Rubicon Organics Inc. (ROMJF), a constituent in the munKNEE Pure-Play Pot Stock Index, is a licensed producer that cultivates and sells organic super-premium cannabis from its state-of-the-art hybrid greenhouse located in Delta, B.C., Canada.

Rubicon announced its Q3, 2020 financial and operating results on Wednesday for the period ended September 30, 2020, as follows:

Q3 Financial Highlights 

(All results are presented in Canadian dollars and compared to the previous quarter.)

• Revenue: increased 219% to $3.2M 
• Net Loss: increased 133.3% to $(4.2)M
• Loss/Share: increased to $(0.09) from $(0,04)
• Adj. EBITDA: increased to $(2.6)M from $(2.5)M

Q3 Operational Highlights

• Entered into a brand licensing agreement with Wildflower Brands Inc. (WLDFF) (CSE: SUN) for the production of Wildflower-branded CBD Relief Sticks and CBD Cool Sticks in Canada;
• commenced trading on the TSX Venture Exchange on September 22, 2020, and
• completed the amalgamation of subsidiaries which allows for over $20 million of tax losses to be applied against future profits.

Outlook

The company:

• Intends to launch additional brands into the market in both the flower and extract categories, along with a diverse portfolio of cannabis 2.0 products to complement its flagship Simply Bare Organic cannabis brand;
• expects to enter international markets in 2021 and to that end has entered into a supply agreement with Canacur GmbH to supply the German market;
• expects to ramp up product deliveries to the OCS, BCLDB, and AGLC and has recently signed with the SQDC.;
• plans to continue to use local distributors in Saskatchewan and Manitoba;
• is assessing the scale and viability of expanding its pilot scale outdoor grow to a larger outdoor grow program in 2021;
• is assessing areas for additional capital expenditure which would increase throughput and efficiency;
• is renovating the Delta Facility’s processing area to facilitate compliance with EU-GMP requirements;
• has developed an extensive product innovation pipeline and
• is preparing to bring the first phase of those products to market.

Guidance

The Company currently expects:

• to achieve positive adjusted EBITDA on a monthly basis by year-end 2020,
• to achieve monthly positive cash flow from operations in the first half of 2021,
• to generate significant operating leverage by maintaining moderate increases in production costs and operating expenses, with linear increases in inventory expensed to costs of sales relative to net revenue, but at a lower per unit cost, and
• to refinance debt maturing in 2021 to a long-term mortgage financing facility, potentially with more favorable terms, and may seek other capital through equity, and other debt arrangements.

Management Commentary

Jesse McConnell, Chief Executive Officer, said:

• “The net revenue increase we delivered in Q3 2020 is only the beginning of Rubicon Organics demonstrating its potential.
• We have been operating at full capacity for six months now, and more and more Simply Bare^TM Organic product continues to hit the shelves across the country with customers and cannabis connoisseurs giving strong endorsements of our super-premium organic products.
• Our journey is only going to get more exciting from here. We have invested in world-class personnel that will help bring new brands and products to market that will capture the desire of consumers to drive our growth in revenue and profitability.” 

Stock Performance

Rubicon is one of 14 companies in the 25 constituent munKNEE Pure-Play Pot Stock Index that has appreciated in price so far this year. Its stock price is UP 95.9% YTD and continues to appreciate UP 11.4%% since the end of September as illustrated in the chart below:

(Click on image to enlarge)