Company to refocus resources and efforts on the Israeli and German markets;

Commences exit of the Canadian market

 

TORONTO and GLIL YAM, Israel, November 14, 2022 -- IM Cannabis Corp. (the "Company", "IM Cannabis", or "IMC") (CSE: IMCC) (NASDAQ: IMCC), a leading medical cannabis company, provided financial results for its third quarter ended September 30, 2022. All amounts are reported in Canadian dollars unless otherwise stated.

 

Q3 2022 Highlights

 

 

 

 

 

 

 

Management Commentary

 

"The third quarter marked a pivotal moment on our trajectory to profitability," said Oren Shuster, Chief Executive Officer of IM Cannabis. "By commencing our exit from Canada, we are now concentrating all our efforts on our highest value markets, Israel and Germany, to accelerate our path to profitability and long-term shareholder value.”

“We will continue building on the increasing demand and positive momentum in Israel, supported by strategic alliances with Canadian suppliers and skilled sourcing team, to cement our leadership position. In parallel, we are advancing a long-term growth plan in Germany, based on replicating our success in Israel. We are also preparing ourselves for the proposed legalization of recreational cannabis in Germany.”

“We continue to be strongly focused on generating efficiencies and synergies, bringing all our financial and human capital to support growth and profitability in Israel and Germany,” concluded Shuster.

Q3 2022 Business Highlights

 

 

 

 

 

 

Q3 2022 Financial Results

 

 

The increase in revenues is primarily attributed to the increase in the quantity of medical cannabis products sold, as well as from the higher average selling price per gram the Company realized from its portfolio of premium and ultra-premium branded cannabis products in Israel.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company’s financial statements as of September 30, 2022 includes a note regarding the Company’s ability to continue as a going concern. The Company’s Q3 2022 financial statements do not include any adjustments relating to the recoverability and classification of assets or liabilities that might be necessary should the Company be unable to continue as a going concern. For more information, please refer to the ‘LIQUIDITY AND CAPITAL RESOURCES’ section as well as the ‘RISK FACTORS’ section in the Company’s MD&A, available under the Company’s SEDAR profile at www.sedar.com on EDGAR at www.sec.gov/edgar.

 

Share Consolidation

 

The Company will be consolidating all of its issued and outstanding common shares (the “Common Shares”) on the basis of one (1) post-consolidation Common Share for each ten (10) pre-consolidation Common Shares (the “Consolidation”). The objective of the Consolidation is to enable the Company to regain compliance with the minimum bid price requirement set forth in the listing rules of The Nasdaq Stock Market LLC and maintain its listing on the Nasdaq Capital Market (“NASDAQ”).

 

The Company's board of directors approved the Consolidation and it is expected that the Common Shares will commence trading on a post-Consolidation basis on the Canadian Securities Exchange (the “CSE”) and NASDAQ on or about November 17, 2022.

 

Assuming the Consolidation is completed, the existing 75,695,325 Common Shares will be reduced to approximately 7,569,526 Common Shares, subject to adjustments for rounding purposes. No fractional Common Shares will be issued. Any fractional interest in Common Shares that is less than 0.5 of a Common Share resulting from the Consolidation will be rounded down to the nearest whole Common Share and any fractional interest in Common Shares that is 0.5 or greater of a Common Share will be rounded up to the nearest whole Common Share.

 

The Consolidation was approved by holders of Common Shares at the Company's annual general and special meeting held on October 20, 2022. The Consolidation is subject to acceptance by the CSE.

 

Upon completion of the Consolidation, a letter of transmittal will be sent by mail to registered shareholders advising that the Consolidation has taken effect. The letter of transmittal will contain instructions on how registered shareholders can exchange their share certificates or Direct Registration System (“DRS”) statements evidencing their pre-Consolidation Common Shares for new share certificates or new DRS statements representing the number of post-Consolidation Common Shares to which they are entitled.

 

Beneficial shareholders holding their Common Shares through an intermediary may be subject to different procedures for obtaining their post-Consolidation Common Shares. If you have questions in this regard, you are encouraged to contact your intermediary.

 

The Company does not intend to change its name or seek a new stock trading symbol on the CSE or NASDAQ in connection with the Consolidation.

 

Financial Statements and Management’s Discussion and Analysis

 

The complete interim condensed consolidated financial statements of the Company for the three and nine months ended September 30, 2022 and 2021 and related management’s discussion and analysis will be available under the Company’s SEDAR profile at www.sedar.com on EDGAR at www.sec.gov/edgar.

 

Q3 2022 Conference Call

 

The Company will host a zoom web conference today at 9:00a.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.

 

IM Cannabis (NASDAQ: IMCC) (CSE: IMCC) is an international cannabis company providing premium products to medical patients in Israel, Germany and Canada, the three largest federally legal markets. 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. (“Focus Medical”), 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 IM Cannabis products throughout the entire value chain. In Germany, the IMC ecosystem operates through Adjupharm GmbH, where it also distributes cannabis to pharmacies to medical cannabis patients. In Canada, IMC operates through Trichome Financial and its wholly-owned subsidiaries Trichome JWC Acquisition Corp. and MYM Nutraceuticals Inc., where it cultivates and processes cannabis for the adult-use market at its Ontario and Nova Scotia facilities under the WAGNERS and Highland Grow brands. For more information, please visit www.imcannabis.com.

 

Company Contact:

Maya Lustig, Director Investor & Public Relations

IM Cannabis

+972-54-677-8100

Oren Shuster, CEO

IM Cannabis Corp.

+972-77-3603504

Disclaimer for Forward-Looking Statements

 

This press release contains “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and United States securities laws (collectively, “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 in this press release includes, without limitation, statements relating to the Company leaving the Canadian cannabis market to focus on Israel, Germany and Europe; achieving profitability and shareholder value; expectations related to demand, growth opportunities in Israel, Germany and Europe; demand and momentum in the Company’s Israeli operations; the restructuring of Trichome under CCAA; the continuation of the Company’s Canadian operations through Trichome until a sale transaction or one or more other restructuring transactions is completed; any material recovery on the Company’s equity investment in Trichome; whether the Company will recover any of its unsecured loans to Trichome; statements relating to the Company’s business objectives and the anticipated timing of execution in Israel, Germany and Europe; the expected cost savings from streamlining operations in Canada and Israel; anticipated market reception of the BLKMKT brand in the Israeli medical cannabis market; expectations related to the Company’s import of medical cannabis products from SNDL and other Canadian suppliers and the market reception of such products; statements relating to the timing, terms and completion of the Consolidation, including the ratio of pre-consolidation Common Shares to post-consolidation Common Shares that will be effected, non-issuance of fractional shares, and the contents and delivery of the letter of transmittal following completion of the Consolidation; timing for the commencement of trading on the CSE and NASDAQ following the completion of the Consolidation;; and the anticipated decriminalization or legalization of adult-use recreational cannabis in Germany and Europe.

 

Forward-looking statements is based on assumptions that may prove to be incorrect, including but not limited, the anticipated increase in demand for medical and adult-use recreational cannabis in the markets in which the Company operates or plans to operate; the Company’s ability to implement its growth strategies and leverage synergies of acquisitions; the ability to import and the supply of premium and indoor grown cannabis products from the Company’s third-party suppliers and partners; the changes and trends in the cannabis industry; and the Company’s ability to market its brands and services successfully to its anticipated customers and medical cannabis patients in Israel and Germany.

 

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: 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 Medical and/or High Way Shinua Ltd. (together with the Company, the “Group”)in accordance with IFRS 10; limitations on stockholdings of the Company in connection with its potential direct engagement in the Israeli medical cannabis market; unexpected changes in governmental policies and regulations in Canada, Israel or Germany such as the Israeli or German government deciding to abandon efforts to decriminalize or legalize adult-use recreational cannabis; the ability of the Company to access future financing if needed or on terms acceptable to the Company; the failure of the Company to comply with applicable regulatory requirements in a highly regulated industry; the Company’s ability to continue to meet the listing requirements of the CSE and the NASDAQ; any unexpected failure to maintain in good standing or renew its cannabis licenses; 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 Groupadverse market conditions; risks of product liability and other safety-related liability from the usage of the Company’s cannabis products; supply chain constraints; competition; reliance on key personnel; litigation risks; the Company’s ability to continue as a going concern; the risk of defaulting on existing debt and war and civil conflict 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, 2022, 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 statements are 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 includes references to “EBITDA”, “Adjusted EBITDA” and “Gross Margin”, which are non-International Financial Reporting Standards (“IFRS”) financial measures. Non-IFRS measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. The Company defines EBITDA as earnings before interest, tax, depreciation and amortization. EBITDA has no direct, comparable IFRS financial measure. The Company defines adjusted EBITDA as EBITDA adjusted by removing other non-recurring or noncash items, including the unrealized change in fair value of biological assets, realized fair value adjustments on inventory sold in the period, share-based compensation expenses, depreciation of right-of-use assets, revaluation adjustments of financial assets and liabilities measured on a fair value basis and non-recurring transaction costs included in operating expenses. The Company defines gross margin as the difference between revenue and cost of goods sold divided by revenue (expressed as a percentage), prior to the effect of a fair value adjustment for inventory and biological assets. IMC has used or included these non-IFRS measures solely to provide investors with added insight into IMC’s financial performance. Readers are cautioned that such non-IFRS measures may not be appropriate for any other purpose. Non-IFRS measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

 

Canadian Dollars in thousands

Canadian Dollars in thousands

Canadian Dollars in thousands, except per share data

(*) Reclassified in respect of discontinued operations.

Canadian Dollars in thousands, except per share data

(*) Reclassified in respect of discontinued operations.

Canadian Dollars in thousands

Canadian Dollars in thousands