TABLE OF CONTENTS

 

 

Legal Entity	Jurisdiction	Relationship with the Company
IMC Holdings Ltd. (“IMC Holdings”)	Israel	Wholly-owned subsidiary
I.M.C. Pharma Ltd. (“IMC Pharma”)	Israel	Wholly-owned subsidiary of IMC Holdings
Focus Medical Herbs Ltd. (“Focus”)	Israel	Private company over which IMC Holdings exercises “de facto control” under IFRS 10
R.A. Yarok Pharm Ltd. (“Pharm Yarok”)	Israel	Wholly-owned subsidiary of IMC Holdings
Rosen High Way Ltd. (“Rosen High Way”)	Israel	Wholly-owned subsidiary of IMC Holdings
High Way Shinua Ltd. (“HW Shinua”)	Israel	Private company over which IMC Holdings exercises “de facto” control under IFRS 10
Revoly Trading and Marketing Ltd. dba Vironna Pharm (“Vironna”)	Israel	Subsidiary of IMC Holdings
Oranim Plus Pharm Ltd. (“Oranim Plus”)	Israel	Subsidiary of IMC Holdings
Trichome Financial Corp. (“Trichome”)	Canada	Wholly-owned subsidiary
Trichome JWC Acquisition Corp. (“TJAC”)	Canada	Wholly-owned subsidiary of Trichome
MYM Nutraceuticals Inc. (“MYM”)	Canada	Wholly-owned subsidiary of Trichome
SublimeCulture Inc. (“Sublime”)	Canada	Wholly-owned subsidiary of TJAC
Highland Grow Inc. (“Highland”)	Canada	Wholly-owned subsidiary of MYM International Brands Inc., a wholly-owned subsidiary of MYM
Adjupharm GmbH (“Adjupharm”)	Germany	Subsidiary of IMC Holdings

•	Geographic diversification and preparation to target, upon legalization, new adult-use recreational  cannabis markets in Germany and Israel, while leveraging the cultivation excellence, consumer insights and experienced team in the mature Canadian market.

•

Properly positioned brands with respect to target-market, price, potency and quality, such as the successful mid-2021 launch of WAGNERS in Canada. By Q1 2022, both WAGNERS and Highland Grow were among the top 3 premium and ultra-premium cannabis brands in Ontario (Canada’s largest province) by retail market share.1

•	High-quality, reliable supply to our customers and patients, leading to recurring sales.

•	Ongoing introduction of new SKUs to keep consumers and patients engaged.

●	Anticipated expansion into Quebec, which accounts for approximately 23% of Canada’s population.

●	Launching new SKUs, products, and formats to meet consumer demand.

●	Continuing to expand competitive market share in key Canadian cannabis markets, of which Ontario is Canada’s largest:

•

In Ontario, WAGNERS has increased from 0% market share in May 2021 to over 8% in the premium dried flower segment for the month of April 2022.4

•

Highland held over 10% market share in the ultra-premium segment in Ontario in April 2022.5

●	Engaging directly with current and prospective customers, retailers, and consumers, and expanding the number of retail locations our products are available in.

Facility	Location	Description
Manitou Facility	Ontario	Flagship 32,050 square metre facility, with approximately 4,340 square metre of cultivation space
Trillium Facility	Ontario	Approximately 1,400 square metre processing and cultivation facility
Sublime Facility	Quebec	Approximately 930 square metre cultivation and storage facility
Highland Facility	Nova Scotia	Approximately 530 square metre cultivation and storage facility

		For the three months ended March 31								For the year ended December 31
		2022				2021				2021
Revenues		$	23,569			$	8,767			$	54,300
Gross profit before fair value impacts in cost of sales		$	6,354			$	4,627			$	11,882
Gross margin before fair value impacts in cost of sales (%)			27	%			53	%			22	%
Operating Loss		$	(11,549	)		$	(1,705	)		$	(38,389	)
Net income (loss)		$	(10,741	)		$	4,715			$	(18,518	)
Net income (loss) per share attributable to equity holders of the Company - Basic		$	(0.14	)		$	0.11			$	(0.31	)
Loss per share attributable to equity holders of the Company - Diluted		$	(0.17	)		$	(0.06	)		$	(0.66	)

		For the three months ended March 31,								For the year ended December 31,
		2022				2021				2021
Average net selling price of dried flower (per Gram) 1		$	6.23			$	4.94			$	4.90
Average net selling price of other cannabis products (per Gram)2		$	2.76				-			$	4.70
Quantity harvested and trimmed (in Kilograms)3			1,744				131				4,770
Quantity of other cannabis products sold (in Kilograms)1			1,085				-				1,033
Quantity of dried flower sold (in Kilograms)			3,035				1,185				8,410

1.	Cannabis selling prices in the Canadian market are characterized by lower selling prices than dried flowers in the Israeli and German market.

2.	Including other cannabis products such as Concentrates, Kief, Hash and Pre-rolls.

3.	Harvested flowers, after trimming and ready for manufacturing.

---

		Israel								Canada								Germany								Adjustments								Total
		2022				2021				2022				2021				2022				2021				2022				2021				2022				2021
Revenues		$	12,403			$	4,344			$	10,568			$	1,256			$	598			$	3,167			$	-			$	-			$	23,569			$	8,767
Inter-segment revenues		$	-			$	-			$	663			$	-			$	-			$	-			$	(663	)		$	-			$	-			$	-
Total revenues		$	12,403			$	4,344			$	11,231			$	1,256			$	598			$	3,167			$	(663	)		$	-			$	23,569			$	8,767
Segment income (loss)		$	(6,620	)		$	1,040			$	(2,690	)		$	763	)		$	(1,028	)		$	230			$	-			$	-			$	(10,338	)		$	507
Unallocated corporate expenses		$	-			$	-			$	-			$	-			$	-			$	-			$	(1,211	)		$	(2,212	)		$	(1,211	)		$	(2,212	)
Total operating (loss) income		$	(6,620	)		$	1,040			$	(2,690	)		$	(763	)		$	(1,028	)		$	230			$	(1,211	)		$	(2,212	)		$	(11,549	)		$	(1,705	)
Depreciation & amortization		$	407			$	306			$	1,368			$	61			$	62			$	18			$	-			$	-			$	1,837			$	385

●

Revenues for the three months ended March 31, 2022 and 2021 were $23,569 and $8,767, respectively, representing an increase of $14,802 or 169%. The increase in revenues was mainly attributed to the acquisitions in Israel and Canada since March 31, 2021.

●

Revenues from the Israeli operation were attributed to the sale of medical cannabis through the Company’s agreement with Focus and the consolidation of revenues from the Company’s acquisition of the Israeli Pharmacies.

●

Revenues from the Company’s Canadian operation include revenues from the sale of adult-use recreational cannabis in Canada through the acquisitions of TJAC and MYM.

●

In Germany, Company revenues were attributed to the sale of medical cannabis through the Company’s subsidiary Adjupharm.

●

Total dried flower sold for the three months ended March 31, 2022 was 3,035kg at an average selling price of $6.23 per gram compared to 1,185kg for the same period in 2021 at an average selling price of $4.94 per gram, derived mainly from the higher average selling price per gram the Company recognized through the acquisition of the Israeli pharmacies in Israel.

●

The increase in revenues related to dried flower in the three months ended March 31, 2022 is attributable to deliveries made under the Focus’ sales agreements to pharmacies and revenues generated from Adjupharm, Trichome, MYM, and the Israeli subsidiaries.

●

Total other cannabis product sold for the three months ended March 31, 2022 was 1,085kg at an average selling price of $2.76 per gram as compared to $nil in the three months ended March 31, 2021. Other cannabis products include kief, hash and pre-rolls and are attributable to Trichome and MYM and the sales of the WAGNERS, Highland and Sublime brands in 2022.

1.	Selling price per gram - calculated as the weighted average historical selling price for all strains of cannabis sold by the Group, which is expected to approximate future selling prices.

2.	Post-harvest costs - calculated as the cost per gram of harvested cannabis to complete the sale of cannabis plants post-harvest, consisting of the cost of direct and indirect materials, depreciation and labor as well as labelling and packaging costs.

3.	Attrition rate - represents the weighted average percentage of biological assets which are expected to fail to mature into cannabis plants that can be harvested.

4.	Average yield per plant - represents the expected number of grams of finished cannabis inventory which are expected to be obtained from each harvested cannabis plant.

5.	Stage of growth - represents the weighted average number of weeks out of the average weeks growing cycle that biological assets have reached as of the measurement date. The growing cycle is approximately 12 weeks.

										10% change as of
		March 31, 2022				December 31, 2021				March 31, 2022				December 31, 2021
		In CAD								In Thousands of CAD
Average selling price per gram of dried cannabis		$	3.79			$	3.64			$	474			$	296
Average post-harvest costs per gram of dried cannabis		$	0.77			$	1.16			$	280			$	140
Attrition rate			27	%			27	%			410				100
Average yield per plant (in grams)			48				47				392				228
Average stage of growth			53	%			47	%			387				212

●

The cost of revenues for the three months ended March 31, 2022 and 2021 were $17,215 and $4,140, respectively, representing an increase of $13,075 or 316%.

●	production costs (current period costs that are directly attributable to the cannabis growing and harvesting process);

●	materials and finished goods purchase costs;

●	a fair value adjustment on sale of inventory (the change in fair value associated with biological assets that were transferred to inventory upon harvest); and

●	a fair value adjustment on growth of biological assets (the estimated fair value less cost to sell of biological assets as at the reporting date).

●

Through the Trichome Transaction, the Company recognized goodwill of approximately $67,269 and intangible assets, primarily attributed to the cultivation license, worth approximately $6,458 (based on a preliminary purchase price allocation). The goodwill arising on acquisition is attributed to the expected benefits from the synergies of the combination of the activities of the Company and Trichome, as well as value attributed to the assembled workforce, which is included in goodwill. The goodwill recognized is not expected to be deductible for income tax purposes.

●

The Company recognized the fair value of the assets acquired and liabilities assumed in the business combination according to a provisional measurement. The purchase consideration and the fair value of the acquired assets and liabilities may be adjusted within 12 months from the acquisition date. At the date of final measurement, adjustments are generally made by restating comparative information previously determined provisionally. As of the date of the Interim Financial Statements, a final valuation for the fair value of the identifiable assets acquired and liabilities assumed by an external valuation specialist had been obtained.

●

The Company recognized the fair value of the assets acquired and liabilities assumed in the business combination according to a provisional measurement. As of the date of the approval of the Interim Financial Statements, a final valuation for the fair value of the identifiable assets acquired and liabilities assumed by an external valuation specialist has not been obtained. The purchase consideration and the fair value of the acquired assets and liabilities may be adjusted within 12 months from the acquisition date. At the date of final measurement, adjustments are generally made by restating comparative information previously determined provisionally.

Uses of Available Funds (Net)		Amount ($)				Actual amount used ($)				Variances
CAPEX Activities		$	4,340			$	2,758			$	(1,582	)
M&A and investments		$	14,880			$	16,510			$	1,630
Working capital		$	11,750			$	11,750			$	-
General corporate activities		$	8,652			$	8,604			$	48
TOTAL		$	39,622			$	39,622			$	-

		Less than one year				1 to 5 years				6 to 10 years				> 10 years
Contractual Obligations		$	28,738			$	11,478			$	14,342				-

		Payments Due by Period
Contractual Obligations		Total				Less than one year				1 to 3 years				4 to 5 years				After 5 years
Debt		$	25,903			$	25,525			$	378			$	-			$	-
Finance Lease Obligations		$	28,519			$	3,077			$	5,845			$	5,255			$	14,342
Operating Leases		$	136			$	136			$	-			$	-			$	-
Purchase Obligations1		$	-			$	-			$	-			$	-			$	-
Other Obligations2		$	-			$	-			$	-			$	-			$	-
Total Contractual Obligations		$	54,558			$	28,738			$	6,223			$	5,255			$	14,342

		For the three months ended March 31,								For the year ended December 31,
		2022				2021				2021
Net cash provided by (used in):
Operating activities		$	(9,443	)		$	(7,791	)		$	(34,372	)
Investing activities		$	(332	)		$	(549	)		$	(9,012	)
Financing activities		$	5,363			$	470			$	48,731
Effect of foreign exchange		$	824			$	237			$	(329	)
Increase (Decrease) in cash		$	(3,588	)		$	(7,633	)		$	5,018

For the year ended		December 31, 2021				December 31, 2020
Revenues		$	54,300			$	15,890
Net Loss		$	(18,518	)		$	(28,734	)
Basic net income (Loss) per share:		$	(0.31	)		$	(0.74	)
Diluted net income (Loss) per share:		$	(0.66	)		$	(0.74	)
Total assets		$	287,388			$	38,116
Total non-current financial liabilities		$	31,216			$	19,237

For the three months ended		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021
Revenues		$	23,569			$	20,028			$	14,393			$	11,112
Net income (Loss)		$	(10,741	)		$	(12,488	)		$	(5,656	)		$	(5,089	)
Basic net income (Loss) per share:		$	(0.14	)		$	(0.19	)		$	(0.06	)		$	(0.10	)
Diluted net loss per share:		$	(0.17	)		$	(0.19	)		$	(0.18	)		$	(0.23	)

For the three months ended		March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
Revenues		$	8,767			$	4,900			$	5,893			$	3,757
Net income (Loss)		$	4,715			$	(19,976	)		$	738			$	(9,696	)
Basic net income (Loss) per share:		$	0.11			$	(0.13	)		$	0.004			$	(0.52	)
Diluted net income (Loss) per share:		$	(0.06	)		$	(0.13	)		$	0.004			$	(0.52	)

Three months ended		March 31, 2022				March 31, 2021
Net Revenue		$	23,569			$	8,767
Cost of sales		$	17,215			$	4,140
Gross profit before FV adjustments		$	6,354			$	4,627
Gross margin before FV adjustments			27	%			53	%

		For the three months ended March 31,								For the year ended December 31,
		2022*				2021*				2021
Operating Loss		$	(11,549	)		$	(1,705	)		$	(38,389	)
Depreciation & Amortization		$	1,837			$	385			$	6,004
EBITDA		$	(9,712	)		$	(1,320	)		$	(32,385	)
IFRS Biological assets fair value adjustments, net		$	(216	)		$	(401	)		$	1,586
Share-based payments		$	1,610			$	630			$	7,471
Costs related to the NASDAQ listing		$	-			$	122			$	1,296
Restructuring cost		$	3,747			$	-			$	-
Other non-recurring costs		$	67			$	-			$	-
Adjusted EBITDA (Non-IFRS)1		$	(4,504	)		$	(969	)		$	(22,032	)

		Less than one year				1 to 5 years				6 to 10 years				>10 years
Lease liabilities		$	3,077			$	11,100			$	14,342				-

		Less than one year				1 to 5 years				6 to 10 years				>10 years
Lease liabilities		$	172			$	312			$	534				-

●

that the MOH immediately suspend the implementation of the new regulation that harms, disproportionally, the medical cannabis patients;

●

that the implementation of the new regulation, as is, would cause violation of constitutional rights of the medical cannabis patients; and

●

that the MOH amends the flaws of the new regulation, prior to becoming effective, and to establish new regulations regarding labeling and use of pesticides.

1.

that the contractual partner of the Company is not the defendant, Stroakmont & Atton is not the real purchaser rather a company named Uniclaro GmbH.

2.

that the Company allegedly placed an order with Uniclaro GmbH for a total of 4.3 million Clongene COVID-19 tests, of which Uniclaro GmbH claims to have a payment claim against the Company for a partial delivery of 380,400 Clongene COVID-19 tests in the total amount of EUR 941,897.20. Uniclaro GmbH has assigned this alleged claim against the Company to Stroakmont & Atton Trading GmbH, and Stroakmont & Atton Trading GmbH has precautionary declared a set-off against the Company’s claim.

●

What is meant by a right to defer settlement;

●

That a right to defer must exist at the end of the reporting period;

●

That classification is unaffected by the likelihood that an entity will exercise its deferral right.

●

That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification.

Financial Instruments Measured at Fair Value		Fair Value Method
Derivative assets1		Black - Scholes model (Level 3 category)
2019 Unlisted Warrants1		Black - Scholes model (Level 3 category)
2019 Listed Warrants1		Market price (Level 1 category)
Loans receivable		Discounted cash flow method (Level 3 category)
Financial Instruments Measured at Amortized Cost
Cash and cash equivalents, trade receivables and other account receivables		Carrying amount (approximates fair value due to short-term nature)
Loans receivable		Amortized cost (effective interest method)
Trade payables, other accounts payable and accrued expenses		Carrying amount (approximates fair value due to short-term nature)

1	Finance expense (income) include fair value adjustment of Warrants, investments, and derivative assets measured at fair value, for the three months ended March 31, 2022 and 2021, amounted to $2,688 and $7,160, respectively.

●	maintenance of records in reasonable detail, that accurately and fairly reflect the transactions and dispositions of assets;

●	reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with applicable IFRS;

●	receipts and expenditures are only being made in accordance with authorizations of management or the board of directors; and

●	reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial instruments.

Province or Territory	Minimum Age to Purchase Adult-Use Recreational Cannabis Products	Private and/or Public Operated Retailers	Online Sales
Alberta	18	Private and Public	Yes (Public only)
British Columbia	19	Private and Public	Yes (Public only)
Manitoba	19	Private	Yes
New Brunswick	19	Private and Public	Yes
Newfoundland and Labrador	19	Private and Public	Yes (Public only)
Nova Scotia	19	Public	Yes
Ontario	19	Private and Public	Yes (Public only)
Prince Edward Island	19	Public	Yes
Quebec	21	Public	Yes
Saskatchewan	19	Private	Yes
Northwest Territories	19	Private and Public	Yes (Public only)
Nunavut	19	Private and Public	Yes
Yukon	19	Private and Public	Yes (Public only)

●	the Company’s business objectives and milestones and the anticipated timing of execution;

●	the performance of the Company’s business, strategies and operations;

●	the intention to expand the business, operations and potential activities of the Company;

●	geographic diversification and brand recognition;

●	preparations to target, upon legalization, new cannabis markets;

●	the closure of the Focus Facility;

●	expectations relating to the number of patients in Israel licensed by the MOH to consume medical cannabis;

●	expectations of TJAC and MYM on variations of net cost of sales based on the number of pre-harvest plants, after harvest plants, the strains being grown and technological progress in the trimming machines;

●	the future impact of the Oranim Transaction, Panaxia Transaction, Pharm Yarok Transaction and the Vironna Transaction;

●	The Company’s proposed acquisition of the HW Shinua and the Panaxia Pharmacy Closing and the future impact thereof;

●	the future product portfolios of the Group and the Company’s ability to export its products, strains and genetics from Canada to Israel and Germany;

●	the competitive conditions of the cannabis industry and the growth of medical or adult-use recreational cannabis markets in the jurisdictions in which the Company operates;

●	the growth of the Company’s brands in the respective jurisdictions;

●	the Company’s retail presence, distribution capabilities and data-driven insights;

●	the competitive conditions of the industry, including the Company’s ability to maintain or grow its market share;

●	cannabis licensing in Israel, Germany and Canada;

●	the anticipated decriminalization or legalization of adult-use recreational cannabis in Israel and Germany;

●	expectations regarding the renewal and/or extension of the Group’s licenses;

●	the Group’s anticipated operating cash requirements and future financing needs;

●	the Group’s expectations regarding its revenue, expenses, profit margins and operations;

●	the anticipated Gross Margins, EBITDA and Adjusted EBITDA from the Company’s operations;

●	future opportunities for the Company in Canada, particularly in the premium and ultra-premium segments;

●	future opportunities for the Company in Israel, particularly in the retail and distribution segments of the cannabis market; and

●	contractual obligations and commitments.

●	the anticipated increase in demand for medical and adult-use recreational cannabis in the markets in which the Company operates;

●	the Company’s satisfaction of international demand for its products;

●	the Company’s ability to implement its growth strategies and leverage synergies of acquisitions;

●	the Company’s ability to reach patients through e-commerce and brick and mortar retail;

●	the development and introduction of new products;

●	the ability to import and the supply of premium and indoor grown cannabis products from third- party suppliers and partners;

●	the changes and trends in the cannabis industry;

●	the Company’s ability to maintain and renew or obtain required licenses, permits or authorization related to its domestic and international operations;

●	the Company’s ability to rely on the export of, creation and maintenance of and maintain a consistent supply of imported cannabis from the Canadian Facilities;

●	the ability to maintain cost-efficiencies and network of suppliers to maintain purchasing capabilities;

●	the effectiveness of its products for medical cannabis patients and recreational consumers;

●	future cannabis pricing and input costs;

●	cannabis production yields;

●	the Company being able to continue to drive organic growth from Canadian operations; and

●	the Company’s ability to market its brands and services successfully to its anticipated customers.

●	general business risk and liability, including claims or complaints in the normal course of business;

●	any failure of the Company to maintain “de facto” control over Focus and/or HW Shinua in accordance with IFRS 10 Consolidated Financial Statements (“IFRS 10”);

●	regulatory authorities in Israel viewing the Company as the deemed owner of more than 5% of Focus or licensed entities in contravention of Israeli regulations;

●	limitations on stockholdings of the Company in connection with its potential direct engagement in the Israeli medical cannabis market;

●	the ability and/or need to obtain additional financing for continued operations;

●	the lack of control over the Company’s investees;

●	the failure of the Company to comply with applicable regulatory requirements in a highly regulated industry;

●	unexpected changes in governmental policies and regulations affecting the production, distribution, manufacture or use of medial cannabis in Israel, Germany, Canada, or any jurisdictions in which the Company intends to operate;

●	the Company’s ability to continue to meet the listing requirements of the CSE and the NASDAQ;

●	the Israeli government deciding to abandon the decriminalization or legalization of adult-use recreational cannabis;

●	any change in the political environment which would negatively affect the prospect of decriminalization or legalization of adult-use recreational cannabis in Israel;

●	any adverse outcome of the Construction Proceedings;

●	any unexpected failure of Adjupharm to maintain in good standing or renew any of its Adjupharm Licenses;

●	any unexpected failure of TJAC to maintain in good standing or renew any of the TJAC Licenses or MYM License;

●	any unexpected failure of TJAC and/or MYM to maintain their facilities in good standing with all applicable regulations, including all required licenses and permits and under the TJAC Leases and the Sublime Lease;

●	the Group’s ability to maintain ancillary business licenses, permits and approvals required to operate effectively;

●

the ability of the Company, following the Trichome Transaction, the MYM Transaction, the Panaxia Transaction, the Pharm Yarok Transaction, the Oranim Transaction and the Vironna Transaction to integrate each entity into the Company’s operations and realize the anticipated benefits and synergies of each such transaction and the timing thereof and the focus of management on such integration;

●	any potential undisclosed liabilities of Trichome, MYM, Pharm Yarok, Rosen High Way, Oranim Pharm, and Vironna or other entities acquired by the Company that were unidentified during the due diligence process;

●	the interpretation of Company’s acquisitions of companies or assets by tax authorities or regulatory bodies, including but not limited to the change of control of licensed entities;

●	the ability of the Group to deliver on their sales commitments or growth objectives;

●	the Group’s reliance on third-party supply agreements and its ability to enter into additional 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, including but not limited to the Construction Proceedings, the MOH allegations and the class action proceedings described herein;

●	the impact of increasing competition;

●	any lack of merger and acquisition opportunities;

●	inconsistent public opinion and perception regarding the use of cannabis;

●	engaging in activities considered illegal under US federal law related to cannabis;

●	political instability and conflict in the Middle East, Eastern Europe and Ukraine;

●	adverse market conditions;

●	unexpected disruptions to the operations and businesses of the Group as a result of the COVID-19 global pandemic or other disease outbreaks including a resurgence in the cases of COVID-19;

●	the inherent uncertainty of production quantities, qualities and cost estimates and the potential for unexpected costs and expenses;

●	the Group’s ability to sell its products;

●	currency fluctuations;

●	any change in accounting practices or treatment affecting the consolidation of financial results;

●	the costs of inputs;

●	reliance on management; and

●	the loss of key management and/or employees.