MustGrow Biologics Corp. (MGRO) Earnings Call Transcript
August 31, 2026
Earnings Call Speaker Segments
Welcome to MustGrow Biologics Q2 2026 Earnings Call with CEO, Corey Giasson; and COO, Colin Bletsky. The financial statements and management discussion and analysis are available on SEDAR+. Today's remarks may contain forward-looking statements. These statements involve known and unknown risks and uncertainties. Please refer to MustGrow's filings on SEDAR+ for more information. [Operator Instructions] Welcome, gentlemen, and please begin your presentation.
Thank you Martin. Good afternoon, everyone, and welcome to MustGrow'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 mustgrow.ca. So last week, we announced the Q2 2026 results. TerraSante sales revenue for the quarter was $75,000. Gross profit, which is a gross loss, negative margin of about $17,000. That was due to us shipping product from Asia through air freight into the U.S., 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 had received that portion of the cash flow in the Q2 financial statements, it reads as an accounts receivable. Our expenses continue to normalize without NexusBioAg, 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 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 expect that the first half of the year 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 enough products 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 their 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 news release sent out on Thursday that as of August 15 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've seen in 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 U.S. We've seen a strong second -- start to the second half of the year, as you've seen over $900,000 or approximately $900,000 of sales year-to-date, and we expect the remaining 4 months of 2026, and going into 2027, to be even stronger. We are 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 what the Bayer commercial license is an around it and kind of the going forward with it. As you remember, back in 2023, we did sign a commercial exclusive agreement with Bayer for the bio pesticide and bio herbicide 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 more -- it's harder for a lot of these large organizations to get the registrations in place and get some synthetic chemicals and fertilizers into those markets. The need is growing and continues to grow within that region right across our barriers working. And when we look at the commitment from Bayer, we always estimate as MustGrow that they will be investing anywhere from $35 million to $40 million to get that product registered. And right from day 1, there was 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. So 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 million to $40 million mark, actually through that period. And once we move to sales, once the product is registered after the registration process, that's when we 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. I'm very excited to hit those technical advancements and really start driving these products that next stage of retoration and more market development and really looking at working with them and excited to work with them in the next 7 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 to take this forward is very exciting for us.
In terms of our pipeline, not a lot has changed since our previous call back in May. Again, our focus remains on driving TerraSante sales in the U.S. I mean, we think that this is a massive market, a massive opportunity. It's up to us to be able to generate the product to be able to have the manufacturers manufacture that product and get it into the market in a timely manner so that we can move this company into positive cash flows and continue to grow it from there. But the U.S. is really key for us. We are also, as I mentioned before, supplementing or looking to supplement TerraSante sales in other markets potentially. This is going to take on-farm testing, which we're doing here right now. And with positive results, and identifying an economic need for this product in the market. We'll be looking to do the initial ramp up, just as what we've done in California, for instance, starting a few years ago now. In terms of our biocontrol TerraMG in Canada and the U.S., not much has changed here. We continue to work with the EPA and the PMRA. But you will take note in our financial statements in the income statement that we are spending less and less on regulatory work. Part of it's a wait-and-see type of period. And part of it is that we want to also make sure that we're driving cash to be able to generate those sales of TerraSante, which, again, is going to the positive cash flows. And I won't comment any more on Bayer, Colin covered that very well in the last slide. In terms of our capital structure, we have 70 million shares outstanding, about $92 million fully diluted. We have seen discount grow over the last few years as we've raised some much needed capital. We're sitting in a very comfortable cash position right now. And I believe if we're able to execute on manufacturing and selling this product into the market in a timely manner, our goal is still that will be positive cash flows next year, in 2027. So we're well on our way to do that. And we're fortunate to have manufacturers in Asia. It's typical to have hiccups when you bring new equipment online. We understand some of these hiccups. We've been working with them. We're fortunate to have them invest their own capital to go and do this work and be able to produce product for us now and into the future. And it allows us not to have to spend tens of millions of dollars to go and develop a plant. We're also excited with some of the discussions we've had with some of these manufacturers that not only do they want to be able to hit their targets right now in terms of production, but they want to continue to grow with us as we need more and more product in the future. So I think we've got some very good good partners that we have in terms of manufacturing, and I'm looking forward to us being able to hit those manufacturing numbers so that we can really start driving sales and work this company into positive cash flow in blend. So with that, Martin, that's the presentation, and I'd like to open it up to question and answers.
All right. Thank you, gentlemen. We will now take questions from the audience. We have received numerous by e-mail already. [Operator Instructions] First question, what kind of milestone was achieved for TerraMG with Bayer and will there be a next milestone?
Yes. So Martin, as I said, those were based on a technical achievements in both technical and efficacy in field. but also an application. And one of the key criteria is not only about having a product that actually works, that's having a product that can go through the typical farm systems that are used in that region. And when you look at what's happening in Italy and Spain with the different types of equipment than some parts of the U.S. A big part of that milestone was based on those technical treatments. So on that, and then we're very hopeful in the potential milestone for 2027, we do believe we're well on our way for that milestone, but we also have to work through a lot of different meetings, a lot of different things with Bayer over the next course of the year.
I think you've addressed this already, but is there a realistic chance of achieving additional buyer-related milestones in 2027?
Yes. And as I said, the potential there and the opportunities there, I believe, with the diligence that we're working with Bayer, hopefully, within 2027, we will see an additional milestone.
Can you quantify the current production capacity for TerraSante? Are the newly commissioned production line already operating at full capacity?
Yes, based on the existing lines that have been put in place, I estimate there could be potentially CAD 15 million to CAD 25 million of product being produced at nameplate capacity. No, they're not operating currently at full capacity. We have seen improvements. And I believe that the -- we will get there.
Are you now able to fully meet customer demand? Or how are you, or are you still experiencing periods of being sold out?
Yes. We're still experiencing periods of being sold out. We have an existing PO that we need to go and deliver on. So we're waiting on some product. But our objective here is to meet fully customer demand and then be able to build up inventories, specifically for the end of the year so that we can hit the beginning of Q1 hard with sales.
You mentioned additional production capacity in Canada. How is total TerraSante production capacity currently distributed between your facilities in Asia and Canada and are all of them running dedicated for TerraSante?
Well, all of our production is currently out of Asia. And we have 2 producers in Asia, 1 in Thailand, 1 in India. One of the facilities is 100% dedication to TerraSante. The other facility, I'd say, is about 80% to 90% dedication to TerraSante. They do need to produce another product for a month or 2 over a particular period of time, and I've taken that all into account in terms of the expected nameplate capacity. So for the one facility where we don't have 100% availability, I've taken into account the months that they will be down.
Are you scaling production based on actual customer purchase orders in order to avoid building excess inventory?
Well, right now, we're just trying to meet demand. Our whole goal is to -- I mean, we will be carrying inventory in the future. If we can get our manufacturing up to a level, there will be inventory carried in the future, which, again, is a good thing because we have seen unexpected demand creep up in that, and we want to be able to not only sell to existing customer base, but any orders that aren't anticipated, we want to be able to supply those as well.
Can you provide insight into TerraSante's seasonality and how demand would typically fluctuate throughout the year?
Yes. And right now, Martin, so it is sold out or sold throughout the year depending on the type of application method that's going on. There's pre-plant going on, but also in season applications. So when I look at the, I would say, the 2 heavy areas would be Q4 and then Q1. Q4 typically would be around the strawberry, specifically strawberry and vegetable production in Southern U.S., specifically California. And then Q1 is also strawberries, other barriers, but potatoes. And that's when you see potatoes come online, specifically in the Pacific Northwest. So as the U.S. as a whole right now, it is spread across the entire year. But the bulk of it would be a Q4/Q1 heavy time frame just based on the crop plantings.
How has demand for TerraSante developed compared to 2025? Are you seeing stronger order volumes from more repeat customers or expansion into new regions?
Yes. And as Corey mentioned, and part of the, I guess, the release was the increase of over 40% already for TerraSante sales in 2026 versus full year 2025. Now most of that product has actually gone to repeat customers. We have to satisfy those needs first. As Corey mentioned, we're still in a [ solo ] position. And as soon as we get product in, it is gone. So most of that is going to existing customers who are expanding acres. And as I always said, farmers will use a little bit and then continually expand over time. We have now branched out and are selling into some other new customers, which is great to expand that similar. But for the most part, the bulk of the sales are still coming out of strawberries, still coming out of California, and then also into potatoes. So those are the 2 main crops for us right now. But we have seen a lot of good growth with existing customers who have used the product now for, in some cases, 1 year in some cases, 2 years.
Are you sell directly to those farmers? Or is it being sold to distribution companies who then move it on to the farmer customers themselves?
Yes. And we go through distribution. You need to work with the right professional agronomists and the right distribution chain to do so. And I could say we've been open about this, but we've had extremely strong support from Nutrien, specifically looking in the California region, they have been tremendous partners for us, driving that demand with their key customers. So everything we do in that sense is through distribution, and that's how we will continue to go forward.
I think you've addressed much of this, but with this question. Which regions or crop markets are currently generating the highest TerraSante sales?
Yes, it is strawberries -- strawberries and potatoes. And I would say the one key thing that we're seeing is very good yield response in both those crops compared to synthetic fertilizers and actually the synthetic systems that those growers are using. So we're seeing that growth head-to-head versus our targets.
This strawberry market, is that primarily California? Or is that in the Southeast as well or other southern states?
Yes. California is the biggest driver of it right now. We are looking and driving some new field trials and testing in Florida. But the 2 key markets for strawberries would be California and into Florida. When you look at potatoes, like I said, that's more Northwest. And if you go into fruit and veg or other vegetables, that's still a very dominant California market.
How much improvement in gross margins do you expect now that you are transitioning from airfreight to more economical ocean freight? And what are delivery times with ocean?
Yes. So in terms of gross margin improvements, in Q1, we had about 24% gross margin. I expect to see us going back to that 25% to 30%, 40% range. It all depends on some of the costs such as ocean freight at the time. We have seen ocean freight rates spike up during the Iranian war. In terms of delivery times, we're looking at about 6 weeks on ocean freight.
So that 25-ish percent would be at full production capacity?
No. No, it's not a full production capacity, no.
What would -- can you estimate what gross margins would be when you're running at full production?
Well, we've got agreements with our partners in terms of the costs and purchase orders that we put in for the product. The more efficient that they get in terms of their production, and we've seen their efficiencies starting to increase. It means that their costs are going to go down in that. And that's a good thing for them because with the low rates that they've been producing at, it could be quite costly for them in terms of their margins.
What are the next steps in the regulatory process for TerraMG and your other biocontrol technologies?
Yes. Well, in terms of the PMRA, I'll let Colin comment on that. But in terms of the EPA, in the U.S., we're in a wait-and-see period here right now. Again, we haven't been spending very much money there because we haven't had to. When we get an idea in a sense of where the EPA is at and what our next steps would be, we'll have to assess. It's going to cost more capital for us to do that. We'll have to assess do we want to be driving capital there versus TerraSante sales? And if not, we'll hopefully, if not, we don't have to spend any more money in this area. We look forward to receiving our registration. In terms of a time line, the EPA, it's hard to say.
Yes. And then Martin, in Canada, we are addressing one data need that we are putting forward this fall, and we hope to have that soon. And then with the European Union in Bayer's area. Bayer continually worked forward that registration process across EU27 and there are other regions. And looking at other parts, other parts of the world, we continually assess other markets and seeing what would be the best route to market and with who in other areas such as Asia, Latin America, et cetera.
When do you expect TerraSante to be available in Europe?
As of right now, we are doing testing in Europe, specifically looking in flowers in the Netherlands. So we have to wait for that process and that data to come through before we can then make the next step of working with the right partner and the other partners. Flowers is not part of the Bayer agreement. So we do have freedom to work in that area and Netherlands being a very large opportunity. So it's going to depend on country, depending on the country, depending on the data, depending on the crop as well. But we're hopeful that we will be getting a lot of those answers here at the end of this -- end of 2026 and then really figuring what the plan as to when for TerraSante will go with it.
For TerraSante, you're gaining -- or you've gotten a lot of action from the potato and the strawberry markets. Are you working on research to validate the efficacy and value in other crops?
Yes, we are, Martin. So with TerraSante, with TerraMG, both of those products are crop agnostic. So we can work in many different crops. It all comes down to the dose, the timing and the application. And the one difference between something like vegetables versus strawberries is the value at a farm gate level. So we have to then work through different dose, but we continually look leaving greens, tomatoes. We're looking in other berries even down to the point of looking into specific row crops as well just to continue that expansion. But it all comes down to you need to get the right value at the right time for that farmer. And that's where we have to work through some of those key different metrics.
With over 100 patents in hand, could some of those be sold for cash?
Yes. So I guess we have about 110 patents here right now. We think there's better value for us keeping these patents right now and moving our technologies into commercialization and scale-up because there'll be a lot more value for those patents down the road as we execute on commercialization.
What level of exposure to U.S. tariffs to your customers in the U.S. have? And what, if any, impact do you expect them to have on a go-forward sales?
Yes, in terms of tariffs, so far, our product -- I mean, as it sits here right now, our product being a bio fertility product coming out of Asia. We're not seeing any tariffs. But again, that could change at any time. Even if we work from seeing products here in Canada and exporting to the U.S. I believe being a biofertility product, it would be not under the new 50% tariffs that are expected here.
Has the EU changed their bio pesticides approval times to be more of a fast track process?
They talk about it, Martin, but they have not clarified or changed the registration or regulations in that sense yet. There are still, like I said, discussions about utilizing natural products like ours to drive that and go faster. But every regulatory body, I think, on this globe says that they want to be fast, but they never are. It just takes time. It's government and that's something we just have to deal with.
What will your pricing policy be once production is meeting demand?
So in the marketplace right now for TerraSante, we are in a good sweet spot to drive that growth. It is a profitable product for us in that sense and in those areas. My mindset would be that we maintain our pricing, we maintain driving the value, showing the value at a farm gate level and showing that value to the producers. Getting more product on the ground, getting more users, getting more turnover is going to benefit us over the long time. And looking at a lot of the market sentiment right now, specifically in the U.S., fert and vegetable growers are having a tough time. So to do a long-term price increase or pricing strategy with TerraSante right now just wouldn't be feasible. So my goal would be to continue to look, continue to adjust and look the marketplace, see what's possible, but the first priority is to increase sales and get more product on the ground and get more reducers utilizing TerraSante so we can continue that growth curve.
Have you started the registration in more states?
As of right now, we have a number of different states and new ones that we just announced. There are a few key other states that I would like to get into just based on demand. I would say our first priority is to get the product placed and put into the marketplace as quick as we can, number one. But number 2 is, continue the growth curve in the key regions. And I would say those key regions would be Pacific Northwest, California and Florida. And in my mind, there's no use getting more states when we don't have enough boots on the ground, rather focus and get these other areas right first, and then we can look at additional states based on demand and based on priority.
You said flowers are not part of the buyer agreement. Is TerraSante also covered in the buyer agreement?
It is. Our technologies are covered in that buyer agreement. We will continue to work with Bayer to see how and where we would take TerraSante into the marketplace in those regions. But the first goal would be to get it into something like flowers, where we have freedom to operate, show the demand, get the growth, get the data and drive that. Flowers are a tremendous value prop. And if you look at the Netherlands alone, there's roughly 28,000 hectares of flowers in the Netherlands, so it's a very large opportunity. So first is to focus on there, second would be then to look at where else can go with TerraSante and TerraMG with buyer within their region and pick up those key countries.
Can you make a comment to the current share price?
Yes. I mean we've seen our share price down over the last year or so. we're shareholders in this company, and it's not that we don't notice it, but we know how we can see an appreciating share price, and that is going to be generating sales of TerraSante and moving the company into positive cash flows, showing the growth, and that's our focus in that. And that's where we're headed.
Does Bayer also work also support work on TerraSante already is working towards registration? Or was -- has all the work been on the TerraMG?
Yes. All the work with Bayer right now is on TerraMG. TerraSante is a, I would say, a potential upside for both organizations. I will be meeting with them coming up in October to go through potential next steps. But when you look at a large agricultural chemical company like Bayer, having TerraMG in the marketplace first is something that they want to do, do first and foremost. They do see TerraSante to as a potential upside, but we have to work through a number of different things with it to see the right time and where it has a good fit.
Given they're both with the same core technology from the mustard seed having -- getting approval for the TerraMG, would that facilitate or potentially accelerate an approval process for TerraSante in Europe?
No, they are 2 separate products with claims with separate formulations, separate targets. So the answer would be no. It's 2 different systems. The biocontrol system versus biofertility in biostimulant is different, but it does come down to a country level discussion than with biofertility products. Biocontrol, you work through the whole EU27, where with biofertility is more a country-level basis discussions. So it's just really about understanding where those opportunities are and where the fit is, and where a need is having -- or where growers are having a desperate need right now. But like I said, we'll be working through that to get a better understanding and really see where we can drive that growth with Bayer.
Thank you. There are no further questions. This concludes today's call. Thank you for joining us, everyone.
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