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Share Name | Share Symbol | Market | Type |
---|---|---|---|
IM Cannabis Corporation | NASDAQ:IMCC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.1051 | 4.17% | 2.625 | 2.57 | 2.68 | 2.7399 | 2.40 | 2.40 | 37,893 | 16:52:20 |
IMC leans further into its strategy, continuing to focus on the Israeli and German markets with a primary goal of sustainably increasing revenue in each of these core markets, while accelerating its path to profitability through active cost management and margin improvement.
TORONTO and GLIL YAM, Israel, May 15, 2023 /CNW/ -- IM Cannabis Corp. (the "Company" or "IMC") (NASDAQ: IMCC) (CSE: IMCC), an international medical cannabis company, announced its financial results today for the first quarter ended March 31, 2023. All amounts are reported in Canadian dollars and compared to Q1 2022 unless otherwise stated.
Q1 2023 Financial Highlights
Management Commentary
"In 2022 IMC reworked its strategy," said Oren Shuster, Chief Executive Officer of IMC. "We shifted our focus to meeting patients' and pharmacies' needs. During Q1 of this year, we have continued this transition. IMC is becoming a lean and agile company, with a clear focus on building brands that consumers love, driven by consumer insight.
"The strategic shift drove the additional restructuring initiatives we announced this quarter - the reorganization of the Company's management and operations to better suit the current market environment and our short- to mid-term objectives. This allowed us to focus on core activities, drive efficiencies and reduce costs in furtherance of the goal to realize sustainable profitability. We are already seeing the results of our shift in strategy in our Q1 results. Our gross profit increased 46% compared to Q1 2022, while our revenue stayed stable", concluded Shuster.
Operational Highlights
Q1 2023 Financial Results
The complete non- audited interim condensed consolidated financial statements of the Company and related management's discussion and analysis for the three months ended March 31, 2023, will be available under the Company's SEDAR profile at www.sedar.com and will be available on EDGAR at www.sec.gov/edgar.
Q1 2023 Conference Call
The Company will host a zoom web conference call today at 9:00 a.m. ET to discuss the results, followed by a question-and-answer session for the investment community. Investors are invited to register by clicking here. All relevant information will be sent upon registration.
If you are unable to join us live, a recording of the call will be available on our website at https://investors.imcannabis.com/ within 24 hours after the call.
About IM Cannabis Corp.
IMC (Nasdaq: IMCC) (CSE: IMCC) is an international cannabis company that provides premium cannabis products to medical patients in Israel and Germany, two of the largest medical cannabis markets. The Company has recently exited operations in Canada to pivot its focus and resources to achieve sustainable and profitable growth in its highest value markets, Israel and Germany. The Company leverages a transnational ecosystem powered by a unique data-driven approach and a globally sourced product supply chain. With an unwavering commitment to responsible growth and compliance with the strictest regulatory environments, the Company strives to amplify its commercial and brand power to become a global high-quality cannabis player.
The IMC ecosystem operates in Israel through its commercial relationship with Focus Medical Herbs Ltd., which imports and distributes cannabis to medical patients, leveraging years of proprietary data and patient insights. The Company also operates medical cannabis retail pharmacies, online platforms, distribution centers, and logistical hubs in Israel that enable the safe delivery and quality control of IMC products throughout the entire value chain. In Germany, the IMC ecosystem operates through Adjupharm GmbH, where it distributes cannabis to pharmacies for medical cannabis patients. Until recently, the Company also actively operated in Canada through Trichome Financial Corp and its wholly owned subsidiaries, where it cultivated, processed, packaged, and sold premium and ultra-premium cannabis at its own facilities under the WAGNERS and Highland Grow brands for the adult-use market in Canada. The Company has exiting operations in Canada and considers these operations discontinued.
Disclaimer for Forward-Looking Statements
This press release contains forward-looking information or forward-looking statements under applicable Canadian and U.S. securities laws (collectively, "forward-looking statements"). All information that addresses activities or developments that we expect to occur in the future are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", "likely" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. Forward-looking statements are based on the estimates and opinions of management on the date the statements are made. In the press release, such forward-looking statements include, but are not limited to, statements relating to the Company leaving the Canadian cannabis market to focus on Israel and Germany; achieving profitability and shareholder value; statements regarding the Company's ongoing restructuring of its operations, including the reduction in its Israeli workforce, the strategic plans of the Company, estimated cost reductions and maintaining revenues.
Forward-looking statements are based on assumptions that may prove to be incorrect, including but not limited to: the development and introduction of new products; continuing demand for medical and adult-use recreational cannabis in the markets in which the Company operates; the Company's ability to reach patients through both e-commerce and brick and mortar retail operations; the Company's ability to maintain and renew or obtain required licenses; the effectiveness of its products for medical cannabis patients and recreational consumers; and the Company's ability to market its brands and services successfully to its anticipated customers and medical cannabis patients.
The above lists of forward-looking statements and assumptions are not exhaustive. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated or implied by such forward-looking statements due to a number of factors and risks. These include: any failure of the Company to maintain "de facto" control over Focus Medical in accordance with IFRS 10; the failure of the Company to comply with applicable regulatory requirements in a highly regulated industry; unexpected changes in governmental policies and regulations in the jurisdictions in which the Company operates; the Company's ability to continue to meet the listing requirements of the Canadian Securities Exchange and the NASDAQ Capital Market; any unexpected failure to maintain in good standing or renew its licenses; the ability of the Company and Focus Medical (collectively, the "Group") to deliver on their sales commitments or growth objectives; the reliance of the Group on third-party supply agreements to provide sufficient quantities of medical cannabis to fulfil the Group's obligations; the Group's possible exposure to liability, the perceived level of risk related thereto, and the anticipated results of any litigation or other similar disputes or legal proceedings involving the Group; the impact of increasing competition; any lack of merger and acquisition opportunities; adverse market conditions; the inherent uncertainty of production quantities, qualities and cost estimates and the potential for unexpected costs and expenses; risks of product liability and other safety-related liability from the usage of the Group's cannabis products; supply chain constraints; reliance on key personnel; the risk of defaulting on existing debt and war, conflict and civil unrest in Eastern Europe and the Middle East.
Please see the other risks, uncertainties and factors set out under the heading "Risk Factors" in the Company's annual information form dated March 31, 2023, which is available on the Company's issuer profile on SEDAR at www.sedar.com and Edgar at www.sec.gov. Any forward-looking statement included in this press release is made as of the date of this press release and is based on the beliefs, estimates, expectations and opinions of management on the date such forward looking information is made. The Company does not undertake any obligation to update forward-looking statements except as required by applicable securities laws. Investors should not place undue reliance on forward-looking statements. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
Non-IFRS Measures
This press release makes reference to "Gross Margin" and "Adjusted EBITDA", which are financial measures that are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. These measures are provided as complementary information to the Company's IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should neither be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.
For an explanation of how management defines Gross Margin and Adjusted EBITDA, see the Company's management's discussion and analysis for the period ended December 31, 2022, available under the Company's SEDAR profile at www.sedar.com on EDGAR at www.sec.gov/edgar.
We reconcile these non-IFRS financial measures to the most comparable IFRS measures as set out below.
Company Contact:
Oren Shuster, CEO
IM Cannabis Corp.
info@imcannabis.com
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||
Canadian Dollars in thousands | ||||||
March 31, 2023 | December 31, 2022 | |||||
Note | (Unaudited) | |||||
ASSETS | ||||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents | $ 1,419 | $ 2,449 | ||||
Trade receivables | 6,227 | 8,684 | ||||
Advances to suppliers | 2,161 | 1,631 | ||||
Other accounts receivable | 3,657 | 3,323 | ||||
Inventories | 4 | 16,156 | 16,585 | |||
29,620 | 32,672 | |||||
NON-CURRENT ASSETS: | ||||||
Property, plant and equipment, net | 5,435 | 5,221 | ||||
Investments in affiliates | 2,347 | 2,410 | ||||
Right-of-use assets, net | 1,701 | 1,929 | ||||
Deferred tax assets, net | 824 | 763 | ||||
Intangible assets, net | 7,349 | 7,910 | ||||
Goodwill | 9,515 | 9,771 | ||||
27,171 | 28,004 | |||||
Total assets | $ 56,791 | $ 60,676 | ||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||
Canadian Dollars in thousands | ||||||
March 31, 2023 | December 31, 2022 | |||||
Note | (Unaudited) | |||||
LIABILITIES AND EQUITY | ||||||
CURRENT LIABILITIES:
| ||||||
Trade payables | $ 9,240 | $ 15,312 | ||||
Bank loans and credit facilities | 7,957 | 9,246 | ||||
Other accounts payable and accrued expenses | 6,203 | 6,013 | ||||
Accrued purchase consideration liabilities | 1,951 | 2,434 | ||||
Current maturities of operating lease liabilities | 676 | 814 | ||||
26,027 | 33,819 | |||||
NON-CURRENT LIABILITIES:
| ||||||
Warrants measured at fair value | 5 | 3,398 | 8 | |||
Operating lease liabilities | 990 | 1,075 | ||||
Long-term loans | 393 | 399 | ||||
Employee benefit liabilities, net | 182 | 246 | ||||
Deferred tax liability, net | 1,250 | 1,332 | ||||
6,213 | 3,060 | |||||
Total liabilities | 32,240 | 36,879 | ||||
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY: | 6 | |||||
Share capital and premium | 246,866 | 245,776 | ||||
Translation reserve | 888 | 1,283 | ||||
Reserve from share-based payment transactions | 15,159 | 15,167 | ||||
Accumulated deficit | (239,229) | (239,574) | ||||
Total equity attributable to equity holders of the Company | 23,684 | 22,652 | ||||
Non-controlling interests | 867 | 1,145 | ||||
Total equity | 24,551 | 23,797 | ||||
Total liabilities and equity | $ 56,791 | $ 60,676 | ||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS | ||||||
AND OTHER COMPREHENSIVE INCOME (UNAUDITED) | ||||||
Canadian Dollars in thousands, except per share data | ||||||
Three months ended March 31, | ||||||
Note | 2023 | 2022 (*) | ||||
Revenues | $ 13,173 | $ 13,001 | ||||
Cost of revenues | 9,286 | 9,915 | ||||
Gross profit before fair value adjustments | 3,887 | 3,086 | ||||
Fair value adjustments: | ||||||
Unrealized change in fair value of biological assets | - | (315) | ||||
Realized fair value adjustments on inventory sold in the period | (339) | (366) | ||||
Total fair value adjustments | (339) | (681) | ||||
Gross profit | 3,548 | 2,405 | ||||
General and administrative expenses | 3,175 | 3,947 | ||||
Selling and marketing expenses | 2,805 | 2,461 | ||||
Restructuring expenses | 283 | 3,747 | ||||
Share-based compensation | 258 | 1,110 | ||||
Total operating expenses | 6,521 | 11,265 | ||||
Operating loss | 2,973 | 8,860 | ||||
Finance income | 5 | 3,796 | 2,886 | |||
Finance expense | (795) | (1,333) | ||||
Finance (expense) income, net | 3,001 | 1,553 | ||||
Gain (Loss) before income taxes | 28 | (7,307) | ||||
Income tax benefit | (15) | (225) | ||||
Net (loss) gain from continuing operations | 43 | (7,082) | ||||
Net loss from discontinued operations | - | 3,659 | ||||
Net (loss) gain | 43 | (10,741) | ||||
Other comprehensive income that will not be reclassified to profit or loss in | ||||||
Total other comprehensive income that will not be reclassified to profit or | 36 | - | ||||
Exchange differences on translation to presentation currency | (562) | (1,792) | ||||
Total other comprehensive income that will not be reclassified to profit or | (526) | (1,792) | ||||
Other comprehensive income that will be reclassified to profit or loss in | ||||||
Adjustments arising from translating financial statements of foreign operation | 155 | 858 | ||||
Total other comprehensive income (loss) that will be reclassified to profit | 155 | 858 | ||||
Total other comprehensive loss | 371 | 934 | ||||
Total comprehensive loss | $ 328 | $ 11,675 |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS | ||||||
AND OTHER COMPREHENSIVE INCOME (UNAUDITED) | ||||||
Canadian Dollars in thousands, except per share data | ||||||
Three months ended March 31, | ||||||
Note | 2023 | 2022 (*) | ||||
Net income (loss) attributable to: | ||||||
Equity holders of the Company | 309 | (9,452) | ||||
Non-controlling interests | (266) | (1,289) | ||||
$ 43 | $ (10,741) | |||||
Total comprehensive income (loss) attributable to: | ||||||
Equity holders of the Company | (50) | (10,290) | ||||
Non-controlling interests | (278) | (1,385) | ||||
$ (328) | $ (11,675) | |||||
Net income (loss) per share attributable to equity holders of the | 7 | |||||
Basic and diluted (loss) gain per share (in CAD) | $ 0.03 | $ (0.14) | ||||
Earnings (loss) per share attributable to equity holders of the Company | ||||||
Basic and diluted (loss) gain per share (in CAD) | $ 0.03 | $ (0.08) | ||||
Loss per share attributable to equity holders of the Company from | ||||||
Basic and diluted loss per share (in CAD) | $ - | $ (0.06) | ||||
(*) Reclassified in respect of discontinued operations – see Note 9. | ||||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||
Canadian Dollars in thousands | ||||
Three months ended March 31, | ||||
2023 | 2022 | |||
Cash provided by operating activities: | ||||
Net income (loss) for the period | $ 43 | $ (10,741) | ||
Adjustments for non-cash items: | ||||
Unrealized gain on changes in fair value of biological assets | - | (1,079) | ||
Fair value adjustment on sale of inventory | 339 | 863 | ||
Fair value adjustment on Warrants, investments and accounts receivable | (3,636) | (2,688) | ||
Depreciation of property, plant and equipment | 174 | 1,038 | ||
Amortization of intangible assets | 456 | 636 | ||
Depreciation of right-of-use assets | 179 | 163 | ||
Finance expenses, net | 635 | 2,132 | ||
Deferred tax liability, net | (150) | (542) | ||
Share-based payment | 258 | 1,610 | ||
Share-based acquisition costs related to business combination with acquisition of subsidiary | - | - | ||
Revaluation of other receivable | - | 67 | ||
Restructuring expense | 283 | 3,069 | ||
(1,462) | 5,269 | |||
Changes in working capital: | ||||
Decrease (increase) in trade receivables | 1,937 | (6,009) | ||
Decrease (increase) in other accounts receivable and advances to suppliers | (940) | 1,892 | ||
Decrease (increase) in biological assets, net of fair value adjustments | - | 641 | ||
Decrease (increase) in inventories, net of fair value adjustments | 90 | (1,847) | ||
Decrease (increase) in trade payables | (6,021) | 2,377 | ||
Changes in employee benefit liabilities, net | (22) | (83) | ||
Increase in other accounts payable and accrued expenses | (14) | (437) | ||
(4,970) | (3,466) | |||
Taxes (paid) received | 328 | (505) | ||
Net cash used in operating activities | (6,061) | (9,443) | ||
Cash flows from investing activities: | ||||
Purchase of property, plant and equipment | (411) | (682) | ||
Payment of purchase consideration | (56) | - | ||
Proceeds from loan receivable | - | 350 | ||
Net cash used in investing activities | $ (467) | $ (332) | ||
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||
Canadian Dollars in thousands | ||||
Three months ended March 31, | ||||
2023 | 2022 | |||
Cash flow from financing activities: | ||||
Proceeds from issuance of share capital, net of issuance costs | 825 | - | ||
Proceeds from issuance of warrants | 7,027 | - | ||
Proceeds from exercise of options | - | 333 | ||
Repayment of lease liability | (175) | (371) | ||
Interest paid - lease liability | (18) | (435) | ||
Receipt of bank loan and credit facilities | (1,046) | 6,047 | ||
Cash paid for interest | (56) | (211) | ||
Net cash provided by financing activities | 6,557 | 5,363 | ||
Effect of foreign exchange on cash and cash equivalents | (1,059) | 824 | ||
Decrease in cash and cash equivalents | (1,030) | (3,588) | ||
Cash and cash equivalents at beginning of the period | 2,449 | 13,903 | ||
Cash and cash equivalents at end of the period | $ 1,419 | $ 10,315 | ||
Supplemental disclosure of non-cash activities: | ||||
Right-of-use asset recognized with corresponding lease liability | $ 49 | $ 169 | ||
Issuance of shares in payment of purchase consideration liability | $ - | $ 3,147 | ||
Issuance of shares in payment of debt settlement to a non-independent | $ 222 | $ - | ||
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
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SOURCE IM Cannabis Corp.
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