Cannabis
cbdMD Posts $15 Million in Net Income Improvement over Prior Year Quarter
Company continues to make headway despite challenging consumer environment.
Charlotte, North Carolina–(Newsfile Corp. – February 13, 2023) – cbdMD, Inc. (NYSE American: YCBD) (NYSE American: YCBDpA), one of the nation’s leading and most highly trusted and recognized CBD companies, and operator the leading CBD brands – including its flagship brand cbdMD, and its animal health brand Paw CBD, today announced our first quarter of fiscal 2023 results.
For the first quarter of fiscal 2023 Net Loss improved to $3.9 million on sales of $6.1 million as compared to a $19.1 million Net Loss on sales of $9.3 million in the prior year comparative quarter. Year over year saw marked gains in gross margins and continued significant improvements in SG&A costs.
“Despite a challenging quarter for consumer brands in general and the CBD Category specifically, we continued to aggressively manage our cost structure. We encountered some external headwinds and internal challenges as we pivoted our portfolio to a unique clinically studied higher-potency product offering. We reduced a significant amount of unprofitable spend and are seeing revenues stabilize and margins improve during the second quarter. We continue to execute on our plan and remain very encouraged about the pipeline of opportunities and anticipated improvement in our operating income for the second quarter of fiscal 2023,” says Kevin MacDermott, cbdMD’s President.
Financial Highlights from our First Quarter of Fiscal 2023:
- We reported that our net sales for the December 31, 2022 quarter were $6.1 million versus net sales of $7.8 million quarter ending September 30, 2022, a decrease of 22%. Our net sales for the quarter ended December 31, 2022 were down 35% compared to the prior year quarter ended December 31, 2021.
- We reported that our quarter ending December 31, 2022 direct to consumer (DTC) net sales were $4.9 million, versus $7.1 million for our quarter ending December 31, 2021, or a year over year decline of 31%. Our e-commerce net sales were down 22% sequentially.
- We reported that our quarter ending December 31, 2022, wholesale sales (including brick and mortar retail customers) were $1.2 million, versus $1.6 million for quarter ending September 30, 2022 or sequential decrease of 26%. Wholesale net sales were down 46% compared to the prior year quarter ended December 31, 2021. We have added a number of specific food, drug, mass, and convenience channel focused resources during the quarter and anticipate building wholesale inertia as we execute our plan over the next 2 quarters and beyond.
- We reported that our quarter ending December 31, 2022, gross profit margin was 59% versus 54% for the prior year period.
- We committed to ongoing cost reductions and SG&A expense improvements on our last call in December. For the quarter ending December 31, 2022, the Company continued delivering on cost rationalizations and recorded SG&A Costs of $7.6 million for the quarter as compared to $11.9 million in the prior year period. SG&A has improved $4.8 million or 38% compared to the prior year quarter ended December 31, 2021. We anticipate further reductions in SG&A during the second quarter based on ongoing management efforts to right size our costs.
- We reported GAAP loss from operations of approximately $4.0 million for the quarter ending December 31, 2022 compared to a $25.1 million loss from operations for our quarter ending December 31, 2021, a reduction of approximately $21 million or 84% year over year. This decrease is primarily related to the $18.1 million in goodwill and intangibles impairment. Excluding these non-cash impairment charges, year over year non-GAAP operating income improved $2.9 million on lower revenues.
- We reported non-GAAP adjusted operating loss of approximately $2.6 million in our December 31, 2022 quarter, compared to $4.6 million for the December 31, 2021 quarter. This reduction was primarily related to management’s actions taken to right size our cost structure over the last few quarters.
Highlights for the First Quarter and Notable Business Updates:
- The Company successfully launched cbdMD Max with patented Univestin™ that has clinical pain claims. The Company holds an exclusive license to formulate CBD Products with Univestin.
- The Company is taking swift action to reinvigorate sales, hired new marketing leadership and retained an outside agency to aide in improving sales trends.
- The Company’s Japanese market sales showed growth during the first fiscal quarter and continues to trend during the second quarter.
- cbdMD Therapeutics completed our human clinical study and results indicated our proprietary broad spectrum reduces pain in healthy adults, in addition to other significant indications on mood, immunity and sleep. The data is currently being used to support product development and marketing campaigns. After we publish our findings sometime in fiscal 2023, the data will be used to support the submission of structure function claim notifications to FDA.
- Adara Acquisition Corporation completed its merger with Alliance Entertainment Inc. on February 10, 2023 and the Company received back its $1 million investment in Adara Sponsor, LLC.
- cbdMD entered into an Agreement for Advertising Placement with a360 Media, LLC (“a360”) in which a360 will provide professional media support and advertising placement in exchange for shares of the Company’s common stock. This will expand access and marketing on a360’s platform and we believe this will help add customers and brand awareness and allow us to preserve cash during 2023.
We will host a conference call at 4:15 p.m., Eastern Time, on Monday, February 13, 2022, to discuss our December 31, 2022, first quarter financial results and business progress.
CONFERENCE CALL DETAILS
| Monday February 13, 2022, 4:15 p.m. Eastern Time | ||
| USA/Canada: | 800-319-4610 | |
| International: | 604-638-5340 | |
| Teleconference Replay dial in: | ||
| USA/Canada: | 855-669-9658 | |
| International: | 412-317-0088 | |
| Replay Passcode: | 9893 | |
| Webcast/Webcast Replay link – available through February 13, 2023: https://www.gowebcasting.com/12471 | ||
About cbdMD, Inc.
cbdMD, Inc. is one of the leading and most highly trusted and most recognized cannabidiol (CBD) brands with a comprehensive line of U.S. produced, THC-free1 CBD products as well as our new Full Spectrum products. Our cbdMD brand currently includes high-grade, premium CBD products including CBD tinctures, CBD gummies, CBD topicals, CBD capsules, CBD bath bombs, CBD sleep aids and CBD drink mixes and an array of Farm Act compliant Delta 9 products. Our Paw CBD brand of pet products includes veterinarian-formulated products including tinctures, chews, topicals products in varying strengths, and our CBD Botanicals brand of beauty and skincare products including facial oil and serum, toners, moisturizers, clear skin, facial masks, exfoliants and body care. To learn more about cbdMD and our comprehensive line of U.S. grown, THC-free1 CBD oil and Full Spectrum products, please visit www.cbdmd.com, follow cbdMD on Instagram and Facebook, or visit one of the thousands of retail outlets that carry cbdMD’s products.
Forward-Looking Statements
This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements can be identified using words such as ”should,” ”may,” ”intends,” ”anticipates,” ”believes,” ”estimates,” ”projects,” ”forecasts,” ”expects,” ”plans,” and ”proposes.” These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict. You are urged to carefully review and consider any cautionary statements, including but not limited to expectations on our ability to continue as a going concern, increasing our revenues, cost reductions, potential need for additional working capital, future profitability, results from clinical studies and other disclosures, including the statements made under the heading “Risk Factors” in cbdMD, Inc.’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022 as filed with the Securities and Exchange Commission (the “SEC”) on December 15, 2022 and as amended on December 20, 2022 and our other filings with the SEC. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of cbdMD, Inc. and are difficult to predict. cbdMD, Inc. does not undertake any duty to update any forward-looking statements except as may be required by law. The information which appears on our websites and our social media platforms, including, but not limited to, Instagram and Facebook, is not part of this press release.
1 THC-free is defined as below the level of detection using validated scientific analytical methods.
Non-GAAP Financial Measures
This press release includes a financial measure that excludes the impact of certain items and therefore has not been calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). cbdMD, Inc. has included adjusted loss from operations because management uses this measure to assess operating performance in order to highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. The adjusted operating loss has not been prepared in accordance with GAAP. This non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, net loss from operations as an indicator of our operating performance. Further, this non-GAAP financial measure, as presented by cbdMD, Inc., may not be comparable to similarly titled measures reported by other companies. cbdMD, Inc. has attached to this press release a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure.
| cbdMD, INC. | ||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| DECEMBER 31, 2022 AND SEPTEMBER 30, 2021 | ||||||||||||||
| (Unaudited) | ||||||||||||||
| December 31, | September 30, | |||||||||||||
| 2022 | 2022 | |||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ | 3,352,664 | $ | 6,720,234 | ||||||||||
| Accounts receivable | 898,720 | 1,447,831 | ||||||||||||
| Accounts receivable – discontinued operations | – | 1,375 | ||||||||||||
| Marketable securities, at cost | – | – | ||||||||||||
| Investment other securities | 1,000,000 | 1,000,000 | ||||||||||||
| Inventory | 4,690,609 | 4,255,914 | ||||||||||||
| Inventory prepaid | 170,659 | 511,459 | ||||||||||||
| Prepaid sponsorship | 66,784 | 1,372,845 | ||||||||||||
| Prepaid expenses and other current assets | 1,349,784 | 701,945 | ||||||||||||
| Total current assets | 11,529,220 | 16,011,603 | ||||||||||||
| Other assets: | ||||||||||||||
| Property and equipment, net | 900,567 | 823,310 | ||||||||||||
| Operating lease assets | 4,201,204 | 4,477,841 | ||||||||||||
| Deposits for facilities | 138,708 | 244,606 | ||||||||||||
| Intangible assets | 17,557,194 | 17,834,549 | ||||||||||||
| Goodwill | – | – | ||||||||||||
| Investment in other securities, noncurrent | 1,400,000 | 1,400,000 | ||||||||||||
| Total other assets | 24,197,673 | 24,780,306 | ||||||||||||
| Total assets | $ | 35,726,893 | $ | 40,791,909 | ||||||||||
| Liabilities and shareholders’ equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 1,689,527 | $ | 2,036,558 | ||||||||||
| Deferred revenue | 2,650,337 | 2,060,762 | ||||||||||||
| Accrued expenses | 1,202,797 | 1,178,683 | ||||||||||||
| Note payable | 9,758 | 9,609 | ||||||||||||
| Total current liabilities | 5,552,419 | 5,285,612 | ||||||||||||
| Long term liabilities: | ||||||||||||||
| Long term liabilities | – | 125,491 | ||||||||||||
| Operating leases – long term portion | 3,368,713 | 3,680,375 | ||||||||||||
| Contingent liability | 215,000 | 276,000 | ||||||||||||
| Total long term liabilities | 3,583,713 | 4,081,866 | ||||||||||||
| Total liabilities | 9,136,132 | 9,367,478 | ||||||||||||
| shareholders’ equity: | ||||||||||||||
| Preferred stock, authorized 50,000,000 shares, $0.001 | ||||||||||||||
| par value, 5,000,000 and 500,000 shares issued and outstanding, respectively | 5,000 | 5,000 | ||||||||||||
| Common stock, authorized 150,000,000 shares, $0.001 | ||||||||||||||
| par value, 60,712,262 and 60,665,595 shares issued and outstanding, respectively | 60,712 | 60,666 | ||||||||||||
| Additional paid in capital | 178,905,176 | 178,782,328 | ||||||||||||
| Accumulated deficit | (152,380,127 | ) | (147,423,563 | ) | ||||||||||
| Total shareholders’ equity | 26,590,761 | 31,424,431 | ||||||||||||
| Total liabilities and shareholders’ equity | $ | 35,726,893 | $ | 40,791,909 | ||||||||||
| cbdMD, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 and 2021 | ||||||||
| (Unaudited) | ||||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Gross Sales | $ | 6,240,526 | $ | 9,856,767 | ||||
| Allowances | (155,308 | ) | (534,945 | ) | ||||
| Total Net Sales | 6,085,218 | 9,321,822 | ||||||
| Cost of sales | 2,517,452 | 4,328,310 | ||||||
| Gross Profit | 3,567,766 | 4,993,512 | ||||||
| Operating expenses | 7,613,947 | 11,955,284 | ||||||
| Impairment of Goodwill and other intangible assets | – | 18,183,285 | ||||||
| Loss from operations | (4,046,181 | ) | (25,145,057 | ) | ||||
| Realized and Unrealized loss on marketable and other securities, including impairments | – | (33,351 | ) | |||||
| Decrease of contingent liability | 61,000 | 5,950,000 | ||||||
| Other income | – | 70,738 | ||||||
| Interest income (expense) | 29,119 | (3,234 | ) | |||||
| Loss before provision for income taxes | (3,956,062 | ) | (19,160,904 | ) | ||||
| Benefit for income taxes | – | – | ||||||
| Net Loss | (3,956,062 | ) | (19,160,904 | ) | ||||
| Preferred dividends | 1,000,502 | 1,000,502 | ||||||
| Net Loss available to cbdMD, Inc. common shareholders | $ | (4,956,564 | ) | $ | (20,161,406 | ) | ||
| Net Loss per share: | ||||||||
| Basic earnings per share | (0.08 | ) | (0.35 | ) | ||||
| Diluted earnings per share | (0.08 | ) | (0.35 | ) | ||||
| Weighted average number of shares Basic: | 60,357,449 | 57,825,367 | ||||||
| Weighted average number of shares Diluted: | 60,357,449 | 57,825,367 | ||||||
| cbdMD, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||||||
| FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 and 2021 | ||||||||
| (Unaudited) | ||||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Net Loss | $ | (3,956,062 | ) | $ | (19,160,904 | ) | ||
| Comprehensive Loss | (3,956,062 | ) | (19,160,904 | ) | ||||
| Preferred dividends | (1,000,502 | ) | (1,000,502 | ) | ||||
| Comprehensive Loss attributable to cbdMD, inc. common shareholders | $ | (4,956,564 | ) | $ | (20,161,406 | ) | ||
| cbdMD, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||
| FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 and 2021 | ||||||||
| (Unaudited) | ||||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net Loss | $ | (3,956,062 | ) | $ | (19,160,904 | ) | ||
| Adjustments to reconcile net loss to net | ||||||||
| cash used by operating activities: | ||||||||
| Stock based compensation | 79,446 | 505,466 | ||||||
| Restricted stock expense | 43,449 | 508,754 | ||||||
| Write off of prepaid assets due to termination of contractual obligation | 884,892 | – | ||||||
| Marketing stock amortization | – | 220,000 | ||||||
| Issuance of stock / warrants for service | – | – | ||||||
| Inventory and materials impairment | – | 878,142 | ||||||
| Intangibles Amortization | 277,354 | – | ||||||
| Depreciation | 100,112 | 340,701 | ||||||
| Impairment of goodwill and other intangible assets | – | 18,183,285 | ||||||
| Gain on sale of fixed assets | – | – | ||||||
| Decrease in contingent liability | (61,000 | ) | (5,950,000 | ) | ||||
| Realized and unrealized loss of Marketable and other securities | – | 33,351 | ||||||
| Amortization of operating lease asset | 276,636 | 318,017 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 549,111 | 4,554 | ||||||
| Deposits | 105,898 | 121,875 | ||||||
| Inventory | (434,695 | ) | (723,483 | ) | ||||
| Prepaid inventory | 340,799 | (8,189 | ) | |||||
| Prepaid expenses and other current assets | (226,670 | ) | (303,391 | ) | ||||
| Accounts payable and accrued expenses | 39,203 | (127,254 | ) | |||||
| Operating lease liability | (287,547 | ) | (321,464 | ) | ||||
| Deferred revenue / customer deposits | 203,341 | 3,723 | ||||||
| Collection on discontinued operations accounts receivable | 1,375 | 8,342 | ||||||
| Deferred tax liability | – | – | ||||||
| Cash used by operating activities | (2,064,358 | ) | (5,468,475 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of other investment securities | – | – | ||||||
| Purchase of other investment securities | – | – | ||||||
| Purchase of DirectCBDOnline.com | – | – | ||||||
| Purchase of property and equipment | (177,370 | ) | (231,030 | ) | ||||
| Cash flows from investing activities | (177,370 | ) | (231,030 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of preferred stock | – | – | ||||||
| Note payable | (125,341 | ) | (14,498 | ) | ||||
| Preferred dividend distribution | (1,000,502 | ) | (1,000,502 | ) | ||||
| Cash flows from financing activities | (1,125,843 | ) | (1,015,000 | ) | ||||
| Net increase (decrease) in cash | (3,367,570 | ) | (6,714,505 | ) | ||||
| Cash and cash equivalents, beginning of period | 6,720,234 | 26,411,424 | ||||||
| Cash and cash equivalents, end of period | $ | 3,352,664 | $ | 19,696,919 | ||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| 2022 | 2021 | |||||||
| Cash Payments for: | ||||||||
| Interest expense | $ | 2,638 | $ | 3,234 | ||||
| Non-cash financial activities: | ||||||||
| Issuance of Contingent earnout shares: | $ | – | $ | 405,000 | ||||
| cbdMD, Inc. | ||||||||
| SUPPLEMENTAL FINANCIAL INFORMATION | ||||||||
| RECONCILIATION OF NON-GAAP ADJUSTED LOSS FROM OPERATIONS | ||||||||
| (unaudited) | ||||||||
| Three Months | Three Months | |||||||
| Ended | Ended | |||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| GAAP (loss) from operations | $ | (4,046,181 | ) | $ | (25,145,057 | ) | ||
| Adjustments: | ||||||||
| Depreciation & Amortization | 377,466 | 340,701 | ||||||
| Employee and director stock compensation (1) | 137,144 | 1,014,220 | ||||||
| Other non-cash stock compensation for services (2) | 884,893 | – | ||||||
| Inventory adjustment (3) | – | 878,142 | ||||||
| Impairment of goodwill and other intangible assets (4) | – | 18,183,285 | ||||||
| Accrual / expenses for discretionary bonus | – | 150,000 | ||||||
| Non-GAAP adjusted (loss) from operations | $ | (2,646,678 | ) | $ | (4,578,709 | ) | ||
(1) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.
(2) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.
(3) Represents an operating expense related to inventory loss related to regulatory changes impacting labels and packaging and obsolete/expired inventory.
(4) Represents non-cash impairment of the cbdMD trademark of $4,285,000 and $13,898,285 of goodwill impairment during the first fiscal quarter of 2022.
Contacts:
Investors:
cbdMD, Inc.
Ronan Kennedy
Chief Financial Officer
[email protected]
(704) 445-3064
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/154610
IMC prepares for accelerated growth after legalization in Germany and recovers from the impact of the Israel-Hamas war.
TORONTO and GLIL YAM, Israel, May 8, 2024 /PRNewswire/ — IM Cannabis Corp. (the “Company” or “IMC“) (NASDAQ: IMCC) (CSE: IMCC), an international medical cannabis company, announced its financial results today for the first quarter ended March 31, 2024. All amounts are reported in Canadian dollars and compared to the quarter ended March 31, 2023, unless otherwise stated.
Q1 2024 Financial Highlights
- 13% Revenue increase vs. Q4 2023 of $12.1M vs. $10.7M and 4% decrease vs. Q1 2023 of $12.5M
- 125% Gross profit increase vs. Q4 2023 of $1.8M vs. $0.8 and 39% Gross profit decrease vs. Q1 2023 of $2.9M
- 29% decrease in operating expenses vs. Q1 2023 excluding the one-time Oranim revoke related losses of $4.6M vs. $6.5M and 14% increase including Oranim
- 12% increase of Non-IFRS Adjusted EBITDA loss to $2.1M
Operational Highlights
The Company intends to complete a non-brokered private placement (the “Offering“) of secured convertible debentures of the Company (each, a “Debenture“) for aggregate proceeds of up to C$2,500,000. The Debentures will mature on the date that is 12 months from the date of issuance and will not incur interest except in the event of default. The Debentures are being issued to holders of short term loans and obligations owed by the Company or its wholly owned subsidiaries. The principal of the Debenture may be converted into common shares in the Company (each, a “Share“) at a conversion price of $1.08 per Share.
Management Commentary
“With the April 1st cannabis legalization in Germany, we are augmenting our focus and resources on the German market, where we expect to see the biggest growth potential, and the best return on investment. While it is still too early to make any predictions, our sales in Germany almost doubled during the month of April,” said Oren Shuster, Chief Executive Officer of IMC. “Looking back on the first month post legalization in Germany, I see that we have the infrastructure and the supply agreements in place to continue delivering the accelerated growth we have already seen in April. We will also ensure that we have the necessary resources in place for success.”
“In 2023 we completely restructured, becoming a very lean and agile company, leaning into active cost management. This process is reflected in the numbers, our G&A decreased 27% vs Q1 2023” said Uri Birenberg, Chief Financial Officer of IMC. “While our results have recovered from the impact of the Israel-Hamas war, our revenue was still effected by both an unfavorable exchange rate, as well as price reductions to sell off inventory.”
Q1 2024 Conference Call
The Company will host a Zoom web conference call today at 9:00 a.m. ET to discuss the results, followed by a question-and-answer session for the investment community. Investors are invited to register by clicking here. All relevant information will be sent upon registration.
If you are unable to join us live, a recording of the call will be available on our website at https://investors.imcannabis.com/ within 24 hours after the call.
Q1 2024 Financial Results
- Revenues for the first quarter of 2024 were $12.1 million compared to $12.5 million in the first quarter of 2023, a decrease of 3%. The decrease is mainly due an exchange rate effect of about $0.2 million and decrease in avg. price per sale due to increased competition.
- Gross profit for the first quarter of 2024 was $1.8 million, compared to $2.9 million in Q1 2024, a decrease of 39%. The downside is attributed mainly to the slow-moving stock that was moved out at a lower price and an exchange rate difference totaling $0.4 million and $0.64 million cost of sales loss due to an inventory erase of the slow-moving stock. Company fair value adjustment was $0 and $0.4 million for the Q1 2024 and Q1 2023 respectively.
- Total Dried Flower sold in Q1 2024 was approximately 1,873 kg with an average selling price of $5.68 per gram, compared to approximately 1,842kg in Q1 2023, with an average selling price of $6.59 per gram. This difference is mainly due to increased competition within the retail segment, and mid-range stock discounts to move out slow moving stock.
- Total operating expenses in Q1 2024 were $7.4 million compared to $6.5 million in Q1 2023. The increase is due to the other operating expenses related to Oranim Deal revoke, with an expected losses of $2.8 million. Adjusting for this one-time losses, Q1 2024 operating expenses were $4.6 million compared to $6.5 million in Q1 2023, a decrease of 29%.
- G&A Expenses in Q1 2024 were $2.3 million, compared to $3.2 million in Q1 2023, a decrease of 28%. The decrease in the G&A expense is attributable mainly to salaries and professional services of $0.64 million.
- Selling and Marketing Expenses in Q1 2024 were $2.3 million, compared to $2.8 million in Q1 2023, a decrease of 18% mainly due to a decrease in Salaries and professional services of $0.5 million.
- Net Loss from continuing operations in Q1 2024 was $6.0 million, compared to $0.9 million in Q12023.
- Basic and diluted Loss per Share in Q1 2024 was $0.42, compared to a loss of $0.05 per Share in Q1 2023.
- Non-IFRS Adjusted EBITDA loss in Q1 2024 was $2.1 million, compared to an Adjusted EBITDA loss of $1.9 million in Q1 2023 an increase of 10%.
- Cash and Cash Equivalents as of March 31, 2024, were $1.0 million compared to $1.8 million in December 31, 2023.
- Total assets as of March 31, 2024, were $41.1 million, compared to $48.8 million in December 31, 2023, a decrease of 16%. The decrease is mainly attributed to the goodwill reduction due to Oranim agreement cancelation of about $2.8M, a reduction in Inventory of $2.1 million, reduction of Cash and cash equivalents of $0.8M and reduction in Trade payables of $1.2 million.
- Total Liabilities as of March 31, 2024, were $32.8 million, compared to $35.1 in December 31, 2023, a decrease of about 7%. The decrease was mainly due to the reduction in other accounts payables and accrued expenses of $1.8 million and reduction in the PUT option liability of $0.7 million.
The Company’s financial statements as of March 31, 2024 includes a note regarding the Company’s ability to continue as a going concern. The Company’s Q1 2024 financial results do not include any adjustments relating to the recoverability and classification of assets or liabilities that might be necessary should the Company be unable to continue as a going concern. For more information, please refer to the “Liquidity and Capital Resources” and “Risk Factors” sections in the Company’s management’s discussion and analysis for the quarter ended March 31, 2024.
Non-IFRS Measures
This press release makes reference to “Gross Margin” and “Adjusted EBITDA”, which are financial measures that are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. These measures are provided as complementary information to the Company’s IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should neither be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.
For an explanation of how management defines Gross Margin and Adjusted EBITDA, see the Company’s management’s discussion and analysis for the period ended March 31, 2024, available under the Company’s SEDAR+ profile at www.sedarplus.ca on EDGAR at www.sec.gov/edgar.
We reconcile these non-IFRS financial measures to the most comparable IFRS measures as set out below.
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
||||||
|
Canadian Dollars in thousands |
||||||
|
March 31, |
December 31, |
|||||
|
Note |
(Unaudited) |
|||||
|
ASSETS |
||||||
|
CURRENT ASSETS: |
||||||
|
Cash and cash equivalents |
$ 1,048 |
$ 1,813 |
||||
|
Trade receivables |
6,506 |
7,651 |
||||
|
Advances to suppliers |
780 |
936 |
||||
|
Other accounts receivable |
3,732 |
3,889 |
||||
|
Inventories |
3 |
7,901 |
9,976 |
|||
|
19,967 |
24,265 |
|||||
|
NON-CURRENT ASSETS: |
||||||
|
Property, plant and equipment, net |
4,939 |
5,058 |
||||
|
Investments in affiliates |
2,078 |
2,285 |
||||
|
Right-of-use assets, net |
1,243 |
1,307 |
||||
|
Intangible assets, net |
5,440 |
5,803 |
||||
|
Goodwill |
7,442 |
10,095 |
||||
|
21,142 |
24,548 |
|||||
|
Total assets |
$ 41,109 |
$ 48,813 |
||||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
||||||
|
Canadian Dollars in thousands |
||||||
|
March 31, |
December 31, |
|||||
|
Note |
(Unaudited) |
|||||
|
LIABILITIES AND EQUITY |
||||||
|
CURRENT LIABILITIES:
|
||||||
|
Trade payables |
$ 9,511 |
$ 9,223 |
||||
|
Bank loans and credit facilities |
11,941 |
12,119 |
||||
|
Other accounts payable and accrued expenses |
4,440 |
6,218 |
||||
|
Accrued purchase consideration liabilities |
2,165 |
2,097 |
||||
|
PUT Option liability |
1,967 |
2,697 |
||||
|
Current maturities of operating lease liabilities |
461 |
454 |
||||
|
30,485 |
32,808 |
|||||
|
NON-CURRENT LIABILITIES:
|
||||||
|
Warrants measured at fair value |
4 |
137 |
38 |
|||
|
Operating lease liabilities |
744 |
815 |
||||
|
Long-term loans |
401 |
394 |
||||
|
Employee benefit liabilities, net |
96 |
95 |
||||
|
Deferred tax liability, net |
902 |
963 |
||||
|
2,280 |
2,305 |
|||||
|
Total liabilities |
32,765 |
35,113 |
||||
|
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY: |
5 |
|||||
|
Share capital and premium |
253,887 |
253,882 |
||||
|
Translation reserve |
1,399 |
95 |
||||
|
Reserve from share-based payment transactions |
9,664 |
9,637 |
||||
|
Accumulated deficit |
(255,431) |
(249,145) |
||||
|
Total equity attributable to equity holders of the Company |
9,519 |
14,469 |
||||
|
Non-controlling interests |
(1,175) |
(769) |
||||
|
Total equity |
8,344 |
13,700 |
||||
|
Total liabilities and equity |
$ 41,109 |
$ 48,813 |
||||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS |
||||||
|
AND OTHER COMPREHENSIVE INCOME (UNAUDITED) |
||||||
|
Canadian Dollars in thousands, except per share data |
||||||
|
Three months ended March 31, |
||||||
|
Note |
2024 |
2023 (*) |
||||
|
Revenues |
$ 12,063 |
$ 12,529 |
||||
|
Cost of revenues |
10,274 |
9,286 |
||||
|
Gross profit before fair value adjustments |
1,789 |
3,243 |
||||
|
Fair value adjustments: |
||||||
|
Realized fair value adjustments on inventory sold in the period |
(10) |
(339) |
||||
|
Total fair value adjustments |
(10) |
(339) |
||||
|
Gross profit |
1,779 |
2,904 |
||||
|
General and administrative expenses |
2,332 |
3,175 |
||||
|
Selling and marketing expenses |
2,292 |
2,805 |
||||
|
Restructuring expenses |
– |
283 |
||||
|
Share-based compensation |
32 |
258 |
||||
|
Other operating expenses |
9 |
2,753 |
– |
|||
|
Total operating expenses |
7,409 |
6,521 |
||||
|
Operating loss |
5,630 |
3,617 |
||||
|
Finance income |
4 |
(14) |
3,530 |
|||
|
Finance expense |
(487) |
(795) |
||||
|
Finance income, net |
(501) |
2,735 |
||||
|
Gain (loss) before income taxes |
(6,131) |
(882) |
||||
|
Income tax benefit |
(111) |
(16) |
||||
|
Net )loss( gain |
(6,020) |
(866) |
||||
|
Other comprehensive income that will not be reclassified to profit or loss in |
||||||
|
Total other comprehensive income that will not be reclassified to profit or loss |
67 |
36 |
||||
|
Exchange differences on translation to presentation currency |
1,330 |
(562) |
||||
|
Total other comprehensive income (loss) that will not be reclassified to profit |
1,397 |
(526) |
||||
|
Other comprehensive income that will be reclassified to profit or loss in |
||||||
|
Adjustments arising from translating financial statements of foreign operation |
(35) |
155 |
||||
|
Total other comprehensive income (loss) that will be reclassified to profit or loss |
(35) |
155 |
||||
|
Total other comprehensive income (loss) |
1,362 |
(371) |
||||
|
Total comprehensive loss |
$ (4,658) |
$ (1,237) |
||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS |
||||||
|
AND OTHER COMPREHENSIVE INCOME (UNAUDITED) |
||||||
|
Canadian Dollars in thousands, except per share data |
||||||
|
Three months ended March 31, |
||||||
|
Note |
2024 |
2023 (*) |
||||
|
Net income (loss) attributable to: |
||||||
|
Equity holders of the Company |
(5,623) |
(600) |
||||
|
Non-controlling interests |
(397) |
(266) |
||||
|
$ (6,020) |
$ (866) |
|||||
|
Total comprehensive income (loss) attributable to: |
||||||
|
Equity holders of the Company |
(4,252) |
(959) |
||||
|
Non-controlling interests |
(406) |
(278) |
||||
|
$ (4,658) |
$ (1,237) |
|||||
|
Net income (loss) per share attributable to equity holders of the Company: |
7 |
|||||
|
Basic and diluted (loss) gain per share (in CAD) |
$ (0.42) |
$ (0.05) |
||||
|
Earnings (loss) per share attributable to equity holders of the Company |
||||||
|
Basic and diluted (loss) gain per share (in CAD) |
$ (0.42) |
$ (0.05) |
||||
|
(*) See note 1 regarding figures disclosure. |
||||||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
||||
|
Canadian Dollars in thousands |
||||
|
Three months ended March 31, |
||||
|
2024 |
2023 (*) |
|||
|
Cash provided by operating activities: |
||||
|
Net income (loss) for the period |
$ (6,020) |
$ 43 |
||
|
Adjustments for non-cash items: |
||||
|
Fair value adjustment on sale of inventory |
10 |
339 |
||
|
Fair value adjustment on Warrants, investments and accounts receivable |
100 |
(3,636) |
||
|
Depreciation of property, plant and equipment |
147 |
174 |
||
|
Amortization of intangible assets |
452 |
456 |
||
|
Depreciation of right-of-use assets |
118 |
179 |
||
|
Impairment of goodwill |
2,753 |
– |
||
|
Finance expenses, net |
401 |
635 |
||
|
Deferred tax liability, net |
(69) |
(150) |
||
|
Share-based payment |
32 |
258 |
||
|
Restructuring expense |
– |
283 |
||
|
3,944 |
(1,462) |
|||
|
Changes in working capital: |
||||
|
Decrease (increase) in trade receivables |
1,332 |
1,937 |
||
|
Decrease (increase) in other accounts receivable and advances to suppliers |
159 |
(940) |
||
|
Decrease (increase) in inventories, net of fair value adjustments |
2,159 |
90 |
||
|
Decrease (increase) in trade payables |
663 |
(6,021) |
||
|
Changes in employee benefit liabilities, net |
– |
(22) |
||
|
Increase in other accounts payable and accrued expenses |
(2,745) |
(14) |
||
|
1,568 |
(4,970) |
|||
|
Taxes (paid) received |
(121) |
328 |
||
|
Net cash used in operating activities |
(629) |
(6,061) |
||
|
Cash flows from investing activities: |
||||
|
Purchase of property, plant and equipment |
(2) |
(411) |
||
|
Payment of purchase consideration |
– |
(56) |
||
|
Net cash used in investing activities |
$ (2) |
$ (467) |
||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
||||
|
Canadian Dollars in thousands |
||||
|
Three months ended March 31, |
||||
|
2024 |
2023 |
|||
|
Cash flow from financing activities: |
||||
|
Proceeds from issuance of share capital, net of issuance costs |
176 |
825 |
||
|
Proceeds from issuance of warrants |
(176) |
7,027 |
||
|
Repayment of lease liability |
(118) |
(175) |
||
|
Interest paid – lease liability |
(15) |
(18) |
||
|
Receipt (repayment) of bank loan and credit facilities |
(2,856) |
(1,046) |
||
|
Cash paid for interest |
(444) |
(56) |
||
|
Proceeds from discounted checks |
2,581 |
|||
|
Net cash (used in) provided by financing activities |
(852) |
6,557 |
||
|
Effect of foreign exchange on cash and cash equivalents |
718 |
(1,059) |
||
|
Decrease in cash and cash equivalents |
(765) |
(1,030) |
||
|
Cash and cash equivalents at beginning of the period |
1,813 |
2,449 |
||
|
Cash and cash equivalents at end of the period |
$ 1,048 |
$ 1,419 |
||
|
Supplemental disclosure of non-cash activities: |
||||
|
Right-of-use asset recognized with corresponding lease liability |
$ 40 |
$ 49 |
||
|
Issuance of shares in payment of debt settlement to a non-independent director of the company |
$ – |
$ 222 |
||
|
(*) See note 1 regarding Figures disclosure. |
||||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||
About IM Cannabis Corp.
IMC (Nasdaq: IMCC) (CSE: IMCC) is an international cannabis company that provides premium cannabis products to medical patients in Israel and Germany, two of the largest medical cannabis markets. The Company has exited operations in Canada to pivot its focus and resources to achieve sustainable and profitable growth in its highest value markets, Israel and Germany. The Company leverages a transnational ecosystem powered by a unique data-driven approach and a globally sourced product supply chain. With an unwavering commitment to responsible growth and compliance with the strictest regulatory environments, the Company strives to amplify its commercial and brand power to become a global high-quality cannabis player.
The IMC ecosystem operates in Israel through Focus Medical Herbs Ltd., which imports and distributes cannabis to medical patients, leveraging years of proprietary data and patient insights. The Company also operates medical cannabis retail pharmacies, online platforms and logistical hubs in Israel that enable the safe delivery and quality control of IMC products throughout the entire value chain. In Germany, the IMC ecosystem operates through Adjupharm GmbH, where it distributes cannabis to pharmacies for medical cannabis patients. The Company also operated in Canada through Trichome Financial Corp and its wholly owned subsidiaries. The Company has exited operations in Canada and considers these operations as discontinued.
Disclaimer for Forward-Looking Statements
This press release contains forward-looking information or forward-looking statements under applicable Canadian and United States securities laws (collectively, “forward-looking statements“). All information that addresses activities or developments that we expect to occur in the future are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “believe”, “plan”, “estimate”, “expect”, “likely” and “intend” and statements that an event or result “may”, “will”, “should”, “could” or “might” occur or be achieved and other similar expressions. Forward-looking statements are based on the estimates and opinions of management on the date the statements are made. In the press release, such forward-looking statements include, but are not limited to, statements relating to: the impact of the Israel-Hamas war on the Company, including its operations and the medical cannabis industry in Israel; the timing and impact of the legalization of medicinal cannabis in Germany, including, the Company having it “all in house”; the Company being positioned to take advantage of the legalization; the Company’s growth in 2024; the market growth for medicinal cannabis in Germany; the stated benefits of the Company’s EU-GMP processing facility and an EU-GDP logistics center; the Company to host a teleconference meeting as stated; and the Company’s stated goals, scope, and nature of operations in Germany, Israel, and other jurisdictions the Company may operate.
Forward-looking statements are based on assumptions that may prove to be incorrect, including but not limited to: the Company’s ability to focus and resources to achieve sustainable and profitable growth in its highest value markets; the Company’s ability to mitigate the impact of the Israel-Hamas war on the Company; the Company’s ability to take advantage of the legalization of medicinal cannabis in Germany; the Company’s ability to host a teleconference meeting as stated; and the Company’s ability to carry out its stated goals, scope, and nature of operations in Germany, Israel, and other jurisdictions the Company may operate.
The above lists of forward-looking statements and assumptions are not exhaustive. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated or implied by such forward-looking statements due to a number of factors and risks. These include: the failure of the Company to comply with applicable regulatory requirements in a highly regulated industry; unexpected changes in governmental policies and regulations in the jurisdictions in which the Company operates; the Company’s ability to continue to meet the listing requirements of the Canadian Securities Exchange and the NASDAQ Capital Market; any unexpected failure to maintain in good standing or renew its licenses; the ability of the Company and its subsidiaries (collectively, the “Group“) to deliver on their sales commitments or growth objectives; the reliance of the Group on third-party supply agreements to provide sufficient quantities of medical cannabis to fulfil the Group’s obligations; the Group’s possible exposure to liability, the perceived level of risk related thereto, and the anticipated results of any litigation or other similar disputes or legal proceedings involving the Group; the impact of increasing competition; any lack of merger and acquisition opportunities; adverse market conditions; the inherent uncertainty of production quantities, qualities and cost estimates and the potential for unexpected costs and expenses; risks of product liability and other safety-related liability from the usage of the Group’s cannabis products; supply chain constraints; reliance on key personnel; the risk of defaulting on existing debt; risks surrounding war, conflict and civil unrest in Eastern Europe and the Middle East, including the impact of the Israel-Hamas war on the Company, its operations and the medical cannabis industry in Israel; risks associated with the Company focusing on the Israel and Germany markets; the inability of the Company to achieve sustainable profitability and/or increase shareholder value; the inability of the Company to actively manage costs and/or improve margins; the inability of the company to grow and/or maintain sales; the inability of the Company to meet its goals and/or strategic plans; the inability of the Company to reduce costs and/or maintain revenues; the Company’s inability to take advantage of the legalization of medicinal cannabis in Germany; and the Company’s inability to host a teleconference meeting as stated.
Please see the other risks, uncertainties and factors set out under the heading “Risk Factors” in the Company’s annual report dated March 28, 2024, which is available on the Company’s issuer profile on SEDAR+ at www.sedarplus.ca and Edgar at www.sec.gov/edgar. Any forward-looking statement included in this press release is made as of the date of this press release and is based on the beliefs, estimates, expectations and opinions of management on the date such forward looking information is made. The Company does not undertake any obligation to update forward-looking statements except as required by applicable securities laws. Investors should not place undue reliance on forward-looking statements. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
Company Contact:
Anna Taranko, Director Investor & Public Relations
IM Cannabis Corp.
+49 157 80554338
[email protected]
Oren Shuster, CEO
IM Cannabis Corp.
+972-77-3603504
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View original content:https://www.prnewswire.co.uk/news-releases/im-cannabis-reports-first-quarter-financial-results-302139688.html
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