WHAT THE MARKET NEEDS, RIGHT NOW A CLEAR PATH TO PROFITABILITY - - PowerPoint PPT Presentation

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WHAT THE MARKET NEEDS, RIGHT NOW A CLEAR PATH TO PROFITABILITY - - PowerPoint PPT Presentation

CSE: ROMJ | OTCQX: ROMJF WHAT THE MARKET NEEDS, RIGHT NOW A CLEAR PATH TO PROFITABILITY June 2020 Disclaimer This presentation is not, and under no circumstances is to be construed as, a prospectus, or advertisement or a public offering of


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WHAT THE MARKET NEEDS, RIGHT NOW – A CLEAR PATH TO PROFITABILITY June 2020

CSE: ROMJ | OTCQX: ROMJF

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Disclaimer

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This presentation is not, and under no circumstances is to be construed as, a prospectus, or advertisement or a public offering of securities of Rubicon Organics Inc. (“Rubicon Organics" or the "Company"). This presentation contains forward-looking statements within the meaning of applicable securities laws. All statements that are not historical facts, including without limitation, statements regarding future estimates, plans, programs, forecasts, projections, objectives, assumptions, expectations or beliefs of future performance, statements regarding Rubicon Organics’ plan to cultivate, timing and estimates of production for its facilities, are "forward-looking statements." Forward-looking statements can be identified by the use of words such as "plans" or "is expected", or variations of such words and phrases or statements that certain actions, events or results are “to begin”, “ramping up to”, “imminent”, “set to” or "will" be taken, occur or be achieved. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward looking statements. Such risks and uncertainties associated include, among others, information or statements concerning the Company’s expectations of financial resources availability to fund operations; Rubicon Organics' limited operating history and lack of historical profits; obtaining the necessary regulatory approvals; that regulatory requirements will be maintained; general business and economic conditions; the Company’s ability to successfully execute its plans and intentions; the Company’s ability to obtain financing at reasonable terms though the sale of equity and/or debt commitments; the Company’s ability to attract and retain skilled staff; market competition; the products and technology offered by the Company’s competitors; that our current good relationships with our suppliers, service providers and other third parties will be maintained; and the impact of the current global health crisis caused by COVID-19 pandemic. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. Although Rubicon Organics has attempted to identify important risk factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other risk factors that cause actions, events or results to differ from those anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in forward-looking statements. Rubicon Organics assumes no obligation to update any forward-looking statement, even if new information becomes available as a result of future events, new information or for any other reason except as required by law. This presentation contains information obtained by the Company from third parties, including but not limited to market data. The Company believes such information to be accurate but has not independently verified such information. To the extent such information is obtained from third party sources, there is a risk that the assumptions made and conclusions drawn by the Company based on such representations are not accurate. An investment in the Company is speculative and involves substantial risk and is only suitable for investors that understand the potential consequences and are able to bear the risk of losing their entire

  • investment. The Company is in the early stage of development and has a limited operational history, making it difficult to accurately predict business operations. The Company has limited resources

and may run out of capital prior to becoming profitable. The Company may fail and investors may lose their entire investment. An investment in the Company may have tax consequences to the

  • investor. The Company assumes no responsibility for the tax consequences of any investment. Investors should confer with their own tax advisors regarding an investment in the Company.

The production, packaging, labelling, handling, distribution, importation, exportation, licensing, sale and storage of cannabis products are affected by extensive laws, governmental regulations, administrative determinations and similar constraints which are beyond the Company’s control. There can be no assurance that the Company is or will be in compliance with all of these laws, regulations, determinations and other constraints. Failure to comply with these laws, regulations, determinations and other constraints or new laws, regulations, determinations or constraints could lead to the imposition of significant penalties or claims and could negatively impact the Company’s business. In addition, the adoption of new laws, regulations, determinations other constraints or changes in the interpretations of such requirements may result in significant compliance costs. This may have a material adverse effect on the Company’s business, results of operations, cash flows and financial condition. Figures are presented in Canadian dollars, unless otherwise noted.

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Rubicon Organics at a Glance

Operating Cash Flow

Positive in 2020

Rubicon’s 100%-owned hybrid greenhouse in Delta, BC

Hybrid Greenhouse in Delta, BC

125,000 ft2

Annual Production Capacity

11,000 kg

Organic Certified LPs in Canada1

1 of only 6

Market Cap

CSE: ROMJ OTCQX: ROMJF

$121 million

Management Team & Board

World Class

Coverage of the Addressable Canadian Market2

~71%

Provinces Selling Rubicon Product

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  • 1. Other organic certified producers include Whistler Medical (part of Aurora), TGOD, Emerald Health,

Organigram and Good Buds; Certified by a CFIA accredited entity

  • 2. By population per Statistics Canada

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Simply BareTM Organic

▪ Launched in December 2019 to rave reviews ▪ Rare combination of Organic Certified and Premium ▪ Simply BareTM Organic sold-out on the BC cannabis website within 1 week of delivery ▪ $5.00 gross margin/gram1 Reviews:

Rubicon knocked it out of the park with this one. Hands down the best Blue Dream I have ever had. And organic certified on top of it! – Consumer2 Your creek Congo has given me new hope about this legal market. I never thought I would see this day where legal flower has surpassed black market

  • quality. – BC Retailer

Ranked top 5% of flower reviews. Visuals are near the upper echelon…and the feel is near flawless. [Creek Congo is] a high caliber offering worthy of the price segment in the current market. – Pancakenap3

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  • 1. Blended average across SKUs and provinces at full operational run rate
  • 2. Source: https://lift.co/cannabis/strains/reviews
  • 3. https://pancakenap.com/creek-congo-by-simply-bare
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▪ Simply BareTM Organic is currently available in Ontario, British Columbia, Alberta, Saskatchewan and Manitoba ▪ Supply agreement for Quebec expected in Q3 2020

Rapid Geographic Expansion

Existing Product Sales Product Sales in Q3 2020

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▪ Multi-year product supply agreement in place with canacur GmbH, a German cannabis distributor − Provides access to the fast-growing German medical market at attractive gross margins ▪ Completion of EU-GMP Certification1 and first export expected in Q1 2021

International Route-to-Market Established

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  • 1. COVID-19 travel restrictions could impact timing of receipt of EU-GMP Certification
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Perfect Size Facility

▪ High quality “craft” product from a mid-sized facility ▪ Rubicon’s 125,000 sq. ft. greenhouse is fully planted with identified demand for the 11,000 kg/year capacity ▪ Low SG&A and lean operational model creates near term profitability ▪ Break-even run rate at low sales volumes

Differentiated Premium Offering

▪ Rubicon is 1 of only 6 LPs in Canada with an organic certification1 ▪ Combination of super-premium and organic certified cannabis is rare

Right Team

▪ World class CPG + cannabis expertise + strong corporate governance + financial control & compliance

Proven Ability to Execute

▪ Launched Simply BareTM Organic in December 2019 to strong demand in BC and Saskatchewan ▪ Jesse McConnell, Rubicon’s Founder and CEO, also co-founded Whistler Medical Marijuana Corp., which was acquired by Aurora for $175 million

Strong Business Fundamentals

▪ $5.00 gross margin/gram2 ▪ Operating cash flow positive in 2020 ▪ Low SG&A and monthly burn rate

Investment Highlights – Operating Profitability in 2020

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1. Other organic certified producers include Whistler Medical (part of Aurora), TGOD, Emerald Health, Organigram and Good Buds; Certified by a CFIA accredited entity 2. Blended average across SKUs and provinces at full operational run rate

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CY 2019 Opex (C$M) $11 $971 $522 $109 $78 CY 2019 Sales Volume (kg) n/a 44,025 47,626 7,609 n/a CY 2019 Net Loss (C$M) ($14) ($2,102) ($1,458) ($127) ($196)

2,137 kg 194,269 kg 104,488 kg 21,872 kg 15,647 kg Rubicon Canopy Aurora Zenabis TGOD

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Our Peers’ Approach: ▪ Built over-sized facilities, some of which have shuttered ▪ Significant operating costs relative to revenues ▪ High volumes, low margin Rubicon’s Approach: ▪ Built the perfect size facility and scaling up with demand ▪ Low operating costs and clear path to profitability ▪ Low volumes, high margin (super-premium organic)

Perfect Size Facility to Excel in the Current Market

A Story of the Hare & the Tortoise…

Break-Even Sales Volumes1

  • 1. Assumes C$5.00/g gross margin for all Companies

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Rubicon has the lowest break-even sales volume Break-even sales volume is significantly higher than actual sales

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Highly Differentiated Offering

Organic Certified + Super-Premium Cannabis is RARE

▪ Rubicon is 1 of only 6 organic certified producers in Canada1, and even fewer are focused in the super-premium category ▪ Rubicon is 1 of only 2 both super premium and organic certified producers2 ▪ There is currently a 25-40% price premium for high quality organic products Organic Matters to our Consumers: ▪ Better experience − Higher terpene and cannabinoid levels − Toxin-free and environmentally friendly ▪ Organic certified associated with health and wellness category ▪ 2018 was the year of “The Sustainable Shopper”, Millennials are willing to pay more for sustainably (90%) and organically (86%) produced products3

1. Other organic certified producers include Whistler Medical (part of Aurora), TGOD, Emerald Health, Organigram and Good Buds; Certified by a CFIA accredited entity 2. Whistler Medical is the other super-premium, organic certified producer 3. https://www.nielsen.com/us/en/insights/news/2018/was-2018-the-year-of-the-influential-sustainable-consumer.html

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Right Team – Significant Cannabis and CPG Expertise

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Margaret Brodie, CPA, CA CFO & Director

▪ 20+ years in Finance ▪ 10 years with KPMG & experienced CFO of public companies

Jesse McConnell, M.A. CEO & Director

▪ 20+ years in the Cannabis Industry ▪ Co-Founder of WMMC, the first Organic Certified Cannabis producer in Canada ▪ WMMC acquired by Aurora for C$175M

Bryan Disher, CPA, CA, ICD.D Director (Chair)

▪ 40+ years in Finance ▪ Retired PwC Partner & Former Chair of the PwC Board

John Pigott Director

▪ 35+ years in the Food & Beverages Industry ▪ CEO of Club Coffee & Morrison Lamothe Inc.

David Donnan, P.Eng., MBA Director

▪ 35+ years in Management, Agriculture & Consumer Products ▪ Senior Partner at A.T. Kearney

Peter Doig, M.Sc., P.Ag. CSO

▪ 20+ years in the Agri-Business ▪ Wrote the Organic Cannabis Certification Standard in Canada

Tim Roberts President, North America

▪ 20+ years in Sales & Brand Development ▪ Former Senior Executive of Red Bull and Diageo

Melanie Ramsey VP Marketing & Innovation

▪ 20+ years in Brand Development & Innovation ▪ Former Senior Executive of Diageo and Beiersdorf

Management Independent Directors

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Key Milestones

Receive License to Cultivate from Health Canada Feb 2019 Complete Organic Certification with FVOPA Jul 2019 First Commercial Harvest at Delta Greenhouse Oct 2019 Launch Simply BareTM Organic Brand in Canada Dec 2019 Product Sales in Saskatchewan and BC Jan 2020 125,000 sq. ft. Delta Greenhouse Fully Planted Mar 2020 Complete Multiple Successful Harvests Mar 2020 Product Sales in Ontario Apr 2020 Receive Sales Amendment from Health Canada May 2020 Product Sales in Alberta June 2020 Launch Pilot Scale Medical Sales in Canada June 2020 Launch Pre-Rolls in Canada Q2 2020 Pilot-Scale Harvest from Outdoor Grow in Delta Q3 2020 Product Sales in Quebec Q3 2020 Launch Cannabis 2.0 Products Q4 2020 Complete EU-GMP Certification and Export to German Partner Q1 2021 Up-List on Major Stock Exchange Q1 2021

Proven Ability to Execute

✓ ✓ ✓ ✓ ✓ ✓

Ramp-Up Phase

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Optimization & Steady-State

✓ ✓ ✓ ✓

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Risk Management

Adjusted Supply and Profit Forecast: ▪ COVID-19 Risk Management: − Risk adjusted business plan to account for expected reduction in sales volume − Comprehensive action plan to help all employees stay safe and allow the Company to remain operational across all functions ▪ Successfully managed various disease and pest pressure throughout the year across multiple harvests Maximizing Gross Margin per Gram: ▪ Building a highly strategic portfolio of brands and product formats to ensure long-term demand for

  • ur capacity

▪ European route-to-market established and fully funded to protect against potential over supply in Canada

Rubicon Follows Best Practices to Mitigate Operational Risk and Maximize Profit |12

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Rubicon Overview Ticker CSE: ROMJ OTCQX: ROMJF Share Price (as of June 17, 2020) C$2.65 / share Market Capitalization C$121 million 52-Week Low / High C$1.28 - C$3.47 / share As at June 2020 # of Shares % Founders & Management 23,397,112 51% Public Float 22,336,760 49% Total Shares Outstanding 45,733,872 100% Options 5,470,000 Warrants 13,098,889 Deferred Share Units 75,000 Fully Diluted Shares Outstanding 64,377,761

Market Information

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▪ Tight share structure with less than 46 million shares

  • utstanding

▪ Founders and management hold 51% of common shares outstanding

Analyst Coverage Firm Analyst John Chu Greg McLeish Neal Gilmer

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CONTACT US

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Investor Relations

IR@rubiconorganics.com +1-437-929-1964 Please visit us at: www.rubiconorganics.com Rubicon Organics Inc. 505 – 744 W. Hastings Street Vancouver, BC V6C 1A5

CSE: ROMJ | OTCQX: ROMJF