Exhibit 99.2


IM CANNABIS CORP.

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2025

Canadian dollars in thousands

(Unaudited)

INDEX

 
Page
 
 

F-2 - F-3
 
 

F-4 - F-5
 
 

F-6 - F-7
 
 

F-8 - F-9
 
 

F-10 - F-25

IM CANNABIS CORP.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Canadian Dollars in thousands

         
September 30, 2025
    
December 31, 2024
  
   
Note
    
(Unaudited)
        
                   
ASSETS
                  
                   
CURRENT ASSETS:
                  
Cash
        
$
1,182
    
$
863
  
Restricted cash
          
1,134
      
64
  
Trade receivables
          
11,255
      
13,803
  
Other current assets
          
8,073
      
5,419
  
Inventory
          
10,023
      
3,215
  
                       
           
31,667
      
23,364
  
NON-CURRENT ASSETS:
                      
Investments in affiliate
  
4
      
1,742
      
1,631
  
Property, plant and equipment, net
          
3,819
      
3,730
  
Intangible assets, net
  
3I

   
1,586
      
3,333
  
Goodwill
  
3I

   
5,005
      
6,679
  
Right-of-use assets, net
          
513
      
451
  
                       
           
12,665
      
15,824
  
                       
Total assets
        
$
44,332
    
$
39,188
  

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

F - 2
IM CANNABIS CORP.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Canadian Dollars in thousands

         
September 30,
2025
    
December 31,
2024
  
   
Note
    
(Unaudited)
        
                   
LIABILITIES AND SHAREHOLDERS' EQUITY
                  
                   
CURRENT LIABILITIES:
                  
Current maturities of operating lease liabilities
        
$
379
    
$
262
  
Trade payables
          
7,147
      
11,159
  
Other current liabilities
          
13,917
      
5,001
  
Loans and credit from bank institution and others
          
15,417
      
15,145
  
Convertible debentures
  
3D

   
597
      
1,968
  
Derivative warrants liabilities and prefunded warrants
  
3C, 4
      
1,002
      
1,383
  
                       
           
38,459
      
34,918
  
                       
NON-CURRENT LIABILITIES:
                      
Operating lease liabilities
          
92
      
171
  
Loans and credit from bank institution and others
          
1,078
      
466
  
Deferred tax liabilities
          
400
      
487
  
                       
           
1,570
      
1,124
  
                       
Total liabilities
          
40,029
      
36,042
  
                       
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY:
  
5
                  
Share capital and premium
          
269,574
      
265,000
  
Capital reserve from share-based payment transactions
          
475
      
150
  
Amount received on account of financial instruments and other
          
3,112
      
297
  
Capital reserve from translation differences of foreign operations
          
(3,783
)
    
(1,265
)
Capital reserve from transaction with non-controlling interests
          
(2,872
)
    
-
  
Capital reserve from transaction with controlling shareholder
          
33
      
-
  
Accumulated deficit
          
(262,576
)
    
(258,939
)
                       
Total equity attributable to shareholders of the Company
          
3,963
      
5,243
  
                       
Non-controlling interests
          
340
      
(2,097
)
                       
Total equity
          
4,303
      
3,146
  
                       
Total liabilities and equity
        
$
44,332
    
$
39,188
  

The accompanying notes are an integral part of the interim condensed consolidated financial statements.
 
F - 3
IM CANNABIS CORP.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS (UNAUDITED)
Canadian Dollars in thousands, except per share data

         
Nine months ended
September 30,
    
Three months ended
September 30,
  
   
Note
    
2025
    
2024
    
2025
    
2024
  
                               
Revenue
        
$
39,047
    
$
40,696
    
$
13,851
    
$
13,883
  
Cost of revenue
          
29,443
      
34,925
      
11,120
      
10,735
  
                                       
Gross profit
          
9,604
      
5,771
      
2,731
      
3,148
  
                                       
Selling and marketing expenses
          
3,935
      
5,279
      
1,373
      
1,506
  
General and administrative expenses
          
6,924
      
6,846
      
2,433
      
2,351
  
Share-based compensation
          
14
      
364
      
2
      
244
  
Other expenses
  
3I

   
3,076
      
2,734
      
3,076
      
-
  
Total operating expenses
          
13,949
      
15,223
      
6,884
      
4,101
  
                                       
Operating loss
          
(4,345
)
    
(9,452
)
    
(4,153
)
    
(953
)
                                       
Finance income
          
3,181
      
495
      
1,111
      
1
  
Finance expenses
          
(2,634
)
    
(2,577
)
    
(682
)
    
(156
)
                                       
Finance income (expenses), net
          
547
      
(2,082
)
    
429
      
(155
)
                                       
Loss before tax benefit
          
(3,798
)
    
(11,534
)
    
(3,724
)
    
(1,108
)
Taxes on income (tax benefit)
          
86
      
(976
)
    
141
      
(26
)
                                       
Net loss
        
$
(3,884
)
  
$
(10,558
)
  
$
(3,865
)
  
$
(1,082
)

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

F - 4
IM CANNABIS CORP.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS (UNAUDITED)
Canadian Dollars in thousands, except per share data

         
Nine months ended
September 30,
    
Three months ended
September 30,
  
   
Note
    
2025
    
2024 (*)
    
2025
    
2024 (*)
  
                               
Other comprehensive income that will not be reclassified to profit or loss in subsequent periods:
                              
Remeasurement gain on defined benefit plan
          
48
      
1,633
      
-
      
49
  
                                       
Other comprehensive income (loss) that will be reclassified to profit or loss in subsequent periods:
                                      
Adjustments arising from translating financial statements of foreign operations
  
     
(2,440
)
    
(508
)
    
(961
)
    
(482
)
   
                                 
Total other comprehensive income (loss)
  
     
(2,392
)
    
1,125
      
(961
)
    
(433
)
   
                                 
Total comprehensive loss
        
$
(6,276
)
  
$
(9,433
)
  
$
(4,826
)
  
$
(1,515
)
                                       
Net income (loss) attributable to:
                                      
Shareholders of the Company
        
$
(3,685
)
  
$
(9,574
)
  
$
(3,651
)
  
$
(922
)
Non-controlling interests
          
(199
)
    
(984
)
    
(214
)
    
(160
)
                                       
         
$
(3,884
)
  
$
(10,558
)
  
$
(3,865
)
  
$
(1,082
)
                                       
Total comprehensive income (loss) attributable to:
                                      
Shareholders of the Company
        
$
(6,155
)
  
$
(8,458
)
  
$
(4,627
)
  
$
(1,357
)
Non-controlling interests
          
(121
)
    
(975
)
    
(199
)
    
(158
)
                                       
         
$
(6,276
)
  
$
(9,433
)
  
$
(4,826
)
  
$
(1,515
)
                                       
Net loss per share attributable to shareholders of the Company:
  
6
                                  
                                       
Basic net loss per share (in CAD)
        
$
(0.98
)
  
$
(4.29
)
  
$
(0.75
)
  
$
(0.41
)
Diluted net loss per share (in CAD)
        
$
(1.00
)
  
$
(4.29
)
  
$
(0.75
)
  
$
(0.41
)

(*)
Loss per share includes the effect of Reverse Share Split (see also Note 5A below).

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

F - 5
IM CANNABIS CORP.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
Canadian Dollars in thousands

   
Share capital and premium
    
Capital reserve from share-based payment transactions
    
Amount received on account of financial instruments and other
    
Capital reserve from translation difference of foreign operations
    
Capital reserve from transaction with non-controlling interests
    
Capital reserve from transaction with controlling shareholder
    
Accumulated deficit
    
Total
    
Non-controlling interests
    
Total
equity
  
                                                             
Balance as of January 1, 2025
  
$
265,000
    
$
150
    
$
297
    
$
(1,265
)
  
$
-
    
$
-
    
$
(258,939
)
  
$
5,243
    
$
(2,097
)
  
$
3,146
  
                                                                                 
Net loss
    
-
      
-
      
-
      
-
      
-
      
-
      
(3,685
)
    
(3,685
)
    
(199
)
    
(3,884
)
Total other comprehensive income (loss)
    
-
      
-
      
-
      
(2,518
)
    
-
      
-
      
48
      
(2,470
)
    
78
      
(2,392
)
                                                                                 
Total comprehensive income (loss)
    
-
      
-
      
-
      
(2,518
)
    
-
      
-
      
(3,637
)
    
(6,155
)
    
(121
)
    
(6,276
)
                                                                                 
Recognition of capital contribution from a controlling shareholder (Note 3B6)
    
-
      
-
      
-
      
-
      
-
      
33
      
-
      
33
      
-
      
33
  
Common shares issued upon exercise of pre-funded warrants (Note 3C)
    
372
      
-
      
-
      
-
      
-
      
-
      
-
      
372
      
-
      
372
  
Expiration of conversion feature related to convertible debentures (Note 3D)
    
297
      
-
      
(297
)
    
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Recognition of conversion feature related to convertible debentures (Note 3D)
    
-
      
-
      
364
      
-
      
-
      
-
      
-
      
364
      
-
      
364
  
Common shares issued upon partial conversion of convertible debentures (Note 3D)
    
1,651
      
-
      
(256
)
    
-
      
-
      
-
      
-
      
1,395
      
-
      
1,395
  
Common shares issued as consideration upon acquisition on non-controlling interest (Note 3E)
    
314
      
-
      
-
      
-
      
(2,872
)
    
-
      
-
      
(2,558
)
    
2,558
      
-
  
Common shares issued upon debt settlement (Note 3F)
    
190
      
-
      
-
      
-
      
-
      
-
      
-
      
190
      
-
      
190
  
Net proceeds received upon completion of private placement transaction (Note 3G)
    
1,750
      

311
      
3,004
      
-
      
-
      
-
      
-
      

5,065
      
-
      
5,065
  
Share-based compensation
    
-
      
14
      
-
      
-
      
-
      
-
      
-
      
14
      
-
      
14
  
                                                                                 
Balance as of September 30, 2025
  
$
269,574
    
$
475
    
$
3,112
    
$
(3,783
)
  
$
(2,872
)
  
$
33
    
$
(262,576
)
  
$
3,963
    
$
340
    
$
4,303
  

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

F - 6
IM CANNABIS CORP.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
Canadian Dollars in thousands

   
Share
Capital and premium
    
Capital reserve from share-based payment transactions
    
Amount received on account of financial instruments and other
    
Translation reserve
    
Accumulated deficit
    
Total
    
Non-controlling interests
    
Total
equity
  
                                                 
Balance as of January 1, 2024
  
$
253,882
    
$
9,637
    
$
-
    
$
95
    
$
(249,145
)
  
$
14,469
    
$
(769
)
  
$
13,700
  
                                                                 
Net loss
    
-
      
-
      
-
      
-
      
(9,574
)
    
(9,574
)
    
(984
)
    
(10,558
)
Total other comprehensive income
    
-
      
-
      
-
      
1,049
      
67
      
1,116
      
9
      
1,125
  
                                                                 
Total comprehensive loss
    
-
      
-
      
-
      
1,049
      
(9,507
)
    
(8,458
)
    
(975
)
    
(9,433
)
                                                                 
Other comprehensive loss classification
    
-
      
-
      
-
      
-
      
(748
)
    
(748
)
    
-
      
(748
)
Recognition of conversion feature related to convertible debentures
    
-
      
-
      
327
      
-
      
-
      
327
      
-
      
327
  
Share-based compensation
    
-
      
364
      
-
      
-
      
-
      
364
      
-
      
364
  
Forfeited options
    
2,803
      
(2,803
)
    
-
      
-
      
-
      
-
      
-
      
-
  
                                                                 
Balance as of September 30, 2024
  
$
256,685
    
$
7,198
    
$
327
    
$
1,144
    
$
(259,400
)
  
$
5,954
    
$
(1,744
)
  
$
4,210
  

 The accompanying notes are an integral part of the interim condensed consolidated financial statements.

F - 7
IM CANNABIS CORP.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Canadian Dollars in thousands

   
Nine months ended
September 30,
  
   
2025
    
2024
  
Cash flow from operating activities:
            
             
Net loss
  
$
(3,884
)
  
$
(10,558
)
Adjustments for non-cash items:
                
Revaluation of financial instruments
    
(9
)
    
(24
)
Discount expenses in respect of convertible debentures
    
178
      
197
  
Depreciation of property, plant and equipment
    
212
      
332
  
Amortization of intangible assets
    
991
      
1,036
  
Depreciation of right-of-use assets
    
232
      
274
  
Impairment of intangible assets and goodwill (Note 3I)
    
3,076
      
-
  
Impairment of property, plant and equipment
    
-
      
10
  
Loss from deconsolidation of subsidiary
    
-
      
2,734
  
Recognition of extension fee related to debentures (Note 3D)
    
209
      
-
  
Finance expenses, net
    
(716
)
    
2,268
  
Deferred tax liability, net
    
(111
)
    
(138
)
Share-based payments
    
14
      
364
  
Changes in employe benefit liabilities, net
    
-
      
(71
)
Discount expenses in respect of loans and credit received
    
141
      
-
  
     
4,217
      
6,982
  
                 
Changes in working capital:
                
Decrease (increase) in trade receivables
    
3,306
      
(8,184
)
Increase in other current assets
    
(2,494
)
    
(2,775
)
Decrease (increase) in inventory
    
(6,222
)
    
4,864
  
Increase (decrease) in trade payables
    
(3,896
)
    
10,595
  
Increase in other current liabilities
    
9,442
      
2,420
  
                 
     
136
      
6,920
  
                 
Taxes (paid) received
    
22
      
(222
)
                 
Net cash provided by operating activities
    
491
      
3,122
  
                 
Cash flows from investing activities:
                
                 
Purchase of property, plant and equipment
    
(8
)
    
(126
)
Deconsolidation of subsidiary
    
-
      
(346
)
Change in restricted cash
    
(1,070
)
    
-
  
                 
Net cash used in investing activities
  
$
(1,078
)
  
$
(472
)

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

F - 8
IM CANNABIS CORP.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Canadian Dollars in thousands

   
Nine months ended
September 30,
  
   
2025
    
2024
  
Cash flow from financing activities:
            
             
Net proceeds received upon completion of private placement transaction (Note 3G)
    
5,064
      
-
  
Repayment of lease liabilities
    
(230
)
    
(265
)
Payment of interest on lease liabilities
    
(26
)
    
(44
)
Proceeds from loans and credit received
    
4,634
      
1,803
  
Repayment of loans and credit
    
(2,573
)
    
(4,427
)
Interest paid
    
(1,954
)
    
(1,572
)
Proceeds from (repayment of) discounted checks
    
(1,647
)
    
4,483
  
                 
Net cash provided by (used in) financing activities
    
3,268
      
(22
)
                 
Effect of foreign exchange on cash
    
(2,362
)
    
(2,483
)
                 
Change in cash
    
319
      
145
  
Cash at the beginning of the period
    
863
      
1,813
  
                 
Cash at end of the period
  
$
1,182
    
$
1,958
  
                 
Supplemental disclosure of non-cash activities:
                
                 
Right-of-use assets recognized with corresponding lease liabilities
  
$
272
    
$
40
  
                 
Issuance of convertible debentures in exchange for loans (principal and interest) received (Note 3C)
  
$
-
    
$
2,092
  
                 
Common shares issued upon exercise of pre-funded warrant (Note 3C)
  
$
372
    
$
-
  
                 
Common shares issued upon partial conversion of convertible debentures (Note 3D)
  
$
1,395
    
$
-
  
                 
Common shares issued as debt settlement (Note 3F)
  
$
190
    
$
-
  

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

F - 9
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data

NOTE 1 -
GENERAL
 
  A.
Corporate information

IM Cannabis Corp. (the “Company” or “IMCC”) is listed for trading on the NASDAQ, commencing from March 1, 2021, under the ticker symbol “IMCC”. IMCC’s main office is in Kibbutz Glil-Yam, Israel. On June 2, 2025, the common shares of the Company were voluntary delisted from trading on the Canadian Securities Exchange (the “CSE”).
 
The Company and its subsidiaries (collectively, the “Group”) operate as one reporting unit in geographical reporting segments (see also Note 7 below). Most of the Group’s revenue is generated from sales of medical cannabis products to customers in Israel and Germany. The remaining revenue is generated from sales of other products to customers in Israel and Germany.
 
In Israel, IMCC operates in the field of medical cannabis through its subsidiary, Focus Medical Herbs Ltd. (“Focus”), which held a cultivation license to breed, grow and supply medical cannabis products in Israel under the regulations of medical cannabis by the Israeli Ministry of Health through its Israel Medical Cannabis Agency (“IMCA”) until July 2022. In July 2022, Focus closed its cultivation facility and received an IMCA license, which allows it to import cannabis products and proceed with its supply activity. All its operations are performed pursuant to the Israeli Dangerous Drugs Ordinance (New Version), 1973 (the “Dangerous Drugs Ordinance”) and the related regulations issued by IMCA.
 
In 2021, IMCC also entered the field of retail medical cannabis and other pharmaceutical products in Israel through the acquisition of several pharmacies and trade houses specializing in medical cannabis, including the pharmacies of Rivoly Trading and Marketing Ltd. (“Vironna”), R.A. Yarok Pharm Ltd. (“Yarok Pharm”) and the trade houses of Panaxia and Rosen High Way Ltd. (“Rosen”).
 
In Europe, IMCC operates through Adjupharm GmbH (“Adjupharm”), a German-based subsidiary acquired by IMC Holdings Ltd. (“IMC Holdings”) on March 15, 2019. Adjupharm is an EU-GMP-certified medical cannabis producer and distributor with wholesale, narcotics handling, manufacturing, procurement, storage and distribution licenses granted by German regulatory authorities that allow for import or export capability with requisite permits.
 
The Company and its subsidiaries do not engage in any U.S. cannabis-related activities as defined in Canadian Securities Administrators Staff Notice 51-352.
 
  B.
Definitions

In these financial statements:
 
The Company, or IMCC
-
IM Cannabis Corp.
     
The Group
-
IM Cannabis Corp., its Subsidiaries
     
Subsidiaries
-
Companies that are controlled by the Company (as defined in IFRS 10) and whose accounts are consolidated with those of the Company
     
CAD or $
-
Canadian Dollar
     
US$
-
United States dollar
     
NIS
-
New Israeli Shekel

F - 10
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 1 -
GENERAL (Cont.)

  C.
Liquidity and capital resources and going concern

The Company devotes substantially all its efforts to commercializing its medical cannabis products, which are expected to require substantial further expenditures. Thus, from time to time the Company is raising capital for such purposes. As of September 30, 2025, the Group has cash and restrict cash on hand, negative working capital and an accumulated deficit of $2,316, $6,792 and $262,576, respectively.
 
During the reported periods, the Group’s operating expenses included various assumptions concerning the level and timing of cash receipts from sales and cash outlays for operating expenses and capital expenditure, of which the Company executed a cost-saving plan, to allow the continuing of its operations and meet its cash obligations. The cost saving plan consisted of cost reduction due to efficiencies and synergies, which include mainly (i) discontinued operations of loss-making activities, (ii) reduction in payroll and headcount, (iii) reduction in compensation paid to key management personnel (including layoffs of key executives), (iv) operational efficiencies and reduced capital expenditures and (v) establishing new and efficient supply chains to support its activities in the German region. In the reporting period, the Company continued to closely monitor its expenses.
 
Management plans to finance its operations through (i) sales of its medical cannabis products in Israel and on a larger scale in the German territory, resulting from Germany's legalization of cannabis on April 1, 2024, which facilitates the access to medical cannabis prescriptions for patients and legalizes non-profit social clubs starting July 1, 2024 (for more information regarding the potential change of Germany's legalization of cannabis, see Note 1E below), (ii) sales of equity and/or raising debts (including shelf registration statement on Form F-3 that was declared effective on July 11, 2025 by the U.S. Securities and Exchange Commission (“SEC”) and which allows the Company to register up to US$50,000 thousand (for more information regarding the registration of certain securities issued through private placement offering, see Note 3G below) of certain equity and/or debt securities of the Company through prospectus supplement). However, there is no assurance that additional capital and financing will be available to the Group, and even if available, whether it will be on terms acceptable to the Group or in the required amounts and through (iii) exploring of additional business activities with the goal of enhancing long-term growth opportunities (for more information regarding the execution of non-binding term sheet, see Note 8A below).
 
For more information regarding the funds raising through debts and/or capital transactions, see Note 3B and 3G below, respectively.
 
These conditions raise uncertainties that cast significant doubt as to whether the Company will be able to continue as a going concern. The consolidated financial statements do not include any adjustments relating to recoverability and classification of assets or liabilities that might be necessary should the Company be unable to continue as a going concern.
 
  D.
Impact of continued interest rate on the Group's business activity

Following macroeconomic developments around the world that have taken place in recent years, there has been an increase in inflation rates in Israel and around the world. As part of the steps taken to curb the rise in prices, central banks around the world, including the Bank of Israel, began to raise the interest rate.
 
The increase in the interest rate has a negative impact on the Company due to its liabilities towards bank institution and others that bear an interest rate at a variable rate.
 
F - 11
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 1 -
GENERAL (Cont.)

  E.
Impact of potential Germany's legalization of cannabis
 
In October 2025, the federal cabinet in Germany approved a draft of legislation change, if enacted as proposed, would (i) require in-person physician contact for prescribing cannabis flowers and (ii) prohibit mail-order dispatch of cannabis flowers within Germany, allowing pharmacy courier delivery only. While timing and final content remains uncertain, the Company's management believes that if the change in legislation will be approved it might have significant adverse effect on the Group's business activity (see Note 3I below).
 
  F.
Impact of the security situation on the Group's business activity
 
On October 7, 2023, the State of Israel was attacked by the terrorist organization Hamas, and as a result, the State of Israel declared a state of war and a large-scale mobilization of reserves (the “War”). At the same time, a front of fighting also developed in the northern border against the terrorist organization Hezbollah, which led to extensive evacuation of residents. The War is an exceptional event with security and economic implications whose extent and outcomes are unpredictable. In response to the War, the State of Israel is taking significant steps to ensure the security of its residents, which have a considerable impact on economic and business activities in the country. The events of the War have led to a reduction in business activity in the economy and a significant slowdown in economic activity, affecting the business operations of entities in various circles of influence, among others due to the closure of factories in the south and north of the country, damage to infrastructure, long-term mobilization of reservists, and more. Potential fluctuations in commodity prices, foreign exchange rates, availability of materials, availability of manpower, local services, and difficulties in accessing local resources have affected and are expected to continue to affect entities whose main operations are in Israel. In addition, the state of warfare also affects the activities of entities that rely on foreign workers or on workers recruited for the purposes of the fighting, international trade, foreign companies in Israel, civil aviation, and more. As a result, the War has significant implications for the economy and imposes a considerable burden on the continuation of business activity and the functional and operational continuity of the entities.
 
In November 2024, a ceasefire was reached with the terrorist organization Hezbollah in the north of the country, however, the War continues in other arenas and the rehabilitation process of areas affected by the War has not yet been completed.
 
On June 13, 2025, the State of Israel launched operation “Rising Lion” against military targets in Iran, with a focus on the Iranian nuclear project. As a result, a state of emergency was declared in Israel, causing repercussions and restrictions on the Israeli economy, which included, inter alia, partial or complete closure of businesses, restrictions on gatherings in workplaces and in the education system, as well as a decrease in workforce due to reserve enlistment and a reduction in number of foreign workers. During the operation, a targeted American attack occurred in Iran, after which a ceasefire was achieved on June 24, 2025.
 
The Company's management is continuously monitoring the developments regarding the War and is acting in accordance with the guidelines of the various authorities. The Company suffered a negative impact from the War commencing the last quarter of 2023 but it believes that it will have a potential positive effect in the medium to long term. The Company has experienced damage to its ability to function, affecting various aspects, including employees, supplies, imports, sales, and more.
 
  G.
Approval of consolidated financial statements

These interim condensed consolidated financial statements were authorized for issue by the Company's Board of Directors (“Board”) on November 12, 2025.
 
F - 12
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 2 -
MATERIAL ACCOUNTING POLICIES

  A.
Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements and related notes should be read in conjunction with the Company's annual audited financial statements and related notes (the “Annual Financial Statements”), which have been prepared in accordance with IFRS Accounting Standards (“IFRS Accounting Standards”) as issued by the International Accounting Standards Board (“IASB”) as included in the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2024, which was filed with the SEC on March 31, 2025. The unaudited interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC related to interim financial statements. The interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for the preparation of financial statements for interim periods, as prescribed in IAS 34 “Interim Financial Reporting”. The financial information contained herein is unaudited, however, management believes all adjustments have been made that are considered necessary to present fairly the results of the Company’s financial position and operating results for the interim periods. All such adjustments are of a normal recurring nature.
 
The results for the period of nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any other interim period or for any future period.
 
  B.
Use of estimates in the preparation of financial statements

The preparation of Company's interim condensed consolidated financial statements in conformity with IFRS Accounting Standards requires management to make accounting estimates and assessments that involve use of judgment and that affect the amounts of assets and liabilities presented in the financial statements, the disclosure of contingent assets and liabilities at the dates of the financial statements, the amounts of revenue and expenses during the reporting periods and the accounting policies adopted by the Company. Actual results could differ from those estimates.
 
Estimates and underlying assumptions are reviewed on an ongoing basis for reasonableness and relevancy. Where revisions are required, they are recognized in the period in which the estimate is revised as well as future periods that are affected.

  C.
Disclosure of new standards amendments and interpretations to existing standards that are effective and relevant to the Group's business activity

Amendments to IAS 21, "The Effects of Changes in Foreign Exchange Rates"
 
In August 2023, the IASB issued “Amendments to IAS 21: Lack of Exchangeability (Amendments to IAS 21, “The Effects of Changes in Foreign Exchange Rates”)” to clarify how an entity should assess whether a currency is exchangeable and how it should measure and determine a spot exchange rate when exchangeability is lacking. The Amendments set out the requirements for determining the spot exchange rate when a currency lacks exchangeability. The Amendments require disclosure of information that will enable users of financial statements to understand how a currency not being exchangeable affects or is expected to affect the entity's financial performance, financial position and cash flows.
 
The Amendments apply for annual reporting periods beginning on or after January 1, 2025. Upon applying the Amendments, restatement of comparative information is prohibited.
 
The Company believes that the adoption of the Amendments have no material impact on its consolidated financial statements.
 
F - 13
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 2 -
MATERIAL ACCOUNTING POLICIES (Cont.)

  D.
Disclosure of new standards in the period prior to their adoption

IFRS 18, Presentation and Disclosure in Financial Statements
 
On April 9, 2024, the IASB published IFRS 18, which replaces IAS 1 ‘Presentation of Financial Statements’ with the objective to improve how information is communicated in an entity’s financial statements, particularly in the statement of profit or loss and in its notes to the financial statements.
 
The main changes that will apply to the financial statements with the implementation of IFRS 18, in relation to the presentation and disclosure instructions that apply today include the following:
 
 
■
IFRS 18 changes the structure of the profit or loss report and includes three new defined categories: operating, investment and financing and adds two new interim summaries: operating profit and profit before financing and income taxes.
 
 
■
IFRS 18 includes guidelines for providing disclosure on performance indicators defined by management (Management-defined performance measures).
 
 
■
IFRS 18 provides guidelines regarding the aggregation and disaggregation of the information in the financial statements in relation to the question of whether information should be included in the main reports or in explanations and disclosures regarding items defined as "other".
 
 
■
IFRS 18 includes amendments to other standards, including limited amendments to International Accounting Standard 7, Statement of Cash Flows.
 
IFRS 18 will become effective, in a retrospective manner, for annual reporting periods beginning on or after January 1, 2027. Early application of IFRS 18 is permitted.
 
The Company is examining the possible impact of the new standard on the financial statements, but at this stage it is unable to assess such an impact. The effect of the new standard, however it may be, will only affect matters of presentation and disclosure.
 
F - 14
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 3 -
SIGNIFICANT EVENTS DURING THE REPORTING PERIOD

  A.
Telecana Agreements

On November 29, 2022, IMC Holdings signed on a convertible loan agreement with Telecana Ltd. (“Telecana”), a pharmacy for sell of medical Cannabis under which IMC Holdings granted a loan amounted to NIS 1,545 thousand (approximately $601) which was planned to be converted into 1,040 shares which represented 51% of the total equity of Telecana on a diluted basis, upon the earlier of (i) Telecana will receive the permit for sell of medical Cannabis from the Israeli Ministry of Health, (ii) IMC Holdings' sole decision for conversion. As of December 31, 2023, IMC Holdings didn’t start the regulatory process of receiving the Israeli Ministry of Health approval for the conversion. Consequently, in 2023, IMC Holdings recognized an impairment loss of $601 from loan remeasurement.
 
On March 20, 2023, the Company also granted Telecana a loan of NIS 100,000 (approximately $39) which bears an annual interest of 4%. The loan was required to be paid from the available funds of Telecana subject to written notice given by the Company but not before the maturity of the above convertible loan. Consequently, in 2023, IMC Holdings recognized a revaluation loss of $39 from loan remeasurement.
 
In January 2025, IMC Holdings entered into an agreement with third-party under which its entire rights (51%) in Telecana have been sold for total consideration of NIS 350 thousand (approximately $138). In February 2025, Telecana also repaid a principal loan granted in previous year to IMC Holdings in total amount of NIS 100 thousand (approximately $39).
 
Since the loans were accounted for as financial instruments measured at fair value through profit or loss at the initial date and subsequently, during the year ended December 31, 2024, IMC Holdings recognized a revaluation income of $177 from remeasurement of such loans.
 
  B.
Credit facilities


1.
On January 16, 2025, IMC Holdings entered into a second amendment to an agreement with a non-financial institution for the extension of maturity date of a loan principal amounted NIS 1,800 thousand (approximately $729) until May 16, 2025. In addition, IMC Holdings paid an additional fee of NIS 150 thousand (approximately $61).
 
Through the approval date of these financial statements, the principal amount and the accrued interest were fully paid.
 

 2.
On January 30, 2025, Yarok Pharm entered into an amendments to an agreement with a non-financial institution under which loan principal of NIS 1,000 thousand (approximately $393) was paid and the maturity date of the remaining loan principal of NIS 2,000 thousand (approximately $844) was extended until June 30, 2026.
 

 3.
On June 12, 2025, IMC Holdings entered into a fifth amendment to an agreement with a non-financial institution for the extension of maturity date of a loan received amounted to NIS 4,500 thousand (approximately $1,822) until September 30, 2025. Currently, the parties are discussing to amend the commercial terms.
 

 4.
On March 20, 2025, the Company and commercial bank signed an agreement under which a short-term loan of NIS 5 million (approximately $1,950) received from the bank was refinanced by the way that (i) an outstanding principal loan of NIS 4 million (approximately $1,619) was extended as a loan with 5-month grace period, after which repayment will be made in 31 monthly installments commencing September 21, 2025. The principal loan will bear an annual interest rate of P+2.9% to be paid monthly commencing April 20, 2025 and (ii) remaining amount of NIS 1 million (approximately $405) was extended as a credit line from March 19, 2025 to March 12, 2026.
 
F - 15
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 3 -
SIGNIFICANT EVENTS DURING THE REPORTING PERIOD (Cont.)
5.
 

 B.
Credit facilities (Cont.)


5.
On April 29, 2025, IMC Holdings entered into a loan agreement with a non-financial institution in the amount of NIS 1,000 thousand (approximately $375) which bears interest at an annual rate of 17% and shall be matured 12 months from the signing date of the loan agreement.
 

 6.
During the period of nine months ended September 30, 2025, IMC Holdings entered in a loan agreement with the Company's then chairman of the Board, Chief Executive Officer and main shareholder (the “Main Shareholder”), in the amount of NIS 1,450 thousand (approximately $612) which bear fixed annual interest at the rate prescribed by the Income Tax Regulations for determining the interest rate under Section 3(i) of the Income Tax Ordinance and shall be repaid up to April 30, 2026.
 
Since the loan received from the Main Shareholder includes an interest which did not represent the applicable rate of risk for the Company, the aforesaid transaction was accounted for as a capital contribution from a controlling shareholder. Thus, the liability towards the Main Shareholder was measured at fair value based on future cash payments discounted using an interest rate of 17% which represented the Company's applicable rate of risk, as determined by management using the assistance of third-party appraiser. As a result, the Company recorded a discount on the balance of liability towards the Main Shareholder in total amount of NIS 85 thousand (approximately $33) against capital reserve from transaction with controlling shareholder. Discount expenses are recorded over the economic life of the loan based on an effective interest rate method.
 
See also Note 8B below regarding an additional loan amounted to NIS 300 thousand (approximately $127) as received from the Main Shareholder.
 

 7.
On May 25, 2025, IMC Holdings entered into a loan agreement with a non-financial institution in the amount of NIS 350 thousand (approximately $131) which bears interest at an annual rate of 17% and shall be matured 12 months from the signing date of the loan agreement.
 

 8.
On July 6, 2025, the Company entered into a loan agreement with a non-financial institution in the amount of US$1,000 thousand (approximately $1,364) which bears interest at an annual rate of 8% and shall be matured by June 30, 2026. In the event of non-repayment by June 30, 2026, a default interest at a rate of 15% per annum on the unpaid balance will apply. The Loan is secured by a pledge over the issued and outstanding shares of IMC Holdings with the pledged shares held directly by the Company. The pledge was registered on July 7, 2025. Pursuant to the Loan Agreement, the Company will not issue new shares or commit to issue new shares, except for under certain circumstances as defined under the loan agreement.
 
The loan agreement also grants the non-financial institution (i) certain acceleration rights of the repayment of the outstanding loan balance, in whole or in part, in the event of specified events, including enforcement proceedings or insolvency-related actions and (ii) the right to recommend a director to be appointed to the Board.
 

 9.
On July 16, 2025, Rosen entered into a loan agreement with a non-financial institution in the amount of NIS 500 thousand (approximately $202) which bears interest at an annual rate of 17% and shall be matured 12 months from the signing date of the loan agreement. Through the approval date of these interim condensed consolidated financial statements, the principal amount and the accrued interest were fully paid.
 
F - 16
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 3 -
SIGNIFICANT EVENTS DURING THE REPORTING PERIOD (Cont.)

  C.
Exercise of Pre-Funded Warrants
 
Effective May 26, 2025, following the shareholders' approval for the Company's then chairman of the Board, Chief Executive Officer to become a control person (as defined under the policies of the CSE), an aggregate 152,701 Pre-Funded Warrants held by the Main Shareholder have been exercised for the same number of ordinary shares at an exercise price of $0.00001 per Pre-Funded Warrant. Consequently, the Pre-Funded Warrants were classified from derivative liability to equity at their fair value as of that date in total amount of $372 based on a deemed price of $2.44 per Common Share, equal to the 10-day volume weighted average price of the common shares on the CSE ending on May 26, 2025.
 
During the period commencing January 1, 2025 through the exercise date, the Company recorded revaluation income of $124 due to a change in the fair value of derivative liability.
 

 D.
Closing of Secured Debenture Offering
 
On May 26, 2024, the Company closed a debt settlement agreement under which an aggregate amount of $1,902 (the “Debt”) to certain creditors (collectively, the “Creditors”) have been settled through the issuance of up to $2,092 of secured convertible debentures (the “Debentures”), including of a 10% extension fee. The Debentures will mature on May 26, 2025, will not incur interest except in the event of default and may be converted into common shares of the Company at a fixed conversion price of $5.1 per common share. The Company was entitled through the term of the Debentures to early repayment of the Debentures for cash amount of $2,092. As the conversion feature expired, the amount of $297 related to such option was classified from conversion feature related to convertible debt to share capital and premium.
 
Effective May 26, 2025, following the shareholders' approval, the Company and the Creditors agreed to extend the term of the Debentures until May 25, 2026, subject to extension fee of additional 10%, such than upon maturity of the Debentures, the principal to be paid will be $2,301. The conversion price was determined as $2.61 per Common Share and the Company is entitled to through the term of the Debentures to early repayment of the Debentures for cash amount of $2,301.
 
Based on the updated terms of the Debentures, including the Company's early repayment option, it was determined that the fair value of the modified financial instrument upon its extension is $2,301. Thus, the Company recorded an immediate financing expense of $209 as an increase to the balance of the Debentures to their modified fair value.
 
As the exercise price of the conversion option is fixed and determined in the functional currency of the Company, it was determined to be eligible for equity classification. Thus, it was determined that the Company has issued a compound instrument that include a financial instrument that is considered as “host” which comprised of Debentures and an embedded conversion feature with an embedded prepayment option which was determined as not closely related to the host. In accordance with IAS 32, the Company applied "split-accounting" as follows: first, the Company measured the fair value of the host (including any embedded non-equity derivative) at fair value of a similar liability that does not have an associated equity conversion feature and the equity conversion component was measured as a residual amount. In subsequent periods, the host liability is accounted for at amortized cost using an effective interest method.
 
F - 17
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 3 -
SIGNIFICANT EVENTS DURING THE REPORTING PERIOD (Cont.)


D.
Closing of Secured Debenture Offering (Cont.)

Pursuant to the above, at May 26, 2025, management by assistance of third-party appraiser allocated the Debentures amount to identified components as follows:
 
   
May 26, 2025
  
       
Debentures (host instrument) (*)
  
$
571
  
Embedded conversion feature
    
107
  
Total fair value of the convertible debentures
  
$
678
  
 

 (*)
At the initial date, the Debentures' fair value was measured by management using the assistance of an external appraiser taking into account a debt discount rate of 18.79%.
 
The following tabular presentation reflects the reconciliation of the carrying amount of Debentures during the period of nine months ended September 30, 2025:
 
   
Debentures
  
       
Balance at January 1, 2025
  
$
1,968
  
Amortization of discount expenses
    
178
  
Recognition of extension fee
    
209
  
Recognition of discount equal to embedded conversion feature
    
(363
)
Partial conversion into common shares (*)
    
(1,395
)
Balance at September 30, 2025
  
$
597
  


(*)
During the period commencing May 26, 2025 through September 30, 2025, total debentures at carrying amount of approximately $1,395 have been converted into 625,461 common shares of the Company.
 

 E.
Closing of Focus Transaction

In February 2024, the Company, through IMC Holdings, acquired 74% interest in Focus. The Company intends to acquire the remaining 26% interest in Focus (the “Focus Transaction”) from Ewave Group Ltd.’s (“Ewave”) which is a privately held entity jointly owned by two main shareholders of the Company.
 
In September 2024, the Board unanimously determined the Focus Transaction to be in the Company's best interests and recommended the approval of the Focus Transaction and Focus Transaction resolution by disinterested shareholders at the meeting.
 
Management estimated by using the assistance of third-party appraiser the fair value of Focus to be approximately NIS 3.1 million based on discounted cash flow approach. Thus, it was determined that 26% interest in Focus is equal to approximately NIS 819 thousand (approximately $314) (the “Focus Purchase Price”). As a result, the Company issued an aggregate of 128,818 common shares at a deemed price of $2.44 per Common Share, equal to the 10-day volume weighted average price of the common shares on the CSE ending on May 26, 2025, the date in which the Company received disinterested shareholders’ approval to complete the Focus Transaction (the “Closing Date”).
 
At the Closing Date, the common shares issued were recorded as part of share capital and premium based on the estimated Focus Purchase Price. The difference between the estimated Focus Purchase Price and the amount of ($2,558) which represents the book value of non-controlling interest allocated to 26% interest in Focus at the Closing Date was recorded as capital reserve related to transaction with non-controlling interest.

F - 18
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 3 -
SIGNIFICANT EVENTS DURING THE REPORTING PERIOD (Cont.)


F.
Debt Settlement

On June 12, 2025, the Board approved the Company to enter into a debt settlement agreement with an unrelated service provider, pursuant to which unpaid fees, charges, and disbursements for legal services rendered to the Company in previous periods in total amount of $190 will be settled to a number of 52,380 common shares at a deemed price per share equal to 10-day volume weighted average price of the shares ending on the date prior to issuance of the common shares. The common shares have been issued on June 18, 2025.
 
The above transaction was accounted for as a settlement of financial liability under which the instruments issued are eligible for equity classification.
 

 G.
Private placement offering

On July 30, 2025 (the “Closing Date”), the Company closed a Private Placement Offering (the “Offering”) through issuance of 2,050,000 units (each a “Unit”) for gross cash proceeds of US$ 4,100 thousand (approximately $5,622). Each Unit was sold at a price of C$2.74 per Unit and consisted of (i) one common share or one common share pre-funded warrant in lieu thereof (the “Pre-Funded Warrants”) and (ii) one common share purchase warrant (the “Warrant Shares”).
 
Each Warrant Share entitles its holder to purchase one common share at an exercise price of $3.43 per Warrant Share over a period of 60 months from its issuance.
 
Each Pre-Funded Warrant entitles its holder to purchase one common share at an exercise price of $0.00001 per Pre-Funded Share at any time until exercised in full.
 
In connection with the Offering, on July 31, 2025, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Pure Equity Ltd. (“Pure Equity”), under which Pure Equity provided the Company with consulting services related to the Offering for total consideration that includes (i) issuance of warrant (the “Finder’s Warrant”) to purchase up to 140,000 common shares of the Company (the “Finder’s Warrant Shares”) at an exercise price of US$2.50 per Finder’s Warrant Share over a period of 60 months following its issuance and (ii) one-time cash payment of US$260 thousand, plus VAT.
 
Upon Closing Date, the management by using the assistance of an external appraiser allocated the gross cash proceeds received based on the relative fair value of the common shares, Pre-Funded Warrants and the Warrant Shares in total amount of $2,070, $1,460 and $2,092, respectively. The fair value of the Warrant Shares was determined by using Black-Scholes pricing model taking into account, inter alia, expected stock price volatility of 66% and risk-free interest rate of 3.15%. The amount allocated to Pre-Funded Warrants and the Warrant Shares was classified as a component of permanent equity as their terms permit the holders to receive a fixed number of shares of common stock upon exercise for a fixed exercise price.
 
Direct and incremental costs incurred related to the Offering amounted to $869 allocated to common shares, Pre-Funded Warrants and Warrant Shares based on the same proportion as the allocation of the gross proceeds.
 
As the Finder’s Warrant was granted to Pure Equity as compensation for its services rendered in respect to the Offering, the Finder’s Warrant was accounted for under IFRS 2 “Share-based Payment” in total amount of $311. These expenses were estimated at fair value by using Black-Scholes pricing model taking into account, inter alia, expected stock price volatility of 66.1% and risk-free interest rate of 3.96%. These expenses were included as part of the incremental and direct issuance costs incurred through the Offering.
 
F - 19
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 3 -
SIGNIFICANT EVENTS DURING THE REPORTING PERIOD (Cont.)


G.
Private placement offering (Cont.)

Pursuant to the subscription agreement, the Company has agreed to file a resale registration statement on Form F-3 (or other available form) (the “Registration Statement”) providing for the resale by the purchasers of the common shares, the Warrant Shares, the Pre-Funded Shares and the Finder’s Warrant Shares within 30 calendar days of the Closing Date. The Company also agreed to use commercially reasonable efforts to cause such Registration Statement to become effective as soon as practicable, but in no event later than the date, which shall be either: (i) in the event that the SEC does not review the Registration Statement, 60 calendar days after the Closing Date, or (ii) in the event that the SEC reviews the Registration Statement, 90 days after the Closing Date. On July 28, 2025, the Registration Statement was declared effective by the SEC.
 
During the period commencing Closing Date through September 30, 2025, none of the Warrant Shares, the Pre-Funded Shares and the Finder’s Warrant Shares have been exercised into common shares.
 
For more information regarding the exercise of Pre-Funded Warrants into common shares of the Company, see Note 8C below.
 

 H.
Amendment to Common Share purchase warrants

On August 13, 2025, the Company entered into agreements with the holders of certain common share purchase warrants (the “Warrants”) originally issued by the Company as part of its private placement offering that closed on November 12, 2024 (the “2024 Private Placement”), pursuant to which the Company reduced the exercise price of each Warrant from C$4.32 per common share to C$3.43 per common share and extended the expiration date of each Warrant from November 12, 2026 to July 31, 2030. Except as set forth above, all other terms of the Warrants remain unchanged and in full force and effect.
 

 I.
Intangible assets and goodwill impairment

As of September 30, 2025, the Company's management has identified the need to perform an intangible assets and goodwill impairment analysis, due to the existence of significant changes in the extent to which, or manner in which, the related cash generating units (CGUs) to which such intangible assets and goodwill relate, is expected to be used, including the potential impact of the legalization of cannabis in Germany on the entire Group, as noted in Note 1E above. Accordingly, the Company’s management, using the assistance of external appraiser, measured the recoverable amounts of the intangible assets and the goodwill derived from the applicable CGUs based on the value in use which was calculated at the expected estimated future cash flows, as determined according to the budget for the next five years, by taking into account a pre-tax discount rate of cash flows for the Israeli CGU and German CGU of 18.64% and 21.86% , respectively. In addition, the projected cash flow for the period exceeding five years was estimated by using a fixed growth rate of 1.5% for both Israeli and German CGUs, representing the long-term average growth rate as expected for such business. Based on the analysis performed, the Company has determined that recoverable amount of the applicable CGUs to which intangible assets and goodwill has been allocated is less than the carrying amount of the applicable CGUs. The impairment analysis resulted a write-off in an amount of $950 and $2,126 of intangible assets and goodwill, respectively. The impairment has been recorded as other expenses in the statements of operations and other comprehensive.
 
F - 20
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 4 -
FINANCIAL INSTRUMENTS
 
Financial instruments are measured either at fair value or at amortized cost. The table below lists the valuation methods used to determine fair value of each financial instrument.

Financial Instruments Measured at Fair Value
Fair Value Method
Liability for warrants and pre-funded warrants (*)
Investment in Xinteza (**)
Black & Scholes model (Level 3 category)
Market comparable (Level 3 category)

Management believes that the carrying amount of cash, trade receivables, other current assets, trade payables, credits from bank institution and others and other current liabilities, approximate their fair value due to the short-term maturity of these instruments.
 

 (*)
Finance income from revaluation of warrants and prefunded warrants measured at fair value for the period of nine months ended September 30, 2025 and 2024, amounted to $9 and $24, respectively.


(**)
No quantitative or qualitative indicators have been identified during the period of nine months ended September 30, 2025, indicating a significant change in fair value of Investment in Xinteza from December 31, 2024.

As of September 30, 2025, the fair value of derivative warrants liability was measured using the assistance of third-party appraiser by using the Black & Scholes model with the following key assumptions:

   
September 30, 2025
  
   
Series 2024
    
Series 2023
    
Series 2021
  
                   
Expected volatility
    
66.19
%
    
59.32
%
    
66.1
%
Share price (Canadian Dollar)
    
2.67
      
2.67
      
2.67
  
Expected life (in years)
    
4.83
      
0.37
      
0.616
  
Risk-free interest rate
    
2.67
%
    
3.98
%
    
3.83
%
Expected dividend yield
    
0
%
    
0
%
    
0
%
                         
Per Warrant (Canadian Dollar)
  
$
1.35
    
$
-
    
$
-
  
Total Warrants (Canadian Dollar in thousands)
  
$
1,002
    
$
-
    
$
-
  

For more information regarding the exercise of pre-funded warrants granted to the Main Shareholder and amendment to Common Share Purchase Warrants issued under 2024 Private Placement, see also Note 3C and Note 3H above, respectively.

F - 21
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
 NOTE 5 -
EQUITY
 

 A.
Composition of share capital:

   
September 30, 2025
    
December 31, 2024
  
   
Authorized
    
Issued and outstanding
    
Authorized
    
Issued and outstanding
  
   
Unaudited
    
Audited
  
     












 
Common shares without par value
  
Unlimited
      
5,246,812
    
Unlimited
      
3,085,452
  
 
Common shares confer upon their holders the right to participate in the general meeting where each Common Share has one voting right in all matters, receive dividends if declared and to participate in the distribution of surplus assets in case of liquidation of the Company.
 
As of July 12, 2024, the Board of the Company has approved a reverse share split of all outstanding common shares of the Company at a ratio of 6:1 so that each six common shares without par value were consolidated into one common share without par value (the “Reverse Share Split”). For accounting purposes, loss per share amounts have been adjusted to give a retroactive effect on the Reverse Share Split for all periods presented in the consolidated financial statements. All fractional common shares equal to or greater than one-half resulting from the Reverse Share Split were rounded to the next whole number, otherwise, the fractional Common Share was cancelled.
 

 B.
Changes in issued and outstanding share capital:

   
Nine months period ended
September 30, 2025
  
   
Unaudited
  
       
Balance as of January 1, 2025
    
3,085,452
  
Common shares issued upon pre-funded warrants exercised (Note 3C)
    
152,701
  
Common shares issued upon debentures converted (Note 3D)
    
625,461
  
Common shares issued as consideration upon acquisition of non-controlling interest (Note 3E)
    
128,818
  
Common shares issued upon debt settlement (Note 3F)
    
52,380
  
Common shares issued through private placement offering (Note 3G)
    
1,202,000
  
         
Balance as of September 30, 2025
    
5,246,812
  

F - 22
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 6 -
NET LOSS PER SHARE

The net loss and the weighted average number of common shares used in computing basic and diluted net loss per share during the reported periods, are as follows:

   
Nine months ended
September 30,
    
Three months ended
September 30,
  
   
2025
      
2024 (
*)
    
2025
      
2024 (
*)
   
(Unaudited)
  
                               
Numerator:
                              
Net basic loss attributable to shareholders of the Company
  
$
(3,685
)
  
$
(9,574
)
  
$
(3,651
)
  
$
(922
)
Change in fair value of derivative pre-funded warrant liability
  
$
(124
)
  
$
-
    
$
-
    
$
-
  
Net diluted loss
  
$
(3,809
)
  
$
(9,574
)
  
$
(3,651
)
  
$
(922
)
                                 
Denominator:
                                
Common shares used in computing basic net loss per share
    
3,742
      
2,232
      
4,864
      
2,232
  
Common shares to be issued upon exercise of derivative pre-funded warrant liability
    
81
      
-
      
-
      
-
  
Common shares used in computing diluted net loss per share
    
3,823
      
2,232
      
4,864
      
2,232
  
                                 
Basic net loss per common share
  
$
(0.98
)
  
$
(4.29
)
  
$
(0.75
)
  
$
(0.41
)
Diluted net loss per common share
  
$
(1.00
)
  
$
(4.29
)
  
$
(0.75
)
  
$
(0.41
)


(*)
Include the effect of Reverse Share Split (see also Note 5A above).

F - 23
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 7 -
OPERATING SEGMENTS

General information:

Since inception date, the operation of the Group has been conducted through one operating segment, (i.e., sales of medical cannabis products and other products) to customers through certain geographical areas (i.e. Israel and Germany).

Nine months ended September 30, 2025

   
Israel
    
Germany
    
Adjustments
    
Total
  
                         
Revenue
  
$
15,772
    
$
23,275
    
$
-
    
$
39,047
  
                                 
Segment loss
  
$
(1,392
)
  
$
(677
)
  
$
-
    
$
(2,069
)
                                 
Unallocated corporate expenses
                  
$
(2,276
)
  
$
(2,276
)
                                 
Total operating loss
                          
$
(4,345
)
                                 
Depreciation and amortization
  
$
1,314
    
$
121
    
$
-
    
$
1,435
  

Nine months ended September 30, 2024:

   
Israel
    
Germany
    
Adjustments
    
Total
  
                         
Revenue
  
$
30,219
    
$
10,477
    
$
-
    
$
40,696
  
                                 
Segment profit (loss)
  
$
(8,261
)
  
$
993
    
$
-
    
$
(7,268
)
                                 
Unallocated corporate expenses
                  
$
(2,184
)
  
$
(2,184
)
                                 
Total operating loss
                          
$
(9,452
)
                                 
Depreciation and amortization
  
$
1,520
    
$
122
    
$
-
    
$
1,642
  

F - 24
IM CANNABIS CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Canadian Dollars in thousands, except share and per share data
NOTE 8 -
SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the financial position date up to the date that the financial statements were issued (November 13, 2025). Based upon this review, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the financial statements, except as disclosed below.


 A.
Execution of non-binding term sheet

On October 23, 2025, the Company signed on a non-binding indicative term sheet for a proposed securities exchange agreement to acquire a 60% equity interest in a pioneering quantum computing bio data company (the “Target Company”) for aggregate consideration of up to US$54 million.
 
The Target Company specializes in utilizing quantum computing principles to store, manipulate, and analyze BIO data more efficiently than current technologies, offering groundbreaking advancements in biological data processing and analytics.
 
Under the terms of the term sheet, aggregate consideration of up to $54 million would be payable in a combination of cash, Common Shares of the Company and potential earn-out payments tied to agreed performance milestones.
 
The proposed transaction remains subject to the completion of due diligence, negotiation and execution of definitive agreements, receipt of all required corporate and regulatory approvals, and other customary closing conditions. There can be no assurance that any definitive agreement will be entered into or that the transaction will be completed on the terms described, or at all.
 
This term sheet follows the Company’s decision to explore the introduction of additional business activities, with the goal of enhancing long-term growth opportunities and creating further shareholder value.
 

 B.
Credit facilities


1.
On October 5, 2025, IMC Holdings entered into a loan agreement with the Company's then chairman of the Board, Chief Executive Officer and main shareholder, in the amount of NIS 300 thousand (approximately $127) which bears fixed annual interest at the rate prescribed by the Income Tax Regulations for determining the interest rate under Section 3(i) of the Income Tax Ordinance and shall be repaid by January 5, 2026.
 

 2.
On October 5, 2025, IMC Holdings entered into a loan agreement with a non-financial institution in the amount of NIS 500 thousand (approximately $211) which bears an interest at an annual rate of 17% and shall be matured on November 13, 2025.
 

 C.
Exercise of Pre-Funded Warrants

During the period commencing October 1, 2025 through the filing of these financial statements, an aggregate 648,000 Pre-Funded Warrants have been exercised into the same number of common shares of the Company at an exercise price of $0.00001 per Pre-Funded Warrant.
 
F - 25