☐ |
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023 |
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________ |
☐ |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
||
Common Shares, no par value
|
IMCC
|
Nasdaq Capital Market
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|
Non-accelerated filer ☒
|
Emerging growth company ☒
|
U.S. GAAP ☐
|
International Financial Reporting Standards as issued By the International Accounting Standards Board ☒
|
Other ☐
|
5 | ||
6 | ||
11 | ||
11 | ||
11 | ||
A. |
Reserved. |
11 |
B. |
Capitalization and Indebtedness |
11 |
C. |
Reasons for the Offer and Use of Proceeds
|
11 |
D. |
Risk Factors |
11 |
39 | ||
A. |
History and Development of the Company
|
39 |
B. |
Business Overview |
49 |
C. |
Organizational Structure |
63 |
D. |
Property, Plants and Equipment |
63 |
64 | ||
77 | ||
A. |
Directors and Senior Management |
77 |
B. |
Compensation |
79 |
C. |
Board Practices |
89 |
D. |
Employees |
95 |
E. |
Share Ownership |
96 |
F. |
Disclosure of a registrant’s action
to recover erroneously awarded compensation |
96 |
96 | ||
A. |
Major Shareholders |
96 |
B. |
Related Party Transactions |
98 |
C. |
Interests of Experts and Counsel
|
99 |
100 | ||
A. |
Consolidated Statements and Other Financial
Information |
100 |
B. |
Significant Changes |
105 |
105 | ||
A. |
Offer and Listing Details |
105 |
B. |
Plan of Distribution |
105 |
C. |
Markets |
105 |
D. |
Selling Shareholders |
105 |
E. |
Dilution |
105 |
F. |
Expenses of the Issue |
105 |
105 | ||
A. |
Share Capital |
105 |
B. |
Memorandum and Articles of Association
|
105 |
C. |
Material Contracts |
109 |
D. |
Exchange Controls |
109 |
E. |
Taxation |
|
F. |
Dividends and Paying Agents |
116 |
G. |
Statement by Experts |
116 |
H. |
Documents on Display |
116 |
I. |
Subsidiary Information |
117 |
J. |
Annual Report to Security Holders
|
117 |
117 | ||
117 | ||
117 | ||
117 | ||
117 | ||
A. |
Disclosure Controls and Procedures
|
117 |
B. |
Management’s Annual Report on Internal
Control Over Financial Reporting |
118 |
C. |
Attestation Report of Registered Public
Accounting Firm |
118 |
D. |
Changes in Internal Controls Over Financial
Reporting |
118 |
118 | ||
119 | ||
119 | ||
119 | ||
119 | ||
119 | ||
119 | ||
120 | ||
120 | ||
120 | ||
120 | ||
122 | ||
122 | ||
123 |
Legal
Entity |
Jurisdiction |
Relationship
with the Company |
I.M.C.
Holdings Ltd. (“IMC Holdings”) |
Israel
|
Wholly-owned
subsidiary |
I.M.C.
Pharma Ltd. (“IMC Pharma”) |
Israel
|
Wholly-owned
subsidiary of IMC Holdings |
I.M.C
Farms Israel Ltd. (“IMC Farms”) |
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 |
Revoly
Trading and Marketing Ltd. dba Vironna Pharm (“Vironna”) |
Israel
|
Subsidiary
of IMC Holdings |
Oranim
Plus Pharm Ltd.** (“Oranim
Plus” and together with IMC Pharma, IMC Farms, Pharm Yarok, Rosen High Way, Vironna and Oranim Plus, the “Israeli
Subsidiaries“) |
Israel
|
Subsidiary
of IMC Holdings |
Adjupharm GmbH (“Adjupharm”)
|
Germany |
Subsidiary of IMC
Holdings |
Trichome Financial
Corp.** |
Canada |
Wholly-owned subsidiary
|
|
• |
the Company’s business objectives and milestones and the anticipated timing of execution; |
|
• |
the performance of the Company’s business, strategies and operations; |
|
• |
the Company’s intentions to expand the business, operations and potential activities of the Company; |
|
• |
the Company’s plans to expand its sales channels, distribution, delivery and storage capacity, and reach to medical cannabis
patients; |
|
• |
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 competitive conditions of the industry, including the Company’s ability to maintain or grow its market share and maintain
its competitive advantages; |
|
• |
statements relating to the Company’s commitment to responsible growth and compliance with the strictest regulatory environments;
|
|
• |
the Company’s focus on providing premium cannabis products to medical patients in the jurisdictions in which the Company conducts
business and any other jurisdiction in which the Company may conduct business in the future; |
|
• |
the Company’s plans to amplify its commercial and brand power to become a global high-quality cannabis player; |
|
• |
the Company’s primary goal of sustainably increasing revenue in its core markets; |
|
• |
the demand and momentum in the Company’s Israeli and Germany operations; |
|
• |
how the Company intends to position its brands; |
|
• |
the efficiencies and synergies of the Company as a global organization with domestic expertise in Israel and Germany; |
|
• |
expectations that providing high-quality, reliable supply to the Company’s customers and patients will lead to recurring sales;
|
|
• |
expectations related to the Company’s introduction of new Stock Keeping Units (“SKUs”);
|
|
• |
anticipated cost savings from the reorganization of the Company and the completion thereof upon the timelines disclosed herein;
|
|
• |
geographic diversification and brand recognition and the growth of the Company’s brands in the jurisdictions that the Company
operates in or may expand to; |
|
• |
expectations related to the Company’s ability to address the ongoing needs and preferences of medical cannabis patients;
|
|
• |
the Company’s retail presence, distribution capabilities and data-driven insights; |
|
• |
the future impact of the Regulations Amendment (as defined herein) regarding the transition reform from licenses to prescriptions
for medical treatment of cannabis; |
|
• |
the Company’s continued partnerships with third party suppliers and partners and the benefits thereof; |
|
• |
the Company’s ability to achieve profitability in 2024; |
|
• |
the number of patients in Israel licensed by the Israeli Ministry of Health (“MOH”)
to consume medical cannabis; |
|
• |
expectations relating to the number of patients paying out-of-pocket for medical cannabis products in Germany; |
|
• |
the anticipated decriminalization or legalization of adult-use recreational cannabis in Israel and Germany; |
|
• |
expectations related to the demand and the ability of the Company to source premium and ultra-premium cannabis products exclusively
and competition in this product segment; |
|
• |
the anticipated impact of inflation and liquidity on the Company’s performance; |
|
• |
expectations with respect to the Company’s operating budget and the assumptions related thereto; |
|
• |
expectations relating to the Company as a going concern and its ability to conduct business under the ordinary course of operations;
|
|
• |
expectations related to the collection the payment awarded in the Judgment and the chances of the claim advancing or the potential
outcome of the Test Kits Appeal (as defined herein); |
|
• |
the continued listing of the common shares in the capital of the Company (“Common Shares”)
on the Nasdaq Stock Market (“Nasdaq”) and Canadian Securities Exchange (“CSE”);
|
|
• |
cannabis licensing in the jurisdictions in which the Company operates; |
|
• |
the renewal and/or extension of the Company’s licenses; |
|
• |
the Company’s anticipated operating cash requirements and future financing needs; |
|
• |
the Company’s expectations regarding its revenue, expenses, profit margins and operations; |
|
• |
the expected increase in revenue and margins in its Israeli medical cannabis market activities arising from its acquisitions;
|
|
• |
future opportunities for the Company in Israel, particularly in the retail and distribution segments of the cannabis market;
|
|
• |
future expansion and growth opportunities for the Company in Germany and Europe and the timing of such; |
|
• |
contractual obligations and commitments.; and |
|
• |
the Company completing the Potential Transaction with Kadimastem (each as defined herein). |
|
• |
the Company has the ability to achieve its business objectives and milestones under the stated timelines; |
|
• |
the Company will succeed in carrying out its business, strategies and operations; |
|
• |
the Company will realize upon its intentions to expand the business, operations and potential activities of the Company; |
|
• |
the Company will expand its sales channels, distribution, delivery and storage capacity, and reach to medical cannabis patients;
|
|
• |
the competitive conditions of the cannabis industry and the growth of medical or adult-use recreational cannabis in the jurisdictions
in which the Company operates; |
|
• |
the competitive conditions of the industry will be favorable to the Company, and the Company has the ability to maintain or grow
its market share and maintain its competitive advantages; |
|
• |
the Company will commit to responsible growth and compliance with the strictest regulatory environments; |
|
• |
the Company will remain focused on providing premium cannabis products to medical patients in the jurisdictions in which the Company
conducts business and any other jurisdiction in which the Company may conduct business in the future; |
|
• |
the Company has the ability to amplify its commercial and brand power to become a global high-quality cannabis player; |
|
• |
the Company will maintain its primary goal of sustainably increasing revenue in its core markets; |
|
• |
the demand and momentum in the Company’s Israeli and Germany operations will be favorable to the Company; |
|
• |
the Company will carry out its plans to position its brands as stated; |
|
• |
the Company’s Company has the ability to realize upon the stated efficiencies and synergies the Company as a global organization
with domestic expertise in Israel and Germany; |
|
• |
providing a high-quality, reliable supply to the Company’s customers and patients will lead to recurring sales; |
|
• |
the Company will introduce of new SKUs; |
|
• |
the Company will realize the anticipated cost savings from the reorganization; |
|
• |
the Company has the ability to achieve geographic diversification and brand recognition and the growth of the Company’s brands
in the jurisdictions that the Company operates in or may expand to; |
|
• |
the Company’s has the ability to address the ongoing needs and preferences of medical cannabis patients; |
|
• |
the Company has the ability to realize upon its retail presence, distribution capabilities and data-driven insights; |
|
• |
the future impact of the Regulations Amendment will be favorable to the Company; |
|
• |
the Company will maintain its partnerships with third parties, suppliers and partners; |
|
• |
the Company has the ability to achieve profitability in 2024; |
|
• |
the accuracy of number of patients in Israel licensed by the MOH to consume medical cannabis; |
|
• |
the accuracy of the number of patients paying out-of-pocket medical cannabis products in Germany; |
|
• |
the anticipated decriminalization or legalization of adult-use recreational cannabis in Israel and Germany will occur; |
|
• |
the Company has the ability to source premium and ultra-premium cannabis products exclusively and competition in this product segment;
|
|
• |
the anticipated impact of inflation and liquidity on the Company’s performance will be as forecasted; |
|
• |
the accuracy with respect to the Company’s operating budget and the assumptions related thereto; |
|
• |
the Company will remain as going concern; |
|
• |
a favorable outcome with respect to the collection the payment awarded in the Judgment and the chances of the claim advancing or
the potential outcome of the Test Kits Appeal; |
|
• |
the Company’s Common Shares will remain listed on the Nasdaq and CSE; |
|
• |
the Company’s ability to maintain cannabis licensing in the jurisdictions in which the Company operates; |
|
• |
the Company has the ability to obtain the renewal and/or extension of the Company’s licenses; |
|
• |
the Company has the ability to meet operating cash requirements and future financing needs; |
|
• |
the Company will meet or surpass its expectations regarding its revenue, expenses, profit margins and operations; |
|
• |
the Company will increase its revenue and margins in its Israeli medical cannabis market activities arising from its acquisitions;
|
|
• |
the Company has the ability to capitalize on future opportunities for the Company in Israel, particularly in the retail and distribution
segments of the cannabis market; |
|
• |
the Company will carry out its future expansion and growth opportunities for the Company in Germany and Europe and the timing of
such; |
|
• |
the Company will fulfill its contractual obligations and commitments; and |
|
• |
the Company will complete the Proposed Transaction with Kadimastem. |
|
• |
the Company’s inability to achieve its business objectives and milestones under the stated timelines; |
|
• |
the Company inability to carry out its business, strategies and operations; |
|
• |
the Company’s inability to realize upon its intentions to expand the business, operations and potential activities of the Company;
|
|
• |
the Company will not expand its sales channels, distribution, delivery and storage capacity, and reach to medical cannabis patients;
|
|
• |
the competitive conditions of the cannabis industry and the growth of medical or adult-use recreational cannabis markets will be
unfavorable to the Company in the jurisdictions in which the Company operates; |
|
• |
the competitive conditions of the industry will be unfavorable to the Company, and the Company’s inability to maintain or grow
its market share and maintain its competitive advantages; |
|
• |
the Company will not commit to responsible growth and compliance with the strictest regulatory environments; |
|
• |
the Company’s inability to remain focused on providing premium cannabis products to medical patients in the jurisdictions in
which the Company conducts business and any other jurisdiction in which the Company may conduct business in the future; |
|
• |
the Company inability to amplify its commercial and brand power to become a global high-quality cannabis player; |
|
• |
the Company will not maintain its primary goal of sustainably increasing revenue in its core markets; |
|
• |
the demand and momentum in the Company’s Israeli and Germany operations will be unfavorable to the Company; |
|
• |
the Company will not carry out its plans to position its brands as stated; |
|
• |
the Company’s inability to realize upon the stated efficiencies and synergies of the Company as a global organization with
domestic expertise in Israel and Germany; |
|
• |
providing a high-quality, reliable supply to the Company’s customers and patients will not lead to recurring sales; |
|
• |
the Company will not introduce of new SKUs; |
|
• |
the Company’s inability to realize upon the anticipated cost savings from the reorganization; |
|
• |
the Company’s inability to achieve geographic diversification and brand recognition and the growth of the Company’s brands
in the jurisdictions that the Company operates in or may expand to; |
|
• |
the Company’s inability to address the ongoing needs and preferences of medical cannabis patients; |
|
• |
the Company’s inability to realize upon its retail presence, distribution capabilities and data-driven insights; |
|
• |
the future impact of the Regulations Amendment will be unfavorable to the Company; |
|
• |
the Company will not maintain its partnerships with third party suppliers and partners; |
|
• |
the Company’s inability to achieve profitability in 2024; |
|
• |
the inaccuracy of number of patients in Israel licensed by the MOH to consume medical cannabis; |
|
• |
the inaccuracy of the number of patients paying out-of-pocket for medical cannabis products in Germany; |
|
• |
the anticipated decriminalization or legalization of adult-use recreational cannabis in Israel and Germany will not occur;
|
|
• |
the Company’s ability to source premium and ultra-premium cannabis products exclusively and competition in this product segment;
|
|
• |
the anticipated impact of inflation and liquidity on the Company’s performance will not be as forecasted; |
|
• |
the inaccuracy with respect to the Company’s operating budget and the assumptions related thereto; |
|
• |
the Company will not remain as going concern; |
|
• |
an unfavorable outcome of the negotiations or the Construction Proceedings; |
|
• |
an unfavorable outcome with respect to the collection the payment awarded in the Judgment and the chances of the claim advancing
or the potential outcome of the Test Kits Appeal; |
|
• |
the Company’s Common Shares will not remain listed on the Nasdaq and CSE; |
|
• |
the Company’s inability to maintain cannabis licensing in the jurisdictions in which the Company operates; |
|
• |
the Company’s inability to obtain the renewal and/or extension of the Company’s licenses; |
|
• |
the Company’s inability to meet operating cash requirements and future financing needs; |
|
• |
the Company will not meet or surpass its expectations regarding its revenue, expenses, profit margins and operations; |
|
• |
the Company will not increase its revenue and margins in its Israeli medical cannabis market activities arising from its acquisitions;
|
|
• |
the Company’s ability to capitalize on future opportunities for the Company in Israel, particularly in the retail and distribution
segments of the cannabis market; |
|
• |
the Company will not carry out its future expansion and growth opportunities for the Company in Germany and Europe and the timing
of such; |
|
• |
the Company will not fulfill its contractual obligations and commitments; and |
|
• |
the Company will not complete the Proposed Transaction with Kadimastem. |
1) |
the Company receiving economic benefits from Focus (and the terms of the Commercial Agreements (as defined herein) cannot be changed
without the approval of the Company); |
2) |
the Company having the option to purchase the divested 74% interest in Focus held by Oren Shuster, the Chief Executive Officer, director
and a promoter of the Company, and Rafael Gabay, a former consultant director, a former consultant and a promoter of the Company;
|
3) |
Messrs. Shuster and Gabay each being a director of Focus (while Mr. Shuster concurrently being a director, officer and substantial
shareholder of the Company and Mr. Gabay concurrently being a substantial shareholder of the Company); and |
4) |
the Company providing management and support activities to Focus through the Services Agreement (as defined herein). |
|
● |
diversion of management time and focus from operating our business to addressing acquisition integration challenges; |
|
● |
coordination of research and development and sales and marketing functions; |
|
● |
retention of employees from the acquired company; |
|
● |
cultural challenges associated with integrating employees from the acquired company into our organization; |
|
● |
integration of the acquired company's accounting, management information, human resources, and other administrative systems;
|
|
● |
the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked effective
controls, procedures, and policies; |
|
● |
potential write-offs of intangible assets or other assets acquired in transactions that may have an adverse effect on our operating
results in a given period; |
|
● |
liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations
of laws, commercial disputes, tax liabilities, and other known and unknown liabilities; and |
|
● |
litigation or other claims in connection with the acquired company, including claims from terminated employees, consumers, former
stockholders, or other third parties. |
|
• |
Shai Shemesh, resigned as Chief Financial Officer of the Company and Itay Vago, was appointed as Chief Financial Officer of the Company
to fill the vacancy created by Shai Shemesh’s resignation. |
|
• |
Rinat Efrima, resigned as Chief Executive Officer of IMC Holdings and Eyal Fisher was appointed as the General Manager of IMC Holdings
to fill the vacancy created by Ms. Efrima’s resignation. Mr. Fisher previously held the position of Sales Director of IMC Holdings
prior to his appointment as General Manager. |
|
• |
Yael Harrosh resigned as Chief Legal and Operations Officer of the Company and Michal Lebovitz was appointed as General Counsel of
the Company to fill the vacancy created by Mr. Harrosh’s resignation. |
|
• |
approve the Proposed Transaction; |
|
• |
approve the Spin-Out; |
|
• |
a change of name of the Company as directed by Kadimastem and acceptable to the applicable regulatory authorities effective upon
Closing; and |
|
• |
reconstitution of the Board. |
|
• |
the execution of a definitive agreement; |
|
• |
completion of mutually satisfactory due diligence; |
|
• |
completion of the share consolidation; and |
|
• |
receipt of all required regulatory, corporate and third party approvals, including approvals by governing regulatory bodies, the
shareholders of IMC and Kadimastem, applicable Israeli governmental authorities, and the fulfilment of all applicable regulatory requirements
and conditions necessary to complete the Proposed Transaction. |
The Top-Shelf
Collection – IMC’s premium product line, which offers indoor-grown, high-THC cannabis flowers with strains such as
Lemon Rocket, Diesel Drift, Tropicana Gold, Lucy Dreamz, Santa Cruz, Or’enoz, and Banjo. Inspired by the 1970’s cannabis culture
in America, the Top-Shelf Collection targets the growing segment of medical patients who are cannabis culture enthusiasts. |
|
BLKMKT™, the Company’s
second Canadian brand, super premium product line with indoor grown, hand-dried and hand-trimmed high-THC cannabis flowers. The BLKMKT™
includes JEALOUSY, BACIO GLTO, PNPL P, PARK FIRE OG, UPSIDE DOWN C. In Q4 2023, the Company relaunched JEALOUSY and BACIO GLTO.
|
|
Revenues
from Continuing operations - By Product Type | ||||
Financial Year |
Medical Cannabis Products |
Adult-Use Recreational Cannabis Products |
Other Products |
Total |
2023 |
$44,246 |
-
|
$4,559 |
$48,804 |
2022 |
$48,384 |
-
|
$5,951 |
$54,335 |
2021 |
$26,449 |
-
|
$7,604 |
$34,053 |
|
• |
The intellectual property agreement dated April 2, 2019 and as amended on January 1, 2021, between IMC Holdings and Focus (the “IP
Agreement”) and the Services Agreement dated April 2, 2019 and as amended on January 1, 2021, between IMC Holdings and Focus
(the “Services Agreement” and together with the IP Agreement, the “Commercial
Agreements”), whereby IMC Holdings derives economic benefit from Focus and whereby Focus (i) uses the IMC brand on an exclusive
basis for the sale of cannabis products; and (ii) engages IMC Holdings to provide certain management and consulting services. As a result
of the Company’s commercial relationship with Focus, it is dependent on Focus maintaining its licenses, as well as any ancillary
licenses required to carry on its operations in the Israeli medical cannabis industry. |
|
• |
Supply agreements with third party cannabis cultivators and suppliers to meet the Israeli market’s demand for the Company’s
products. |
|
• |
Purchase orders received from time to time for the sale of the Company’s products to pharmacies or distributors, either in
association with Focus or through the Company’s direct trading house operations. |
|
• |
Ongoing retail purchases of the Company’s products sold at the Israeli Pharmacies by Israeli medical cannabis patients.
|
Israel |
Germany |
Adjustments |
Total |
|||||||||||||||||||||||||||||
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
|||||||||||||||||||||||||
Revenues |
$ |
43,316 |
$ |
50,500 |
$ |
5,488 |
$ |
3,835 |
$ |
- |
$ |
- |
$ |
48,804 |
$ |
54,335 |
||||||||||||||||
Segment income (loss) |
$ |
(6,627 |
) |
$ |
(23,606 |
) |
$ |
(1,615 |
) |
$ |
(3,225 |
) |
$ |
- |
$ |
- |
$ |
(8,242 |
) |
$ |
(26,831 |
) | ||||||||||
Unallocated corporate expenses |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
(4,550 |
) |
$ |
(3,960 |
) |
$ |
(4,550 |
) |
$ |
(3,960 |
) | ||||||||||||
Total operating (loss) income |
$ |
(6,627 |
) |
$ |
(23,606 |
) |
$ |
(1,615 |
) |
$ |
(3,225 |
) |
$ |
(4,550 |
) |
$ |
(3,960 |
) |
$ |
(12,792 |
) |
$ |
(30,791 |
) | ||||||||
Depreciation, amortization & impairment
|
$ |
2,823 |
$ |
6,747 |
$ |
173 |
$ |
200 |
$ |
- |
$ |
- |
$ |
2,996 |
$ |
6,947 |
Israel |
Germany |
Adjustments |
Total |
|||||||||||||||||||||||||||||
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
|||||||||||||||||||||||||
Revenues |
$ |
9,375 |
$ |
13,136 |
$ |
1,323 |
$ |
1,325 |
$ |
- |
$ |
- |
$ |
10,698 |
$ |
14,461 |
||||||||||||||||
Segment income (loss) |
$ |
(3,653 |
) |
$ |
(10,280 |
) |
$ |
(580 |
) |
$ |
(517 |
) |
$ |
- |
$ |
- |
$ |
(4,233 |
) |
$ |
(10,797 |
) | ||||||||||
Unallocated corporate income (expenses)
|
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
(932 |
) |
$ |
90 |
$ |
(932 |
) |
$ |
90 |
||||||||||||||
Total operating (loss) income |
$ |
(3,653 |
) |
$ |
(10,280 |
) |
$ |
(580 |
) |
$ |
(517 |
) |
$ |
(932 |
) |
$ |
90 |
$ |
(5,165 |
) |
$ |
(10,707 |
) | |||||||||
Depreciation, amortization & impairment
|
$ |
684 |
$ |
4,957 |
$ |
47 |
$ |
48 |
$ |
- |
$ |
- |
$ |
731 |
$ |
5,005 |
|
● |
Revenues from continuing operations for the year ended December 31, 2023 and 2022 were $48,804 and $54,335, respectively, representing
a decrease of $5,531 or 10%. Revenues for the three months ended December 31, 2023, and 2022 were $10,698 and $14,461, respectively,
representing a decrease of $3,763 or 26%. The decrease in revenues is primarily attributed to the effects of the Israel – Hamas
war and the different challenges it caused from a business perspective effecting the Company sells and also its operation activities such
as longer importing cycles (transportation of goods, approvals from relevant authorities etc.) |
|
● |
Revenues from the Israeli operation were attributed to the sale of medical cannabis through the Company’s agreement with Focus
Medical and the revenues from the Israeli Pharmacies the Company owns, mostly from cannabis products. |
|
● |
In Germany, Company revenues were attributed to the sale of medical cannabis through Adjupharm. |
|
● |
Total dried flower sold for the year ended December 31, 2023, was 8,609 kg at an average selling price of $5.14 per gram compared
to 6,794kg for the same period in 2022 at an average selling price of $7.12 per gram, mainly attributed to the inventory life cycle, discounts
given and increased competition in the segment. Total dried flower sold for the three months ended December 31, 2023, was 2,082kg at an
average selling price of $4.52 per gram compared to 2,334kg for the three months ended December 31, 2022, at an average selling price
of $5.19 per gram. The decreased is mainly attributed to the Israel – Hamas war effect. |
Less than one year |
1 to 5 years |
6 to 10 years |
> 10 years |
|||||||||||||
Contractual Obligations |
$ |
12,618 |
$ |
1,293 |
- |
- |
Payments Due by Period |
||||||||||||||||||||
Contractual Obligations
|
Total |
Less than one year |
1 to 3 years |
4 to 5 years |
After 5 years |
|||||||||||||||
Debt |
$ |
12,513 |
$ |
12,119 |
$ |
394 |
$ |
- |
$ |
- |
||||||||||
Finance Lease Obligations |
$ |
1,398 |
$ |
499 |
$ |
814 |
$ |
85 |
$ |
- |
||||||||||
Total Contractual Obligations
|
$ |
13,911 |
$ |
12,618 |
$ |
1,208 |
$ |
85 |
$ |
- |
Name |
Position(s) with the
Company |
Other Directorships
|
Date of Initial Appointment
|
Oren Shuster |
Chief Executive Officer and Director
|
IMC Holdings; Focus; Pharm Yarok; Rosen High Way; IMC Pharma; IMC Farms; Ewave Group Ltd (“Ewave”) and its subsidiaries |
October 11, 2019 |
Marc Lustig |
Executive Chairman and Director |
PharmaCielo Ltd.
Cresco Labs Inc.
Aequus Pharmaceuticals Inc.
22 Capital Corp.
BriaCell Therapeutics Corp. |
October 11, 2019 |
Moti Marcus(2)(3)(4)
|
Director |
Nil |
September 12, 2022 |
Einat Zakariya(2)(3)(4)
|
Director |
HYGEAR Inc. |
September 12, 2022 |
Brian Schinderle(2)(3)
|
Director |
Nil |
February 22, 2021 |
Uri Birenberg |
Chief Financial Officer |
Nil |
October 10, 2023 |
Eyal Fisher |
Chief Executive Officer of IMC Holdings
and each of the Israeli Subsidiaries |
Nil |
March 8, 2023 |
Michal Lebovitz Nissimov |
General Counsel |
Nil |
April 14, 2023 |
Richard Balla |
Chief Executive Officer of Adjupharm
|
Nil |
October 11, 2019 |
|
(1) |
Information furnished by the respective individual. |
|
(2) |
Member of the Audit Committee. |
|
(3) |
Member of Compensation Committee. |
|
(4) |
Member of the Governance and Nomination Committee. |
|
(1) |
Oren Shuster, CEO and a director of the Company; |
|
(2) |
Uri Birenberg, CFO of the Company; |
|
(3) |
Itay Vago, former CFO of the Company; |
|
(4) |
Shai Shemesh, former CFO of the Company; |
|
(5) |
Marc Lustig, Executive Chairman and a director of the Company; |
|
(6) |
Eyal Fisher, CEO of the IMC Holdings and each of the Israeli Subsidiaries; and |
|
(7) |
Richard Balla, CEO of Adjupharm. |
|
1. |
base salary; |
|
2. |
cash bonuses; and/or |
|
3. |
long-term incentives. |
1. |
Base Salary |
2. |
Cash Bonuses |
3. |
Long Term Incentives |
|
(a) |
the maximum number of RSUs available for grant to any one person under the RSU Plan and any other Securities Based Compensation Arrangements
of the Company in a 12-month period is 5% of the total number of Common Shares then outstanding on a non-diluted basis; and |
|
(b) |
the maximum number of Common Shares issuable to insiders of the Company (as a group) under the RSU Plan, together with any other
Common Shares issuable under any other Securities Based Compensation Arrangements, shall not exceed at any time or within any 12-month
period, 10% of the issued and outstanding Common Shares on a non-diluted basis at the time of grant. |
|
(a) |
increase the number of Common Shares which may be issued pursuant to the RSU Plan, other than by virtue of a change in Common Shares,
whether by reason of a stock dividend, consolidation, subdivision or reclassification which adjustment may be made by the Board or Compensation
Committee for the number of Common Shares available under the RSU Plan and the number of Common Shares subject to RSUs; |
|
(b) |
amend the definition of “Participant” under the RSU Plan which would have the potential of narrowing, broadening or increasing
insider participation; |
|
(c) |
amendments to cancel and reissue RSUs; |
|
(d) |
amendments to the list of amendments to the RSU Plan or RSUs requiring requisite regulatory and shareholder approval and those subject
to requisite regulatory approval (where required) but not subject to shareholder approval; |
|
(e) |
amendments that extend the term of an RSU; |
|
(f) |
amendments to the participation limits including: the maximum number of shares issuable under the RSU Plan, limitations on grants
of RSUs to any one person in a 12-month period, grants within a one year period to insiders, and the number of shares issuable to a person
providing investor relations activities in any 12-month period; and |
|
(g) |
amendments to the RSU Plan that would permit RSUs, or any other right or interest of a RSU Participant under the RSU Plan, to be
assigned or transferred, other than for normal estate settlement purposes. |
|
(a) |
amendments of a housekeeping nature; |
|
(b) |
amendments to the vesting provisions of a RSU or the RSU Plan; |
|
(c) |
amendments to the definitions, other than such definitions noted above; |
|
(d) |
amendments to reflect changes to applicable securities laws; and |
|
(e) |
amendments to ensure that the RSUs granted under the RSU Plan will comply with any provisions respecting income tax and other laws
in force in any country or jurisdiction of which a RSU Participant to whom a RSU has been granted may from time to time be a resident,
citizen or otherwise subject to tax therein. |
November 5, 2019
|
December 2019
|
December 2020
|
December 2021
|
December 2022
|
December 2023
| |
IM Cannabis Corp.
|
$100.00 |
$53.97 |
$398.41 |
$167.46 |
$5.16 |
$1.83 |
CSE Composite Index
|
$100.00 |
$99.81 |
$170.10 |
$130.97 |
$48.67 |
$40.95 |
|
1. |
Brian Schinderle (Chair); |
|
2. |
Moti Marcus; and |
|
3. |
Einat Zakariya, |
Name and Principal Position
|
Year |
Salary
($)(1)
|
Share-Based Awards
($) |
Option-Based Awards
($)(8)
|
Non-Equity Incentive
Plan Compensation
($) |
Pension Value
($) |
All Other
Compensation ($) |
Total
Compensation ($) | |
Annual Incentive Plans
|
Long-Term Incentive
Plans | ||||||||
Oren Shuster
CEO
and Director |
2023 |
476,266(2)
|
Nil |
331,802 |
Nil |
Nil |
Nil |
Nil |
818,068 |
2022 |
506,244(2)
|
Nil |
1,110,057 |
Nil |
Nil |
Nil |
Nil |
1,616,301 | |
2021 |
515,731(2)
|
Nil |
1,388,455 |
121,000 |
Nil |
Nil |
Nil |
2,025,186 | |
Uri Birenberg(3)
CFO
|
2023 |
73,558 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
73,558 |
2022 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil | |
2021 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil | |
Itay Vago(4)
Former
CFO |
2023 |
180,968 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
180,968 |
2022 |
53,219 |
Nil |
508 |
Nil |
Nil |
Nil |
Nil |
53,727 | |
2021 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil | |
Shai Shemesh(5)
Former
CFO |
2023 |
135,934 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
135,934 |
2022 |
321,950 |
Nil |
307,636 |
Nil |
Nil |
Nil |
Nil |
629,586 | |
2021 |
300,607 |
Nil |
408,653 |
82,500 |
Nil |
Nil |
Nil |
791,760 | |
Marc Lustig
Executive
Chairman and Director(6) |
2023 |
129,920 |
79,959 |
Nil |
Nil |
Nil |
Nil |
Nil |
209,879 |
2022 |
282,480 |
558,538 |
50,089 |
Nil |
Nil |
Nil |
Nil |
891,107 | |
2021 |
264,000 |
1,286,498 |
329,846 |
Nil |
Nil |
Nil |
Nil |
1,880,344 | |
Eyal Fisher(7)
CEO of the IMC Holdings
and each of the Israeli Subsidiaries |
2023 |
216,998 |
Nil |
1,693 |
Nil |
Nil |
Nil |
Nil |
216,998 |
2022 |
215,586 |
Nil |
4,381 |
Nil |
Nil |
Nil |
Nil |
217,279 | |
2021 |
144,506 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
144,506 | |
Richard Balla
CEO of Adjupharm
|
2023 |
175,385 |
Nil |
Nil |
87,692 |
Nil |
Nil |
30,895 |
293,972 |
2022 |
164,186 |
Nil |
37 |
Nil |
Nil |
Nil |
29,066 |
193,289 | |
2021 |
176,674 |
Nil |
7,799 |
121,087 |
Nil |
Nil |
38,083 |
343,643 |
(1) |
Each of Messrs. Shuster, Birenberg, Vago, Shemesh and Fisher received their compensation in NIS and Mr. Balla received his compensation
in Euros. All salaries were converted to CDN pursuant to the average Bank of Canada rate for the applicable fiscal year. |
(2) |
Oren Shuster, through Ewave, entered into a consulting agreement with the Company pursuant to which he is paid NIS 108,350 plus VAT
per month (approximately $39,544 plus tax per month) in consideration of his CEO services provided to Company. Mr. Shuster did not earn
consideration for his role as a director of the Company during the fiscal years ended December 31, 2023, 2022 and 2021. |
(3) |
Mr. Birenberg was appointed as CFO of the Company effective October 10, 2023. |
(4) |
Mr. Vago was appointed as CFO of the Company effective March 8, 2023 and resigned effective October 10, 2023, but stayed on to assist
the transition until November 15, 2023. |
(5) |
Mr. Shemesh resigned as the CFO of the Company effective March 8, 2023. |
(6) |
Mr. Lustig does not earn consideration for his role as a director of the Company; however, Mr. Lustig, through L5 Capital, entered
into a consulting agreement with the Company pursuant to which he is paid $5,250 per month in consideration of his Executive Chairman
services provided to the Company. |
(7) |
Mr. Fisher was appointed as CEO of the IMC Holdings and each of the Israeli Subsidiaries effective March 15, 2023. |
(8) |
The Company used the Black-Scholes pricing model as the methodology to calculate the grant date fair value, and relied on the following
the key assumptions and estimates for each calculation under the following assumptions: (i) risk free interest rate of 0.42% to 1.97%
(ii) expected dividend yield of 0%; (iii) expected volatility of 76.28% to 82.31%; and (iv) a term of 5 to 10 years. The Black-Scholes
pricing model was used to estimate the fair value as it is the most accepted methodology. |
Option-based
Awards |
Share-based
Awards | ||||||
Name
|
Number
of securities underlying unexercised Options
(#)(1)
|
Option
exercise price
($)
|
Option
expiration date |
Value
of unexercised
in-the-money Options ($)
|
Number
of shares or units of shares that have not vested
(#)
|
Market
or payout value of share-based awards that have not vested(4)
($)
|
Market or payout value
of vested share-based awards not paid out or distributed
($) |
Oren Shuster |
6,250
75,000
50,000 |
40.00
58.70
16.00 |
June 9, 2025
May 19, 2026
January 4, 2029 |
Nil
Nil
Nil |
Nil |
Nil |
Nil |
Marc Lustig |
67,500 |
16.00 |
September 11, 2029 |
Nil |
Nil |
Nil |
Nil |
Eyal Fisher |
1,000 |
27.30 |
April 4, 2027 |
Nil |
Nil |
Nil |
Nil |
Richard Balla |
9,000 |
16.00 |
July 30, 2029 |
Nil |
Nil |
Nil |
Nil |
(1) |
Each Option entitles the holder to purchase one Common Share. |
Name
|
Option-based
awards – Value vested during the year
($)
|
Share-based
awards – Value vested during the year ($) |
Non-equity
incentive plan compensation – Value earned during the year
($)
|
Oren Shuster |
932,254 |
Nil |
Nil |
Marc Lustig |
Nil |
481,494 |
Nil |
Richard Balla |
Nil |
Nil |
87,692 |
Eyal Fisher |
2,171 |
Nil |
Nil |
Name(1)
|
Fees earned
($)(2) |
Share-based awards
($) |
Option-based awards ($)(3) |
Non-equity incentive
plan compensation ($) |
Pension value ($) |
All other compensation ($) |
Total
($) |
Brian Schinderle |
73,700(4) |
Nil |
61,616 |
Nil |
Nil |
Nil |
135,316 |
Moti Marcus |
76,700(45) |
Nil |
19,963 |
Nil |
Nil |
Nil |
96,663 |
Einat Zakariya |
73,200 |
Nil |
19,963 |
Nil |
Nil |
Nil |
93,163 |
(1) |
Each of Mr. Marcus and Ms. Zakariya received their compensation in NIS and Mr. Schinderle received his compensation in USD. All salaries
were converted to CDN pursuant to the average Bank of Canada rate for the applicable fiscal year. |
(2) |
Each director is entitled to a $13,750 payment per quarter for their role as a director of the Company. For each Audit Committee
meeting, the Chair receives a $1,500 payment and each other member receives a $1,000 payment and for each of the Compensation Committee
and Governance and Nomination Committee meetings, the Chair receives a $1,200 payment and each other member receives a $700 payment.
|
(3) |
The Company used the Black-Scholes pricing model as the methodology to calculate the grant date fair value, and relied on the following
the key assumptions and estimates for each calculation under the following assumptions: (i) risk free interest rate of 0.42% to 3.03%
(ii) expected dividend yield of 0%; (iii) expected volatility of 78.7% to 82.01%; and (iv) a term of 5 to 10 years. The Black-Scholes
pricing model was used to estimate the fair value as it is the most accepted methodology. |
(4) |
Mr. Schinderle receives compensation through Solidum Capital Advisors LLC. |
(5) |
Mr. Marcus receives compensation through Marcus Management Services Ltd. |
Option-based
Awards |
Share-based
Awards | ||||||
Name
|
Number
of securities underlying unexercised Options(1)
(#)
|
Option
exercise price
($)
|
Option
expiration date |
Value
of unexercised
in-the-money Options ($)
|
Number
of shares or units of shares that have not vested
(#)
|
Market
or payout value of share-based awards that have not vested
($)
|
Market or payout value
of vested share-based awards not paid out or distributed
($) |
Brian Schinderle |
9,000 |
100.00 |
February 28, 2026 |
Nil |
Nil |
Nil |
Nil |
Moti Marcus |
9,000 |
6.00 |
September 19, 2027 |
Nil |
Nil |
Nil |
Nil |
Einat Zakariya |
9,000 |
6.00 |
September 19, 2027 |
Nil |
Nil |
Nil |
Nil |
|
(1) |
Each Option entitles the holder to purchase one Common Share. |
Name
|
Option-based
awards – Value vested during the year
($)
|
Share-based
awards – Value vested during the year ($) |
Non-equity
incentive plan compensation – Value earned during the year
($)
|
Brian Schinderle |
207,000 |
Nil |
Nil |
Moti Marcus |
14,601 |
Nil |
Nil |
Einat Zakariya |
14,601 |
Nil |
Nil |
Name of Director |
Board |
Audit Committee |
Compensation Committee |
Governance and Nomination Committee |
Oren Shuster |
100% (17/17) |
- |
- |
- |
Marc Lustig |
94.12% (16/17) |
- |
- |
- |
Moti Marcus |
100% (17/17) |
100% (6/6) |
100% (1/1) |
- |
Einat Zakariya |
100% (17/17) |
83.33% (5/6) |
100% (1/1) |
- |
Brian Schinderle |
100% (17/17) |
100% (6/6) |
100% (1/1) |
- |
|
(a) |
overseeing that the day-to-day business affairs of the Company are appropriately managed and taking steps to maintain and enhance
an effective senior management team reporting to the CEO; |
|
(b) |
recommending to the Board the Company’s financial and operating goals and objectives and, following approval by the Board thereof,
consistently striving to achieve such goals and objectives; |
|
(c) |
formulating, and presenting to the Board for approval, long-term business plans, strategies and policies having the objective of
maximizing the Company’s long-term success and the creation of shareholder value; |
|
(d) |
together with other senior management as are appropriate, developing and recommending to the Board annual business plans and budgets
that support the Company’s long term business plans and strategies; |
|
(e) |
developing and implementing, with senior management of the Company, plans, strategies, budgets and policies necessary to achieve
the goals and objectives of the Company; |
|
(f) |
supervising, maintaining and deploying the Company’s resources – human, financial or otherwise – with the purpose
and objective of achieving the Company’s operating goals and objectives; |
|
(g) |
keeping the Board informed in a timely and candid manner of the progress of the Company towards the achievement of its strategic
and operational goals and objectives and of all material deviations from the goals, objectives, plans, strategies, budgets or policies
established by the Board; |
|
(h) |
overseeing, evaluating and taking steps to enhance, where necessary, the integrity and reliability of the Company’s internal
controls, including its management information systems and financial reporting, and establishing, maintaining, designing and evaluating
disclosure controls and procedures for the Company; |
|
(i) |
identifying and managing business risks faced by the Company, including overseeing the design and implementation of appropriate systems
and procedures to effectively monitor, manage and mitigate such risks; |
|
(j) |
ensuring that the Board has regular exposure to the Company’s senior management and overseeing the development and succession
of the Company’s senior management team; |
|
(k) |
evaluating the performance of senior management of the Company and making recommendations with respect to their compensation;
|
|
(l) |
maintaining a positive and ethical work climate that is conducive to attracting, retaining and motivating a diverse group of top-quality
employees at all levels; |
|
(m) |
serving as the Company’s principal spokesperson and ensuring that information communicated to the public fairly portrays the
position of the Company and that timely and continuous disclosure obligations of the Company are met; |
|
(n) |
representing the Company in a such a way so as to enhance and maintain the Company’s reputation and to promote positive relationships
with shareholders, suppliers, contractors, clients, service providers, strategic partners, creditors, financial institutions, local communities,
all levels of government and the media; and |
|
(o) |
fulfilling all other responsibilities as assigned by the Board, in the manner expected by the Board. |
Board Diversity Matrix
– IM Cannabis Corp. | ||||||||
Country of Principal
Executive Offices |
Israel |
|||||||
Foreign Private Issuer
|
Yes | |||||||
Disclosure Prohibited
under Home Country Law |
No | |||||||
As of March 29, 2023
|
As of March 28, 2024
| |||||||
Total Number of Directors
|
5 |
5 | ||||||
Gender Identity
|
Female |
Male |
Non-Binary |
Did Not Disclose Gender
|
Female |
Male |
Non-Binary |
Did Not Disclose Gender
|
Directors |
1 |
4 |
- |
- |
1 |
4 |
0 |
0 |
Demographic Background
| ||||||||
Underrepresented Individual in Home Country
Jurisdiction |
0 |
0 | ||||||
LGBTQ+ |
0 |
0 | ||||||
Did Not Disclose Demographic Background
|
- |
0 |
Name
|
Independence(1)
|
Financial
Literacy(2) |
Moti Marcus (Chair)
|
Independent
|
Financially literate
|
Brian Schinderle
|
Independent
|
Financially literate
|
Einat Zakariya
|
Independent
|
Financially literate
|
|
1. |
Within the meaning of subsection 1.4 of NI 52-110 and as determined under Exchange Act Rule 10A-3 and Rule 5605(a)(2) of the Nasdaq
Stock Market Rules. |
|
2. |
Within the meaning of subsection 1.6 of NI 52-110. |
2023 |
2022(5)
| |
Audit Fees |
$297 |
$427 |
Audit-related Fees(1)
|
$28 |
$61 |
Tax Fees(2)(3)
|
$68 |
$81 |
All Other Fees(4)
|
$13 |
- |
Total |
$406 |
$569 |
|
1. |
Consist of fees for professional services and expenses relating to the audit of the annual financial statements and review of our
quarterly financial information. Fees charged for assurance and related services reasonably related to the performance of an audit, and
not included under “Audit Fees”. |
|
2. |
Consist of fees for professional services and expenses reasonably relating to the audit of the annual financial statements or review
of our quarterly financial information and are not reported as “Audit Fees”. Fees charged for tax compliance, tax advice and
tax planning services. |
|
3. |
Consist of fees for tax-related services related primarily to tax consulting and tax planning. |
|
4. |
Fees for services other than disclosed in any other row, including fees related to the review of management’s discussion and
analysis and Sarbanes-Oxley Act procedures. |
|
5. |
Amounts stated do not include 2022 audit fees of $331 related to deconsolidated Trichome. |
|
(i) |
matters of governance; and |
|
(ii) |
the nomination of directors to the Board. |
|
1. |
Einat Zakariya (Chair); |
|
2. |
Oren Shuster; and |
|
3. |
Moti Marcus. |
Year |
Full Time |
Part Time |
Total | |||
Fiscal 2021 |
283 |
- |
363 | |||
Fiscal 2022 |
153 |
- |
153 | |||
Fiscal 2023 |
95 |
- |
95 |
Year |
Israel |
Germany |
Canada |
Total | ||||
Fiscal 2021 |
112 |
15 |
236 |
363 | ||||
Fiscal 2022 |
126 |
27 |
- |
153 | ||||
Fiscal 2023 |
77 |
18 |
- |
95 |
|
• |
each person, or group of affiliated persons, known by us to beneficially own five percent (5%) or more of any class of our shares;
|
|
• |
each of our Named Executive Officers; |
|
• |
each of our directors; and |
|
• |
all of our directors and executive officers as a group. |
Name of Beneficial Holder
|
Number of Common Shares
Beneficially Held |
Number of Common Shares
Underlying Options |
Option Exercise Price ($) |
Option Expiration Date
|
Restricted Share Units
|
Warrants |
Total Convertible Securities
|
Percentage of Common
Shares Beneficially Held Undiluted |
Percentage of Common
Shares Beneficially Held Partially Diluted |
Oren Shuster(1)
|
1,872,870 |
6,250
75,000
50,000 |
40.00
58.70
16.00 |
June 9, 2025 May 19, 2026 January 4, 2029 |
Nil |
856,704 |
987,954 |
13.98% |
19.89% |
Marc Lustig(2)
|
930,635 |
67,500 |
16.00 |
November 9, 2029 |
55,000 |
633,860 |
756,360 |
6.95% |
11.92% |
Moti Marcus |
Nil |
9,000 |
6.00 |
September 19, 2027 |
Nil |
Nil |
9,000 |
N/A |
0.07% |
Einat Zakariya |
61,200 |
9,000 |
6.00 |
September 19, 2027 |
Nil |
Nil |
9,000 |
0.46% |
0.52% |
Brian Schinderle |
Nil |
9,000 |
N/A |
N/A |
Nil |
Nil |
9,000 |
N/A |
0.07% |
Uri Birenberg |
Nil |
Nil |
N/A |
N/A |
Nil |
Nil |
N/A |
N/A |
N/A |
Michal Lebovitz Nissimov |
Nil |
3,000 |
1.10 |
May 16, 2028 |
Nil |
Nil |
3,000 |
N/A |
0.02% |
Richard Balla |
5,250 |
9,000 |
16.00 |
July 30, 2029 |
Nil |
Nil |
9,000 |
0.04% |
0.11% |
Rafael Gabay(3) |
1,173,716 |
Nil |
N/A |
N/A |
Nil |
303,295 |
303,295 |
8.76% |
10.78% |
Luminera Derm Ltd.(4) |
757,172 |
Nil |
Nil |
Nil |
Nil |
Nil |
757,172 |
5.65% |
10.70% |
|
(5) |
1,872,564 Common Shares and 856,704 Warrants are held by Oren Shuster directly and 153 Common Shares are held indirectly through
Ewave, a privately-held entity of which Mr. Shuster owns and controls 50% of the outstanding voting. |
|
(6) |
300,393 Common Shares and 138,118 Warrants are held by Marc Lustig directly and 630,242 Common Shares and 495,742 Warrants are held
indirectly through L5 Capital, a privately held entity of which Mr. Lustig owns and controls 100% of the outstanding voting. |
|
(7) |
1,173,563 Common Shares and 303,295 Warrants are held by Rafael Gabay directly and 153 Common Shares are held indirectly by Ewave,
a privately-held entity of which Mr. Gabay owns and controls 50% of the outstanding voting shares. |
|
(8) |
Luminera Derm Ltd., has beneficially own 5% of the outstanding voting rights attached to the outstanding Common Shares of the Company starting
from January 20, 2023. |
|
• |
On April 2, 2019, IMC Holdings and Focus entered into an option agreement (the “Focus Agreement”) pursuant to which IMC
Holdings acquired an option to purchase, at its sole discretion and in compliance with Israeli cannabis regulation, all of the ordinary
shares held by Messrs. Shuster and Gabay held in Focus at a price equal to NIS 765.67 per ordinary share until April 2029. On November
30, 2023, IMC Holdings sent a request letter to IMCA to approve IMC Holding’s exercise of the option and on February 25, 2024, IMCA's
approval was obtained. Effective February 27, 2024, IMC Holdings acquired 74% of the ordinary shares of Focus. |
|
• |
The Company is a party to indemnification agreements with certain directors and officers of the Company and Trichome to cover certain
tax liabilities, interest and penalties arising from the Company’s acquisition of all of issued and outstanding securities of Trichome
and certain of its subsidiaries. |
|
• |
The Stalking Horse Purchase Agreement constituted a related party transaction as L5 Capital is an entity controlled by Marc Lustig,
who was a director of Trichome and the Executive Chairman of the Board. On March 8, 2023, the Company announced that the SISP approved
by the Court did not result in any bids for the going-concern business of Trichome; however, L5 Capital advised that it would not complete
the proposed transaction contemplated by the Stalking Horse Share Purchase Agreement. |
|
• |
On January 16, 2023, the Company closed of the first tranche of the Concurrent Offering comprised of an aggregate of 1,159,999 Units
for aggregate gross proceeds of US$1,500. The Concurrent Offering was led by insiders of the Company. The units offered under the Concurrent
Offering were sold under similar terms as the Life Offering. |
|
• |
On January 20, 2023, the Company closed the second tranche of the LIFE Offering comprised of 102,152 Life Units for an aggregate
subscription price of approximately US$128. The second tranche of the LIFE Offering was comprised of a single subscription by the Executive
Chairman of the Company whose subscription price was satisfied by the settlement of approximately US$128 in debt owed by the Company to
him for certain consulting services previously rendered to the Company. |
|
• |
On February 16, 2023, the Company closed the fifth and final tranche of the LIFE Offering. Marc Lustig, the Executive Chairman of
the Company subscribed for 29,548 Life Units in the fifth tranche at an aggregate subscription price of US$37. Marc Lustig’s subscription
price was satisfied by the settlement of US$37 in debt owed by the Company to the director for certain consulting services previously
rendered by the director to the Company. |
|
• |
Pursuant to the consulting agreement between the Company and L5 Capital, the Company issued 50,414 Common Shares as a result of the
vested RSUs according to the agreed vesting schedule. The Common Shares were issued on May 5, 2023. In July 24, 2023, an additional 4,585
Common Shares were issued as a result of the vested RSUs according to the agreed vesting schedule. |
|
• |
On October 12, 2023, Oren Shuster, the CEO loaned an amount of NIS 500 (approximately $170) to IMC Holdings. The participation of
the CEO constituted a “related party transaction”, as such term is defined in MI 61-101 and would require the Company to receive
minority shareholder approval for and obtain a formal valuation for the subject matter of, the transaction in accordance with MI 61-101,
prior to the completion of such transaction. However, in completing the loan, the Company has relied on exemptions from the formal valuation
and minority shareholder approval requirements of MI 61-101, in each case on the basis that the fair market value of the CEO’s loan
did not exceed 25% of the market capitalization of the Company, as determined in accordance with MI 61-101. |
|
1. |
The contractual party of the company was not Stroakmont. The contract with Stroakmont was only concluded as a sham transaction to
cover up a contract with a company named Uniclaro GmbH (“Uniclaro”). Therefore, Stroakmont
is not the real purchaser rather than Uniclaro. |
|
2. |
The company allegedly placed an order with Uniclaro for a total of 4.3 million Clongene COVID-19 tests, of which Uniclaro 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 942.
Uniclaro has assigned this alleged claim against the company to Stroakmont Trading GmbH, and Stroakmont Trading GmbH has precautionary
declared a set-off against the company’s claim. |
|
1. |
under the age of 18 years; |
|
2. |
found by a court, in Canada or elsewhere, to be incapable of managing the individual’s own affairs, unless a court, in Canada
or elsewhere, subsequently finds otherwise; |
|
3. |
an undischarged bankrupt; or |
|
4. |
convicted in or out of the Province of British Columbia of an offence in connection with the promotion, formation or management of
a corporation or unincorporated business, or of an offence involving fraud, unless: |
|
a. |
the court orders otherwise; |
|
b. |
5 years have elapsed since the last to occur of: |
|
i. |
the expiration of the period set for suspension of the passing of sentence without a sentence having been passed; |
|
ii. |
the imposition of a fine; |
|
iii. |
the conclusion of the term of any imprisonment; and |
|
iv. |
the conclusion of the term of any probation imposed; or |
|
c. |
a pardon was granted or issued, or a record suspension ordered, under the Criminal Records Act (Canada) and the pardon or record
suspension, as the case may be, has not been revoked or ceased to have effect. |
|
a. |
Focus Agreement. For more information, please see the section entitled “B. Related Party Transactions”. |
|
b. |
Services Agreement. For more information, please see the section entitled “Economic Dependence”. |
|
c. |
IP Agreement. For more information, please see the section entitled “Economic Dependence”. |
|
d. |
First LIFE Warrant Indenture; For more information, please see the section entitled “Life Offering”. |
|
e. |
Second LIFE Warrant Indenture; For more information, please see the section entitled “Life Offering”. |
|
f. |
Third LIFE Warrant Indenture; For more information, please see the section entitled “Life Offering”. |
|
g. |
The Loan Agreement. For more information, please see the section entitled “Potential Reverse Merger with Kadimastem”.
|
|
• |
an individual who is a citizen or resident of the U.S.; |
|
• |
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the U.S.,
any state thereof or the District of Columbia; |
|
• |
an estate whose income is subject to U.S. federal income taxation regardless of its source; or |
|
• |
a trust that (1) is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for
all substantial decisions or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.
|
Consolidated Financial
Statements for the Years Ended December 31, 2023 and 2022 |
Independent Auditors’ Reports |
Consolidated Statements of Financial Position |
Consolidated Statements of Net Loss and Comprehensive Loss
|
Consolidated Statements of Changes in Shareholders’ Equity
|
Consolidated Statements of Cash Flows |
Notes to the Consolidated Financial Statements |
Description |
Page | |
Consolidated Financial Statements and Notes |
F-1 - F-77 |
No. Item |
Description of Exhibit
|
15.2* | |
101.INS* |
XBRL Instant Document |
101.SCH* |
XBRL Taxonomy Extension Schema Document
|
101.CAL* |
XBLR Taxonomy Extension Calculation Linkbase
Document |
101.DEF* |
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB* |
XBRL Taxonomy Extension Label Linkbase
|
101.PRE* |
XBRL Taxonomy Extension Presentation Linkbase
|
104* |
Cover Page Interactive Data File –
(formatted as Inline XBRL and contained in Exhibit 101) |
Date: March 28, 2024
|
IM Cannabis Corp.
By: /s/
Uri Birenberg
Name: Uri Birenberg Title: Chief Financial Officer |
Page
|
|
Report of Independent Registered Public Accounting Firm (PCAOB ID: 1281)
|
F-2
|
F-3 – F-4
|
|
F-5 – F-6
|
|
F-7 – F- 8
|
|
F-9– F-10
|
|
F-11 – F-72
|
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
|
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
|
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial reporting. Accordingly, we express no such opinion.
/s/ KOST FORER GABBAY & KASIERER |
KOST FORER GABBAY & KASIERER
|
A Member of Ernst & Young Global
|
We have served as the Company's auditor since 2018.
|
Tel-Aviv, Israel
|
March 28, 2024
|
December 31,
|
|||||||||||
Note
|
2023
|
2022
|
|||||||||
ASSETS
|
|||||||||||
CURRENT ASSETS:
|
|||||||||||
Cash and cash equivalents
|
$
|
1,813
|
$
|
2,449
|
|||||||
Trade receivables
|
6
|
7,651
|
8,684
|
||||||||
Advances to suppliers
|
936
|
1,631
|
|||||||||
Other accounts receivable
|
7
|
3,889
|
3,323
|
||||||||
Inventory
|
9
|
9,976
|
16,585
|
||||||||
24,265
|
32,672
|
||||||||||
NON-CURRENT ASSETS:
|
|||||||||||
Property, plant and equipment, net
|
10
|
5,058
|
5,221
|
||||||||
Investments in affiliates
|
15c
|
|
2,285
|
2,410
|
|||||||
Right-of-use assets, net
|
12
|
1,307
|
1,929
|
||||||||
Deferred tax assets, net
|
17
|
-
|
763
|
||||||||
Intangible assets, net
|
11
|
5,803
|
7,910
|
||||||||
Goodwill
|
11
|
10,095
|
9,771
|
||||||||
24,548
|
28,004
|
||||||||||
Total assets
|
$
|
48,813
|
$
|
60,676
|
December 31,
|
|||||||||||
Note
|
2023
|
2022
|
|||||||||
LIABILITIES AND EQUITY
|
|||||||||||
CURRENT LIABILITIES:
|
|||||||||||
Trade payables
|
14
|
$
|
9,223
|
$
|
15,312
|
||||||
Credit from banks and others
|
13
|
12,119
|
9,246
|
||||||||
Other accounts payable and accrued expenses
|
15
|
6,218
|
6,013
|
||||||||
Accrued purchase consideration liabilities
|
5
|
2,097
|
2,434
|
||||||||
PUT Option liability
|
2,697
|
||||||||||
Current maturities of operating lease liabilities
|
12
|
454
|
814
|
||||||||
32,808
|
33,819
|
||||||||||
NON-CURRENT LIABILITIES:
|
|||||||||||
Warrants measured at fair value
|
17
|
38
|
8
|
||||||||
Operating lease liabilities
|
12
|
815
|
1,075
|
||||||||
Credit from banks and others
|
394
|
399
|
|||||||||
Employee benefit liabilities, net
|
16
|
95
|
246
|
||||||||
Deferred tax liability, net
|
19
|
963
|
1,332
|
||||||||
2,305
|
3,060
|
||||||||||
Total liabilities
|
35,113
|
36,879
|
|||||||||
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY:
|
20
|
||||||||||
Share capital and premium
|
253,882
|
245,776
|
|||||||||
Translation reserve
|
95
|
1,283
|
|||||||||
Reserve from share-based payment transactions
|
9,637
|
15,167
|
|||||||||
Accumulated deficit
|
(249,145
|
)
|
(239,574
|
)
|
|||||||
Total equity attributable to shareholders of the Company
|
14,469
|
22,652
|
|||||||||
Non-controlling interests
|
(769
|
)
|
1,145
|
||||||||
Total equity
|
13,700
|
23,797
|
|||||||||
Total equity and liabilities
|
$
|
48,813
|
$
|
60,676
|
March 28, 2024
|
/s/ Marc Lustig | /s/ Oren Shuster | /s/ Uri Birenberg | |||
Date of approval of the
|
Marc Lustig
|
Oren Shuster
|
Uri Birenberg
|
|||
financial statements
|
Chairman of the Board
|
Chief Executive Officer
|
Chief Financial Officer
|
Year ended December 31,
|
|||||||||||||||
Note
|
2023
|
2022
|
*) 2021
|
|
|||||||||||
Revenues
|
21
|
$
|
48,804
|
$
|
54,335
|
$
|
34,053
|
||||||||
Cost of revenues
|
21
|
37,974
|
43,044
|
25,458
|
|||||||||||
Gross profit before fair value adjustments
|
10,830
|
11,291
|
8,595
|
||||||||||||
Fair value adjustments:
|
|||||||||||||||
Unrealized change in fair value of biological assets
|
-
|
(315
|
)
|
6,308
|
|||||||||||
Realized fair value adjustments on inventory sold in the year
|
(984
|
)
|
(1,814
|
)
|
(8,570
|
)
|
|||||||||
Total fair value adjustments
|
(984
|
)
|
(2,129
|
)
|
(2,262
|
)
|
|||||||||
Gross profit after fair value adjustments
|
9,846
|
9,162
|
6,333
|
||||||||||||
General and administrative expenses
|
21
|
11,008
|
21,460
|
17,221
|
|||||||||||
Selling and marketing expenses
|
21
|
10,788
|
11,473
|
6,725
|
|||||||||||
Restructuring expenses
|
1
|
617
|
4,383
|
-
|
|||||||||||
Share-based compensation
|
20
|
225
|
2,637
|
5,422
|
|||||||||||
Total operating expenses
|
22,638
|
39,953
|
29,368
|
||||||||||||
Operating loss
|
(12,792
|
)
|
(30,791
|
)
|
(23,035
|
)
|
|||||||||
Finance income
|
7,006
|
6,703
|
23,544
|
||||||||||||
Finance expenses
|
(3,671
|
)
|
(1,972
|
)
|
(673
|
)
|
|||||||||
Finance income (expense), net
|
3,335
|
4,731
|
22,871
|
||||||||||||
Loss before income taxes
|
(9,457
|
)
|
(26,060
|
)
|
(164
|
)
|
|||||||||
Income tax expense (benefit)
|
18
|
771
|
(1,138
|
)
|
500
|
||||||||||
Net loss from continuing operations
|
(10,228
|
)
|
(24,922
|
)
|
(664
|
)
|
|||||||||
Net loss from discontinued operations, net of tax
|
25
|
-
|
(166,379
|
)
|
(17,854
|
)
|
|||||||||
Net loss
|
(10,228
|
)
|
(191,301
|
)
|
(18,518
|
)
|
Year ended December 31,
|
|||||||||||||||
Note
|
2023
|
2022
|
*) 2021
|
|
|||||||||||
Other comprehensive income that will not be reclassified to profit or loss in subsequent periods:
|
|||||||||||||||
Remeasurement gain on defined benefit plans
|
38
|
59
|
21
|
||||||||||||
Exchange differences on translation to presentation currency
|
(894
|
)
|
(1,238
|
)
|
858
|
||||||||||
Total other comprehensive income that will not be reclassified to profit or loss in subsequent periods
|
(856
|
)
|
(1,179
|
)
|
879
|
||||||||||
Other comprehensive income that will be reclassified to profit or loss in subsequent periods:
|
|||||||||||||||
Adjustments arising from translating financial statements of foreign operation
|
231
|
(246
|
)
|
530
|
|||||||||||
Total other comprehensive income (loss)
|
(625
|
)
|
(1,425
|
)
|
1,409
|
||||||||||
Total comprehensive loss
|
$
|
(10,853
|
)
|
$
|
(192,726
|
)
|
$
|
(17,109
|
)
|
||||||
Net loss attributable to:
|
|||||||||||||||
Equity holders of the Company
|
$
|
(9,498
|
)
|
$
|
(188,890
|
)
|
$
|
(17,763
|
)
|
||||||
Non-controlling interests
|
(730
|
)
|
(2,411
|
)
|
(755
|
)
|
|||||||||
$
|
(10,228
|
)
|
$
|
(191,301
|
)
|
$
|
(18,518
|
)
|
|||||||
Total comprehensive loss attributable to:
|
|||||||||||||||
Equity holders of the Company
|
$
|
(10,648
|
)
|
$
|
(190,162
|
)
|
$
|
(16,357
|
)
|
||||||
Non-controlling interests
|
$
|
(205
|
)
|
(2,564
|
)
|
(752
|
)
|
||||||||
$
|
(10,853
|
)
|
$
|
(192,726
|
)
|
$
|
(17,109
|
)
|
|||||||
Earnings (loss) per share attributable to equity holders of the Company from continuing operations:
|
22
|
||||||||||||||
Basic earnings (loss) per share (in CAD)
|
$
|
(0.74
|
)
|
$
|
(3.13
|
)
|
$
|
0.02
|
|||||||
Diluted loss per share (in CAD)
|
$
|
(0.74
|
)
|
$
|
(3.81
|
)
|
$
|
(3.62
|
)
|
||||||
Loss per share attributable to equity holders of the Company from discontinued operations:
|
|||||||||||||||
Basic and diluted loss per share (in CAD)
|
-
|
$
|
(23.17
|
)
|
$
|
(3.08
|
)
|
||||||||
Loss per share attributable to equity holders of the Company from net loss:
|
|||||||||||||||
Basic earnings (loss) per share (in CAD)
|
$
|
(0.74
|
)
|
$
|
(26.3
|
)
|
$
|
(3.06
|
)
|
||||||
Diluted loss per share (in CAD)
|
$
|
(0.74
|
)
|
$
|
(26.98
|
)
|
$
|
(6.7
|
)
|
IM CANNABIS CORP. AND ITS SUBSIDIARIES
Share capital and premium
|
Treasury Stock
|
Reserve from share-based payment transactions
|
Translation reserve
|
Accumulated deficit
|
Total
|
Non-controlling interests
|
Total
equity
|
|||||||||||||||||||||||||
Balance as of January 1, 2021
|
$
|
37,040
|
$
|
-
|
$
|
5,829
|
$
|
1,229
|
$
|
(33,001
|
)
|
$
|
11,097
|
$
|
1,513
|
$
|
12,610
|
|||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
(17,763
|
)
|
(17,763
|
)
|
(755
|
)
|
(18,518
|
)
|
||||||||||||||||||||
Total other comprehensive income
|
-
|
-
|
-
|
1,385
|
21
|
1,406
|
3
|
1,409
|
||||||||||||||||||||||||
Total comprehensive income (loss)
|
-
|
-
|
-
|
1,385
|
(17,742
|
)
|
(16,357
|
)
|
(752
|
)
|
(17,109
|
)
|
||||||||||||||||||||
Issuance of common shares, net of issuance costs of $3,800
|
195,259
|
-
|
-
|
-
|
-
|
195,259
|
2,948
|
198,207
|
||||||||||||||||||||||||
Purchase of treasury common shares
|
-
|
(660
|
)
|
-
|
-
|
-
|
(660
|
)
|
-
|
(660
|
)
|
|||||||||||||||||||||
Exercise of warrants and compensation options
|
4,293
|
-
|
-
|
-
|
-
|
4,293
|
-
|
4,293
|
||||||||||||||||||||||||
Exercise of options
|
1,053
|
-
|
(920
|
)
|
-
|
-
|
133
|
-
|
133
|
|||||||||||||||||||||||
Share-based compensation
|
-
|
-
|
7,471
|
-
|
-
|
7,471
|
-
|
7,471
|
||||||||||||||||||||||||
Expired options
|
32
|
-
|
(32
|
)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Balance as of December 31, 2021
|
237,677
|
(660
|
)
|
12,348
|
2,614
|
(50,743
|
)
|
201,236
|
3,709
|
204,945
|
||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
(188,890
|
)
|
(188,890
|
)
|
(2,411
|
)
|
(191,301
|
)
|
||||||||||||||||||||
Total other comprehensive income (loss)
|
-
|
-
|
-
|
(1,331
|
)
|
59
|
(1,272
|
)
|
(153
|
)
|
(1,425
|
)
|
||||||||||||||||||||
Total comprehensive loss
|
-
|
-
|
-
|
(1,331
|
)
|
(188,831
|
)
|
(190,162
|
)
|
(2,564
|
)
|
(192,726
|
)
|
|||||||||||||||||||
Issuance of treasury common shares
|
-
|
660
|
-
|
-
|
-
|
660
|
-
|
660
|
||||||||||||||||||||||||
Issuance of shares, net of issuance costs of $178
|
6,818
|
-
|
-
|
-
|
-
|
6,818
|
-
|
6,818
|
||||||||||||||||||||||||
Exercise of options
|
992
|
-
|
(659
|
)
|
-
|
-
|
333
|
-
|
333
|
|||||||||||||||||||||||
Share-based compensation
|
-
|
-
|
3,767
|
-
|
-
|
3,767
|
-
|
3,767
|
||||||||||||||||||||||||
Expired options
|
289
|
-
|
(289
|
)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Balance as of December 31, 2022
|
245,776
|
-
|
15,167
|
1,283
|
(239,574
|
)
|
22,652
|
1,145
|
23,797
|
Share capital and premium*)
|
Reserve from share-based payment transactions
|
Translation reserve
|
Accumulated deficit
|
Total
|
Non-controlling interests
|
Total
equity
|
||||||||||||||||||||||
Balance as of December 31, 2022
|
245,776
|
15,167
|
1,283
|
(239,574
|
)
|
22,652
|
1,145
|
23,797
|
||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(9,498
|
)
|
(9,498
|
)
|
(730
|
)
|
(10,228
|
)
|
|||||||||||||||||
Total other comprehensive income (loss)
|
-
|
-
|
(1,188
|
)
|
38
|
(1,150
|
)
|
525
|
(625
|
)
|
||||||||||||||||||
Total comprehensive loss
|
-
|
-
|
(1,188
|
)
|
(9,460
|
)
|
(10,648
|
)
|
(205
|
)
|
(10,853
|
)
|
||||||||||||||||
Issuance of treasury common shares
|
2,351
|
-
|
-
|
-
|
2,351
|
-
|
2,351
|
|||||||||||||||||||||
Issuance of shares, net of issuance costs of $178
|
||||||||||||||||||||||||||||
Exercise of options
|
||||||||||||||||||||||||||||
Other comprehensive income Classification |
- | - | - | (111 | ) | (111 | ) | (1,709 | ) | (1,820 | ) | |||||||||||||||||
Share-based compensation
|
-
|
225
|
-
|
-
|
225
|
-
|
225
|
|||||||||||||||||||||
Expired options
|
5,755
|
(5,755
|
)
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
Balance as of December 31, 2023
|
253,882
|
9,637
|
95
|
(249,145
|
)
|
14,469
|
(769
|
)
|
13,700
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Cash provided from operating activities:
|
||||||||||||
Net loss
|
$
|
(10,228
|
)
|
$
|
(191,301
|
)
|
$
|
(18,518
|
)
|
|||
Adjustments for non-cash items:
|
||||||||||||
Unrealized gain on changes in fair value of biological assets
|
-
|
(84
|
)
|
(7,210
|
)
|
|||||||
Fair value adjustment on sale of inventory
|
984
|
4,342
|
8,796
|
|||||||||
Fair value adjustment on warrants, investments, and accounts receivable
|
(6,955
|
)
|
(6,000
|
)
|
(21,638
|
)
|
||||||
Depreciation of property, plant and equipment
|
644
|
3,044
|
3,021
|
|||||||||
Amortization of intangible assets
|
1,758
|
2,343
|
1,158
|
|||||||||
Depreciation of right-of-use assets
|
594
|
1,944
|
1,550
|
|||||||||
Impairment of goodwill
|
-
|
107,854
|
275
|
|||||||||
Impairment of property, plant and equipment
|
-
|
2,277
|
-
|
|||||||||
Impairment of intangible assets
|
-
|
7,199
|
-
|
|||||||||
Impairment of right-of-use assets
|
-
|
1,914
|
-
|
|||||||||
Finance income, net
|
3,019
|
6,532
|
1,262
|
|||||||||
Deferred tax payments (benefit), net
|
394
|
(3,004
|
)
|
278
|
||||||||
Share-based payments
|
225
|
3,767
|
7,471
|
|||||||||
Share based acquisition costs related to business combination
|
-
|
-
|
807
|
|||||||||
Revaluation of other accounts receivable
|
-
|
3,982
|
-
|
|||||||||
Restructuring expenses
|
-
|
8,757
|
-
|
|||||||||
Loss from revaluation of investments
|
601
|
-
|
-
|
|||||||||
1,264
|
144,867
|
(4,230
|
)
|
|||||||||
Changes in non-cash working capital:
|
||||||||||||
Increase (decrease) in trade receivables, net
|
2,320
|
6,058
|
(6,602
|
)
|
||||||||
Increase (decrease) in other accounts receivable and advances to suppliers
|
1,299
|
3,622
|
845
|
|||||||||
Decrease in biological assets, net of fair value adjustments
|
-
|
565
|
6,412
|
|||||||||
Increase (decrease) in inventory, net of fair value adjustments
|
4,771
|
883
|
(19,707
|
)
|
||||||||
Increase (decrease) in trade payables
|
(6,098
|
)
|
11,284
|
5,573
|
||||||||
Changes in employee benefit liabilities, net
|
(139
|
)
|
(63
|
)
|
28
|
|||||||
Increase in other accounts payable and accrued expenses
|
(750
|
)
|
12,126
|
2,661
|
||||||||
1,403
|
34,475
|
(10,790
|
)
|
|||||||||
Taxes paid
|
(514
|
)
|
(681
|
)
|
(834
|
)
|
||||||
Net cash used in operating activities
|
(8,075
|
)
|
(12,640
|
)
|
(34,372
|
)
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Cash flows from investing activities:
|
||||||||||||
Purchase of property, plant and equipment
|
(581
|
)
|
(1,562
|
)
|
(4,578
|
)
|
||||||
Proceeds from sales of property, plant and equipment
|
-
|
210
|
-
|
|||||||||
Proceeds from loans receivable
|
-
|
350
|
7,796
|
|||||||||
Purchase of intangible assets
|
-
|
-
|
(17
|
)
|
||||||||
Acquisition of businesses, net of cash acquired
|
-
|
-
|
(12,536
|
)
|
||||||||
Deconsolidation of subsidiary (see Note 25)
|
-
|
(406
|
)
|
-
|
||||||||
Investments in financial assets
|
-
|
-
|
(13
|
)
|
||||||||
Proceeds from sale of investment
|
-
|
-
|
319
|
|||||||||
Proceeds from (investment in) restricted deposits
|
-
|
-
|
17
|
|||||||||
Investments in associates
|
(601
|
)
|
(125
|
)
|
-
|
|||||||
Net cash used in investing activities
|
(1,182
|
)
|
(1,533
|
)
|
(9,012
|
)
|
||||||
Cash provided by financing activities:
|
||||||||||||
Proceeds from issuance of share capital, net of issuance costs
|
1,688
|
3,756
|
28,131
|
|||||||||
Proceeds from issuance of warrants measured at fair value
|
6,585
|
-
|
11,222
|
|||||||||
Proceeds from exercise of warrants
|
-
|
-
|
3,682
|
|||||||||
Proceeds from exercise of options
|
-
|
333
|
133
|
|||||||||
Repayment of lease liability
|
(586
|
)
|
(1,656
|
)
|
(633
|
)
|
||||||
Payment of lease liability interest
|
(63
|
)
|
(1,429
|
)
|
(1,347
|
)
|
||||||
Proceeds from loans
|
5,482
|
9,636
|
7,804
|
|||||||||
Repayment of loans
|
(4,827
|
)
|
(4,976
|
)
|
-
|
|||||||
Interest paid
|
(1,664
|
)
|
(902
|
)
|
(261
|
)
|
||||||
Proceeds from discounted checks
|
2,802
|
-
|
-
|
|||||||||
Net cash provided by financing activities
|
9,417
|
4,762
|
48,731
|
|||||||||
Effect of foreign exchange on cash and cash equivalents
|
(796
|
)
|
(2,043
|
)
|
(329
|
)
|
||||||
Increase (decrease) in cash and cash equivalents
|
(636
|
)
|
(11,454
|
)
|
5,018
|
|||||||
Cash and cash equivalents at beginning of year
|
2,449
|
13,903
|
8,885
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
1,813
|
$
|
2,449
|
$
|
13,903
|
||||||
Supplemental disclosure of non-cash activities:
|
||||||||||||
Right-of-use asset recognized with corresponding lease liability
|
$
|
309
|
$
|
613
|
$
|
1,678
|
||||||
Conversion of warrant and compensation options into common shares
|
$
|
-
|
$
|
-
|
$
|
611
|
||||||
Issuance of shares in payment of purchase consideration liability
|
$
|
-
|
$
|
3,061
|
$
|
-
|
||||||
Issuance of shares in payment of debt settlement to a non-independent director of the company
|
$
|
1,061
|
$
|
-
|
$
|
-
|
IM CANNABIS CORP. AND ITS SUBSIDIARIES
NOTE 1:- |
GENERAL
|
a. |
Corporate information:
|
NOTE 1:- |
GENERAL (Cont.)
|
As of December 31, 2023, the Group's cash and cash equivalents totaled $1,813, the Group's working capital (current assets less current liabilities) amounted to $(8,543) and the Group’s accumulated loss deficit amounted to $249,145. In the twelve months ended December 31, 2023, the Group had an operating loss from continuing operation of ($12,792) and negative cash flows from continuing operating activities of ($8,075).
NOTE 1:- |
GENERAL (Cont.)
|
NOTE 1:- |
GENERAL (Cont.)
|
NOTE 1:- |
GENERAL (Cont.)
|
NOTE 1:- |
GENERAL (Cont.)
|
b. |
Approval of consolidated financial statements:
|
c. |
Definitions:
|
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
|
NIS
|
-
|
New Israeli Shekel
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES |
a. |
Basis of presentation:
|
- |
Financial instruments which are presented at fair value through profit or loss.
|
- |
Biological assets which are presented at fair value less cost to sell up to the point of harvest.
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
b. |
Consolidated financial statements:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Percentage ownership
|
||||||||
Subsidiaries
|
2023
|
2022
|
||||||
I.M.C. Holdings Ltd. (”IMC”)
|
100
|
%
|
100
|
%
|
||||
Focus Medical Herbs Ltd. ("Focus") *)
|
74
|
%
|
74
|
%
|
||||
I.M.C. Pharma Ltd.
|
100
|
%
|
100
|
%
|
||||
I.M.C.C. Medical Herbs Ltd. ***)
|
100
|
%
|
100
|
%
|
||||
I.M.C Farms Israel Ltd. ("IMC Farms") ***)
|
100
|
%
|
100
|
%
|
||||
I.M.C Ventures Ltd. ("IMC Ventures") ***)
|
75
|
%
|
75
|
%
|
||||
I.M.C - International Medical Cannabis Portugal Unipessoal Lda) ***)
|
-
|
-
|
||||||
Adjupharm GmbH (“Adjupharm”)
|
90.02
|
%
|
90.02
|
%
|
||||
R.A. Yarok Pharm Ltd. (“Pharm Yarok”)
|
100
|
%
|
100
|
%
|
||||
Rosen High Way Ltd. (“Rosen High Way”)
|
100
|
%
|
100
|
%
|
||||
High Way Shinua Ltd. (“HW Shinua”)
|
100
|
%
|
100
|
%
|
||||
Revoly Trading and Marketing Ltd. (“Vironna”)
|
51
|
%
|
51
|
%
|
||||
Oranim Plus Pharm LTD.
|
51.3
|
%
|
51.3
|
%
|
||||
Oranim Pharm
|
51
|
%
|
51
|
%
|
||||
Trichome Financial Corp. (“Trichome”)
|
**)
|
**)
|
||||||
Trichome Financial Cannabis GP Inc.
|
**)
|
**)
|
||||||
Trichome Financial Cannabis Manager Inc.
|
**)
|
**)
|
||||||
Trichome Asset Funding Corp.
|
**)
|
**)
|
||||||
Trichome JWC Acquisition Corp. (“TJAC”)
|
**)
|
**)
|
||||||
Trichome Retail Corp.
|
**)
|
**)
|
||||||
MYM Nutraceuticals Inc. (“MYM”)
|
**)
|
**)
|
||||||
SublimeCulture Inc.
|
**)
|
**)
|
||||||
CannaCanada Inc.
|
**)
|
**)
|
||||||
MYM International Brands Inc.
|
**)
|
**)
|
||||||
Highland Grow Inc.
|
**)
|
**)
|
*) |
The Company does not hold directly interest or voting rights in Focus. The Company's wholly-owned subsidiary holds an option to buy the ownership of the 74% of Focus shares. According to accounting criteria in IFRS 10, the Company is viewed as effectively exercising control over Focus, and therefore, the accounts of Focus are consolidated with those of the Company (see also note 26).
|
**) |
Deconsolidated effective November 7, 2022, when Trichome filed to commence proceedings under the Companies’ Creditors Arrangement Act (CCAA) (see Note 1).
|
***) |
Dissolved as of December 31, 2023.
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
c. |
Business combinations and goodwill:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
d. |
Functional currency, presentation currency and foreign currency:
|
1. |
Functional currency and presentation currency:
|
2. |
Transactions, assets and liabilities in foreign currency:
|
e. |
Cash equivalents:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
f. |
Inventories:
|
g. |
Biological assets:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
h. |
Revenue recognition:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
a) |
The reason for the bill-and-hold arrangement is substantive (for example, the customer has requested the arrangement);
|
b) |
The product is identified separately as belonging to the customer;
|
c) |
The product currently is ready for physical delivery to the customer;
|
d) |
The Group does not have the ability to use the product by selling it or delivering it to another customer.
|
i. |
Taxes on income:
|
1. |
Current taxes:
|
2. |
Deferred taxes:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
j. |
Non-current assets or disposal group held for sale and discontinued operations:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
k. |
Leases:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
l. |
Property, plant and equipment, net:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
%
|
Mainly %
|
|||||
Buildings
|
3
|
3
|
||||
Greenhouse production equipment
|
7 - 25
|
20
|
||||
Greenhouse structure
|
12.5
|
12.5
|
||||
Motor vehicles
|
15
|
15
|
||||
Computer, software and equipment
|
20 - 33
|
33
|
||||
Leasehold improvements
|
See below
|
See below
|
m. |
Intangible assets:
|
Years
|
|||
Customer relationship
|
5 - 8
|
||
Brand name
|
9
|
||
Other intangibles
|
9
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
n. |
Impairment of non-financial assets:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
o. |
Financial instruments:
|
1. |
Financial assets:
|
- |
The Group’s business model for managing financial assets; and
|
- |
The contractual cash flow terms of the financial asset.
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
2. |
Financial liabilities:
|
3. |
Issue of a unit of securities:
|
4. |
Put option granted to non-controlling interests:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
p. |
Fair value measurement:
|
Level 1
|
-
|
quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
Level 2
|
-
|
inputs other than quoted prices included within Level 1 that are observable directly or indirectly.
|
Level 3
|
-
|
inputs that are not based on observable market data (valuation techniques which use inputs that are not based on observable market data).
|
q. |
Provisions:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
r. |
Share-based payment transactions:
|
s. |
Earnings (loss) per share:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
1. |
Amendment to IAS 1, "Disclosure of Accounting Policies":
|
2. |
Amendment to IAS 12, "Income Taxes":
|
NOTE 3:- |
SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS
|
a. |
Judgments:
|
- |
Determining the fair value of share-based payment transactions:
|
- |
Discount rate for a lease liability:
|
b. |
Estimates and assumptions:
|
- |
Legal claims:
|
NOTE 3:- |
SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS (Cont.)
|
- |
Deferred tax assets:
|
- |
Impairment of goodwill:
|
- |
Determining the fair value of an unquoted financial assets and liabilities:
|
- |
Loss of control of subsidiary:
On November 7, 2022, Trichome filed a petition with the Superior Court of Ontario for protection under the Companies’ Creditors Arrangement Act (“CCAA”) in order to restructure its business and financial affairs. Management applied judgement in assessing whether this event represented a loss of control of Trichome. On filing of CCAA, which included a request for an order to approve a sale and investment solicitation process and to approve a stalking horse agreement of purchase and sale, management concluded that the Company ceased to have the power to direct the relevant activity of Trichome because substantive rights were granted to other parties through the CCAA proceedings that restricted the decision making ability of the Company to the extent that the Company was unable to demonstrate power over Trichome. As a result, the Company accounted for a loss in control and Trichome was deconsolidated on November 17, 2022 (see Note 1 and Note 25).
|
NOTE 4:- |
DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR ADOPTION
|
a. |
Amendments to IAS 21, "The Effects of Changes in Foreign Exchange Rates":
|
NOTE 5:- |
BUSINESS COMBINATIONS
|
NOTE 6:- |
TRADE RECEIVABLES
|
NOTE 7:- |
OTHER ACCOUNTS RECEIVABLE
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
Prepaid expenses
|
$
|
210
|
$
|
1,488
|
||||
Government authorities
|
1,899
|
1,557
|
||||||
Related parties (see Note 24)
|
-
|
83
|
||||||
Non-independent director – L5 Capital (See note 1)
|
839
|
-
|
||||||
Other receivables
|
941
|
195
|
||||||
$
|
3,889
|
$
|
3,323
|
NOTE 8:- |
BIOLOGICAL ASSETS
|
Balance at of January 1, 2022
|
$
|
1,687
|
||
Production costs capitalized
|
7,744
|
|||
Changes in fair value less cost to sell due to biological transformation
|
84
|
|||
Transferred to inventory upon harvest
|
(9,025
|
)
|
||
Restructuring disposal
|
(108
|
)
|
||
Foreign exchange translation
|
62
|
|||
Deconsolidation of Trichome (see Note 25)
|
(444
|
)
|
||
Balance at of December 31, 2022
|
-
|
|||
Balance at of December 31, 2023
|
-
|
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.
|
NOTE 8:- |
BIOLOGICAL ASSETS (Cont.)
|
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.
|
December 31,
|
10% change as at
December 31,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Average selling price per gram of dried cannabis (in CAD)
|
-
|
$
|
3.21
|
-
|
$
|
60
|
||||||||||
Average post-harvest costs per gram of dried cannabis (in CAD)
|
-
|
$
|
0.75
|
-
|
$
|
17
|
||||||||||
Attrition rate
|
-
|
51
|
%
|
-
|
44
|
%
|
||||||||||
Average yield per plant (in grams)
|
-
|
38
|
-
|
42
|
||||||||||||
Average stage of growth
|
-
|
82
|
%
|
-
|
39
|
%
|
NOTE 9:- |
INVENTORY
|
December 31, 2023
|
||||||||||||
Capitalized costs
|
Fair valuation adjustment, net
|
Carrying value
|
||||||||||
Work in progress:
|
||||||||||||
Bulk cannabis
|
$
|
3,735
|
$
|
-
|
$
|
3,735
|
||||||
Finished goods:
|
||||||||||||
Packaged dried cannabis
|
4,667
|
984
|
5,651
|
|||||||||
Other products
|
590
|
-
|
590
|
|||||||||
Balance as of December 31, 2023
|
8,992
|
984
|
9,976
|
December 31, 2022
|
||||||||||||
Capitalized costs
|
Fair valuation adjustment, net
|
Carrying value
|
||||||||||
Work in progress:
|
||||||||||||
Bulk cannabis
|
$
|
5,364
|
$
|
1,265
|
$
|
6,629
|
||||||
Finished goods:
|
||||||||||||
Packaged dried cannabis
|
8,665
|
549
|
9,214
|
|||||||||
Other products
|
742
|
-
|
742
|
|||||||||
Balance as of December 31, 2022
|
$
|
14,771
|
$
|
1,814
|
$
|
16,585
|
NOTE 10:- |
PROPERTY, PLANT AND EQUIPMENT, NET
|
Buildings and improvements
|
Production equipment and furniture
|
Greenhouse structure
|
Computer, software and equipment
|
Motor vehicles
|
Total
|
|||||||||||||||||||
Cost:
|
||||||||||||||||||||||||
Balance at January 1, 2022
|
$
|
23,156
|
$
|
8,270
|
$
|
2,182
|
$
|
1,039
|
$
|
370
|
$
|
35,017
|
||||||||||||
Additions during the year
|
267
|
795
|
49
|
240
|
211
|
1,562
|
||||||||||||||||||
Deconsolidation of Trichome
|
(13,770
|
)
|
(4,186
|
)
|
-
|
(302
|
)
|
(52
|
)
|
(18,310
|
)
|
|||||||||||||
Foreign currency translation
|
(104
|
)
|
(173
|
)
|
(120
|
)
|
(46
|
)
|
(79
|
)
|
(522
|
)
|
||||||||||||
Balance at December 31, 2022
|
9,549
|
4,706
|
2,111
|
931
|
450
|
17,747
|
||||||||||||||||||
Additions during the year
|
387
|
41
|
-
|
66
|
87
|
581
|
||||||||||||||||||
Foreign currency translation
|
(37
|
)
|
(8
|
)
|
-
|
(75
|
)
|
(26
|
)
|
(146
|
)
|
|||||||||||||
Balance at December 31, 2023
|
9,899
|
4,739
|
2,111
|
922
|
511
|
18,182
|
||||||||||||||||||
Accumulated depreciation:
|
||||||||||||||||||||||||
Balance at January 1, 2022
|
1,742
|
1,952
|
676
|
333
|
46
|
4,749
|
||||||||||||||||||
Depreciation during the year
|
1,549
|
988
|
139
|
286
|
82
|
3,044
|
||||||||||||||||||
Impairment
|
5,258
|
1,931
|
1,377
|
52
|
37
|
8,655
|
||||||||||||||||||
Deconsolidation of Trichome
|
(2,428
|
)
|
(1,095
|
)
|
-
|
(121
|
)
|
(21
|
)
|
(3,665
|
)
|
|||||||||||||
Foreign currency translation
|
(28
|
)
|
(119
|
)
|
(81
|
)
|
(17
|
)
|
(12
|
)
|
(257
|
)
|
||||||||||||
Balance at December 31, 2022
|
6,093
|
3,657
|
2,111
|
533
|
132
|
12,526
|
||||||||||||||||||
Depreciation during the year
|
218
|
135
|
-
|
215
|
76
|
644
|
||||||||||||||||||
Foreign currency translation
|
(10
|
)
|
-
|
-
|
(30
|
)
|
(6
|
)
|
(46
|
)
|
||||||||||||||
Balance at December 31, 2023
|
6,301
|
3,792
|
2,111
|
718
|
202
|
13,124
|
||||||||||||||||||
Depreciated cost at December 31, 2023
|
$
|
3,598
|
$
|
947
|
$
|
-
|
$
|
204
|
$
|
309
|
$
|
5,058
|
||||||||||||
Depreciated cost at December 31, 2022
|
$
|
3,456
|
$
|
1,049
|
$
|
-
|
$
|
398
|
$
|
318
|
$
|
5,221
|
NOTE 11:- |
GOODWILL AND INTANGIBLE ASSETS, NET
|
Cultivations and processing license *)
|
Customer relationships
|
Brand
|
Goodwill
|
Other
|
Total
|
|||||||||||||||||||
Cost:
|
||||||||||||||||||||||||
Balance at January 1, 2022
|
$
|
9,961
|
$
|
10,674
|
$
|
11,363
|
$
|
121,578
|
$
|
202
|
$
|
153,778
|
||||||||||||
PPA adjustments during measurement period
|
-
|
5,715
|
-
|
(2,774
|
)
|
-
|
2,941
|
|||||||||||||||||
Disposals
|
(1,581
|
)
|
-
|
-
|
-
|
-
|
(1,581
|
)
|
||||||||||||||||
Deconsolidation of Trichome
|
(5,856
|
)
|
(2,932
|
)
|
(9,799
|
)
|
-
|
(131
|
)
|
(18,718
|
)
|
|||||||||||||
Foreign currency translation adjustments
|
-
|
(381
|
)
|
-
|
(904
|
)
|
(48
|
)
|
(1,333
|
)
|
||||||||||||||
Balance at December 31, 2022
|
2,524
|
13,076
|
1,564
|
117,900
|
23
|
135,087
|
||||||||||||||||||
PPA adjustments during measurement period
|
-
|
2,225
|
-
|
-
|
-
|
2,225
|
||||||||||||||||||
Disposals
|
-
|
(2,225
|
)
|
-
|
-
|
-
|
(2,225
|
)
|
||||||||||||||||
Foreign currency translation adjustments
|
-
|
(361
|
)
|
-
|
336
|
|
-
|
(25
|
)
|
|||||||||||||||
Balance at December 31, 2023
|
2,524
|
12,715
|
1,564
|
118,236
|
23
|
135,062
|
||||||||||||||||||
Accumulated amortization:
|
||||||||||||||||||||||||
Balance at January 1, 2022
|
774
|
469
|
8
|
275
|
64
|
1,590
|
||||||||||||||||||
Amortization recognized in the year
|
767
|
1,503
|
7
|
-
|
66
|
2,343
|
||||||||||||||||||
Impairment
|
1,215
|
4,461
|
1,501
|
107,854
|
4
|
115,035
|
||||||||||||||||||
Deconsolidation of Trichome
|
(1,083
|
)
|
(365
|
)
|
-
|
-
|
(114
|
)
|
(1,562
|
)
|
||||||||||||||
Balance at December 31, 2022
|
1,673
|
6,068
|
1,516
|
108,129
|
20
|
117,406
|
||||||||||||||||||
Amortization recognized in the year
|
18
|
1,730
|
7
|
-
|
3
|
1,758
|
||||||||||||||||||
Balance at December 31, 2023
|
1,691
|
7,798
|
1,523
|
108,129
|
23
|
119,164
|
||||||||||||||||||
Amortized cost at December 31, 2023
|
$
|
833
|
$
|
4,917
|
$
|
41
|
$
|
10,107
|
$
|
-
|
$
|
15,898
|
||||||||||||
Amortized cost at December 31, 2022
|
$
|
851
|
$
|
7,008
|
$
|
48
|
$
|
9,771
|
$
|
3
|
$
|
17,681
|
*) |
The licenses consist of GMP and GDP licenses.
|
NOTE 11:- |
GOODWILL AND INTANGIBLE ASSETS, NET (Cont.)
|
For the year ended December 31, 2023, the Company did not recorded a goodwill and intangible assets impairment.
NOTE 12:- |
RIGHT-OF-USE ASSETS
|
buildings
|
Motor vehicles
|
Total
|
||||||||||
Cost:
|
||||||||||||
Balance at January 1, 2022
|
$
|
19,514
|
$
|
546
|
$
|
20,060
|
||||||
Additions during the year:
|
||||||||||||
New leases
|
302
|
311
|
613
|
|||||||||
Disposals during the year
|
(315
|
)
|
-
|
(315
|
)
|
|||||||
Termination of leases
|
(1,804
|
)
|
(207
|
)
|
(2,011
|
)
|
||||||
Deconsolidation of Trichome
|
(13,130
|
)
|
(43
|
)
|
(13,173
|
)
|
||||||
Currency translation adjustments
|
(225
|
)
|
(32
|
)
|
(257
|
)
|
||||||
Balance at December 31, 2022
|
4,342
|
575
|
4,917
|
|||||||||
Additions during the year:
|
||||||||||||
New leases
|
-
|
309
|
309
|
|||||||||
Termination of leases
|
-
|
(240
|
)
|
(240
|
)
|
|||||||
Currency translation adjustments
|
(132
|
)
|
(29
|
)
|
(161
|
)
|
||||||
Balance at December 31, 2023
|
4,210
|
615
|
4,825
|
|||||||||
Accumulated depreciation:
|
||||||||||||
Balance at January 1, 2022
|
1,659
|
239
|
1,898
|
|||||||||
Additions during the year:
|
||||||||||||
Depreciation and amortization
|
1,768
|
176
|
1,944
|
|||||||||
Termination of leases
|
(453
|
)
|
(91
|
)
|
(544
|
)
|
||||||
Impairment
|
1,907
|
6
|
1,913
|
|||||||||
Deconsolidation of Trichome
|
(2,164
|
)
|
(10
|
)
|
(2,174
|
)
|
||||||
Currency translation adjustments
|
(35
|
)
|
(14
|
)
|
(49
|
)
|
||||||
Balance at December 31, 2022
|
2,682
|
306
|
2,988
|
|||||||||
Additions during the year:
|
||||||||||||
Depreciation and amortization
|
453
|
141
|
594
|
|||||||||
Currency translation adjustments
|
(48
|
)
|
(16
|
)
|
(64
|
)
|
||||||
Balance at December 31, 2023
|
3,087
|
431
|
3,518
|
|||||||||
Depreciated cost at December 31, 2023
|
1,123
|
184
|
1,307
|
|||||||||
Depreciated cost at December 31, 2022
|
$
|
1,660
|
$
|
269
|
$
|
1,929
|
NOTE 13:- |
CREDIT FROM BANKS AND OTHERS
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
Short-term credit from banks
|
$
|
3,227
|
$
|
5,084
|
||||
Short-term credit from others
|
6,090
|
4,162
|
||||||
Check receivables
|
2,802
|
|||||||
$
|
12,119
|
$
|
9,246
|
1. |
In January 2022, Focus entered into a revolving credit facility with an Israeli bank, Bank Mizrahi (the “Mizrahi Facility”). The Mizrahi Facility is guaranteed by Focus assets. Advances from the Mizrahi Facility will be used for working capital needs. The Mizrahi Facility has a total commitment of up to NIS 15 million (approximately $6,000) and has a one-year term for on-going needs and 6 months term for imports and purchases needs. The Mizrahi Facility is renewable upon mutual agreement by the parties. The borrowing base is available for draw at any time throughout the Mizrahi Facility and is subject to several covenants to be measured on a quarterly basis (the “Mizrahi Facility Covenants”).
|
NOTE 13:- |
CREDIT FROM BANKS AND OTHERS (Cont.)
|
2. |
On October 11, 2022, IMC Holdings entered into a loan agreement with A.D.I. Car Alarms Stereo Systems Ltd (“ADI” and the “ADI Agreement”), to borrow a principal amount of NIS 10,500 thousands (approximately $4,000) at an annual interest of 15% (the “ADI Loan”), which is to be repaid within 12 months of the date of the ADI Agreement. The ADI Loan is secured by a second rank land charge on the Logistics Center of Adjupharm. In addition, CEO and Director of the Company, provided a personal guarantee to ADI should the security not be sufficient to cover the repayment of the ADI Loan.
|
3. |
On July 3rd, 2023, the Company entered into a short-term loan agreement with a non-financial institution in the amount of NIS 1,000 thousands (approx. $358). The Loan beard interest rate of 10% and was repaid in October 2023, according to the Loan Agreement terms.
|
4. |
During October 2023, the Company entered into a series of short-term loans for aggregate gross proceeds of NIS 5,882 thousands (approximately $2,000) from certain lenders, including a director and officer of the Company. Out of the aggregate gross proceeds, a director and officer of the Company loaned an amount of NIS 500 thousands (approximately $170) to the Company.
|
NOTE 14:- |
TRADE PAYABLES
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
Open accounts in Israel
|
$
|
3,686
|
$
|
9,113
|
||||
Open accounts abroad
|
5,537
|
6,199
|
||||||
$
|
9,223
|
$
|
15,312
|
NOTE 15:- |
OTHER PAYABLES AND ACCRUED EXPENSES
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
Accrued expenses
|
$
|
1,615
|
$
|
1,848
|
||||
Employees and payroll accruals
|
1,003
|
1,066
|
||||||
Government authorities
|
2,444
|
1,617
|
||||||
Related parties
|
239
|
693
|
||||||
Advances from customers
|
787
|
31
|
||||||
Liabilities for restructuring
|
117
|
116
|
||||||
Other payables
|
13
|
642
|
||||||
$
|
6,218
|
$
|
6,013
|
NOTE 16:- |
EMPLOYEE BENEFIT LIABILITIES, NET
|
NOTE 17:- |
FINANCIAL INSTRUMENTS
|
a. |
Management believes that the carrying amount of cash and cash equivalents, trade receivables, other accounts receivable, loans receivables, trade payables, bank loans, other account payables and accrued expenses and purchase consideration payable and approximate their fair value due to the short-term maturities of these instruments.
|
b. |
For the years ended December 31, 2023, 2022 and 2021, the Company recognized a revaluation gain (loss) from remeasurement of warrants in the consolidated statement of profit or loss and other comprehensive income, which unrealized gain is included in finance income (expense). (See also note 20f).
|
c. |
On December 26, 2019, IMC entered into a share purchase agreement (the “SPA”) with Xinteza API Ltd. ("Xinteza"), a company with a unique biosynthesis technology.
|
NOTE 17:- |
FINANCIAL INSTRUMENTS (Cont.)
|
d. |
Financial risk management:
|
Less than one year
|
1 to 5 years
|
6 to 10
years
|
>10
years
|
|||||||||||||
Lease liabilities
|
$
|
499
|
$
|
899
|
$
|
-
|
$
|
-
|
||||||||
Bank loans and others
|
12,119
|
394
|
-
|
-
|
||||||||||||
Total
|
$
|
12,618
|
$
|
1,293
|
$
|
-
|
$
|
-
|
Less than one year
|
1 to 5 years
|
6 to 10
years
|
>10
years
|
|||||||||||||
Lease liabilities
|
$
|
922
|
$
|
1,830
|
$
|
598
|
$
|
-
|
||||||||
Bank loans and others
|
9,246
|
399
|
-
|
-
|
||||||||||||
Total
|
$
|
10,168
|
$
|
2,229
|
$
|
598
|
$
|
-
|
NOTE 17:- |
FINANCIAL INSTRUMENTS (Cont.)
|
e. |
On November 29, 2022, the IMC signed on a convertible loan agreement with Telekana Ltd. (“Telekana”), a Pharmacy for sell of medical Cannabis accordingly IMC will loan a total of $611. The loan will be converted to 1,040 shares representing 51% of the total common share of Telekana , at the earlier of the following events; (i) Telekana will receive the permit for sell of medical Cannabis from the Israeli Ministry of Health, (ii) IMC sole decision to convert. The permit was received on November 13, 2023.
|
f. |
Changes in liabilities arising from financing activities:
|
Loans
|
Lease liabilities
|
Warrants
|
Total liabilities arising from financing activities
|
|||||||||||||
Balance as of January 1, 2022
|
$
|
9,894
|
$
|
19,374
|
$
|
6,022
|
$
|
35,290
|
||||||||
Additions for new loans
|
4,660
|
-
|
-
|
4,660
|
||||||||||||
Additions for new leases
|
-
|
613
|
-
|
613
|
||||||||||||
Repayments
|
-
|
(3,085
|
)
|
-
|
(3,085
|
)
|
||||||||||
Effective interest
|
-
|
1,429
|
-
|
1,429
|
||||||||||||
Effect of exchange rate differences
|
(1,135
|
)
|
(2,056
|
)
|
-
|
(3,191
|
)
|
|||||||||
Deconsolidation of Trichome
|
(3,774
|
)
|
(14,386
|
)
|
-
|
(18,160
|
)
|
|||||||||
Effect of changes in fair value
|
-
|
-
|
(6,014
|
)
|
(6,014
|
)
|
||||||||||
Balance as of December 31, 2022
|
9,645
|
1,889
|
8
|
11,542
|
||||||||||||
Additions for new loans
|
655
|
-
|
-
|
655
|
||||||||||||
Additions for new leases
|
-
|
309
|
-
|
309
|
||||||||||||
Receivables checks
|
2,802
|
-
|
-
|
2,802
|
||||||||||||
Repayments
|
-
|
(649
|
)
|
-
|
(649
|
)
|
||||||||||
Effective interest
|
-
|
63
|
|
-
|
63
|
|
||||||||||
Effect of exchange rate differences
|
(589
|
)
|
(343
|
)
|
6,986
|
6,054
|
||||||||||
Deconsolidation of Trichome
|
||||||||||||||||
Effect of changes in fair value
|
-
|
-
|
(6,956
|
)
|
(6,956
|
)
|
||||||||||
Balance as of December 31, 2023
|
12,513
|
1,269
|
38
|
13,820
|
NOTE 18:- |
CONTINGENT LIABILITIES, GUARANTEES, COMMITMENTS AND CHARGES
|
a. |
On August 19, 2019, a cannabis consumer (the “Applicant”) filed a motion for approval of a class action to Tel Aviv - Jaffa District Court (the “Motion”) against 17 companies (the “Parties”) operating in the field of medical cannabis in Israel, including Focus. The Applicant’s argument is that the Parties did not accurately mark the concentration of active ingredients in their products. The personal suit sum for each class member stands at NIS 15,585 and the total amount of the class action suit is estimated at NIS 685,740,000. On June 2, 2020, the Parties submitted their response to the Motion. The Parties argue in their response that the threshold conditions for approval of a class action were not met, since there is no reasonable possibility that the causes of action in the Motion will be decided in favor of the class group. On July 3, 2020 the Applicant submitted his response to the Parties’ response. On July 5, 2020 the Applicant was absent from the hearing. As a result, on July 23, 2020 the Parties filed an application for a ruling of expenses which received a response from the Applicant on August 12, 2020, asking to decline this request. On September 29, 2020 the court ruled that the Applicant would pay the Parties’ expenses amount of NIS 750. On July 14, 2021 a prehearing was held. The court recommended the parties negotiate independently to avoid litigation, and if negotiations fail, then to begin mediation proceedings. The parties agreed to follow the court’s recommendations. On November 3, 2021 the court ruled the Parties will file an update regarding the mediation procedure in 30 days. The parties conducted unsuccessful negotiations. On March 14, 2022, the Applicant filed a request to amend the Motion (the “Applicant’s Request for Amendment”) and the judge disqualified herself from hearing the case. As a result, the case was redirected. On June 21, 2022 the Parties filed a response to the Applicant’s Request for Amendment. On September 12, 2022, the court ruled on the Applicant’s Request for Amendment and accepted the Applicant’s request to clarify its claims regarding product labeling, while rejecting the Applicant’s other requests. On November 27, 2023, the Applicant submitted an amended application for approval of the motion (the “Amended Motion"), and the Parties’ response was submitted on February 8, 2023. The date of the preliminary hearing was postpone several timed and is yet to be determined by court.
Due to the current preliminary state of the litigation process and based on the opinion of legal counsel to Focus, the Company’s management believes that it is not reasonably possible to assess the outcome of the proceeding. Therefore, no provision has been recorded in respect thereof.
|
b. |
On July 11, 2021 the Company was informed that on June 30, 2021, a claim was filed to Beer Sheva Magistrate Court, by the municipal committee presiding over planning and construction in southern Israel against Focus, Focus’ directors and officers, including Oren Shuster and Rafael Gabay, and certain landowners, claiming for inadequate permitting for construction relating to the Focus Facility (the “Construction Proceedings”).
On December 6, 2021 the defendants filed a motion request for dismissal the indictment on the ground of defense of justice. The municipal committee filed its response and after that the defendants filed a response to the municipal committee’s response. As of the date of this letter no decision has yet been made on the application.
|
NOTE 18:- |
CONTINGENT LIABILITIES, GUARANTEES, COMMITMENTS AND CHARGES (Cont.)
|
c. |
On November 19, 2021, Adjupharm filed a statement of claim (the “Claim”) to the District Court of Stuttgart (the “Stuttgart Court”) against Stroakmont & Atton Trading GmbH (“Stroakmont & Atton”), its shareholders and managing directors regarding a debt owed by Stroakmont & Atton to Adjupharm in an amount of approximately EUR 947,563 for COVID-19 test kits purchased by Stroakmont & Atton from Adjupharm in May 2021. The Claim was accepted on December 2, 2021. In January 2022, Stroakmont & Atton filed its statement of defence to the Stuttgart Court in which they essentially stated two main arguments for their defense:
|
1. |
The contractual party of the Company was not the Stroakmont & Atton. The contract with Stroakmont & Atton was only concluded as a sham transaction in order to cover up a contract with a company named Uniclaro. Therefore, Stroakmont & Atton is not the real purchaser rather than Uniclaro GmbH.
|
2. |
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.
|
NOTE 18:- |
CONTINGENT LIABILITIES, GUARANTEES, COMMITMENTS AND CHARGES (Cont.)
|
NOTE 18:- |
CONTINGENT LIABILITIES, GUARANTEES, COMMITMENTS AND CHARGES (Cont.)
|
According to Uniclaro's statement of claim the lawsuit does not concern the same purchase price and the same Covid-19 rapid tests as in the Stroakmont & Atton Claim. On February 23, 2023, the Company provided its statement of defense to the court. The statement of defense contains similar arguments to reject the allegations in this respect as in the court proceedings in Stuttgart about the counterclaims. As a next step, Uniclaro is allowed to respond to the Company's statement of defense.
At this stage, the Company management cannot assess the chances of the claim advancing or the potential outcome of these proceedings. Therefore, no provision has been recorded in respect of this claim.
|
NOTE 19:- |
TAXES ON INCOME
|
a. |
Tax rates applicable to the Group:
|
1. |
The Company is subject to tax rates applicable in Canada. The combined federal and provincial rate for 2023 and 2022 is 26.5%.
|
2. |
The Israeli subsidiaries are subject to Israeli corporate income tax rate of 23% in 2023 and 2022.
|
3. |
The German subsidiary is subject to weighted tax rate of approximately 29.1% (composed of Federal and Municipal tax).
|
b. |
Carryforward losses for tax purposes:
Carryforward operating tax losses of the Israeli subsidiaries total approximately $8,000, as of December 31, 2023. These losses can be carried forward to future years and offset against taxable income in the future without any time limitation. The company did not record deferred tax assets with regards to IMC, Focus and I.M.C. Pharma Ltd. since the Companies does not anticipate to utilize the net operating losses in the foreseeable future.
Carryforward operating tax losses of the German subsidiary as of December 31, 2023, amounted to approximately $15,599. Accumulated tax losses can be carried forward without time restrictions and can be deducted from future profits and capital gains unless they exceed €1,000 thousand (approximately $1,465). Any excess of such amount will be limited to 60% of the profits or capital gains. Unused carried forward losses will be subject to such limitation in the future. No deferred tax assets were recorded with regards to the German subsidiary since the Company does not anticipate to utilize the net operating losses in the foreseeable future.
|
NOTE 19:- |
TAXES ON INCOME (Cont.)
|
c. | Income tax expense (benefit): | |
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Current
|
$
|
182
|
$
|
688
|
$
|
243
|
||||||
Deferred, net
|
394
|
(1,810
|
)
|
278
|
||||||||
Income tax from previous years
|
195
|
(16
|
)
|
(21
|
)
|
|||||||
$
|
771
|
$
|
(1,138
|
)
|
$
|
500
|
d. | Deferred taxes: | |
December 31,
|
||||||||
2023
|
2022
|
|||||||
Deferred tax assets:
|
||||||||
Carryforward tax losses and other
|
$
|
-
|
$
|
731
|
||||
Other deferred tax assets
|
-
|
32
|
||||||
-
|
763
|
|||||||
Deferred tax liabilities:
|
||||||||
Intangible assets
|
963
|
1,285
|
||||||
Other
|
-
|
47
|
||||||
963
|
1,332
|
|||||||
Deferred tax liabilities, net
|
$
|
(963
|
)
|
$
|
(569
|
)
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
Non-current assets
|
$
|
-
|
$
|
763
|
||||
Non-current liabilities
|
$
|
963
|
$
|
1,332
|
NOTE 19:- |
TAXES ON INCOME (Cont.)
|
e. |
Reconciliation of tax expense (benefit) and the accounting loss multiplied by the Company's domestic tax rate for:
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Loss before income tax
|
$
|
(9,457
|
)
|
$
|
(26,060
|
)
|
$
|
(164
|
)
|
|||
Statutory tax rate in Canada 26.5%
|
(2,506
|
)
|
(6,906
|
)
|
(43
|
)
|
||||||
Increase (decrease) in income tax due to:
|
||||||||||||
Non-deductible expenses (non-taxable income), net for tax purposes
|
(122
|
)
|
1,764
|
(4,208
|
)
|
|||||||
Effect of different tax rate of subsidiaries
|
169
|
599
|
310
|
|||||||||
Adjustments in respect of current income tax of previous years
|
195
|
(16
|
)
|
(21
|
)
|
|||||||
Recognition (derecognition) of tax benefit in respect of losses of previous years
|
1,565
|
-
|
846
|
|||||||||
Unrecognized tax benefit in respect of loss for the year
|
1,432
|
4,037
|
4,093
|
|||||||||
Other adjustments
|
38
|
(616
|
)
|
(477
|
)
|
|||||||
Income tax expense (benefit)
|
$
|
771
|
$
|
(1,138
|
)
|
$
|
500
|
NOTE 20:- |
EQUITY
|
a. |
Composition of share capital:
|
December 31, 2023
|
December 31, 2022
|
|||||||||
Authorized
|
Issued and outstanding
|
Authorized
|
Issued and outstanding
|
|||||||
Number of shares
|
||||||||||
Common Shares without par value
|
Unlimited
|
13,394,136
|
Unlimited
|
7,569,526
|
NOTE 20:- |
EQUITY (Cont.)
|
b. |
Capital issuances:
|
NOTE 20:- |
EQUITY (Cont.)
|
NOTE 20:- |
EQUITY (Cont.)
|
c. |
Changes in issued and outstanding share capital:
|
Number of shares
|
||||
Balance as of January 1, 2022
|
6,811,620
|
|||
Common shares issued as a result of options exercises
|
21,736
|
|||
Common shares issued in settlement of purchase consideration of business combination
|
126,006
|
|||
Issuance of treasury Common shares
|
10,165
|
|||
Issuance of Common shares
|
599,999
|
|||
Balance as of December 31, 2022
|
7,569,526
|
|||
Issuance of Common Shares pursuant to debt settlement
|
492,492
|
|||
Issuance of Common Shares pursuant to vested RSUs
|
54,999
|
|||
Issuance of Common shares
|
5,277,119
|
|||
Balance as of December 31, 2023
|
13,394,136
|
NOTE 20:- |
EQUITY (Cont.)
|
d. |
Share option plan:
|
Year ended
December 31,
|
||||||
2023
|
2022
|
|||||
Exercise price (in CAD)
|
$1.1
|
$2.3-$27.3
|
||||
Dividend yield (%)
|
-
|
-
|
||||
Expected life of share options (years)
|
5
|
4-5
|
||||
Volatility (%)
|
104.4-109.35
|
77.04-107.03
|
||||
Annual risk-free rate (%)
|
3.55-3.65
|
1.43-3.85
|
||||
Share price (in CAD)
|
$1.1
|
$2.3-$27.3
|
Year ended December 31, 2023
|
||||||||
Number of options
|
Weighted average exercise price
|
|||||||
in CAD
|
||||||||
Options outstanding at the beginning of the year
|
519,170
|
37.6
|
||||||
Options granted during the year
|
3,000
|
1.1
|
||||||
Options exercised during the year
|
-
|
-
|
||||||
Options forfeited during the year
|
(196,718
|
)
|
(51.78
|
) | ||||
Options outstanding at the end of year
|
325,452
|
28.72
|
||||||
Options exercisable at the end of year
|
299,442
|
28.39
|
NOTE 20:- |
EQUITY (Cont.)
|
Year ended December 31, 2022
|
||||||||
Number of options
|
Weighted average exercise price
|
|||||||
in CAD
|
||||||||
Options outstanding at the beginning of the year
|
544,325
|
39.1
|
||||||
Options granted during the year
|
32,503
|
10.85
|
||||||
Options exercised during the year
|
(22,705
|
)
|
16
|
|||||
Options forfeited during the year
|
(34,953
|
)
|
49.9
|
|||||
Options outstanding at the end of year
|
519,170
|
37.6
|
||||||
Options exercisable at the end of year
|
360,769
|
36.95
|
Number of RSU
|
||||
Outstanding at the beginning of the year
|
55,000
|
|||
Granted during the year
|
-
|
|||
Outstanding at the end of the year
|
55,000
|
|||
Exercisable at the end of year
|
-
|
e. |
Other convertible securities:
|
NOTE 20:- |
EQUITY (Cont.)
|
f. |
On May 10, 2021, the Company completed an overnight marketed offering (the “Offering”) of 608,696 Common Shares (each an “Offered Share”) at a price of US$57.5 per Offered Share for aggregate gross proceeds of approximately US$35 million ($42,000). The Company also issued 304,348 Common Share purchase warrants (each an “2021 Warrant”) to the purchasers of Offered Shares, for no additional consideration, that entitle the holders to purchase 304,348 Common Shares of the Company at an exercise price of US$7.2 per Common Share for a term of 5 years from the closing date.
|
Issue date
|
||||||||||||
May 2023
|
February 2023
|
May 2021
|
||||||||||
Expected volatility
|
48.43
|
%
|
48.43
|
%
|
48.43
|
%
|
||||||
Share price (Canadian Dollar)
|
0.48
|
0.48
|
0.48
|
|||||||||
Expected life (in years)
|
2.342
|
2.096
|
2.342
|
|||||||||
Risk-free interest rate
|
4.12
|
%
|
4.12
|
%
|
4.12
|
%
|
||||||
Expected dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
||||||
Fair value:
|
||||||||||||
Per Warrant (Canadian Dollar)
|
$
|
0.009
|
$
|
0.006
|
$
|
0
|
||||||
Total Warrants (Canadian Dollar in thousands)
|
$
|
5
|
$
|
33
|
$
|
0
|
NOTE 21:- |
ADDITIONAL INFORMATION TO PROFIT OR LOSS ITEMS
|
a. |
Additional information on revenues:
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Israel
|
43,316
|
50,500
|
25,431
|
|||||||||
Foreign countries
|
5,488
|
3,835
|
8,622
|
|||||||||
48,804
|
54,335
|
34,053
|
b. |
Cost of sales and services:
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Salaries
|
457
|
759
|
1,849
|
|||||||||
Materials
|
36,265
|
36,738
|
18,528
|
|||||||||
Professional fees
|
418
|
202
|
1,303
|
|||||||||
Depreciation
|
7
|
55
|
850
|
|||||||||
Others Cost of sales expenses
|
827
|
5,290
|
2,928
|
|||||||||
37,974
|
43,044
|
25,458
|
c. |
Selling and marketing expenses:
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Salaries
|
5,677
|
6,398
|
2,452
|
|||||||||
Selling and Marketing
|
1,568
|
2,075
|
3,484
|
|||||||||
Professional fees
|
36
|
66
|
112
|
|||||||||
Depreciation
|
2,320
|
1,941
|
359
|
|||||||||
Other Selling and marketing expenses
|
1,187
|
993
|
318
|
|||||||||
10,788
|
11,473
|
6,725
|
d. |
General and administrative expenses:
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Salaries
|
2,314
|
4,027
|
4,192
|
|||||||||
Insurance
|
1,847
|
1,566
|
2,448
|
|||||||||
Professional fees
|
4,095
|
4,689
|
7,229
|
|||||||||
Depreciation
|
669
|
819
|
916
|
|||||||||
Impairment
|
-
|
3,905
|
-
|
|||||||||
Other General and Administration
|
2,083
|
6,454
|
2,436
|
|||||||||
11,008
|
21,460
|
17,221
|
NOTE 22:- |
NET LOSS PER SHARE
|
Year ended December 31,
|
||||||||||||||||
2023
|
2022
|
|||||||||||||||
Weighted number of shares (in thousands)
|
Net loss attributable to equity holders of the Company
|
Weighted number of shares (in thousands)
|
Net loss attributable to equity holders of the Company
|
|||||||||||||
For the computation of basic net earnings from continuing operations
|
12,819
|
$
|
(9,498
|
)
|
7,181
|
$
|
(22,511
|
)
|
||||||||
Effect of potential dilutive Ordinary shares - warrants
|
-
|
-
|
304
|
(6,014
|
)
|
|||||||||||
For the computation of diluted net earnings from continuing operations (*)
|
12,819
|
$
|
(9,498
|
)
|
7,485
|
$
|
(28,525
|
)
|
||||||||
For the computation of basic and diluted net earnings from discontinued operations (*)
|
-
|
-
|
7,181
|
$
|
(166,379
|
)
|
*) |
For 2023 and 2022, potentially dilutive securities (share options) were excluded from the calculation of diluted earnings per share as they are antidilutive.
|
**) |
Including the effect of Share Consolidation (See Note 20a).
|
NOTE 23:- |
OPERATING SEGMENTS
|
Israel
|
Germany
|
Adjustments
|
Total
|
|||||||||||||
Year ended December 31, 2023
|
||||||||||||||||
Revenue
|
$
|
43,316
|
$
|
5,488
|
$
|
-
|
$
|
48,804
|
||||||||
Segment loss
|
(6,627
|
)
|
(1,615
|
)
|
-
|
(8,242
|
)
|
|||||||||
Unallocated corporate expenses
|
(4,550
|
)
|
(4,550
|
)
|
||||||||||||
Total operating loss
|
(12,792
|
)
|
||||||||||||||
Depreciation, amortization and impairment
|
$
|
2,823
|
$
|
173
|
$
|
-
|
$
|
2,996
|
Israel
|
Germany
|
Adjustments
|
Total
|
|||||||||||||
Year ended December 31, 2022
|
||||||||||||||||
Revenue
|
$
|
50,500
|
$
|
3,835
|
$
|
-
|
$
|
54,335
|
||||||||
Segment loss
|
$
|
(23,606
|
)
|
$
|
(3,225
|
)
|
$
|
-
|
$
|
(26,831
|
)
|
|||||
Unallocated corporate expenses
|
$
|
(3,960
|
)
|
$
|
(3,960
|
)
|
||||||||||
Total operating loss
|
$
|
(30,791
|
)
|
|||||||||||||
Depreciation, amortization and impairment
|
$
|
6,747
|
$
|
200
|
$
|
-
|
|
$ |
6,947 |
Israel
|
Germany
|
Adjustments
|
Total
|
|||||||||||||
Year ended December 31, 2021
|
||||||||||||||||
Revenue
|
$
|
25,431
|
$
|
8,622
|
$
|
-
|
$
|
34,053
|
||||||||
Segment loss
|
$
|
(10,653
|
)
|
$
|
(5,142
|
)
|
$
|
-
|
$
|
(15,795
|
)
|
|||||
Unallocated corporate expenses
|
$
|
(7,240
|
)
|
$
|
(7,240
|
)
|
||||||||||
Total operating loss
|
$
|
(23,035
|
)
|
|||||||||||||
Depreciation, amortization and impairment
|
$
|
1,424
|
$
|
701
|
$
|
-
|
$
|
2,125
|
NOTE 24:- |
BALANCES AND TRANSACTIONS WITH INTERESTED AND RELATED PARTIES
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
Other accounts receivables
|
$
|
-
|
$
|
83
|
||||
Other accounts payables
|
$
|
239
|
$
|
693
|
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
General and administrative and Interest expenses
|
$
|
641
|
$
|
1,064
|
$
|
1,116
|
b. | Compensation of key management personnel of the Group: |
Year ended December 31,
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Payroll and related expenses
|
$ | 704 |
$
|
916
|
$
|
1,379
|
||||||
Share-based compensation
|
$ | 513 |
$
|
437
|
$
|
4,349
|
||||||
Professional fees *)
|
$ | 852 |
$
|
1,040
|
$
|
1,029
|
*) |
Includes payments to shareholders for the years ended 2023, 2022 and 2021 of $475, $503 and $455, respectively.
|
NOTE 25:- |
DISCONTINUED OPERATIONS AND DECONSOLIDATION OF TRICHOME
|
NOTE 25:- |
DISCONTINUED OPERATIONS AND DECONSOLIDATION OF TRICHOME (Cont.)
|
NOTE 25:- |
DISCONTINUED OPERATIONS AND DECONSOLIDATION OF TRICHOME (Cont.)
|
November 6,
2022
|
December 31,
2021
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
406
|
$
|
3,171
|
||||
Trade receivables
|
1,047
|
8,486
|
||||||
Other accounts receivable
|
2,194
|
11,198
|
||||||
Loans receivable
|
1,010
|
2,708
|
||||||
Biological assets
|
444
|
1,435
|
||||||
Inventories
|
6,784
|
9,715
|
||||||
11,885
|
36,713
|
|||||||
NON-CURRENT ASSETS:
|
||||||||
Property, plant and equipment, net
|
14,645
|
21,236
|
||||||
Derivative assets
|
-
|
14
|
||||||
Right-of-use assets, net
|
10,999
|
14,570
|
||||||
Intangible assets, net
|
17,157
|
22,846
|
||||||
Goodwill
|
-
|
107,854
|
||||||
42,801
|
166,520
|
|||||||
Total assets
|
$
|
54,686
|
$
|
203,233
|
||||
LIABILITIES
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Trade payables
|
$
|
7,266
|
$
|
4,667
|
||||
Bank loans and credit facilities
|
3,774
|
8,684
|
||||||
Other accounts payable and accrued expenses
|
25,217
|
14,019
|
||||||
Current maturities of operating lease liabilities
|
869
|
841
|
||||||
37,126
|
28,211
|
|||||||
NON-CURRENT LIABILITIES:
|
||||||||
Operating lease liabilities
|
13,517
|
14,883
|
||||||
Deferred tax liability, net
|
2,872
|
4,065
|
||||||
16,389
|
18,948
|
|||||||
Total liabilities
|
$
|
53,515
|
$
|
47,159
|
NOTE 25:- |
DISCONTINUED OPERATIONS AND DECONSOLIDATION OF TRICHOME (Cont.)
|
Period ended
November 6,
2022
|
Year ended
December 31,
2021
|
|||||||
Revenues
|
$
|
28,171
|
$
|
20,247
|
||||
Cost of revenues
|
24,227
|
16,960
|
||||||
Gross profit before fair value adjustments
|
3,944
|
3,287
|
||||||
Fair value adjustments:
|
||||||||
Unrealized change in fair value of biological assets
|
399
|
902
|
||||||
Realized fair value adjustments on inventory sold in the period
|
(2,528
|
)
|
(226
|
)
|
||||
Total fair value adjustments
|
(2,129
|
)
|
676
|
|||||
Gross profit
|
1,815
|
3,963
|
||||||
General and administrative expenses
|
38,464
|
14,998
|
||||||
Impairment of goodwill, intangible assets, right-of-use assets and fixed assets
|
115,112
|
-
|
||||||
Selling and marketing expenses
|
4,912
|
2,270
|
||||||
Restructuring expenses
|
4,506
|
-
|
||||||
Share-based compensation
|
1,130
|
2,049
|
||||||
Total operating expenses
|
164,124
|
19,317
|
||||||
Operating loss
|
(162,309
|
)
|
(15,354
|
)
|
||||
Finance expenses, net
|
(5,264
|
)
|
(2,495
|
)
|
||||
Loss before income taxes
|
(167,573
|
)
|
(17,849
|
)
|
||||
Income tax expense (benefit)
|
(1,194
|
)
|
5
|
|||||
Net loss from discontinued operations, net of tax
|
$
|
(166,379
|
)
|
$
|
(17,854
|
)
|
NOTE 25:- |
DISCONTINUED OPERATIONS AND DECONSOLIDATION OF TRICHOME (Cont.)
|
Period ended
November 6,
2022
|
Year ended
December 31,
2021
|
|||||||
Operating activities
|
$
|
(300
|
)
|
$
|
(10,621
|
)
|
||
Investing activities
|
$
|
(615
|
)
|
$
|
(1,434
|
)
|
||
Financing activities
|
$
|
(1,850
|
)
|
$
|
14,864
|
*) |
From business combination dated, March 18, 2021.
|
NOTE 26:- |
SUBSEQUENT EVENTS
|
a. |
Loan from ADI
|
b. |
Potential Reverse Merger with Kadimastem
|
NOTE 26:- |
SUBSEQUENT EVENTS (Cont.)
|
c. |
NASDAQ Compliance Notice
On January 31, 2024, the Company announced that it has received a 180-calendar day extension, until July 29, 2024, from the Nasdaq Stock Market ("Nasdaq"), to regain compliance with Nasdaq Marketplace Rule 5550(a)(2) (the "Bid Price Rule").
|
d. |
35 Oak Holdings Ltd – Statement of Complaint
The Company, together with some of the Defendants brought, on February 22, 2024, a preliminary motion to strike out several significant parts of the claim (the "Motion") The Motion has not been scheduled by the court.
At this time, the Company's management is of the view that the Motion has merit and is likely to succeed in at least narrowing the scope of the claim against the Company, and that it may also result in certain of the claims against individuals being dismissed altogether, and if not dismissed narrowed in scope and complexity.
Given the preliminary stage of the action, and that the Company have not yet conducted a full investigation of the factual defenses, it is too early to opine on the merits of the claim or whether it is more likely than not to result in an outflow of funds to the Company and if so, how much.
|
e. |
Acquisition of Jerusalem’s Leading Medical Cannabis Pharmacy – Oranim Pharm
On January 12, 2024, the Company announced that the final sixth payment of the Oranim Pharmacy Acquisition and the reconciliation between the parties regarding the remaining transaction payments are being rescheduled to April 15, 2024.
Through a new amendment signed January 10, 2024, the sixth (6) payment as well as the reconciliation between the parties regarding all remaining unpaid installments has been postponed to April 15, 2024. All six installments (that remain unpaid) will incur a 15% interest charge. Failure to meet the remaining payments will result in the transfer of IMC Holdings Ltd. shares (51%) back to the seller, along with the revocation of the transaction.
|
f. |
Exercise of Focus Option
On February 26, 2024, IMC Holdings exercised its option and as of that date, the Company holds 74% of Focus.
|
F - 72
|
1. |
THE LOAN
|
|
1.1. |
Provision of Loan. The Lender shall provide to the Company, an aggregate
amount of up to US$650,000 (the “Principal Amount”), as follows:
|
|
1.1.1. |
US$300,000 shall be wired to the Company up to five (5) days from the execution of this Agreement (the “First Drawdown”).
|
|
1.1.2. |
The balance of up to US$350,000 shall be wired to the Company upon the execution of the definitive agreement(s) for the Transaction (the “Definitive Agreements”), provided however, that the Company shall, within three (3) business days prior to the execution of the Definitive
Agreements, inform Lender in writing of the actual amount it desires to draw on account of such balance payment (the “Second Drawdown Request”).
|
|
1.1.3. |
It is clarified that any amount not requested by the Company under the Second Drawdown Request shall be deemed as waived by Company, unless otherwise agreed upon in
writing between the Borrower and Lender.
|
|
1.1.4. |
For the purposes of this Loan Agreement, any reasonable costs, expenses and fees incurred by Lender for the purpose of securing repayment and/or otherwise foreclosing
on the assets underlying the Security Interest (the “Expenses”), shall be deemed an amount accrued on account of the
Loan Amount, provided that, insofar as the Expenses exceed NIS5,000, Lender agrees to solely seek collection of the outstanding
Loan Amount (including Expenses), on account of the Personal Guarantee (as defined below), unless the Personal Guaranty is insufficient in which case the Lender may pursue collection from both.
|
|
1.2. |
Interest. Any outstanding Principal Amount shall bear an interest in the rate
of 9.00% (nine percent) compounded annually, calculated on a daily basis and on the basis of a 360-day year, as of the date in which such actual disbursement of fund was made to Company (the “Interest”, and together with the Principal Amount: the “Loan Amount”).
|
|
1.3. |
Repayment; Maturity Date. Subject to the terms herein, each portion of the
Principal Amount disbursed, plus Interest, shall become due and payable upon the date which is the first anniversary from the date in which such respective amount was disbursed to Company (the “Maturity Date”). The Principal Amount shall be repaid in
full, together with all accrued and unpaid Interest, on the Maturity Date; provided, however, that the Company shall be entitled to
prepay the Loan Amount or any portion thereof prior to the Maturity Date. Any repayment made hereunder shall first be deemed to be made on account of unpaid Interest accrued until the date of such repayment.
|
|
1.4. |
Taxes. Subject to applicable law, all payments due to be made to the Lender
under this Agreement, whether of principal, interest or otherwise, shall be made without deduction or withholding for, any taxes.
|
|
1.5. |
Currency. Any repayment made hereunder shall be in US$, unless otherwise
agreed in writing by Lender. In such event, the US$:NIS exchange rate shall be the USD/ILS representative exchange rate published by the bank of Israel and known on date of actual repayment by Company.
|
|
1.6. |
Collaterals. Concurrently with the execution of this Agreement, Borrower
covenants to provide, and cause the relevant stakeholders to provide, the following collaterals (the “Security Interest”):
|
|
1.6.1. |
10% of the proceeds derived from any operation sale under the CVR (“Charged Rights”) limited to the outstanding Loan Amount and Expenses. Accordingly, (i) The Borrower retains the option, at its sole discretion, to record a second-ranked fixed charge over the Charged Rights or,
alternatively, in case the existing pledges over the Charged Rights at the date of signing this Loan Agreement are subsequently discharged or removed, then the Borrower shall promptly record a first-ranking fixed charge over the Charged
Assets with all applicable public records (ii) Borrower shall not, and shall not permit any person or entity, to impose any new lien, mortgage, charge or pledge over the Charged Rights that did not exist on the date hereof, and (iii) with
respect to any future debt assumed by Borrower, Borrower shall cause that such debt shall be subordinated to Borrower’s rights in the Charged Rights.
|
|
1.6.2. |
The Borrower shall use its best efforts to record a first-ranking fixed charge over the assets of its subsidiary, A.R Yarok Pharm Ltd, in due course when applicable and
as deemed appropriate. A personal guarantee by IMCC’s major shareholder, Mr. Oren Shuster (the “Guarantor"), in the
form attached hereto as Exhibit [x] (the “Personal Guarantee”) for the collection and recovery of any outstanding Loan Amount, along with any Expenses. Upon full and final payment by the Guarantor to the Lender, the Guarantor shall be subrogated to
the rights of the Lender against the Borrower, and the Lender agrees to take such steps as the Guarantor may reasonably request, at the Guarantor's expense, to give effect to such subrogation.
|
|
1.6.3. |
The Parties agree that, subject to Section 1.1.4, Lender shall first be obligated to seek repayment of the Loan Amount from the Company and its assets prior to
foreclosing on the Personal Guarantee.
|
|
2. |
REPRESENTATIONS AND WARRANTIES
|
|
2.1 |
The Company hereby represents and warrants to the Lender that, the following representations are true and correct as of the date of this Agreement:
|
|
2.1.1. |
Organization; Good Standing. The Company is a limited liability company
duly organized, validly existing and in good standing under the laws of the state of Israel, and has all requisite corporate power and authority to carry on its business as presently conducted and as proposed to be conducted. The Company
has all requisite corporate power and authority to own and operate its property and assets and to execute and deliver this Loan Agreement.
|
|
2.1.2. |
No Breach. The execution and delivery of this Loan Agreement and all
transactions and instruments contemplated hereto and thereby (the “Loan Documents”), will not conflict with, or result
in a breach or violation of, any of the terms, conditions and provisions of: (i) the Company’s certificate of formation or other governing instruments of the Company, including but not limited to the Company’s limited liability company
agreement, (ii) any judgment, order, writ, injunction, decree, or ruling of any court or governmental authority, domestic or foreign to which the Company is subject, (iii) any note, indenture, mortgage, agreement, contract, or instrument to
which the Company is a party or by which it or any of its property is bound, or (iv) applicable law, statute, ordinance or regulation.
|
|
2.1.3. |
Corporate Power and Qualification
|
|
2.1.3.1 |
All corporate action required to be taken by the Company in order to authorize the Company to enter into this Loan Documents has been taken prior to the Effective Date.
|
|
2.1.3.2 |
All actions on the part of the Company necessary for the execution and delivery of this Loan Documents and the performance of all obligations of the Company hereunder
have been taken or will be taken prior to the date hereof.
|
|
2.1.3.3 |
The Loan Documents, when executed and delivered by the Company, shall constitute valid and legally binding obligations of the Company, enforceable against the Company
in accordance with its respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’
rights generally, or (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.
|
|
2.1.4. |
Governmental Consents and Filings. Save for, where applicable, the filing of
all customary forms to any relevant stock exchange, no consent, approval, order or authorization of, or registration, qualification, designation, declaration
or filing with state or local governmental authority is required on the part of the Company in connection with the consummation of the transactions contemplated by the Loan Documents.
|
|
2.1.5. |
Litigation. Except for a Statement of Claim that was filed in the Ontario
Superior Court of Justice in Canada by 35 Oak Holdings Ltd., MW Investments Ltd., 35 Oak Street Developments Ltd., Michael Wiener, Kevin Weiner, William Weiner, Liliy Ann Goldstein-Weiner, in their capacity as trustees of the Weiner Family
Foundation against IMCC and some of its board of directors and officers, there is no action, suit, proceeding or investigation pending or, to the knowledge of the Company, currently threatened against the Company, IMCC or the Major
Shareholder that would reasonably be expected to result, either individually or in the aggregate, in any material adverse change in the assets, condition, affairs or prospects of the Company, the Major Shareholder or IMCC, financially or
otherwise, or any change in the current equity ownership of the Company or that questions the validity of this Agreement if the same were executed on this date or the right of the Company to enter into the Loan Agreement, nor is the Company
aware that there is any basis for any of the foregoing.
|
|
2.1.6. |
Taxes. Except as described in Schedule 2.1.6, there are no federal, state, local or foreign taxes due and payable by the Company which has not been timely paid, other than taxes which IMCC is reasonably
contesting. There are no accrued and unpaid federal, state, local or foreign taxes of the Company which are due, whether or not assessed or disputed. Except as set forth in Schedule 2.16, there have been no examinations or audits of any tax returns or reports by any applicable federal, state, local or foreign governmental agency. The Company has duly and timely filed
all federal, state, local and foreign tax returns required to have been filed by it, except as set forth in Schedule 2.1.6.
|
|
2.1.7. |
Full Disclosure. The Company's representations and warranties made or
contained in this Agreement do not contain any untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary in order to make such representations, warranties, or other material not
misleading in light of the circumstances in which they were made or delivered. To the best knowledge of the Company, there have been no events or transactions, or facts or information which have not been disclosed to the Lender or otherwise
properly disclosed through IMCC public disclosure requirements with the Canadian Securities Exchange (CSE), which have or would reasonably be expected to have a material adverse effect on the Company or the properties, business, operations or
financial condition of the Company.
|
|
2.1.8. |
Reliance. The Company acknowledges that the Lender is entering into this
Agreement (and each of the transactions to take place under it) upon the basis of, and in reliance on, the declarations, representations, and undertakings given by the Company in this Agreement.
|
|
2.2 |
Lender hereby represents and warrants to the Company the following:
|
|
2.2.1 |
Organization; Good Standing. The Lender is a limited liability company duly
organized, validly existing and in good standing under the laws of the state of Israel and has all requisite corporate power and authority to carry on its business as presently conducted and as proposed to be conducted. The Lender has all
requisite corporate power and authority to own and operate its property and assets and to execute and deliver this Loan Agreement.
|
|
2.2.2 |
Authorization. The execution, delivery, and performance of this Loan
Agreement have been duly authorized by all necessary corporate or organizational action by the Lender; do not require the consent or approval or any other person, regulatory authority, court or governmental body and do not conflict with,
result in a violation of, or constitute a default under any provision of (i) its articles of incorporation or organization or operating agreement, or (ii) any agreement or other instrument binding upon the Lender.
|
|
2.2.3 |
Binding Effect. The Loan Documents constitute the legally valid and binding
obligation of the Lender, enforceable against the Lender in accordance with the terms herein, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the
enforcement of creditors’ rights and subject to a court’s discretionary authority with respect to the granting of a decree ordering specific performance or other equitable remedies.
|
|
2.2.4 |
No Breach. The execution and delivery of this Loan Documents will not
conflict with, or result in a breach or violation of, any of the terms, conditions and provisions of: (i) the Lender’s governing corporate documents, (ii) any judgment, order, writ, injunction, decree, or ruling of any court or governmental
authority, domestic or foreign to which the Lender is subject, (iii) any note, indenture, mortgage, agreement, contract, or instrument to which the Lender is a party or by which it or any of its property is bound, or (iv) applicable law,
statute, ordinance or regulation to which Lender is bound by.
|
|
2.2.5 |
Financial Ability. The Lender has the financial capacity and ability to meet
provide the First Drawdown as specified herein, and will have the financial capacity and liability to disburse the corresponding amount of the Second Drawdown Request upon and subject to the execution of the Definitive Agreement.
|
|
3. |
EVENTS OF DEFAULT
|
|
3.1 |
Anything to the contrary notwithstanding, each of the following events, which remains uncured, shall constitute an event of default ("Event of Default") under this Agreement:
|
|
3.1.1 |
The Company’s failure to repay the Loan Amount on or before the Maturity Date, unless otherwise extended by the Borrower and Lender mutual written consent.
|
|
3.1.2 |
If an order or judgment is rendered in any suit against the Company, which substantially impairs the ability of the Company to perform any of its obligations under the
Loan Documents and was not set aside within 45 days of their respective initiation (but in any event no later than the original Maturity Date).
|
|
3.1.3 |
If the Company or any of its subsidiaries (i) is adjudicated bankrupt or insolvent; (ii) is subject to adjustment, reorganization, freeze order, stay of proceedings (“Ikuv Halichim”) (or other similar remedy), protection from creditors, relief of debtors, an order for commencing proceedings ("Tzav le-Ptichat Halichim"), an order for financial rehabilitation ("Hafala Leshem Shikum Calcali") or an order for liquidation ("Tzav Piruk"); (iv) enters into a debt
arrangement ("Hesder Chov"); (iii) files a voluntary petition in bankruptcy;; (v) makes a general assignment for the benefit of creditors;
(vi) files a petition or answer seeking or acquiescing in any reorganization excluding for the purpose of the Transaction, management, readjustment, liquidation, dissolution, or arrangement or similar relief for itself, with
creditors, administration or an arrangement (“hesder”) as such terms are understood under the Israeli Companies Law, 1999, or to take
advantage of any law relating to bankruptcy, insolvency or other relief for debtors; (vii) files an answer admitting the material allegations of a petition filed against it in any bankruptcy, reorganization or insolvency
proceeding; or (viii) has been appointed over of a receiver or trustee or other authorized functionary ("baal tafkid"), as such term is
understood under the Israeli Insolvency and Economic Rehabilitation Law, 2018; (ix) takes such action for the purpose of effecting any of the foregoing; then the Company shall have a curing period of 45 days from the occurrence of any of
the events set forth above to cure such event of default to the satisfaction of the Lender, unless otherwise agreed between the parties.
|
|
3.1.4 |
Unless agreed in writing to the contrary by the Lender, the dissolution structure, merger, or consolidation or reorganization of the Company excluding for the purpose
of the Transaction.
|
|
3.1.5 |
There shall have been breach or default of any representations, warranties, undertaking and/or covenants specified in the Loan Documents, and/or the “exclusivity”
provision under the Term Sheet and/or the Definitive Agreement (other than that committed by the Lender), not cured within fourteen (14) days from receipt of notice thereof (to the extent such beach can be cured, without causing substantial
harm to Lender).
|
|
3.1.6 |
Any termination, limitation or challenging of the validity of the Personal Guarantee.
|
|
3.2 |
Upon the occurrence and continuing of an Event of Default, the Lender shall have the right, in addition to any other rights or remedies at law or in equity, to
accelerate and demand payment of all sums in relation to the outstanding Principal Amount and Interest.
|
|
3.3 |
Failure to exercise any of the remedies herein provided shall not constitute a waiver thereof by Lender, nor shall use of any such remedies prevent the subsequent or
concurrent resort to any other remedy or remedies which shall be vested in Lender by this Agreement or at law or in equity. To be effective, any waiver by the Lender must be in writing and such waiver shall be limited in its effect to the
condition or default specified therein; but no such waiver shall extend to any subsequent condition or default or impair any right consequent thereon.
|
|
4. |
COMPANY COVENANTS AND LENDER RIGHTS
|
|
4.1 |
As long as any portion of the Loan Amount remains outstanding, without the prior written consent of the Lender, the Company shall not, and cause its subsidiaries not
to, enter into, create, incur, assume or suffer to exist any new collaterals, security interest, liens and/or mortgages of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein
or any income or profits therefrom (the “Liens”), except for Liens existing on the Effective Date (as extended under
substantially similar terms), Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, being contested in good faith and by appropriate proceedings for which adequate reserves were made, and/or
Liens provided within the scope of leasehold agreements entered into within the ordinary course of business.
|
|
5. |
MISCELLANEOUS.
|
|
5.1 |
No Third Party Beneficiaries. No part of the Loan Agreement will, at any
time, be subject or liable to attachment or levy at the suit of any creditor of the Company or of any other party, or at the suit of any contractor, subcontractor, sub subcontractor or materialman, or any of their creditors.
|
|
5.2 |
Amendments in Writing. This Agreement may not be changed, waived, discharged,
or terminated except by an instrument in writing duly executed by the party against which enforcement of such change, waiver, discharge, or termination is sought.
|
|
5.3 |
Notices. Notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (i) upon personal delivery to the Party to be notified; (ii) on transmission when sent by facsimile or electronic mail if sent during normal business hours of the recipient and, if not, then on the first
business day following such transmission, in each case, provided the sender did not receive an automatic delivery failure message following transmission; or (iii) fourteen (5) business days after having been sent by registered or certified
mail, return receipt requested, postage prepaid. All communications shall be addressed to the parties' addresses set forth in the preamble to this Agreement or to such other address as either party may designate by written notice to the other
Party.
|
|
5.4 |
No Assignment. Company shall have the right to assign any of its rights and
obligations pursuant to this Agreement, without obtaining first the prior written consent of the Lender. Subject to the foregoing, this Agreement shall extend to, and bind, the Parties, their respective heirs, personal representatives,
successors and assigns.
|
|
5.5 |
Delays or Omissions; Waiver. The rights of a Party may be waived by such
Party only in writing and, specifically; the conduct of any one of the Parties shall not be deemed a waiver of any of its rights pursuant to this Agreement or as a waiver or consent on its part as to any breach or failure to meet any of the
terms of this Agreement or as an amendment hereto. A waiver by a Party in respect of a breach by the other Party of its obligations shall not be construed as a justification or excuse for a further breach of its obligations. No delay or
omission to exercise any right, power or remedy accruing to any Party upon any breach or default by the other under this Agreement shall impair any such right or remedy nor shall it be construed to be a waiver of any such breach or default,
or any acquiescence therein or in any similar breach or default thereafter occurring.
|
|
5.6 |
Severability. The provisions of this Loan Agreement shall be deemed severable
and the invalidity or unenforceability of any provision hereof will not affect the validity or enforceability of the other provisions hereof; provided that if any provision of this Loan Agreement, as applied to any party or to any
circumstance, is adjudged by a court or other governmental body not to be enforceable in accordance with its terms, the parties agree that the court or governmental body making such determination will have the power to modify the provision in
a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its reduced form, such provision will then be enforceable and will be enforced.
|
|
5.7 |
Applicable Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with to the laws of the State of Israel, disregarding its conflict of laws rules. Any dispute arising under or in relation to this Agreement shall be resolved exclusively in the competent court located in Tel
Aviv-Jaffa, Israel and each of the parties hereby irrevocably submits to the exclusive jurisdiction of such court.
|
|
5.8 |
Counterparts, Facsimile Signatures. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. A signed Agreement received by a Party via facsimile or electronic mail will be deemed an original, and
binding upon the Party who signed it.
|
|
1. |
A Notice Of Objection (Excise Tax Act) for the assessment dated October 23,2023 was submitted for the period covered January 1, 2020- December 31, 2020. The assessment
amount in question under the Notice Of Objection is $CAD 257,404.03.
|
|
2. |
A Notice Of Objection (Excise Tax Act) for the assessment dated October 23,2023 was submitted for the period covered January 1, 2021- December 31, 2021. The assessment
amount in question under the Notice Of Objection is $CAD 14,520.35.
|
Legal Entity
|
Jurisdiction
|
Relationship with the IM Cannabis Corp.
|
I.M.C Holdings Ltd. (“IMC Holdings”)
|
Israel
|
Wholly-owned subsidiary
|
Focus Medical Herbs Ltd. (“Focus”)
|
Israel
|
Private company over which IMC Holdings exercises “de facto control” under IFRS 10
|
IM Cannabis Holding NL B.V
Netherlands (“IMC Holdings NL”)
|
Netherlands
|
Wholly-owned subsidiary of IMC Holdings
|
I.M.C. Pharma Israel Ltd. (“IMC Pharma”)
|
Israel
|
Wholly-owned subsidiary of IMC Holdings
|
I.M.C Farms Israel Ltd. (“IMC Farms”)
|
Israel
|
Wholly-owned subsidiary of IMC Holdings
|
IMCC Medical Herbs Ltd. (“IMCC Medical Herbs”)
|
Israel
|
Wholly-owned subsidiary of IMC Holdings
|
Xinteza API Ltd (“Xinteza”)
|
Israel
|
Subsidiary of IMC Holdings
|
Shiran Societe Anonyme (“Greece”)
|
Greece
|
Subsidiary of IMC Holdings
|
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
|
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
|
High Way Shinua Ltd. (“High Way Shinua”)
|
Israel
|
Subsidiary of IMC Holdings
|
Oranim Pharm (“Oranim Pharm”)
|
Israel
|
Subsidiary of Oranim Plus
|
Adjupharm GmbH (“Adjupharm”)
|
Germany
|
Subsidiary of IMC Holdings
|
|
1. |
Purpose of this Policy
|
|
2. |
Application of this Policy
|
|
3. |
Prohibited Activities and Blackout Periods
|
|
(a) |
Securities
|
|
(a) |
a put, call, option or other right or obligation to purchase or sell securities of the Company;
|
|
(b) |
a security, the market price of which varies materially with the market price of the securities of the Company; and
|
|
(c) |
a derivative that is related to a security of the Company because the derivative’s market price, value, delivery obligations, payment obligations or settlement obligations are, in a material way, derived from, referenced to or based on the
market price, value, delivery obligations, payment obligations or settlement obligations of the security of the Company.
|
|
(b) |
Prohibition on Insider Trading
|
|
(c) |
Prohibition on Tipping
|
|
(d) |
Prohibition on Speculation
|
|
(e) |
Prohibition on Margin Accounts
|
|
(f) |
Use of Discretionary Accounts
|
|
(g) |
Stock Option Plan
|
|
(h) |
Trades in Securities of Supplier Companies
|
|
(i) |
Quarterly Blackout Periods
|
|
(j) |
Exercising Options
|
|
(k) |
Special Blackout Periods
|
|
(l) |
Quiet Periods
|
4. |
Insider Reporting Requirements
|
|
(a) |
Reporting Requirements for Reporting Insiders
|
|
(b) |
Procedure for Reporting
|
|
5. |
Monitoring Compliance
|
|
(a) |
Initial Certification of Compliance with Stock Trading Policy
|
|
(b) |
Periodic Certification of Compliance with Stock Trading Policy
|
|
(c) |
Periodic Survey of Reporting Insiders
|
|
(d) |
Reporting of Non-Compliance
|
|
(e) |
Compliance Responsibilities
|
|
(i) |
administering this Policy and monitoring and enforcing compliance with its provisions, including:
|
|
(A) |
monitoring reporting by Reporting Insiders (see Section 5(c)); and
|
|
(B) |
upon learning of any violation of the prohibitions against insider trading or tipping, determining what measures the Company should take, if any;
|
|
(ii) |
designating and announcing, in its discretion, as applicable:
|
|
(A) |
quarterly blackout periods and trading windows relating to the Company’s securities; and
|
|
(B) |
special blackout periods relating to the Company’s securities or the securities of other public companies, including customers, suppliers, joint venturers and third parties negotiating a merger or acquisition with the Company;
|
|
(iii) |
organizing training sessions to educate Company Personnel on insider trading;
|
|
(iv) |
responding to all inquiries relating to this Policy;
|
|
(v) |
providing copies of this Policy to all Company Personnel;
|
|
(vi) |
proposing revisions to this Policy as necessary to reflect changes in applicable insider trading laws;
|
|
(vii) |
preparing periodic reports on this Policy’s implementation and preparing documentation of compliance efforts;
|
|
(viii) |
implementing procedures for Company Personnel to report suspected breaches within the Company without fear of retribution;
|
|
(ix) |
maintaining as Company records originals or copies of all required reports relating to insider trading;
|
|
(x) |
reporting to the Board on all matters that arise with respect to this Policy and the Company’s procedures relating to this Policy;
|
|
(xi) |
seek necessary and appropriate legal advice from time to time from the Company’s external legal advisors; and
|
|
(xii) |
such other responsibilities as may be delegated to the General Counsel by the Board from time to time.
|
|
6. |
Consequences of Non-Compliance
|
|
(a) |
Civil, Quasi Criminal and Criminal Liability
|
|
(b) |
Disciplinary Sanctions
|
|
Per: |
Signature
Name
Position
Date
|
|
(a) |
the assets of the subsidiary, as included in the Company’s most recent annual audited or interim statement of financial position, are 30% or more of the consolidated assets of the Company reported on that statement of financial
position; or
|
|
(b) |
the revenue of the subsidiary, as included in the Company’s most recent annual audited or interim statement of comprehensive income, is 30% or more of the consolidated revenue of the Company reported on that statement.
|
|
(a) |
an individual;
|
|
(b) |
a corporation;
|
|
(c) |
a partnership or trust; and
|
|
(d) |
an association, syndicate or organization, whether incorporated or not.
|
|
(a) |
the chief executive officer, chief financial officer and chief operating officer of the Company, of a significant shareholder of the Company or of a major subsidiary of the Company (or individuals performing similar functions);
|
|
(b) |
a director of the Company, of a significant shareholder of the Company or of a major subsidiary of the Company;
|
|
(c) |
an officer responsible for a principal business unit, division or function of the Company;
|
|
(d) |
a significant shareholder of the Company;
|
|
(e) |
a management company that provides significant management or administrative services to the Company or a major subsidiary of the Company, every director of the management company, the chief executive officer, chief financial officer
and chief operating officer of the management company, and every significant shareholder of the management company;
|
|
(f) |
the Company itself, if it has purchased, redeemed or otherwise acquired a security of its own issue, for so long as it continues to hold that security; and
|
|
(g) |
any other insider that
|
|
(i) |
in the ordinary course receives or has access to information as to material facts or material changes concerning the Company before the material facts or material changes are generally disclosed; and
|
|
(ii) |
directly or indirectly exercises, or has the ability to exercise, significant power or influence over the business, operations, capital or development of the Company.
|
Date: March 28, 2024
|
By:
|
“Oren Shuster”
Oren Shuster Chief Executive Officer (Principal Executive Officer)
|
Date: March 28, 2024
|
By:
|
“Uri Birenberg”
Uri Birenberg Chief Financial Officer (Principal Financial and Accounting Officer)
|
March 28, 2024
|
“Oren Shuster”
|
|
Oren Shuster
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
March 28, 2024
|
“Uri Birenberg”
|
|
Uri Birenberg
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
Legal Entity
|
Jurisdiction
|
Relationship with the Company
|
I.M.C. Holdings Ltd. (“IMC Holdings”)
|
Israel
|
Wholly-owned subsidiary
|
I.M.C. Pharma Ltd. (“IMC Pharma”)
|
Israel
|
Wholly-owned subsidiary of IMC Holdings
|
I.M.C. Farms Israel Ltd. (“IMC Farms”)
|
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 Consolidated Financial
Statements (“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
|
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
|
• |
Continue building on the increasing demand and positive momentum in Israel and Germany, supported by strategic alliances with Canadian suppliers and a highly skilled sourcing team, to cement its leadership position in markets where the
Company operates.
|
• |
Develop and execute a long-term growth plan in Germany, based on the strong sourcing infrastructure in Israel which is powered by advanced product knowledge and regulatory expertise establishing, in the Company’s view, a competitive
advantage ahead of proposals for the legalization of recreational cannabis in Germany.
|
• |
Properly position brands with respect to target-market, price, potency and quality, such as our IMC brand in Israel and Germany.
|
• |
Strong focus on efficiencies and synergies as a global organization with domestic expertise in Israel and Germany.
|
• |
High-quality, reliable supply to our customers and patients, leading to recurring sales.
|
• |
Ongoing introduction of new Stock Keeping Unit (“SKUs”) to keep consumers and patients engaged.
|
The Top-Shelf Collection – IMC’s premium product line, which offers indoor-grown, high-THC cannabis
flowers with strains such as Lemon Rocket, Diesel Drift, Tropicana Gold, Lucy Dreamz, Santa Cruz, Or'enoz and Banjo. Inspired by the 1970’s cannabis culture in America, the Top-Shelf Collection targets the growing segment of medical
patients who are cannabis culture enthusiasts.
|
|
BLKMKT™, the Company’s second Canadian brand, super-premium product line with indoor-grown, hand-dried and hand-trimmed
high-THC cannabis flowers. The BLKMKT™ includes JEALOUSY, BACIO GLTO, PNPL P, PARK FIRE OG, UPSIDE DOWN C. In Q4 2023 the Company re-launched JEALOUSY and BACIO GLTO.
|
|
|
• |
approve the Proposed Transaction;
|
|
• |
approve the Spin-Out;
|
|
• |
a change of name of the Company as directed by Kadimastem and acceptable to the applicable regulatory authorities effective upon Closing; and
|
|
• |
reconstitution of the Company’s Board.
|
|
• |
the execution of a definitive agreement;
|
|
• |
completion of mutually satisfactory due diligence;
|
|
• |
completion of the Share Consolidation; and
|
|
• |
receipt of all required regulatory, corporate and third party approvals, including approvals by governing regulatory bodies, the shareholders of IMC and Kadimastem, applicable Israeli governmental authorities, and the fulfilment of all
applicable regulatory requirements and conditions necessary to complete the Proposed Transaction.
|
For the year
ended December 31
|
For the three months
ended December 31
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Net Revenues*
|
$
|
48,804
|
$
|
54,335
|
$
|
10,698
|
$
|
14,461
|
||||||||
Gross profit before fair value impacts in cost of sales*
|
$
|
10,830
|
$
|
11,291
|
$
|
1,115
|
$
|
2,791
|
||||||||
Gross margin before fair value impacts in cost of sales (%)*
|
22
|
%
|
21
|
%
|
10
|
%
|
19
|
%
|
||||||||
Operating Loss*
|
$
|
(12,792
|
)
|
$
|
(30,791
|
)
|
$
|
(5,165
|
)
|
$
|
(10,708
|
)
|
||||
Net loss*
|
$
|
(10,228
|
)
|
$
|
(24,922
|
)
|
$
|
(3,520
|
)
|
$
|
(9,650
|
)
|
||||
Loss per share attributable to equity holders of the Company – Basic (in CAD)*
|
$
|
(0.74
|
)
|
$
|
(3.13
|
)
|
$
|
(0.25
|
) |
$
|
(2.94
|
) |
||||
Loss per share attributable to equity holders of the Company - Diluted (in CAD)*
|
$
|
(0.74
|
)
|
$
|
(3.81
|
)
|
$
|
(0.25
|
) |
$
|
(3.55
|
) |
For the year
ended December 31
|
For the three months
ended December 31
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Average net selling price of dried flower (per Gram)*
|
$
|
5.14
|
$
|
7.12
|
$
|
4.52
|
$
|
5.19
|
||||||||
Quantity of dried flower sold (in Kilograms2)*
|
8,609
|
6,794
|
2,082
|
2,334
|
1. |
Including other cannabis products such as Concentrates, Kief, Hash and Pre-rolls.
|
2. |
Harvested flowers, after trimming and ready for manufacturing.
|
Israel
|
Germany
|
Adjustments
|
Total
|
|||||||||||||||||||||||||||||
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
|||||||||||||||||||||||||
Revenues
|
$
|
43,316
|
$
|
50,500
|
$
|
5,488
|
$
|
3,835
|
$
|
-
|
$
|
-
|
$
|
48,804
|
$
|
54,335
|
||||||||||||||||
Segment income (loss)
|
$
|
(6,627
|
)
|
$
|
(23,606
|
)
|
$
|
(1,615
|
)
|
$
|
(3,225
|
)
|
$
|
-
|
$
|
-
|
$
|
(8,242
|
)
|
$
|
(26,831
|
)
|
||||||||||
Unallocated corporate expenses
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(4,550
|
)
|
$
|
(3,960
|
)
|
$
|
(4,550
|
)
|
$
|
(3,960
|
)
|
||||||||||||
Total operating (loss) income
|
$
|
(6,627
|
)
|
$
|
(23,606
|
)
|
$
|
(1,615
|
)
|
$
|
(3,225
|
)
|
$
|
(4,550
|
)
|
$
|
(3,960
|
)
|
$
|
(12,792
|
)
|
$
|
(30,791
|
)
|
||||||||
Depreciation, amortization & impairment
|
$
|
2,823
|
$
|
6,747
|
$
|
173
|
$
|
200
|
$
|
-
|
$
|
-
|
$
|
2,996
|
$
|
6,947
|
Israel
|
Germany
|
Adjustments
|
Total
|
|||||||||||||||||||||||||||||
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
|||||||||||||||||||||||||
Revenues
|
$
|
9,375
|
$
|
13,136
|
$
|
1,323
|
$
|
1,325
|
$
|
-
|
$
|
-
|
$
|
10,698
|
$
|
14,461
|
||||||||||||||||
Segment income (loss)
|
$
|
(3,653
|
)
|
$
|
(10,280
|
)
|
$
|
(580
|
)
|
$
|
(517
|
)
|
$
|
-
|
$
|
-
|
$
|
(4,233
|
)
|
$
|
(10,797
|
)
|
||||||||||
Unallocated corporate income (expenses)
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(932
|
)
|
$
|
90
|
$
|
(932
|
)
|
$
|
90
|
||||||||||||||
Total operating (loss) income
|
$
|
(3,653
|
)
|
$
|
(10,280
|
)
|
$
|
(580
|
)
|
$
|
(517
|
)
|
$
|
(932
|
)
|
$
|
90
|
$
|
(5,165
|
)
|
$
|
(10,707
|
)
|
|||||||||
Depreciation, amortization & impairment
|
$
|
684
|
$
|
4,957
|
$
|
47
|
$
|
48
|
$
|
-
|
$
|
-
|
$
|
731
|
$
|
5,005
|
|
● |
Revenues from continuing operations for the year ended December 31, 2023 and 2022 were $48,804 and $54,335, respectively, representing a decrease of $5,531 or 10%. Revenues for the three months ended December 31, 2023, and 2022 were $10,698
and $14,461, respectively, representing a decrease of $3,763 or 26%. The decrease in revenues is primarily attributed to the effects of the Israel – Hamas war and the different challenges it caused from a business perspective effecting the
Company sells and also its operation activities such as longer importing cycles (transportation of goods, approvals from relevant authorities etc.)
|
|
● |
Revenues from the Israeli operation were attributed to the sale of medical cannabis through the Company’s agreement with Focus Medical and the revenues from the Israeli Pharmacies the Company owns, mostly from cannabis products.
|
|
● |
In Germany, Company revenues were attributed to the sale of medical cannabis through Adjupharm.
|
|
● |
Total dried flower sold for the year ended December 31, 2023, was 8,609 kg at an average selling price of $5.14 per gram compared to 6,794kg for the same period in 2022 at an average selling price of $7.12 per gram, mainly attributed to the
inventory life cycle, discounts given and increased competition in the segment. Total dried flower sold for the three months ended December 31, 2023, was 2,082kg at an average selling price of $4.52 per gram compared to 2,334kg for the three
months ended December 31, 2022, at an average selling price of $5.19 per gram. The decreased is mainly attributed to the Israel – Hamas war effect.
|
Less than one year
|
1 to 5 years
|
6 to 10 years
|
> 10 years
|
|||||||||||||
Contractual Obligations
|
$
|
12,618
|
$
|
1,293
|
-
|
-
|
Payments Due by Period
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
Less than one year
|
1 to 3 years
|
4 to 5 years
|
After 5 years
|
|||||||||||||||
Debt
|
$
|
12,513
|
$
|
12,119
|
$
|
394
|
$
|
-
|
$
|
-
|
||||||||||
Finance Lease Obligations
|
$
|
1,398
|
$
|
499
|
$
|
814
|
$
|
85
|
$
|
-
|
||||||||||
Total Contractual Obligations
|
$
|
13,911
|
$
|
12,618
|
$
|
1,208
|
$
|
85
|
$
|
-
|
For the year ended December 31,
|
For the three months ended December 31,
|
|||||||||||||||
Net cash provided by (used in):
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Operating activities
|
$
|
(8,075
|
)
|
$
|
(12,340
|
)
|
$
|
(218
|
)
|
$
|
(2,978
|
)
|
||||
Investing activities
|
$
|
(1,182
|
)
|
$
|
(793
|
)
|
$
|
(629
|
)
|
$
|
(580
|
)
|
||||
Financing activities
|
$
|
9,417
|
$
|
6,612
|
$
|
(37
|
)
|
$
|
2,668
|
|||||||
Effect of foreign exchange
|
$
|
(796
|
)
|
$
|
(2,168
|
)
|
$
|
1,393
|
$
|
(289
|
)
|
|||||
Increase (Decrease) in cash
|
$
|
(636
|
)
|
$
|
(8,689
|
)
|
$
|
509
|
$
|
(1,179
|
)
|
For the year ended
|
December 31,
2023 |
December 31, 2022
|
December 31, 2021
|
|||||||||
Revenues
|
$
|
48,804
|
$
|
54,335
|
$
|
34,053
|
||||||
Net Loss
|
$
|
(10,228
|
)
|
$
|
(24,922
|
)
|
$
|
(664
|
)
|
|||
Basic net income (Loss) per share:
|
$
|
(0.74
|
)
|
$
|
(3.13
|
)
|
$
|
0.02
|
||||
Diluted net income (Loss) per share:
|
$
|
(0.74
|
)
|
$
|
(3.81
|
)
|
$
|
(3.62
|
)
|
|||
Total assets
|
$
|
48,813
|
$
|
60,676
|
$
|
129,066
|
||||||
Total non-current liabilities
|
$
|
2,305
|
$
|
3,060
|
$
|
21,354
|
For the three months ended
|
December 31, 2023
|
September 30, 2023
|
June 30, 2023
|
March 31, 2023 (1)
|
||||||||||||
Revenues
|
$
|
10,698
|
$
|
12,370
|
$
|
13,207
|
$
|
12,529
|
||||||||
Net Loss
|
$
|
(3,520
|
)
|
$
|
(2,136
|
)
|
(3,706
|
)
|
$
|
(866
|
)
|
|||||
Basic net income (Loss) per share:
|
$
|
(0.25
|
)
|
$
|
(0.16
|
)
|
$
|
(0.26
|
)
|
$
|
(0.05
|
)
|
||||
Diluted net loss per share:
|
$
|
(0.25
|
)
|
$
|
(0.16
|
)
|
$
|
(0.26
|
)
|
$
|
(0.05
|
)
|
For the three months ended
|
December 31, 2022
|
September 30, 2022
|
June 30, 2022
|
March 31, 2022
|
||||||||||||
Revenues
|
$
|
14,461
|
$
|
14,170
|
$
|
12,703
|
$
|
13,001
|
||||||||
Net income (Loss)
|
$
|
(9,650
|
)
|
$
|
(4,532
|
)
|
$
|
(3,736
|
)
|
$
|
(7,081
|
)
|
||||
Basic net income (Loss) per share:
|
$
|
(1.32
|
)
|
$
|
(0.06
|
)
|
$
|
(0.27
|
)
|
$
|
(0.14
|
)
|
||||
Diluted net income (Loss) per share:
|
$
|
(1.28
|
)
|
$
|
(0.06
|
)
|
$
|
(0.30
|
)
|
$
|
(0.17
|
)
|
Year ended
|
December 31, 2023
|
December 31, 2022
|
||||||
Net Revenue
|
$
|
48,804
|
$
|
54,335
|
||||
Cost of sales
|
$
|
37,974
|
$
|
43,044
|
||||
Gross profit before FV adjustments
|
$
|
10,830
|
$
|
11,291
|
||||
Gross margin before FV adjustments (Non-IFRS)
|
22
|
%
|
21
|
%
|
Three months ended
|
December 31, 2023
|
December 31, 2022
|
||||||
Net Revenue
|
$
|
10,698
|
$
|
14,461
|
||||
Cost of sales
|
$
|
9,583
|
$
|
11,670
|
||||
Gross profit before FV adjustments
|
$
|
1,115
|
$
|
2,791
|
||||
Gross margin before FV adjustments (Non-IFRS)
|
10
|
%
|
19
|
%
|
For the year ended December 31,
|
For the three months ended December 31,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Operating Loss
|
$
|
(12,792
|
)
|
$
|
(30,791
|
)
|
$
|
(5,165
|
)
|
$
|
(10,709
|
)
|
||||
Add: Depreciation & Amortization
|
$
|
2,996
|
$
|
2,815
|
$
|
731
|
$
|
873
|
||||||||
EBITDA (Non-IFRS)
|
$
|
(9,796
|
)
|
$
|
(27,976
|
)
|
$
|
(4,434
|
)
|
$
|
(9,836
|
)
|
||||
Add: IFRS Biological assets fair value adjustments, net (1)
|
$
|
984
|
$
|
2,129
|
$
|
274
|
$
|
188
|
||||||||
Add: Share-based payments
|
$
|
225
|
$
|
2,637
|
$
|
(91
|
)
|
$
|
428
|
|||||||
Add: Restructuring cost (2)
|
$
|
617
|
$
|
4,383
|
$
|
-
|
$
|
-
|
||||||||
Add: Other non-recurring costs (3)
|
$
|
-
|
$
|
7,336
|
$
|
-
|
$
|
7,336
|
||||||||
Adjusted EBITDA (Non-IFRS)
|
$
|
(7,970
|
)
|
$
|
(11,491
|
)
|
$
|
(4,251
|
)
|
$
|
(1,884
|
)
|
1. |
Losses from unrealized changes in fair value of biological assets and realized fair value adjustments on inventory. See “Cost of Revenues” section of the MD&A.
|
2. |
Costs attributable to the Israel Restructuring and closure of Sde Avraham Farm in 2022, and to Israel reorganization plan of the company’s management and operations in 2023.
|
3. |
Mainly fair value adjustment of the Company’s purchase option to acquire a pharmacy. See ”Subsequent Events – Panaxia Transaction Update” of the 2022 MD&A.
|
Less than one year
|
1 to 5 years
|
6 to 10 years
|
>10 years
|
|||||||||||||
Lease liabilities
|
$
|
499
|
$
|
899
|
-
|
-
|
Less than one year
|
1 to 5 years
|
6 to 10 years
|
>10 years
|
|||||||||||||
Lease liabilities
|
$
|
922
|
$
|
1,830
|
$
|
598
|
-
|
|
1. |
The contractual party of the Company was not the Stroakmont & Atton. The contract with Stroakmont & Atton was only concluded as a sham transaction in order to cover up a contract with a company named Uniclaro GmbH. Therefore,
Stroakmont & Atton is not the real purchaser rather than Uniclaro GmbH.
|
|
2. |
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.
|
• |
On April 2, 2019, IMC Holdings and Focus entered into an option agreement (the “Focus Agreement”) pursuant to which IMC Holdings acquired an option to purchase, at its sole discretion and in compliance
with Israeli cannabis regulation, all of the ordinary shares held by Messrs. Shuster and Gabay held in Focus at a price equal to NIS 765.67 per ordinary share until April 2029. On November 30, 2023, IMC Holdings sent a request letter to approve
IMC Holding’s exercise of the option and on February 25, 2024, IMCA's approval was obtained. Effective February 27, 2024, IMC Holdings acquired 74% of the ordinary shares of Focus.
|
• |
The Company is a party to Indemnification Agreement with certain directors and officers of the Company and Trichome to cover certain tax liabilities, interest and penalties arising from the Trichome Transaction. See “Risk Factors - Tax Remittance” section of the MD&A.
|
• |
On August 5, 2022, the Company sold the wholly owned subsidiary of TJAC, Sublime, to a group of purchasers that included current and former members of the Sublime management team for aggregate proceeds of $100 less working capital
adjustments, for a final net purchase price of $89. The transaction constituted a “related party transaction” within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in
Special Transactions (“MI 61-101”), however pursuant to Sections 5.5(a) and 5.7(1)(a) of MI 61-101, the transaction is exempt from the formal valuation and minority shareholder approval
requirements of such instrument.
|
• |
The Stalking Horse Purchase Agreement constituted a related party transaction as L5 is an entity controlled by Marc Lustig, who is a director of Trichome and the Executive Chairman of the Board. On March 8, 2023, the Company announced that
the SISP approved by the Ontario Superior Court of Justice (Commercial List) did not result in any bids for the going-concern business of Trichome; however, L5 advised that it would not complete the proposed transaction contemplated by the
Stalking Horse Share Purchase Agreement.
|
• |
On August 19, 2022, the Company announced a non-brokered private placement offering of Common Shares (the “2022 Private Placement”) for aggregate gross proceeds of up to US$5,000 led by the Company’s
management and executive team. The first and second tranche of which closed on August 24, 2022 and October 5, 2022, respectively. Insiders of the Company, led by the CEO and Director, and the Company’s former CFO, Shai Shemesh, subscribed for
1,563,496 Common Shares for aggregate proceeds of US$782 in the first tranche of the 2022 Private Placement, and the Executive Chairman of the Company, subscribed for 1,112,504 Common Shares for aggregate proceeds of US$556 in the second
tranche of the 2022 Private Placement. As a result of the participation by the CEO, CFO and Executive Chairman, the 2022 Private Placement was considered a “related party transaction” pursuant to MI 61-101. The Company relied on Sections 5.5(a)
and 5.7(1)(a) of MI 61-101 for exemptions from the requirements to obtain a formal valuation and minority shareholder approval, respectively, because the fair market value of the insiders’ participation in the 2022 Private Placement was below
25% of the Company’s market capitalization for purposes of MI 61-101.
|
• |
On January 16, 2023, the Company announced the closing of the first tranche of the Concurrent Offering comprised of an aggregate of 1,159,999 Units for aggregate gross proceeds of US$1,500. The Concurrent Offering was led by insiders of the
Company. The units offered under the Concurrent Offering were sold under similar terms as the Life Offering.
|
• |
On January 20, 2023, the Company closed the second tranche of the LIFE Offering comprised of 102,152 Units for an aggregate subscription price of approximately US$128. The second tranche of the LIFE Offering was comprised of a single
subscription by the Executive Chairman of the Company whose subscription price was satisfied by the settlement of approximately US$128 in debt owed by the Company to him for certain consulting services previously rendered to the Company.
|
• |
On February 16, 2023, the Company closed the fifth and final tranche of the LIFE Offering. A non-independent director of the Company subscribed for 29,548 Units in the fifth tranche at an aggregate subscription price of US$36,935. Marc
Lustig’s subscription price was satisfied by the settlement of US$37 in debt owed by the Company to the director for certain consulting services previously rendered by the director to the Company.
|
• |
Pursuant to the consulting agreement between the Company and L5 Capital, the Company issued 50,414 Common Shares as a result of the vested RSUs according to the agreed vesting schedule. The Common Shares were issued on May 5, 2023. In July
24, 2023, an additional 4,585 Common Shares were issued as a result of the vested RSUs according to the agreed vesting schedule.
|
• |
On October 12, 2023, Oren Shuster, the CEO loaned an amount of NIS 500 thousand (approximately $170) to IMC Holdings. The participation of the CEO constituted a “related party transaction”, as such term is defined in MI 61-101 and would
require the Company to receive minority shareholder approval for and obtain a formal valuation for the subject matter of, the transaction in accordance with MI 61-101, prior to the completion of such transaction. However, in completing the
loan, the Company has relied on exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101, in each case on the basis that the fair market value of the CEO’s loan did not exceed 25% of the market
capitalization of the Company, as determined in accordance with MI 61-101. For further information please see "SUBSEQUENT EVENTS – Short -Term Loan Agreement".
|
a) |
The reason for the bill-and-hold arrangement is substantive (for example, the customer has requested the arrangement);
|
b) |
The product is identified separately as belonging to the customer;
|
c) |
The product currently is ready for physical delivery to the customer;
|
d) |
The Group does not have the ability to use the product by selling it or delivering it to another customer.
|
a. |
Amendments to IAS 21, "The Effects of Changes in Foreign Exchange Rates":
|
Financial Instruments Measured at Fair Value
|
Fair Value Method
|
|
Derivative assets1
|
Black & Scholes model (Level 3 category)
|
|
Warrants liability1
|
Black & Scholes model (Level 3 category)
|
|
Investment in affiliates
|
Market comparable (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 twelve months ended December 31, 2023 and 2022, amounted to $6,955 and $6,014, respectively.
|
Issue date
|
||||||||||||
May 2023
|
February 2023
|
May 2021
|
||||||||||
Expected volatility
|
48.43
|
%
|
48.43
|
%
|
48.43
|
%
|
||||||
Share price (Canadian Dollar)
|
0.48
|
0.48
|
0.48
|
|||||||||
Expected life (in years)
|
2.342
|
2.096
|
2.342
|
|||||||||
Risk-free interest rate
|
4.12
|
%
|
4.12
|
%
|
4.12
|
%
|
||||||
Expected dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
||||||
Fair value:
|
||||||||||||
Per Warrant (Canadian Dollar)
|
$
|
0.009
|
$
|
0.006
|
$
|
0
|
||||||
Total Warrants (Canadian Dollar in thousands)
|
$
|
5
|
$
|
33
|
$
|
0
|
|
● |
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; 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.
|
|
(a) |
the Company receiving economic benefits from Focus (and the terms of the contractual agreements between the Company and Focus cannot be changed without the approval of IMC Holdings);
|
|
(b) |
IMC Holdings having the option to purchase the divested 74% interest in Focus held by Oren Shuster, the CEO, director and a promoter of the Company, and Rafael Gabay, a former director and a promoter of the Company;
|
|
(c) |
Messrs. Shuster and Gabay each being a director of Focus (while Mr. Shuster concurrently being a CEO, director and substantial shareholder of the Company and Mr. Gabay concurrently being a substantial shareholder of the Company); and
|
|
(d) |
the Company providing management and support activities to Focus through a services agreement.
|
|
● |
the Company’s business objectives and milestones and the anticipated timing of execution;
|
|
● |
the performance of the Company’s business, strategies and operations;
|
|
● |
the Company’s intentions to expand the business, operations and potential activities of the Company;
|
|
● |
the Company’s plans to expand its sales channels, distribution, delivery and storage capacity, and reach to medical cannabis patients;
|
|
● |
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 competitive conditions of the industry, including the Company’s ability to maintain or grow its market share and maintain its competitive advantages;
|
|
● |
statements relating to the Company’s commitment to responsible growth and compliance with the strictest regulatory environments;
|
|
● |
the Company’s focus on providing premium cannabis products to medical patients in the jurisdictions in which the Company conducts business and any other jurisdiction in which the Company may conduct business in the future;
|
|
● |
the Company’s plans to amplify its commercial and brand power to become a global high-quality cannabis player;
|
|
● |
the Company’s primary goal of sustainably increasing revenue in its core markets;
|
|
● |
the demand and momentum in the Company’s Israeli and Germany operations;
|
|
● |
how the Company intends to position its brands;
|
|
● |
the efficiencies and synergies of the Company as a global organization with domestic expertise in Israel and Germany;
|
|
● |
expectations that providing high-quality, reliable supply to the Company’s customers and patients will lead to recurring sales;
|
|
● |
expectations related to the Company’s introduction of new Stock Keeping Unit (“SKUs”)
|
|
● |
anticipated cost savings from the reorganization of the Company's and the completion thereof upon the timelines disclosed herein;
|
|
● |
geographic diversification and brand recognition and the growth of the Company’s brands in the jurisdictions that the Company operates in or may expand to;
|
|
● |
expectations related to the Company’s ability to address the ongoing needs and preferences of medical cannabis patients;
|
|
● |
the Company’s retail presence, distribution capabilities and data-driven insights;
|
|
● |
the future impact of the Regulations Amendment regarding the transition reform from licenses to prescriptions for medical treatment of cannabis;
|
|
● |
the Company’s continued partnerships with third party suppliers and partners and the benefits thereof;
|
|
● |
the Company’s ability to achieve profitability in 2024;
|
|
● |
the number of patients in Israel licensed by the Israeli Ministry of Health (“MOH”) to consume medical cannabis;
|
|
● |
expectations relating to the number of patients paying out-of-pocket for medical cannabis products in Germany;
|
|
● |
the anticipated decriminalization or legalization of adult-use recreational cannabis in Israel and Germany;
|
|
● |
expectations related to the demand and the ability of the Company to source premium and ultra-premium cannabis products exclusively and competition in this product segment;
|
|
● |
the anticipated impact of inflation and liquidity on the Company’s performance;
|
|
● |
expectations with respect to the Company’s operating budget and the assumptions related thereto;
|
|
● |
expectations relating to the Company as a going concern and its ability to conduct business under the ordinary course of operations;
|
|
● |
expectations related to the collection the payment awarded in the Judgment and the chances of the claim advancing or the potential outcome of the Test Kits Appeal (as defined herein);
|
|
● |
the continued listing of the Company’s Common Shares in the capital of the Company (“Common Shares”) on the Nasdaq Stock Market (“Nasdaq”) and Canadian
Securities Exchange (“CSE”);
|
|
● |
cannabis licensing in the jurisdictions in which the Company operates;
|
|
● |
the renewal and/or extension of the Company’s licenses;
|
|
● |
the Company’s anticipated operating cash requirements and future financing needs;
|
|
● |
the Company’s expectations regarding its revenue, expenses, profit margins and operations;
|
|
● |
the anticipated Gross Margins, EBITDA and Adjusted EBITDA from the Company’s operations;
|
|
● |
the expected increase in revenue and margins in its Israeli medical cannabis market activities arising from its acquisitions;
|
|
● |
future opportunities for the Company in Israel, particularly in the retail and distribution segments of the cannabis market;
|
|
● |
future expansion and growth opportunities for the Company in Germany and Europe and the timing of such;
|
|
● |
contractual obligations and commitments; and
|
|
● |
the Company completing the Potential Transaction with Kadimastem (each as defined herein).
|
|
● |
the Company has the ability to achieve its business objectives and milestones under the stated timelines;
|
|
● |
the Company will succeed in carrying out its business, strategies and operations;
|
|
● |
the Company will realize upon its intentions to expand the business, operations and potential activities of the Company;
|
|
● |
the Company will expand its sales channels, distribution, delivery and storage capacity, and reach to medical cannabis patients;
|
|
● |
the competitive conditions of the cannabis industry and the growth of medical or adult-use recreational cannabis in the jurisdictions in which the Company operates;
|
● |
the competitive conditions of the industry will be favorable to the Company, and the Company has the ability to maintain or grow its market share and maintain its competitive advantages;
|
|
● |
the Company will commit to responsible growth and compliance with the strictest regulatory environments;
|
|
● |
the Company will remain focused on providing premium cannabis products to medical patients in the jurisdictions in which the Company conducts business and any other jurisdiction in which the Company may conduct business in the future;
|
|
● |
the Company has the ability to amplify its commercial and brand power to become a global high-quality cannabis player;
|
|
● |
the Company will maintain its primary goal of sustainably increasing revenue in its core markets;
|
|
● |
the demand and momentum in the Company’s Israeli and Germany operations will be favorable to the Company;
|
|
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the Company will carry out its plans to position its brands as stated;
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the Company’s Company has the ability to realize upon the stated efficiencies and synergies the Company as a global organization with domestic expertise in Israel and Germany;
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providing a high-quality, reliable supply to the Company’s customers and patients will lead to recurring sales;
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the Company will introduce of new SKUs;
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the Company will realize the anticipated cost savings from the reorganization;
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the Company has the ability to achieve geographic diversification and brand recognition and the growth of the Company’s brands in the jurisdictions that the Company operates in or may expand to;
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the Company’s has the ability to address the ongoing needs and preferences of medical cannabis patients;
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the Company has the ability to realize upon its retail presence, distribution capabilities and data-driven insights;
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the future impact of the Regulations Amendment will be favorable to the Company;
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the Company will maintain its partnerships with third parties, suppliers and partners;
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the Company has the ability to achieve profitability in 2024;
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the accuracy of number of patients in Israel licensed by the MOH to consume medical cannabis;
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the accuracy of the number of patients paying out-of-pocket medical cannabis products in Germany;
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the anticipated decriminalization or legalization of adult-use recreational cannabis in Israel and Germany will occur;
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the Company has the ability to source premium and ultra-premium cannabis products exclusively and competition in this product segment;
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the anticipated impact of inflation and liquidity on the Company’s performance will be as forecasted;
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the accuracy with respect to the Company’s operating budget and the assumptions related thereto;
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the Company will remain as going concern;
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a favorable outcome with respect to the collection the payment awarded in the Judgment and the chances of the claim advancing or the potential outcome of the Test Kits Appeal;
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the Company’s Common Shares will remain listed on the Nasdaq and the CSE;
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the Company’s ability to maintain cannabis licensing in the jurisdictions in which the Company operates;
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the Company has the ability to obtain the renewal and/or extension of the Company’s licenses;
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the Company has the ability to meet operating cash requirements and future financing needs;
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the Company will meet or surpass its expectations regarding its revenue, expenses, profit margins and operations;
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the Company will meet or surpass its expectations regarding Gross Margins, EBITDA and Adjusted EBITDA from the Company’s operations;
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the Company will increase its revenue and margins in its Israeli medical cannabis market activities arising from its acquisitions;
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the Company has the ability to capitalize on future opportunities for the Company in Israel, particularly in the retail and distribution segments of the cannabis market;
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the Company will carry out its future expansion and growth opportunities for the Company in Germany and Europe and the timing of such;
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the Company will fulfill its contractual obligations and commitments; and
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the Company will complete the Proposed Transaction with Kadimastem.
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the Company’s inability to achieve its business objectives and milestones under the stated timelines;
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the Company inability to carry out its business, strategies and operations;
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the Company’s inability to realize upon its intentions to expand the business, operations and potential activities of the Company;
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the Company will not expand its sales channels, distribution, delivery and storage capacity, and reach to medical cannabis patients;
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the competitive conditions of the cannabis industry and the growth of medical or adult-use recreational cannabis markets will be unfavourable to the Company in the jurisdictions in which the Company operates;
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the competitive conditions of the industry will be unfavourable to the Company, and the Company’s inability to maintain or grow its market share and maintain its competitive advantages;
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the Company will not commit to responsible growth and compliance with the strictest regulatory environments;
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the Company’s inability to remain focused on providing premium cannabis products to medical patients in the jurisdictions in which the Company conducts business and any other jurisdiction in which the Company may conduct business in the
future;
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the Company inability to amplify its commercial and brand power to become a global high-quality cannabis player;
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the Company will not maintain its primary goal of sustainably increasing revenue in its core markets;
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the demand and momentum in the Company’s Israeli and Germany operations will be unfavourable to the Company;
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the Company will not carry out its plans to position its brands as stated;
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the Company’s inability to realize upon the stated efficiencies and synergies of the Company as a global organization with domestic expertise in Israel and Germany;
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providing a high-quality, reliable supply to the Company’s customers and patients will not lead to recurring sales;
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the Company will not introduce of new SKUs;
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the Company’s inability to realize upon the anticipated cost savings from the reorganization;
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● |
the Company’s inability to achieve geographic diversification and brand recognition and the growth of the Company’s brands in the jurisdictions that the Company operates in or may expand to;
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● |
the Company’s inability to address the ongoing needs and preferences of medical cannabis patients;
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● |
the Company’s inability to realize upon its retail presence, distribution capabilities and data-driven insights;
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the future impact of the Regulations Amendment will be unfavourable to the Company;
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the Company will not maintain its partnerships with third party suppliers and partners;
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the Company’s inability to achieve profitability in 2023;
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the inaccuracy of number of patients in Israel licensed by the MOH to consume medical cannabis;
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● |
the inaccuracy of the number of patients paying out-of-pocket for medical cannabis products in Germany;
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the anticipated decriminalization or legalization of adult-use recreational cannabis in Israel and Germany will not occur;
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the Company’s ability to source premium and ultra-premium cannabis products exclusively and competition in this product segment;
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the anticipated impact of inflation and liquidity on the Company’s performance will not be as forecasted;
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the inaccuracy with respect to the Company’s operating budget and the assumptions related thereto;
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the Company will not remain as going concern;
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an unfavourable outcome of the negotiations or the Construction Proceedings;
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an unfavourable outcome with respect to the collection the payment awarded in the Judgment and the chances of the claim advancing or the potential outcome of the Appeal;
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the Company’s Common Shares will not remain listed on the Nasdaq and the CSE;
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the Company’s inability to maintain cannabis licensing in the jurisdictions in which the Company operates;
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the Company’s inability to obtain the renewal and/or extension of the Company’s licenses;
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the Company’s inability to meet operating cash requirements and future financing needs;
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the Company will not meet or surpass its expectations regarding its revenue, expenses, profit margins and operations;
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the Company will not meet or surpass its expectations regarding Gross Margins, EBITDA and Adjusted EBITDA from the Company’s operations;
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the Company will not increase its revenue and margins in its Israeli medical cannabis market activities arising from its acquisitions;
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● |
the Company’s ability to capitalize on future opportunities for the Company in Israel, particularly in the retail and distribution segments of the cannabis market;
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● |
the Company will not carry out its future expansion and growth opportunities for the Company in Germany and Europe and the timing of such; and
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the Company will not fulfill its contractual obligations and commitments; and
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the Company will not complete the Proposed Transaction with Kadimastem.
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