California Joins the TerraSante Approved List

A Step Towards Revenue Generation

Releases Fiscal Year 2023 Results

Reaching Another State

Joe Gomes

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MustGrow Biologics Corp

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Fourth Quarter and Fiscal Year Results
All dollars are denoted in Canadian dollars unless specified otherwise. Revenue for the fourth quarter was $4.7 million compared to no revenue for the previous year. The increase was due to&nbsp;fees earned pursuant to the Company&#8217;s technology license, evaluation, and collaboration agreements, of which the revenue&nbsp;was sourced from two companies, $0.6 million from a company in Japan and $4.1 million from a company in Germany.
For the Company&#8217;s expenses, total expenses were $1.2 million in the fourth quarter, an increase from $1.1 million in the prior year. Increases in R&amp;D ($186,205 versus $93,154), professional fees ($178,345 versus $77,800), regulatory expenses ($89,090 compared to $14,585), and patent expenses ($94,326 versus $18,158) were the drivers. Regulatory expenses increased due to advancements in the&nbsp;product registration process in the U.S. and Canada. Operating income for the quarter was $3.5 million compared to an operating loss of $1.1 million last year.
The Company had net income of $3.4 million, or an EPS of $0.07, compared to a net loss of $1.0 million or a loss of $0.02 per share. The large improvement was due to the license revenue that did not occur the prior year.
For the fiscal year, revenue was $4.7 million, up from $6,479 in the previous year, with the increase due to the license fees from the agreements. The previous year had sales of CannaPM that was discontinued in 2022.
 MustGrow had total expenses of $5.5 million for the year compared to $5.7 million in the previous year, with the largest increases being in R&amp;D, regulatory expenses, and in corporate communications. Management reported an operating loss of $0.8 million from a loss of $5.7 million in the prior year.
Net loss for the year was $0.7 million, or&nbsp;a loss of $0.01 per share from a net loss of $5.6 million or a loss of $0.11 per share last year. The improvement was from license revenue that was not included last year.
Setting the Table for 2024 and Beyond
Approvals and collaboration are the themes of the fiscal year for MustGrow, as the Company had a goal of commercialization of its products at the start of 2023. TerraSante, introduced earlier in the 2023 fiscal year, has been approved for product sales in both Washington and, more recently, Oregon. These approvals came after the product was awarded an organic compliance certification from the USDA National Organic Program. With these approvals, we expect sales of TerraSante to begin near the end of 2024 and beginning of 2025.
For the collaboration theme, the Company agreed to a Contract Services Agreement with Bio Ag Product Strategies, which will develop and commercialize MustGrowâ€™s soil amendment and biofertility technologies, including TerraSante. MustGrow also expanded on their Janssen PMP agreement later in the year to include&nbsp;postharvest potatoes and bananas globally. With the expansion, the additional market areas are&nbsp;expected to accelerate MustGrowâ€™s development timeline. Lastly, the Company signed a collaboration agreement with Bayer AG&nbsp;covering soil applications of MustGrowâ€™s mustard-based biocontrol technologies in Europe, Middle East, and Africa. The agreement excludes&nbsp;home and garden, turf, and ornamental applications. With the agreement, the Company will receive an upfront payment and milestone payments and will be&nbsp;entitled to fees from royalties and manufacturing sales. Commercial sales are expected in 2028-2030, and the&nbsp;Company expects the value of the agreement to be between USD$35 to $40 million over the next several years.&#8212;&#8212;&#8212;- page break &#8212;&#8212;&#8212;-
Projections
While the revenue MustGrow during the fourth quarter of 2023 was material, it was the result of upfront and milestone payments from agreements mixed with obligations being met&nbsp;related to a portion of deferred revenue. As of December 31, 2023, MustGrow has deferred revenue of $272,500. We believe the agreement revenue to be non-recurring, however we believe the deferred revenue will be realized at the end of 2024, similar to the just completed year. In our view, TerraSante sales will start near the end of 2024 and will start to provide MustGrow with a revenue stream, however we are being conservative in our estimate. We expect expenses to be slightly higher due to the Company&#8217;s ongoing efforts in the regulation and approval processes. For the first quarter, we estimate revenue of $1,000 with a net loss of $1.2 million, or a loss of $0.02 per share. Last year, the Company received no revenue and had a net loss of $1.0 million or a loss of $0.02 per share. For the year, we estimate revenue of $280,500 and a net loss of $5.1 million or&nbsp;loss of&nbsp;$0.10 per share.

MustGrow Biologics Corp (MGROF)

Releases Fiscal Year 2023 Results

Fundamental Analysis:

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California Joins the TerraSante Approved List (MGROF)

A Step Towards Revenue Generation (MGROF)

Releases Fiscal Year 2023 Results (MGROF)

Reaching Another State (MGROF)

Inbox Intel from Channelchek.