Rua Bioscience has survived an urgent capital raise as the medicinal cannabis business deals with a $3.1 million shortfall of operating cash. The startup expects to be in profit in the next 18 months now it has more export sales on the way but needed help from its shareholders to get to that point.
The doors of this medicinal cannabis company will remain open as it fights to turn a profit.
Rua Bioscience chief executive Paul Naske says the East Coast-based company is looking to its future.
“We think of ourselves as a one-hundred-year-plus company, we’re going to be around for the long haul. There are bumps along the road but we’re definitely going to be around for the long haul, so it’s extremely important for the community.”
Last month Rua Bioscience told the NZX it needed $3.1 million to keep going until it started making profits.
Today Rua Bioscience said it had received $1.2 million from its right issue but, with the sale of its Gisborne manufacturing facility, is hopeful it will reach the intended target.
“While the $1.2 million raised is a strong vote of confidence from existing shareholders, this is part of an ongoing journey,” Rua Bioscience chair Anna Stove says.
“The majority of the proceeds will be used to fund working capital to grow sales. The board remains confident about securing additional funding through the placement, and are also vigorously pursuing new options for the sale of the Gisborne manufacturing facility.”
Naske also says they are confident about the markets where its products are sold.
“We have been planning for years to get our revenue up and we are now really starting to accelerate our revenue in the past few months. So, sales in New Zealand, Germany and Australia are really starting to accelerate,” he says.
The medicinal cannabis business began in the East Coast and by 2016 it became a licensed medicinal hemp cultivator.
But the community is still the drive of its operations.
“The founding vision of the company was to change economic outcomes for people on the coast. So, if this was to go under or this was to stop, then that is pulling the rug out from underneath a dream and a vision, and I think that’s why it’s extremely important.”