'll discuss this more in detail later on in the presentation. I'll turn it back to you, Kip.

Thank you, Alex. And really, reiterating those last two points.

So all the work we have done since March finally translating, transitioning into significant commercial sales. And then in discussions with our Board, our insiders, seeing those sales come and recognizing, we needed to accelerate growth, be ready for growth.

Hence, the fundraise we announced today and that we will discuss later in the presentation. Our foundation.

What it enables all of this at our heart is our technology, the innovation that Burcon has invested in over the years. And what that truly delivers is purity, unmatched purity in the marketplace.

And that's important because that purity is what delivers superior performance, excellent taste, excellent texture, excellent color to our customers. We like to say we give the food companies a protein blank canvas so they can go create the great foods that we all want to buy and enjoy.

The technology also highly relevant in today's market because protein is hot. If you have walked in grocery store, you have noticed protein on the front-of-pack protein positioning, 10 grams of protein, 20 grams of protein in beverages, in coffee and cereals, across all types of foods.

As our potential customers look to position protein to consumers, that is a great place for us. That is a great place for our technology to play a role.

And in the end, this is a dynamic market that is truly good for Burcon. And we see this in our robust funnel.

As mentioned, this funnel has delivered $500,000 of orders since October 1, subsequent quarter, and it is dynamic. So 200 active projects.

We talk about a customer's development in a new food for all of us is a 9- to 18-month process. And as they go through that process, we see signs that they are increasing their investment.

They start off with small bags, maybe 200 grams to 500 grams, then they get order of maybe a kilo, then they order a full bag of our product. Over 30 customers have ordered at least a full bag, paid for to advance their development efforts.

Some as we mentioned, initial orders, initial pallet orders for pea, fava and canola. The next step is just leading to our recurring revenue.

And so it's the dynamic process because we're moving through the funnel. It has great diversity in terms of type of customer, type of food they get across all of our products.

And this is really the lifeblood of our growth in the future. It's fantastic to see that first $500,000 plus in orders coming out the bottom of the funnel as wins.

People often hear me say, one thing you must do before you can sell it is you have to produce it. And working with our partner, ProMan, unbelievable 3 months in the last quarter and then subsequent to the quarter.

So record production, commercialized 3 technologies, again, plant start-up, technology commercialization, both hard individually, done and done successfully at the same time, validating our technology platform. We have quality certifications, third-party, BRC, which is one of the largest food ingredient certification organizations in the world, kosher, allergen free.

We have a facility with our partner that has the capability and the people to deliver our technology, our products at a cost, of quality and the consistency that meet or exceed our customers' expectations and fully enable our business plan.

As Kip has highlighted, Burcon had the opportunity to capture growing market demand for our plant proteins. And we've undertaken a number of steps to strengthen our balance sheet such that we are positioned to capitalize on this opportunity.

The central pillar of our strategy here is the offering of the convertible debentures that were announced this morning. Burcon is undertaking a non-brokered private placement of convertible debentures of up to $4 million.

We intend to use the net proceeds of this offering to invest in inventory, labor and production efficiencies to plan for Burcon's future infrastructure needs and to repay the short-term loan. We further highlight that there is significant support from insiders who have committed to participate at a minimum of $2 million of the offering.

The convertible debentures themselves will be unsecured, carry an annual interest rate of 15% with interest payable in full at maturity and have a 48-month term. The convertible debentures are convertible at the option of the holder in whole or in part into common shares of Burcon at a conversion price of $2.27 per share.

Burcon comparably holds an accelerated prepayment right, whereby if the common share price trades on the TSX or another stock exchange where the shares are principally traded, if the price is above $4.54 for a period of 14 consecutive trading days, then Burcon may prepay you the principal amount and any accrued and unpaid interest thereon. Upon written notice from the company for such prepayment, the holder has 30 days to accept the prepayment.

Failing which, the company may accelerate the conversion of the convertible debentures into common shares at the conversion price. And looking at the -- next slide, Kip, please.

In looking at the financial strategy as a whole here, in addition to the convertible debentures, we've undertaken a number of other steps to strengthen the balance sheet. Specifically, we have obtained a short-term loan of $700,000 from one of Burcon's directors, which carries a 12% interest rate and is repaid at the earlier 4 months and the closing of the convertible debentures.

This loan along with our existing cash resources allow us to maintain the momentum and scale production through to the closing of the convertible debentures financing. Lastly, we've also extended the maturity of tranche 2 of the secured loan, which was provided by Burcon's largest shareholders, and we've extended that until December 2026.

Across these 3 financing steps that we have taken, again, highlight that they each involve significant financial support from Burcon's insiders. And collectively, they position us to be able to capture that growing market demand.

I'll pass it back to Kip to go through our investment opportunity and our future outlook.

Thanks, Alex. Just to reiterate one piece.

Again, I thought the overall theme is great business momentum. And what you're seeing from our insiders, those who follow us closely and are participating with us, is a belief in that momentum and full support for us to actually accelerate to raise money so that we can pull forward investments that were planned in '26 into 2025 so that we are ready for those next customer orders, and we are prepared to truly accelerate our growth the back half of '25 and into 2026.

We talked about the market, sales, production, our balance sheet investing for growth. Collectively, we believe this positions Burcon as a fabulous investment opportunity.

The last piece I want to make is that if you back up from March to now, again, we have significantly de-risked Burcon. Again, we've successfully commercialized the technology in place many people fail.

We have a started a new production facility, incredibly difficult. We have validation by customer activity, either within a project or through already recurring sales.

We are investing for not just a days but for tomorrow's group. So substantially de-risked on one side with significant upside opportunity on the other side.

Again, we believe a great investment opportunity. Looking forward to 2026, and people always asking me, well, how do we know you're being successful?

Where are you going? What are you driving for?

And to reiterate, to affirm, especially with the recent sales momentum is we are absolutely affirming our guidance of $1 million to $3 million in sales in 2025. Our '26 guidance, $10-plus million or double-digit revenue and reaching a cash flow positive state.

And the drivers for that are keep driving sales, driving revenue. In this industry, when you achieve your first sales, they are pretty much by definition recurring sales.

Every time a customer manufactures a new food, they come back to us and buy your monthly or every other month. As we drive sales and fill our capacity, we get margin expansion, critical to our growth.

We'll be investing in capacity, be that more operating days, more shifts, more equipment or all of the above. And we do all of these with a strong executional event to always looking for efficiency to help us produce our products at a cost, quality and consistency that exceed our customers' expectations as well as drive our financial plan.

With that, Marissa, I will turn it back to you for Q&A.

Congratulations on the quarter. The first one is going to be around financing.

Could you walk me through the headcount and logistics of bringing on an additional shift? I guess the expected lag to be reflected in revenue given the subsequent quarter-end orders.

Yes. So I think the simplest way to equate an additional shift is additional operating days.

I think that's the simplest way to do that. Every time you add an operating day, you add 1/7 more capacity per week and that translates per year.

For us, to get ahead of that, to hire and train a shift to get to a base level of performance, that's a minimum of 90 days. So it's really important that we get ahead of that.

We bring those people in, get them trained to ensure they can execute their jobs so that we can, again, produce our products at the cost, quality and consistency that our customers expect and the financial plan needs.

Great. I'm going to pivot over to just customer base now.

Could you provide like a little bit more color on the strategy around new customer acquisition versus the expansion among the current base, especially as there is a 200-plus active projects converting from the evaluation stage to purchase orders and recurring on top of that? Just kind of more color there would be great.

Sure. So I think, first, the primary types of customer focus on are those entrepreneurial brands, those brands that are on the cutting edge, those brands that are on the forefront of innovation.

They are the right size. We have common values.

They move the fastest, therefore, the quicker to sell. So that's the type of customer we're looking at.

For both our funnel and our current sales, we're looking for diversity. So we want diversity in customers, so customer type or customer size.

We want diversity in food types. So we have projects and sales going into a powdered beverage or ready-to-mix beverage and liquid beverage, nutrition bars as well as the broader category of plant-based foods.

And then in those, we want diversity of our products. We have both projects and sales, initial sales of pea protein, fava protein and canola.

So the key for our funnel is diversity of those with a real laser focus on those cutting-edge entrepreneurial brands that are aligned on values, move the fastest and it can help drive Burcon's growth first.

I think the last one I have here is just going to be around guidance more or less. You touched on it at the end of your closing remarks, but cash flow positive by the end of 2026.

Do any of these changes give you an indication that, that could be pulled forward a little bit? Anything there would be great.

Right now, we're affirming the guidance for '25 and '26, Rob. I think the way to think about it really is the guidance hasn't changed, but it's been de-risked.

As we've proven technology, commercialized technology, got customers to move from a project to a sale to a buy, I think all of those things de-risk our guidance and truly position us for a strong close to calendar '25 and just an amazing calendar '26.

I'm thinking from a CapEx point of view, what's the capacity of the current facility? If you're running it at max capacity, however you define that, is that going to get you your $10 million to $20 million?

Or do you need more than that?

The current facility will get us beyond that.

Beyond that?

So we're a few years away from tapping that out as we move forward. So we'll expand capacity in 3 different ways.

So one is the expansion of operating days. We talked about shift people.

One is the addition of equipment. And then third is just good old-fashioned process engineering and gaining efficiency.

And we'll continue to stack all 3 of those in the months and throughout 2026 and then '27 for sure.

Okay. So you think the existing facility can take you to '27, '28, which would put you in the $40 million, $50 million, $60 million range.

It certainly takes us into '27.

Thank you, Marissa. We have one question from the webcast.

This is from [ Harry Hamas ] from [ ARRIS International ]. He says, "long-time investors.

Thanks for all the hard work. We keep hearing $1 million to $3 million revenue this year.

There's a huge difference. What is the forecast?

$1 million, $2 million or $3 million in revenue or maybe even more?"

Thank you, Harry, for the question, and it's a good one. So for us, what we want -- for us, I'll be very frank, as a new company, we believe it's very important that we're consistent in our guidance.

It's very important that we build credibility. We talk a lot about say what we do and do what we say.

That is a mantra inside of Burcon. So we're going to hold fast to our guidance of $1 million to $3 million for '25 and then, at the same time, communicate the reality of where we are, $500,000 in orders from October 1 to now.

And then as we continue to have success in the marketplace, we will communicate that as well. Thank you.

Thanks for the question, Harry. I do not see any further questions from the webcast, unless anyone is putting a question now.

Marissa, back to you. I think we are okay for questions from the webcast.

Thank you to everyone on the phone today in the conference today. Thank you to our investors for your confidence in us, prospective investors for your interest.

Certainly, thank you to our team members that have applied the work and the discipline and the creativity to get us to where we are today, which is a business with great momentum. Exciting days are certainly ahead for Burcon.

Have a great day, everyone. Thank you again for your time.

Cheers all.