Cannabis
Helium Evolution to Begin Trading on TSXV
CALGARY, Alberta, March 28, 2022 (GLOBE NEWSWIRE) — Helium Evolution Incorporated (“HEVI”, “Helium Evolution” or the “Company”), a Canadian-based helium exploration and production company focused on developing assets in southern Saskatchewan, today announced that it will begin publicly trading on the TSX Venture Exchange under the symbol ‘HEVI’ on Wednesday, March 30, 2022.
This listing will occur in connection with the Company’s recently completed transaction (the “Transaction”) with Duckhorn Ventures Ltd. (“Duckhorn”). The Transaction resulted in the reverse takeover of Duckhorn by the shareholders of Helium Evolution Incorporated. A final long form prospectus relating to the Transaction, the Company, and other matters, was filed on March 11, 2022 and is available on SEDAR and on the Company’s website at https://www.heliumevolution.ca/. Upon listing, the Company will have 78,738,474 common shares (the “Shares”) issued and outstanding on an undiluted basis (87,003,014 on a fully-diluted basis), with 14,963,319 Shares held by principals of the Company being subject to escrow. Officers and directors of the Company hold 15,950,094 Shares (approximately 20.3% on an undiluted basis). All Shares issued in connection with the Transaction were issued at a deemed price of $0.30 per Share.
“Our TSXV listing is a huge milestone for Helium Evolution, and provides an opportunity to invest in a Saskatchewan-focused company holding the largest helium exploration land base in North America among those who are publicly-traded,” said Greg Robb, President & CEO of Helium Evolution. “Our top-notch team of highly experienced professionals are preparing to commence our initial drilling program in the spring / summer of 2022, with the goal of sustainable green helium production within an estimated 12 months.”
KEY INVESTMENT HIGHLIGHTS
- Largest Saskatchewan Land Position Among Public Companies: HEVI holds the largest helium land position in North America among publicly-traded companies at 5.4 million+ permitted acres, with multiple seismically defined targets. Saskatchewan presents a unique regulatory regime, desirable geology, and easy access to infrastructure1.
- Rising Helium Demand: Helium’s scarcity has recently caused it to be classified as a critical mineral to many leading countries2, leading to escalating prices. Its usage includes serving as a vital input to high-tech manufacturing – including semiconductors and medical equipment – with zero substitutes and significant supply chain risk2.
- Drilling Program Expected to Commence Spring of 2022: Existing well, seismic and aeromagnetic data was used to identify helium leads in the Deadwood formation, HEVI’s target geological zone. Helium drilling is similar to conventional natural gas drilling which requires simple lower-cost vertical drilling and completions.
- Management Expertise with a Differentiated Strategy: Governed by a strong board, HEVI’s well-rounded management team brings proven acumen in engineering, geology, land acquisition and shareholder value creation with a commitment to conservative execution & contingency planning. HEVI offers investors exposure to a strategy and development path akin to Canada’s largest independent, privately-held helium producer.
- Targeting ‘Green’ Helium Production: Currently, over 95% of helium is produced as a by-product of natural gas / NGL production3. HEVI is targeting wells drilled specifically for helium with environmentally harmless nitrogen as the carrier gas2, which supports greener production. HEVI has also identified a strategy for processing, production and offtake once production comes on stream.
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1 Emerging Ideas, Industrial Technology: Helium; Cormark Securities; 2020.
2 Critical Minerals; Government of Canada; March 2021.
3 USGS Mineral Commodity Summaries; January 2016.
ASSET SUMMARY
Helium Rich, Expansive Land Position: HEVI has amassed over 5.4 million acres of helium land permits representing North America’s largest helium land package among publicly-traded companies, situated near proven discoveries of economic helium concentrations. HEVI is targeting regional basement (Precambrian) highs, near where the highest concentrations of helium, at up to 2.0%, are typically found. The Company’s initial drilling locations will target the Deadwood formation at McCord.
ESG-Friendly Development: Saskatchewan helium occurs with nitrogen as the primary carrier gas and features minimal associated CO2, allowing nitrogen to be vented in an environmentally-friendly manner, while providing cost advantages during helium extraction and purification.
Supportive Supply / Demand Fundamentals: Once helium is utilized in its respective application, the element escapes into the atmosphere where it can only be found in very low concentrations, becoming prohibitively expensive to recapture for future commercial use. With a permanent reduction in the global supply of helium as well as continued growth in demand, helium is expected to remain valuable now and into the future.
A map accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/fec76fd0-3368-4c1f-846b-65eaa2c8f4f5
MANAGEMENT TEAM
HEVI’s well-rounded management team is comprised of resource development experts with proven acumen in production engineering, geology, land acquisition, and creating value for shareholders by transforming resources. Management is strongly aligned with shareholders through meaningful share ownership.
| Greg Robb, Chief Executive Officer, Director | Greg Robb has worked as a geologist in Western Canada since 1984 and brings broad experience in all facets of the oil and gas industry, including exploration and development, acquisitions and dispositions, and reserve valuations. He has held executive positions in several exploration and production companies and in 2006 founded Salvo Energy Corp. Mr. Robb has been involved in heavy oil, shallow gas, coal bed methane, deep basin tight gas and conventional oil and gas plays, evaluating over $500 million of acquired assets across his career. Mr. Robb has a B.A. in economics from the University of Alberta, a B.Sc. in geology from the University of Calgary, and a M.Sc. in geology from the University of Alberta. | |
| Patrick Mills, Chief Operating Officer | Pat Mills has over 30 years of executive, managerial, engineering, and operations experience in the oil and gas industry in the Western Canadian Sedimentary Basin. Mr. Mills was instrumental in the start-up of Mustang Resources and Pegasus Oil & Gas where he held senior executive and board of director positions in the corporations. In addition, Mr. Mills has held various petroleum engineering related technical and managerial positions throughout his career with companies such as Texaco, Imperial Oil, and Startech Energy. He attended the University of Alberta and received a Bachelor of Science Degree in Petroleum Engineering and is an accredited member of APEGA. | |
| John Kanderka, VP, Corporate Development | John. Kanderka has over 40 years of experience in the oil and gas and mineral sectors. Mr. Kanderka has significant corporate experience acting as an officer and as a director in both the private and public sectors in various roles while responsible for strategic planning, corporate finance, management, and administration. He has been a company founder and company builder with a wide array of experience in asset purchase and sale transactions, mergers, buyouts, and reorganizations. Currently Mr. Kanderka is actively a Director of Orestone Mining Corp. and is Chairman of the Board for Visionary Gold Corp. which company he co-founded. Mr. Kanderka has been a Member of the Canadian Association of Petroleum Landmen since 1977 and has held the Certification as a Professional Landman since 1991. | |
| Ryan Tomlinson, Chief Financial Officer | Ryan Tomlinson holds a Bachelor of Commerce degree from the University of Calgary, specializing in accounting, and successfully completed the Certified Management Accountant (CMA) program to obtain his Chartered Professional Accountant and CMA designations. Mr. Tomlinson has extensive financial accounting experience with domestic and international private and public oil and gas companies and has held key roles with increasing responsibility serving as Controller and CFO. Mr. Tomlinson has been involved in start-up companies, raising equity in both the private and public markets. He has been responsible for structuring financial systems, including fully integrated electronic invoicing, reporting and record keeping, that enable companies to make timely operating and capital spending decisions, improve the accuracy of financial reporting, and minimize administrative processing times. | |
BOARD OF DIRECTORS
The members of HEVI’s Board have strong track records and distinguished careers across several organizations in the oil and gas industry, capital markets, and the political arena. Each has held senior leadership positions and brings a breadth of expertise to support the Company with guidance, integrity and oversight.
| Brad Wall, Independent Director |
Mr. Wall is a Special Advisor in the Osler Calgary office. Prior to joining Osler, he was in politics for 18 years where he demonstrated a consistent ability to bring political and business leaders together as he implemented creative ways to bolster the Province’s economic well-being. In 2007, Mr. Wall was elected as Premier of Saskatchewan and helped lead the province to a period of record population and economic growth, export expansion, record infrastructure investment and tax reductions while helping to earn the provinces first ever AAA credit rating.
Mr. Wall offers Osler clients his strategic insight and guidance, particularly in relation to the energy and agri-food industries. In addition, clients benefit from Mr. Wall’s extensive understanding of the interconnection between business, politics, and trade on a global scale. Mr. Wall is the principal and President of Flying W Consulting Inc. and is currently a director of Whitecap Resources Inc and NexGen Energy. He is the volunteer chair of the Stars Air Ambulance Fleet Replacement Campaign, a volunteer member of the Canadian Cattlemen’s Association Advocacy Committee, a Member of the Canada American Business Council and The Fraser Institute. Mr. Wall currently sits on the board of directors of Dye & Durham Limited, Maxim Power Corp., NexGen Energy Ltd. and Whitecap Resources Inc. |
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| Jim Baker Independent Director |
Mr. Baker has over 40 years of experience in the oil and natural gas business. He has had years of experience in both field operations to senior executive positions in several companies. His career started in Alberta as a wellsite geologist and later in the office with North Canadian Oils Ltd. (NCO). In 1989 he was transferred to Saskatchewan to oversee the deregulation of natural gas in the province on behalf of NCO.
After NCO was sold to Norcen Energy Mr. Baker took a senior position in a publicly traded junior oil company based in Regina. After leaving the company he consulted to many companies based in Alberta that had operations in Saskatchewan. In 2004 he started Churchill Energy, a publicly traded oil company based in Regina, and later relocated the company to Calgary with operations in Alberta and Saskatchewan, which was eventually sold to Zargon Oil and Gas. Since 2009 Mr. Baker has been consulting extensively to industry and government alike and has been involved in a number of start-ups in oil and gas, power, and paper recycling. Mr. Baker currently sits on the Boards of Keystone Royalty Corp., Kineticor Resource Corp., and Hason Engineering (Chicago). Mr. Baker is a former director of SaskEnergy Inc. (10 years) as well as a former director of Heritage Gas in Halifax. |
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| Jeff Barber Director |
Mr. Barber has worked closely with various public company boards and executive teams to assist in capital markets initiatives and advise on go-public transactions, valuations and M&A mandates. Mr. Barber was a co-founder and CFO of Hiku Brands (and its predecessor, DOJA Cannabis) until the company’s sale to Canopy Growth in 2018. Prior to that Mr. Barber was the managing partner of a boutique M&A advisory firm in Calgary until 2016. Mr. Barber was previously an investment banker with national investment firms and began his career as an economist with Deloitte LLP. Mr. Barber has served on Standard Lithium’s board since 2017.
Mr. Barber is a CFA charterholder and holds a master’s degree in finance and Economics from the University of Alberta. |
|
| Philip Hughes, Independent Director |
As a leader in Canada’s energy sector for the past 35 years, Mr. Hughes has served as President and Chief Executive Officer of five energy companies across Canada. He has extensive North American and international experience in electrical generation, transmission and distribution, oil and gas and natural gas transmission, distribution and processing. Currently, Mr. Hughes serves as Chairman of Oceanic Wind Energy Group and of Kineticor Resources Inc.
Mr. Hughes was a senior executive with the Fortis Inc. group of companies where he was responsible for various acquisitions (including the successful acquisition and integration of Aquila Networks Canada) and led the operations as President and CEO of several of the Fortis Inc. subsidiaries. He was President and CEO of FortisAlberta, Newfoundland Power Inc., Maritime Electric Company, and FortisBC. Mr. Hughes was also President and CEO of TransGas Limited, Saskatchewan. Mr. Hughes is a past Officer of the World Energy Council (WEC), former Chair of the Canadian Electrical Association (CEA) and former Chair of the Energy Council of Canada (ECC). Through his involvement with WEC, CEA and ECC Mr. Hughes was a significant contributor to the development of North American energy policy and research. Mr. Hughes holds a Bachelor of Arts (Hons.Economics) from Lancaster University, England and is a member of the Institute of Chartered Accountants of Alberta and a Fellow of the Chartered Accountants of England and Wales. |
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| Michael Graham, Independent Director | Mr. Graham is an independent businessman with over 35 years of oil and gas experience. Mr. Graham served as an Executive Vice President of EnCana Corporation from April 14, 2005 and served as its President of the Canadian Division until February 2012. Mr. Graham also serves on the board of directors of Halo Exploration Ltd. and Saguaro Resources Ltd. | |
USE OF AVAILABLE FUNDS
The Company has used, or intends to use, its available funds as follows:
| Item | Funds Allocated | ||
| Available Funds | |||
| Funds from Subscription Receipt Offering | $12,300,000 | ||
| Funds from Loan(1) | $1,500,000 | ||
| Working Capital of the Company as at February 28, 2022 | $(115,000 | ) | |
| Working Capital of Helium Evolution as at February 28, 2022 | $250,000 | ||
| Total Available Funds | $13,935,000 | ||
| Use of Available Funds | |||
| Transaction Costs(2) | $1,513,000 | ||
| Repayment of Loan | $1,500,000 | ||
| General and administrative expenses(3) | $1,197,000 | ||
| Exploration and development expenses(4) | $9,625,000 | ||
| Unallocated working capital | $100,000 | ||
| Total Funds Used | $13,935,000 | ||
Notes:
| (1) | Proceeds of the loan have been/will be used to acquire seismic data and retain drilling contractors and to pay certain expenses incurred by Helium Evolution in connection with pursuing the TSXV listing. |
| (2) | Includes legal fees of $110,000; auditors’ fees of $20,000; securities commission and TSXV fees of $60,000; expenses related to the shareholder meetings of Duckhorn and Helium Evolution of $10,000; transaction advisor fees of $846,000; and share issuance costs of $467,000. |
| (3) | The estimate of general and administrative expenses for the next 12 months includes: salaries, benefits and consulting fees of $707,000; rent and utilities of $55,000; office expenses of $75,000; legal, tax, audit and professional fees of $140,000; investor relations fees of $200,000; and insurance expenses of $20,000. |
| (4) | Exploration and development expenses includes: drilling and completion expenses of $7,200,000; seismic purchase and interpretation expenses of $1,965,000; and helium permit costs of $460,000. |
While the Company currently intends to use the available funds for the purposes set out in the above table, it will have discretion in the actual application of the available funds, and may elect to use the funds differently if the Company believes it is in its best interests to do so.
LEARN MORE ABOUT HELIUM EVOLUTION
Additional information is available on the Company’s website, including a current corporate presentation, along with ‘deep-dive’ research report commissioned by Helium Evolution and prepared by a third party whose background includes serving as a research analyst for several bank-owned and independent investment dealers.
About Helium Evolution Incorporated
Helium Evolution (“HEVI”) is a Canadian-based helium exploration and production company holding the largest helium land rights position in North America among publicly-traded companies, focused on developing assets in southern Saskatchewan. The Company has over five million acres of land under permit near proven discoveries of economic helium concentrations which will support scaling the exploration and development efforts across its land base. HEVI’s management and board are executing a differentiated strategy to become a leading supplier of sustainably-produced helium for the growing global helium market, offering a compelling opportunity for investors. Learn more about the Company’s strategy and plans on its website. In addition, HEVI invites interested parties to follow the Company on LinkedIn and Twitter for ongoing corporate updates and helium industry information.
For further information, please contact:
| Greg Robb, President & CEO | Phone: 1-587-330-2459 |
| Ryan Tomlinson, CFO | Email: [email protected] |
| Web: https://www.heliumevolution.ca/ | |
| Cindy Gray, Investor Relations | [email protected] | 403-705-5076 |
Statement Regarding Forward-Looking Information
This news release contains statements that constitute “forward-looking statements.” Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements, or developments in the industry to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects,” “plans,” “anticipates,” “believes,” “intends,” “estimates,” “projects,” “potential” and similar expressions, or that events or conditions “will,” “would,” “may,” “could” or “should” occur.
Forward-looking statements in this document include statements regarding the Company’s expectations regarding use of available funds, the granting of additional permits over lands under application, drilling of permitted lands, the future of supply and demand fundamentals for helium and other statements that are not historical facts. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors and risks include, among others: the Company may choose to allocate its available funds differently; the Company may require additional financing from time to time in order to continue its operations; financing may not be available when needed or on terms and conditions acceptable to the combined company; new laws or regulations could adversely affect the Company’s business and results of operations; stock markets have experienced volatility that often has been unrelated to the performance of companies. These fluctuations may adversely affect the price of the Company’s securities regardless of its operating performance; the granting of additional permits is subject to a competitive process over which the Company has no control; risks generally associated with the exploration for and production of resources; the uncertainty of estimates and projections relating to expenses; constraint in the availability of services; commodity price and exchange rate fluctuations; the current COVID-19 pandemic; adverse weather or break-up conditions; and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures.
When relying on forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and risks and other uncertainties and potential events. The Company has assumed that the material factors referred to in the previous paragraphs will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement. The forward-looking statements contained in this press release are made as of the date of this press release. The Company does not intend, and expressly disclaims any intention or obligation to, update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
This press release is not for distribution to U.S. news services or for dissemination in the United States. This press release does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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.
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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
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|
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. |
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|
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 |
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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 |
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|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS |
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|
AND OTHER COMPREHENSIVE INCOME (UNAUDITED) |
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|
Canadian Dollars in thousands, except per share data |
||||||
|
Three months ended March 31, |
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|
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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