AGM 2021

Sep 15, 2021

Ladies and gentlemen, thank you for standing by, and welcome to the Rubicon Organics AGM Conference Call. At this time, all participants' lines are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's call is being recorded. I would now like to hand the conference over to your speaker, Jesse McConnell, CEO and Director of Rubicon. Thank you. Please go ahead. Hello, everyone. Welcome to the 2021 AGM for Rubicon Organics. My name is Jesse McConnell. I'm the Chief Executive Officer of the company, and I will be acting as Chair of this meeting. In attendance with me is Margaret Brody, our CFO and Director and Tim Roberts, our President And myself, we're all available at the end of this meeting to answer any questions you may have. I will now call this meeting to order. With the consent of the shareholders present at this meeting, I shall appoint Will Smith to act as secretary of the meeting Would the secretary please assure us that the Annual General Meeting has been properly called. I have before me an affidavit of a representative of Osteo Trust Company testing that the The report of the scrutineer indicates that the required quorum of shareholders is present at this meeting and that this meeting is regularly called, duly constituted I adopt the scrutineers' report and declare accordingly that a quorum is present. I direct The scrutineers report will be kept by the secretary within minutes of this meeting. I now declare that the Annual General Meeting is regularly called and probably constituted for I now propose a deal with the business described in the notice calling this meeting. The first item of business is to receive the consolidated audited financial statements of the corporation for the fiscal financial year ended December 31, 2020, and the reports of the auditors thereon. Copies of the financial statements have been mailed to all the shareholders entitled to copies thereof. Accordingly, unless someone specifically requests, the auditors report will not be read to the meeting. Any questions on the financial statements will be Once the formal part of the meeting is over. Accordingly, I declare the consolidated financial statements of the company for the financial year ended December 31, 2020, And the report of the auditors thereon are thereby received by the shareholders as submitted to this meeting. Next item of business is fixing the number of directors. There are 6 directors standing for election this year, and therefore, the corporation wishes to fix number of directors at 6 for the ensuing year. May I have a motion to fix the number of directors at 6? So moved. All in favor signify by raising your hand. Opposed, if any? I declare the motion carried. The next item of business is electing the directors for the ensuing year. The management information circular, which is mailed to shareholders, contains the names of and information about management's nominees to the Board of Directors. There are 6 positions to be filled, each to hold office until the next annual meeting of shareholders. It is proposed that separate ordinary resolutions be passed electing Jesse McConnell, Margaret Brody, Brian Disher, David Dunn, John Pigott, Julie Lassonde As directors of the corporation to hold office until the next annual meeting of shareholders or until their successors are elected or appointed. Each of the nominees has previously consented in writing to act as Director. If there are no other nominations, I would ask for a motion that nominations be closed. So moved. All in favor, signify by raising your hand. Opposed, if any. I declare the motion carried. I would now ask that each shareholder signify their vote on the following by raising their hand. All those in favor of the appointment of Jesse McConnell? Withheld, if any, carried. All those in favor of the appointment of Margaret Brody, withheld if any, carried. All those in favor of the appointment of Brian Disher, withheld as many, carried. All those in favor of the appointment of David Donnan, withheld if any, Carry. All those in favor of the appointment of John Pigott, withheld the fitting, carried. All those in favor of the appointment of Julie Lassonde, withheld if any, carried. I declare that Jesse McConnell, Margaret Brody, Brian Disher, David Donnan, John Pickett and Julie Lassonde Have been elected as directors of the corporation for the ensuing year to hold office until the next annual meeting of shareholders or until their successors are elected or elected. The next item of business is the appointment of auditors. The Board of Directors desires to appoint Deloitte LLP, chartered professional accounts as auditors of the corporation for the ensuing year and such firm has consented to their appointment. May I have a motion that Deloitte LLP Chartered Professional Accountants be and are hereby reappointed as auditors of the corporation for the ensuing year The directors be granted authorization to fix the remuneration to be paid to Deloitte LLP for the ensuing year. So moved. All in favor, signify by raising your hand. Withheld, if any, I declare the motion carried. Is there any other business which the shareholders would like to bring before the meeting at this time? If not, all the business for which this Annual General Meeting was called has now been completed. There being no further business to be brought before the meeting, I would appreciate receiving a motion that the meeting be and is hereby terminated. I move that this meeting be concluded. All in favor signify by raising your hand. Opposed, if any. And now declare the motion carried. I declare the formal portion of this Annual General Meeting of the Corporation concluded. Thank you for your attendance and continued support. At this point, we'll be providing an update on the business Post on what we have achieved over the last year. Thank you for that, Lynn. And looking at what we'll be delivering over the course of the next year. I'll start this By thanking the Rubicon team for all the hard work and dedication after what has been a very challenging year, everything from COVID closures, Store closures in Ontario, the supply chain issues, but nonetheless throughout that, the team has showed Relentless determination in achieving our goals, enabling us to largely deliver on our commitments Through 2020 in a timely fashion, sum total of which has advanced us toward our vision of being the global brand leader In premium organic cannabis. So what have we done over the last year to help realize that vision. We've spoken a lot about innovation and product innovation, and this is a key to the profitability for Rubicon. We've articulated a good, better, best strategy since 2019, and I'm proud to say that we are now executing on that strategy. We have increased the SKU count across the country to 44 SKUs as of quarter across 5 different brands. We've significantly increased our distribution across the nation. We began with our home province is British Columbia, Alberta, Saskatchewan and Ontario. And since the last AGM, we've brought Quebec. We've entered into the Eastern provinces of New Brunswick, Guyton, Manitoba and the Yukon and developed our medical sales channel We've also significantly increased the financial strength of the company, Undertaking a $23,000,000 equity financing in the beginning of this year and further adding to our balance sheet With a US8 $1,000,000 secured debenture at a very competitive 6.5% interest rate. That financial strength Not only ensures our ability to deliver on our core forecast, but also gives us the flexibility to be opportunistic As this market develops. And all of that to say is that we have gotten even further in our goal of being an industry leader with the publication of our first ESG report in the cannabis industry. We are the clear Leaders in premium cannabis in Canada. And this achievement is a result of our focus on the most important product categories, namely Flowers and pre rolls represent over 70% of the Canadian market, and those segments are mirrored in more mature markets In the U. S. As of quarter 2, our flagship brand, Simply Bear, was the number 5 premium across all flower and free world products in Ontario. In our home province and Connoisseur market of British Columbia, we were the number one premium brand. In Alberta, which is a more challenged space for premiumization. We were number 6. And in Quebec, we retained our Top 3 spot being number 3 in premium brand across all flowers and pre rolls, and we were the number 1 premium brand in Ash. But for Rubicon, being the leader in premium is not enough. We offer a differentiated value proposition to the consumer through our organic and sustainable products. We are the best in class producer of organic cannabis in the world. And for the consumer, choosing organic factors into 42% of their purchase decisions, And of those consumers, 65% are willing to pay a premium for organic products. In each market that we have good data for, We are the number one organic flower premium flower brand by margin, British Columbia, Ontario, Quebec and Alberta. This is why organic and sustainability with good governance are core to executing on our strategy. By focusing on strong governance, we've been able to capitalize on the macro trends associated with sustainably produced products. As mentioned, not only will we be the 1st cannabis producer in the world with an ESG report, and this isn't just about doing what's right for the world, although it about that as well. It's also doing what's right for our shareholders. We see that with outsized growth for sustainably marketed products with Over 7 times faster growth for those products versus ones that are not marketed as sustainable. Being able to maintain competitive pricing, strong margins, There's an associated price premium of nearly 40% for sustainably produced products across CPG's categories. As we draw on our investor pool, we see ESG funds attracting record inflows of over $185,000,000,000 in the Q1 of 2021 and they skew more toward millennials and younger investors, which mirrors the consumers that we're seeing in Investors have really yet to determine Who the long term winners are in this category? I think we have to acknowledge that the sector has been under significant sell pressure since the early part of this year. Large cap names down over 50%. But there's still a tremendous market out there And we are beginning to see those winners emerge. And those winners are going to be to demonstrate strong margins and profitability. As we continue to build our brand activity across our portfolio, we further cement Simply Bear the number one organic premium cannabis brand In Canada and early in the globe, we are confident that we are going to we will achieve profitability in the near term. And as we do, We expect to see a significant valuation rerating that puts us in line and relative to our peers. This path to profitability comes through initiatives that are already well underway. I'm proud to say that as of today, We have increased our product portfolio by nearly 50% from 44 SKUs that are in market to nearly 64 SKUs that will be shipping prior to the end of the year And so I'm into early January. We've seen an accelerated revenue trajectory with the launch of our 1964 SupplyCo Brand across the country and our Homestead Cannabis Supply brand, we've achieved a critical milestone To order EU GMP certification, just a few short weeks ago, we sent our first trial batch of cannabis to Germany, Which is absolutely critical to the achievement of that milestone and the development of international marketplaces. And to that end, we are in late stage discussions to sign and execute against other international distribution agreements outside of the one that we currently have with Cancure. And what all this leads to is our renewed confidence in our outlook and ability to achieve adjusted EBITDA profitability and cash flow We are in the best position that we have ever been in, which is something I'm very happy to be safe. We're in a position to financial strength, we have great balance sheet, we're on customer profitability, we've got the right product portfolio, We've secured those product listings in major marketplaces to ensure we have a relative market for those products. We're experiencing accelerated revenue growth, and we're confident that our continued focus on our mission to grow the best cannabis on our journey for the earth We'll deliver near term profitability, enable us to realize our vision of being the global brand leader in organic Thank you, everyone, for your continued support for showing up at this AGM, and we look forward to delivering for you in the upcoming quarters. I now open the line to any questions for myself or any of the other executives that are here. And at this time, there are no audio questions. Okay. Well, then that concludes the 2021 AGM for Rubicon Organics. Thanks everybody and get back to work. That does conclude today's conference. We thank you for participating. You may now disconnect.