Rubicon Organics Reports Second Quarter Financial Results and Operational Milestones

Published: August 27, 2020

Rubicon Organics Reports Second Quarter Financial Results and Operational Milestones

Rubicon Organics Inc. reported its financial results for the second quarter ended June 30, 2020 (“Q2 2020”).  All amounts are expressed in Canadian dollars.

“Our team at Rubicon Organics achieved a number of very significant milestones in Q2 2020. The result is a strong foundation for the distribution of our premium and organically cultivated cannabis products and the financial resources to secure the execution of our strategy,” said Jesse McConnell, Chief Executive Officer.

“In particular, we have expanded our distribution channels across Canada from British Columbia to Ontario, received licensing to access the Canadian medical market and established a partnership that will open distribution in Germany in 2021. With $12.5 million in cash at quarter end, our facility is running at full utilization and we have the resources to fund our growth into all these markets, achieve our financial goals and to expand our product line through innovation of the highest quality and sustainably produced cannabis products.”

Second Quarter Highlights:

  • Increased quarterly gross revenue sequentially to $1.2 million in Q2 2020 from $0.5 million in Q1 2020;
  • Achieved full cultivation utilization at the Company’s Delta, BC facility with eight SKUs now on shelves across the country;
  • Received a medical sales license from Health Canada;
  • Received a sales amendment from Health Canada to sell dried and fresh cannabis products for recreational use directly to all provincial and territorial distributors;
  • Announced direct supply agreements with the Alberta Gaming, Liquor & Cannabis (“AGLC”), British Columbia Liquor Distribution Branch (“BCLDB”) and the Ontario Cannabis Store (“OCS”);
  • Signed a three-year product supply agreement with Canacur GmbH, a medical cannabis distributor in Germany, with first shipment expected in the first half of 2021, pending Rubicon Organics’ EU-GMP certification;
  • Completed a private placement of common shares and common share purchase warrants for gross proceeds of $13.5 million, with proceeds to be used to optimize the Company’s Delta, BC facility and to launch cannabis 2.0 products; and
  • Subsequent to quarter-end, received conditional approval to list on the TSX Venture Exchange (“TSXV”).

Second Quarter Select Financial and Operational Results:

For the three months ended June 30
  2020 2019
 $  $
Gross revenue   1,198,683         —
Net revenue     992,003         —
Other income         —            —
Loss from continuing operations  (1,568,361 )  (3,211,408 )
Loss from discontinued operations    (246,691 )    (246,523 )
Net loss for the period  (1,815,052 )  (3,457,931 )
Total comprehensive loss  (1,888,271 )  (3,770,598 )
Loss per share from continuing operations       (0.04 )       (0.09 )
Loss per share       (0.04 )       (0.09 )
*Restated due to discontinued operations

“We are well on track during this ramp up phase in our operations and have met our internal expectations. We have established a solid platform for high quality production and we anticipate significant revenue growth in the upcoming quarters as we continue to build our product inventory and sell through our newly established provincial channels,” said Jesse McConnell, Chief Executive Officer.

In the second quarter, Rubicon Organics earned $1.0 million of net revenue which is an increase of 118% as compared to the first quarter. This increase in net revenue is attributable to higher sales volume through all distribution channels.

The Company reported an Adjusted EBITDA loss of $2.5 million in Q2 2020, as compared to a loss of $3.0 million in Q1 2020 and a loss of $2.0 million in the prior year. The sequential improvement in Adjusted EBITDA is attributable to the increase in net revenue in Q2 described above and reflects relatively consistent cash operating expenses.

The Company reported a net loss of $1.8 million in Q2 2020, as compared to a net loss of $3.8 million in Q1 2020 and net loss of $3.5 million in the prior year. The sequential improvement in profitability includes gains on changes in the fair value of the Company’s cannabis assets.


Rubicon Organics is focused on producing premium organic certified cannabis products and developing brands for sale to the Canadian market as well as establishing distribution channels to Germany with the expectation to enter international markets in 2021.

The Company has three direct supply agreements with the OCS, BCLDB and AGLC and expects to ramp up product deliveries to these markets as well as to access the Quebec market in 2020. The Company plans to continue to use local distributors in Saskatchewan and Manitoba.

Following approval from Health Canada on May 5, 2020 for site amendments that included the use of its land at the Delta Facility for an outdoor grow, the Company has launched a pilot scale outdoor grow and is assessing strain suitability to potentially launch a larger outdoor grow program in 2021 with the most successful outdoor strains.

The Company is in the process of installing additional high-performance LED lighting in the final three of its five cultivation compartments to supplement sunlight in winter months. Renovations to the Delta Facility’s processing area are also underway to facilitate compliance with EU-GMP requirements thereby providing access to the German market. The Company also continues to work to accelerate certain of its innovation pipeline projects.

The Company is determined to achieve positive operating cash flow and profitability.  The Company currently expects to achieve positive EBITDA on a monthly basis by year-end 2020 and to achieve monthly positive cash flow from operations in the first half of 2021.

The Company expects to refinance debt maturing in 2021 to a long-term mortgage financing facility at lower interest rates and may seek other capital through equity, and debt arrangements.

The Company expects to list the common shares and 3,150,000 warrants of the Company on the TSXV in September 2020. The Company is actively working to satisfy certain requirements of the TSXV in accordance with the terms of its conditional approval letter.

The COVID-19 outbreak was declared a pandemic by the World Health Organization in 2020. The situation is dynamic and the ultimate duration and magnitude of the impact on the economy and our business are not known at this time. These impacts could include an impact on our ability to maintain operations, to obtain debt and equity financing, access to necessary supplies, credit risk associated with our accounts receivable, impairments in the value of our long-lived assets, or potential future decreases in revenue or the profitability of our ongoing operations. The Company continues to work diligently to ensure operations continue and product is delivered while continuing to emphasize the safety of our product and employees.

Rubicon Organics Inc., through its wholly owned subsidiary Vintages Organic Cannabis Company Inc., holds a license to cultivate and process certified organic, premium cannabis at its flagship 125,000 sq. ft. state-of-the-art hybrid greenhouse located on a 20-acre property in Delta, BC, Canada.