Cannabis
Tilray Brands, Inc. Reports Record Fiscal Year 2022 Results
FY2022 Net Revenue Grew 22% to $628 Million Compared to the Prior Year; On a Constant Currency Basis, Net Revenue Increased by 29%
Fourth Quarter Net Revenue Grew 8% to $153 Million Compared to the Prior Year Period; On a Constant Currency Basis, Net Revenue Increased by 14% to $163 Million
Company Expects to Generate $70-$80 Million of Adjusted EBITDA and be Free-Cash Flow Positive in Its Operating Business Units in FY2023
Foundation in Place for Profitable and Sustainable Growth
- Fourth Quarter International Cannabis Increased 205% from the Prior Year Q4; Tilray Medical Leads European Medical Cannabis Market with 20% Market Share in Germany
- Delivered $85 Million in Cost Savings to Date, Exceeding Original Target on Accelerated Timeline; Company Now Expects to Deliver $100 Million by the End of FY2023
- Significantly Strengthened Balance Sheet, Reduced Debt, and Ended FY2022 with $416 Million in Cash
- Tilray Brands Sets Stage for Next Evolution of Cannabis Following HEXO Transaction, which Positions the Company for Additional Growth Opportunities in Canada, Europe, and the U.S
NEW YORK and LEAMINGTON, Ontario, July 28, 2022 (GLOBE NEWSWIRE) — Tilray Brands, Inc. (“Tilray” or the “Company”) (Nasdaq: TLRY; TSX: TLRY), a leading global cannabis-lifestyle and consumer packaged goods company inspiring and empowering the worldwide community to live their very best life, today reported financial results for the fourth quarter and full fiscal year ended May 31, 2022. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated, and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”).
Irwin D. Simon, Tilray Brands’ Chairman and Chief Executive Officer, stated, “Over the past year, we have accelerated the optimization of our operations and sharpened execution against our most profitable core business opportunities in medical, adult-use, wellness, and beverage-alcohol across Canada, Europe, and the U.S. At the same time, we accelerated our growth potential through tactical execution and strategic initiatives that enable accelerated revenue growth through improved cultivation, brand building, and distribution. These actions should also contribute to bottom-line performance improvement through production efficiencies and cost reductions. The outcome of this work is that we have driven top line growth across our markets, significantly improved our operating performance, and strengthened our balance sheet.”
He continued, “We are confident that our proactive steps to plan for the evolution of the cannabis business in each of our markets has positioned Tilray Brands to be at the forefront of the industry on a global basis while delivering profitability and driving shareholder value.”
Financial Highlights – 2022 Fiscal Fourth Quarter1
- Net revenue grew 8% to $153.3 million during the fourth quarter from $142.2 million in the prior year quarter. On a constant currency basis, net revenue increased 14.5%.
- Net loss of $457.8 million during the fourth quarter compared to net income of $33.6 million in the prior year quarter. Net loss in the fiscal 2022 fourth quarter includes a non-cash impairment of $395.0 million primarily impacting inventory, goodwill and other intangible assets. The impact was related to changes in market opportunities causing a shift in our strategic priorities, and market conditions inclusive of higher rates of borrowing and lower foreign exchange rates.
- Adjusted EBITDA of $11.5 million, marking the Company’s 13th consecutive quarter of positive Adjusted EBITDA.
Financial Highlights- 2022 Fiscal Year
- Net revenue increased 22% to $628.4 million during fiscal 2022 from $513.1 million in the prior fiscal year. The increase was driven by 17.9% growth in cannabis net revenue to $237.5 million, a 150.0% increase in beverage alcohol net revenue of $71.5 million, and a 928.8% increase in wellness net revenue to $59.6 million. On a constant currency basis, net revenue increased by 29%.
- Net loss of $434 million in fiscal 2022 includes the non-cash impairment of $395.0 million in the fourth quarter (discussed above).
- Adjusted EBITDA increased 17.8% to $48.0 million in fiscal year 2022 from $40.8 million in the prior fiscal year.
- Ended the year with a strong balance sheet and liquidity, including cash and cash equivalents of $415.9 million.
Cost-Saving Synergies and Strengthened Balance Sheet
Since the closing of the Tilray-Aphria transaction, the Company has delivered $85 million in cost synergies, exceeding its original target of delivering $80 million of cost savings by the end of fiscal year 2023. These synergies are due to consolidation in key areas of cultivation and production, cannabis and product purchasing, sales and marketing, and corporate expenses. The Company has subsequently identified an additional $20 million of savings, and now expects to deliver a total of $100 million in cost synergies from the transaction by the end of fiscal year 2023.
Further, with the benefit of an additional $80 million of shared cost savings, synergies and financial benefits over the next two years associated with the HEXO transaction, management expects that Tilray Brands will be free cash flow positive in its business units in fiscal year 2023.
Upside Potential of HEXO Transaction
Tilray Brands’ acquisition of HEXO Corp.’s senior secured convertible note, on highly favorable terms, closed on July 12, 2022, bringing immediate accretion to the Company and facilitating collaboration and the sharing of best practices that will help Tilray Brands to drive ongoing international expansion and take advantage of the opportunities expected to come with federal legalization in the U.S. In addition, due to significant operating efficiencies, the companies expect to deliver a total of $80 million of shared cost savings over the next two years.
Highlights of Strategic Growth Actions in Fiscal 2022
United States:
- August ’21 – Tilray Acquires Majority Position in Amended MedMen Convertible Notes
- November ’21 – Tilray’s SweetWater Brand Enters Spirits Category Through New Ready-To-Drink Cocktail Now Available in the United States
- December ’21 – Tilray Strengthens Strategic Position in the U.S. with Acquisition of Breckenridge Distillery
- December ’21 – SweetWater Brewing announced the acquisition of Alpine Beer Company and Green Flash Brewing Company
- January ’22 – Manitoba Harvest Launches 2022 Wellness Boost Campaign
- February ’22 – SweetWater Brewing Company Expands Distribution Across California
- February ’22 – SweetWater Brewing Company Continues Rapid Expansion with Distribution Rollout Across Washington & Oregon
- April ’22 – SweetWater Brewing Company celebrated 25th anniversary and hosted 420 music Festival in Atlanta, Georgia with 75 thousand festival goers
- April ’22 – Manitoba Harvest Enters Exclusive Partnership with Whole Foods Market
- April ’22 – Breckenridge Distillery Takes Home Two Double Gold and One Gold Medal at the 2022 San Francisco World Spirits Competition
- April ’22 – Breckenridge Distillery Launches New Collectors Art Series with Denver Artist Alexandrea Pangburn
Canada:
- June ’21 – Tilray Launches New Medical Cannabis Brand, Symbios
- June ’21 – Tilray Launches Canadian Craft Cannabis Brand, Broken Coast, in the U.S. with Broken Coast Lager
- August ’21 – Tilray Medical Launches New Medical Cannabis Edibles in Canada
- October ’21 – Tilray Strengthens Leadership Position in Canada with new addition of Blair MacNeil, President of Canada
- October ’21 – Tilray Expands Distribution across Canada with Great North Distributors
- December ’21 – Launch of Tilray’s Fast-Acting Oral Strips Highlights Commitment to Medical Cannabis Innovation and Patient Care
- March ’22 – Good Supply Brand Expands Its Award-Winning Cannabis Portfolio with Hash Bats™; A New ‘Hard-Hitting’ Infused Pre-Roll
- March ’22 – Solei Brand Launches New Wellness Product for Nighttime Use
- April ’22 – Solei Brand Launches the First Cannabis Edible Available in Quebec
- April ’22 – Tilray Brands hosts sold-out ‘Holy Smokes’ 420 Budtender event in Toronto
- May ’22 – Good Supply Brand Expands High-Potency Cannabis Portfolio with Launch of Liquid Wax Vapes and New Exclusive Strains
Europe and International:
- July ’21 – Tilray’s Aphria RX GmbH Completes First Harvest and Delivery of Medical Cannabis Grown in Germany
- October ’21 – Tilray Launches Medical Cannabis in Luxembourg
- November ’21 – Tilray Expands Medical Cannabis Footprint in Malta
- January ’22 – Tilray Expands Medical Cannabis Product Offering in Australia
- February ‘22 – Tilray Brands Consolidates its Global Medical Offering into Tilray Medical, a Comprehensive Portfolio of Brands and Products
- February ’22 – Tilray Launches Medical Cannabis Products in Malta
- March ’22 – Tilray Medical Expands Offering in Malta and Launches First Medical Cannabis Oil Products in Market
- May ’22 – Announced the launch of CBD lifestyle brand, POLLEN, on Amazon UK
Webcast
Tilray Brands will host a webcast to discuss these results today at 8:30 a.m. ET. Investors may join the live webcast available on the Investors section of the Company’s website at www.tilray.com. The webcast will also be archived after the call concludes.
About Tilray Brands
Tilray Brands, Inc. (Nasdaq: TLRY; TSX: TLRY), is a leading global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America that is changing people’s lives for the better – one person at a time. Tilray Brands delivers on this mission by inspiring and empowering the worldwide community to live their very best life, enhanced by moments of connection and wellbeing. Patients and consumers trust Tilray Brands to be the most responsible, trusted and market leading cannabis consumer products company in the world with a portfolio of innovative, high-quality and beloved brands that address the needs of the consumers, customers and patients we serve. A pioneer in cannabis research, cultivation, and distribution, Tilray Brands’ unprecedented production platform supports over 20 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods, and craft beverages.
For more information on Tilray Brands, visit www.Tilray.com and follow @Tilray
Cautionary Statement Concerning Forward-Looking Statements
Certain statements in this press release constitute forward-looking information or forward-looking statements (together, “forward-looking statements”) under Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be subject to the “safe harbor” created by those sections and other applicable laws. Forward-looking statements can be identified by words such as “forecast,” “future,” “should,” “could,” “enable,” “potential,” “contemplate,” “believe,” “anticipate,” “estimate,” “plan,” “expect,” “intend,” “may,” “project,” “will,” “would” and the negative of these terms or similar expressions, although not all forward-looking statements contain these identifying words. Certain material factors, estimates, goals, projections or assumptions were used in drawing the conclusions contained in the forward-looking statements throughout this communication.
Forward-looking statements include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: the Company’s ability to become the world’s leading cannabis-focused consumer branded company and achieve $4B in revenue by the end of fiscal 2024; the Company’s ability to generate $70-$80 million of Adjusted EBITDA and expectation to be free-cash flow positive in its operating business units in FY 2023; the Company’s ability to achieve operational scale, market share, distribution, profitability and revenue growth in particular markets, including in Canada, the U.S. and the EU; and the Company’s ability to successfully achieve the expected production efficiencies, synergies and cost savings relating to the HEXO transactions and agreed commercial arrangements; and the Company’s anticipated investments, including in organic and strategic growth, partnership efforts, product offerings and other initiatives.
Many factors could cause actual results, performance or achievement to be materially different from any forward-looking statements, and other risks and uncertainties not presently known to the Company or that the Company deems immaterial could also cause actual results or events to differ materially from those expressed in the forward-looking statements contained herein. For a more detailed discussion of these risks and other factors, see the most recently filed annual information form of the Company and the Annual Report on Form 10-K (and other periodic reports filed with the SEC) of the Company made with the SEC and available on EDGAR. The forward-looking statements included in this communication are made as of the date of this communication and the Company does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws.
Use of Non-U.S. GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures, including adjusted gross margin, Adjusted EBITDA and free cash flow. Management believes that the non-GAAP financial measures presented provide useful additional information to investors about current trends in the Company’s operations and are useful for period-over-period comparisons of operations. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should be read only in connection with the Company’s Consolidated Statements of Operations and Cash Flows presented in accordance with GAAP.
Certain forward-looking non-GAAP financial measures included in this press release are not reconciled to the comparable forward-looking GAAP financial measures. The Company is not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the Company is unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures but would not impact the non-GAAP measures. Such items may include litigation and related expenses, transaction costs, impairments, foreign exchange movements and other items. The unavailable information could have a significant impact on the Company’s GAAP financial results.
The Company believes presenting net sales at constant currency provides useful information to investors because it provides transparency to underlying performance in the Company’s consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on period-to-period comparability given the volatility in foreign currency exchange markets. To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.
Adjusted EBITDA is calculated as net income (loss) before inventory valuation adjustments; interest expenses, net; other expenses (income), net; deferred income tax (recoveries) expenses, current income tax expenses (benefit); foreign exchange gain (loss), net; depreciation and amortization expenses; stock-based compensation expenses; loss from equity method investments; loss on disposal of property and equipment; amortization of inventory step-up; severance costs; impairment of assets; and change in fair value of warrant liability. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Gross margin, excluding inventory valuation adjustments, is calculated as revenue less cost of sales adjusted to add back inventory valuation adjustments and amortization of inventory step-up, divided by revenue. A reconciliation of Gross margin, excluding inventory valuation adjustments, to gross margin, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. Free cash flow is comprised of two GAAP measures deducted from each other which are net cash flow provided by (used in) operating activities less investments in capital and intangible assets. A reconciliation of net cash flow provided by (used in) operating activities to free cash flow, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release.
For further information:
Media: Berrin Noorata, [email protected]
Investors: Raphael Gross, +1-203-682-8253, [email protected]
1 This press release includes certain non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP financial measures. Reconciliations of non-GAAP financial measures to GAAP financial measures and other non-GAAP financial calculations are provided herein in the tables.
Consolidated Statements of Financial Position
(In thousands of United States dollars) | May 31, 2022 | May 31, 2021 | |||||||
Assets | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 415,909 | $ | 488,466 | |||||
Accounts receivable, net | 95,279 | 87,309 | |||||||
Inventory | 245,529 | 256,429 | |||||||
Prepaids and other current assets | 46,786 | 48,920 | |||||||
Current portion of convertible notes receivable | — | 2,485 | |||||||
Total current assets | 803,503 | 883,609 | |||||||
Capital assets | 587,499 | 650,698 | |||||||
Right-of-use assets | 12,996 | 18,267 | |||||||
Intangible assets | 1,277,875 | 1,605,918 | |||||||
Goodwill | 2,641,305 | 2,832,794 | |||||||
Interest in equity investees | 4,952 | 8,106 | |||||||
Long-term investments | 10,050 | 17,685 | |||||||
Convertible notes receivable | 111,200 | — | |||||||
Other assets | 314 | 8,285 | |||||||
Total assets | $ | 5,449,694 | $ | 6,025,362 | |||||
Liabilities | |||||||||
Current liabilities | |||||||||
Bank indebtedness | $ | 18,123 | $ | 8,717 | |||||
Accounts payable and accrued liabilities | 157,431 | 212,813 | |||||||
Contingent consideration | 16,007 | 60,657 | |||||||
Warrant liability | 14,255 | 78,168 | |||||||
Current portion of lease liabilities | 6,703 | 4,264 | |||||||
Current portion of long-term debt | 67,823 | 36,622 | |||||||
Total current liabilities | 280,342 | 401,241 | |||||||
Lease liabilities | 11,329 | 53,946 | |||||||
Long-term debt | 117,879 | 167,486 | |||||||
Convertible debentures | 401,949 | 667,624 | |||||||
Deferred tax liabilities, net | 196,638 | 265,845 | |||||||
Other liabilities | 191 | 3,907 | |||||||
Total liabilities | 1,008,328 | 1,560,049 | |||||||
Commitments and contingencies (refer to Note 17) | |||||||||
Stockholders’ equity | |||||||||
Common stock ($0.0001 par value; 990,000,000 shares authorized; 532,674,887 and 446,440,641 shares issued and outstanding, respectively) | 53 | 46 | |||||||
Additional paid-in capital | 5,382,367 | 4,792,406 | |||||||
Accumulated other comprehensive (deficit) income (loss) | (20,764 | ) | 152,668 | ||||||
Accumulated deficit | (962,851 | ) | (486,050 | ) | |||||
Total Tilray Brands, Inc. stockholders’ equity | 4,398,805 | 4,459,070 | |||||||
Non-controlling interests | 42,561 | 6,243 | |||||||
Total stockholders’ equity | 4,441,366 | 4,465,313 | |||||||
Total liabilities and stockholders’ equity | $ | 5,449,694 | $ | 6,025,362 | |||||
Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)
(In thousands of United States dollars, excpet for per share data) | For the three months ended May 31, | For the year ended May 31, | ||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||
Net revenue | $ | 153,325 | $ | 142,236 | $ | 628,372 | $ | 513,085 | ||||||||||
Cost of goods sold | 160,058 | 119,738 | 511,555 | 389,903 | ||||||||||||||
Gross profit | (6,733 | ) | 22,498 | 116,817 | 123,182 | |||||||||||||
Operating expenses: | ||||||||||||||||||
General and administrative | 41,400 | 32,839 | 162,801 | 111,575 | ||||||||||||||
Selling | 9,643 | 8,525 | 34,926 | 26,576 | ||||||||||||||
Amortization | 30,846 | 16,100 | 115,191 | 35,221 | ||||||||||||||
Marketing and promotion | 10,771 | 5,103 | 30,934 | 17,539 | ||||||||||||||
Research and development | 54 | 358 | 1,518 | 830 | ||||||||||||||
Change in fair value of contingent consideration | (15,585 | ) | — | (44,650 | ) | — | ||||||||||||
Impairment | 378,241 | — | 378,241 | — | ||||||||||||||
Litigation costs | 4,099 | 2,099 | 16,518 | 3,251 | ||||||||||||||
Transaction costs | 1,221 | 31,161 | 31,739 | 60,361 | ||||||||||||||
Total operating expenses | 460,690 | 96,185 | 727,218 | 255,353 | ||||||||||||||
Operating loss | (467,423 | ) | (73,687 | ) | (610,401 | ) | (132,171 | ) | ||||||||||
Interest expense, net | (5,522 | ) | (9,466 | ) | (27,944 | ) | (27,977 | ) | ||||||||||
Non-operating income (expense), net | 11,342 | 121,510 | 197,671 | (184,838 | ) | |||||||||||||
Loss before income taxes | (461,603 | ) | 38,357 | (440,674 | ) | (344,986 | ) | |||||||||||
Income taxes (recovery) | (3,803 | ) | 4,735 | (6,542 | ) | (8,972 | ) | |||||||||||
Net loss | $ | (457,800 | ) | $ | 33,622 | $ | (434,132 | ) | $ | (336,014 | ) | |||||||
Net loss per share – basic and diluted | $ | (0.90 | ) | $ | 0.38 | $ | (0.90 | ) | $ | (1.25 | ) | |||||||
Net Revenue by Operating Segment
(In thousands of United States dollars) | Year Ended May 31, 2022 | % of Total Revenue | Year Ended May 31, 2022 | % of Total Revenue | |||||||||
Cannabis business | $ | 237,522 | 38 | % | $ | 201,392 | 39 | % | |||||
Distribution business | 259,747 | 42 | % | 277,300 | 54 | % | |||||||
Beverage alcohol business | 71,492 | 11 | % | 28,599 | 6 | % | |||||||
Wellness business | 59,611 | 9 | % | 5,794 | 1 | % | |||||||
Net revenue | $ | 628,372 | 100 | % | $ | 513,085 | 100 | % | |||||
(In thousands of United States dollars) | Three months ended May 31, 2022 | % of Total Revenue | Three months ended May 31, 2021 | % of Total Revenue | |||||||||
Cannabis business | $ | 53,253 | 35 | % | $ | 53,703 | 38 | % | |||||
Distribution business | 61,160 | 39 | % | 66,792 | 47 | % | |||||||
Beverage alcohol business | 22,727 | 15 | % | 15,947 | 11 | % | |||||||
Wellness business | 16,185 | 11 | % | 5,794 | 4 | % | |||||||
Net revenue | $ | 153,325 | 100 | % | $ | 142,236 | 100 | % | |||||
Net Cannabis Revenue by Market Channel
(In thousands of United States dollars) | For the year ended May 31, | For the year ended May 31, | ||||||||||||||||
2022 | 2022 | 2021 | 2021 | |||||||||||||||
Revenue from Canadian medical cannabis products | $ | 30,599 | 13 | % | $ | 25,539 | 13 | % | ||||||||||
Revenue from Canadian adult-use cannabis products | 209,501 | 88 | % | 222,930 | 110 | % | ||||||||||||
Revenue from wholesale cannabis products | 6,904 | 3 | % | 6,615 | 3 | % | ||||||||||||
Revenue from international cannabis products | 53,887 | 23 | % | 9,250 | 5 | % | ||||||||||||
Less excise taxes | (63,369 | ) | -27 | % | (62,942 | ) | -31 | % | ||||||||||
Total | $ | 237,522 | 100 | % | $ | 201,392 | 100 | % | ||||||||||
For the three months ended May 31, | For the three months ended May 31, | |||||||||||||||||
(In thousands of United States dollars) | 2022 | 2022 | 2021 | 2021 | ||||||||||||||
Revenue from Canadian medical cannabis products | $ | 7,246 | 14 | % | $ | 6,968 | 13 | % | ||||||||||
Revenue from Canadian adult-use cannabis products | 46,869 | 88 | % | 59,710 | 111 | % | ||||||||||||
Revenue from wholesale cannabis products | 141 | 0 | % | 56 | 0 | % | ||||||||||||
Revenue from international cannabis products | 14,095 | 26 | % | 4,623 | 9 | % | ||||||||||||
Less excise taxes | (15,098 | ) | -28 | % | (17,654 | ) | -33 | % | ||||||||||
Total | $ | 53,253 | 100 | % | $ | 53,703 | 100 | % | ||||||||||
Gross Margin and Adjusted Gross Margin
(In thousands of United States dollars) | For the year ended May 31, 2022 | ||||||||||||||||||||
Cannabis | Beverage | Distribution | Wellness | Total | |||||||||||||||||
Revenue | $ | 300,891 | $ | 74,959 | $ | 259,747 | $ | 59,611 | $ | 695,208 | |||||||||||
Excise taxes | (63,369 | ) | (3,467 | ) | — | — | (66,836 | ) | |||||||||||||
Net revenue | 237,522 | 71,492 | 259,747 | 59,611 | 628,372 | ||||||||||||||||
Cost of goods sold | 194,834 | 32,033 | 243,231 | 41,457 | 511,555 | ||||||||||||||||
Gross profit | 42,688 | 39,459 | 16,516 | 18,154 | 116,817 | ||||||||||||||||
Gross margin | 18.0 | % | 55.2 | % | 6.4 | % | 30.5 | % | 18.6 | % | |||||||||||
Adjustments: | |||||||||||||||||||||
Inventory valuation adjustments | 59,500 | — | 7,500 | — | 67,000 | ||||||||||||||||
Purchase price accounting step-up | — | 2,214 | — | — | 2,214 | ||||||||||||||||
Adjusted gross profit | 102,188 | 41,673 | 24,016 | 18,154 | 186,031 | ||||||||||||||||
Adjusted gross margin | 43.0 | % | 58.3 | % | 9.2 | % | 30.5 | % | 29.6 | % | |||||||||||
(In thousands of United States dollars) | For the year ended May 31, 2021 | ||||||||||||||||||||
Cannabis | Beverage | Distribution | Wellness | Total | |||||||||||||||||
Revenue | $ | 264,334 | $ | 29,661 | $ | 277,300 | $ | 5,794 | $ | 577,089 | |||||||||||
Excise taxes | (62,942 | ) | (1,062 | ) | — | — | (64,004 | ) | |||||||||||||
Net revenue | 201,392 | 28,599 | 277,300 | 5,794 | 513,085 | ||||||||||||||||
Cost of goods sold | 130,511 | 12,687 | 242,472 | 4,233 | 389,903 | ||||||||||||||||
Gross profit | 70,881 | 15,912 | 34,828 | 1,561 | 123,182 | ||||||||||||||||
Gross margin | 35.2 | % | 55.6 | % | 12.6 | % | 26.9 | % | 24.0 | % | |||||||||||
Adjustments: | |||||||||||||||||||||
Inventory valuation adjustments | 19,919 | — | — | — | 19,919 | ||||||||||||||||
Purchase price accounting step-up | — | 835 | — | — | 835 | ||||||||||||||||
Adjusted gross profit | 90,800 | 16,747 | 34,828 | 1,561 | 143,936 | ||||||||||||||||
Adjusted gross margin | 45.1 | % | 58.6 | % | 12.6 | % | 26.9 | % | 28.1 | % | |||||||||||
(In thousands of United States dollars) | For the three months ended May 31, 2022 | ||||||||||||||||||||
Cannabis | Beverage | Distribution | Wellness | Total | |||||||||||||||||
Revenue | $ | 68,351 | $ | 23,459 | $ | 61,160 | $ | 16,185 | $ | 169,155 | |||||||||||
Excise taxes | (15,098 | ) | (732 | ) | — | — | (15,830 | ) | |||||||||||||
Net revenue | 53,253 | 22,727 | 61,160 | 16,185 | 153,325 | ||||||||||||||||
Cost of goods sold | 72,342 | 11,359 | 65,138 | 11,219 | 160,058 | ||||||||||||||||
Gross profit | (19,089 | ) | 11,368 | (3,978 | ) | 4,966 | (6,733 | ) | |||||||||||||
Gross margin | -35.8 | % | 50.0 | % | -6.5 | % | 30.7 | % | -4.4 | % | |||||||||||
Adjustments: | |||||||||||||||||||||
Inventory valuation adjustments | 47,500 | — | 7,500 | — | 55,000 | ||||||||||||||||
Purchase price accounting step-up | — | 2,214 | — | — | 2,214 | ||||||||||||||||
Adjusted gross profit | 28,411 | 13,582 | 3,522 | 4,966 | 50,481 | ||||||||||||||||
Adjusted gross margin | 53.4 | % | 59.8 | % | 5.8 | % | 30.7 | % | 32.9 | % | |||||||||||
(In thousands of United States dollars) | For the three months ended May 31, 2021 | ||||||||||||||||||||
Cannabis | Beverage | Distribution | Wellness | Total | |||||||||||||||||
Revenue | $ | 71,357 | $ | 16,549 | $ | 66,792 | $ | 5,794 | $ | 160,492 | |||||||||||
Excise taxes | (17,654 | ) | (602 | ) | — | — | (18,256 | ) | |||||||||||||
Net revenue | 53,703 | 15,947 | 66,792 | 5,794 | 142,236 | ||||||||||||||||
Cost of goods sold | 49,731 | 5,350 | 60,424 | 4,233 | 119,738 | ||||||||||||||||
Gross profit | 3,972 | 10,597 | 6,368 | 1,561 | 22,498 | ||||||||||||||||
Gross margin | 7.4 | % | 66.5 | % | 9.5 | % | 26.9 | % | 15.8 | % | |||||||||||
Adjustments: | |||||||||||||||||||||
Inventory valuation adjustments | 19,919 | — | — | — | 19,919 | ||||||||||||||||
Purchase price accounting step-up | — | 835 | — | — | 835 | ||||||||||||||||
Adjusted gross profit | 23,891 | 11,432 | 6,368 | 1,561 | 43,252 | ||||||||||||||||
Adjusted gross margin | 44.5 | % | 71.7 | % | 9.5 | % | 26.9 | % | 30.4 | % |
Adjusted Earnings before Interest, Taxes, and Amortization
(In thousands of United States dollars) | Three months ended May 31, | Year ended May 31, | |||||||||||||||
Adjusted EBITDA reconciliation: | 2022 | 2021 | 2022 | 2021 | |||||||||||||
Net loss | $ | (457,800 | ) | $ | 33,622 | $ | (434,132 | ) | $ | (336,014 | ) | ||||||
Income taxes | (3,803 | ) | 4,735 | (6,542 | ) | (8,972 | ) | ||||||||||
Interest expense, net | 5,522 | 9,466 | 27,944 | 27,977 | |||||||||||||
Non-operating expense (income), net | (11,350 | ) | (121,510 | ) | (197,671 | ) | 184,838 | ||||||||||
Amortization | 40,768 | 24,540 | 154,592 | 67,832 | |||||||||||||
Stock-based compensation | 8,969 | 5,937 | 35,994 | 17,351 | |||||||||||||
Change in fair value of contingent consideration | (15,577 | ) | — | (44,650 | ) | — | |||||||||||
Impairment | 378,241 | — | 378,241 | — | |||||||||||||
Inventory valuation adjustments | 55,000 | 19,919 | 67,000 | 19,919 | |||||||||||||
Purchase price accounting step up | 2,214 | 835 | 2,214 | 835 | |||||||||||||
Facility start-up and closure costs | 3,300 | 2,056 | 13,700 | 2,056 | |||||||||||||
Lease expense | 700 | 335 | 3,100 | 1,337 | |||||||||||||
Litigation costs | 4,099 | 2,099 | 16,518 | 3,251 | |||||||||||||
Transaction costs | 1,221 | 31,161 | 31,739 | 60,361 | |||||||||||||
Adjusted EBITDA | $ | 11,504 | $ | 13,195 | $ | 48,047 | $ | 40,771 |
Key Operating Metrics
For the three months ended May 31, | For the years ended May 31, | |||||||||||||||
(In thousands of United States dollars) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Net cannabis revenue | $ | 53,253 | $ | 53,703 | $ | 237,522 | $ | 201,392 | ||||||||
Net beverage alcohol revenue | 22,727 | 15,947 | 71,492 | 28,599 | ||||||||||||
Distribution revenue | 61,160 | 66,792 | 259,747 | 277,300 | ||||||||||||
Wellness revenue | 16,185 | 5,794 | 59,611 | 5,794 | ||||||||||||
Cannabis cost of sales | 72,342 | 49,731 | 194,834 | 130,511 | ||||||||||||
Beverage alcohol cost of sales | 11,359 | 5,350 | 32,033 | 12,687 | ||||||||||||
Distribution cost of sales | 65,138 | 60,424 | 243,231 | 242,472 | ||||||||||||
Wellness cost of sales | 11,219 | 4,233 | 41,457 | 4,233 | ||||||||||||
Gross profit (excluding inventory valuation adjustments and step-up) | 50,481 | 43,252 | 186,031 | 143,936 | ||||||||||||
Cannabis gross margin (excluding inventory valuation adjustments and step-up) | 53.4 | % | 44.5 | % | 43.0 | % | 45.1 | % | ||||||||
Beverage gross margin (excluding inventory valuation adjustments and step-up) | 59.8 | % | 71.7 | % | 58.3 | % | 58.6 | % | ||||||||
Distribution gross margin (excluding inventory valuation adjustments and step-up) | 5.8 | % | 9.5 | % | 9.2 | % | 12.6 | % | ||||||||
Wellness gross margin (excluding inventory valuation adjustments and step-up) | 30.7 | % | 26.9 | % | 30.5 | % | 26.9 | % | ||||||||
Adjusted EBITDA | 11,504 | 13,195 | 48,047 | 40,771 | ||||||||||||
Cash and cash equivalents | 415,909 | 488,466 | 415,909 | 488,466 | ||||||||||||
Working capital | 523,161 | 479,883 | 523,161 | 482,368 | ||||||||||||
Cannabis
IM Cannabis Reports 2023 Financial Results
TORONTO and GLIL YAM, Israel, March 28, 2024 /PRNewswire/ — IM Cannabis Corp. (the “Company” or “IMC“) (NASDAQ: IMCC) (CSE: IMCC), an international medical cannabis company, announced its financial and operational results for the year ended December 31, 2023, the highlights of which are included in this news release. All figures are reported in Canadian dollars. The Company’s full set of consolidated audited financial statements for the years ended December 31, 2023 and 2022 (the “Annual Financial Statements“) and accompanying management’s discussion and analysis (the “Annual MD&A“) can be accessed by visiting the Company’s website at https://investors.imcannabis.com/, and its profile pages on SEDAR+ at www.sedarplus.ca, and EDGAR at http://www.sec.gov/edgar.
FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2023
- Revenue decreased to $48.8 million for the fiscal year ended December 31, 2023 (compared to $53.3 in 2022), representing a decrease of 10%.
- Primarily due to negative currency fluctuations and the impact of the Israel-Hamas war on the Company’s operations.
- Revenue decreased to $10.7 million for the three months ended December 31, 2023 (compared to $14.5 million in 2022), representing a decrease of 26%.
- Primarily due to the interruption on the Company’s supply chain caused by the Israel-Hamas war and the Company discounting certain outstanding inventory at lower prices.
- Gross profit increased to $9.8 million for the fiscal year ended December 31, 2023 (compared to $9.2 million in 2022), representing an increase of 7.5%
- Gross profit decreased to $0.8 million for the three months ended December 31, 2023 (compared to $2.6 million in 2022), representing a decrease of 68%
- Primarily due to the interruption on the Company’s supply chain caused by the Israel-Hamas war and the Company discounting certain outstanding inventory at lower prices.
- The Company’s fair value adjustment was approximately $1 million for the fiscal year ended December 31, 2023 (compared to $2.1 million in 2022).
- G&A expenses decreased to $11 million for the fiscal year ended December 31, 2023 (compared to $21.5 million in 2022), representing an decrease of 49%
- G&A expenses decreased to $3.3 million for the three months ended December 31, 2023 (compared to $9.8 million in 2022), representing a decrease of 66%
- Primarily due to the impairment on Y2022 and restructuring and HC adjustments in 2023.
- Selling and marketing expenses decreased to $10.8 million for the fiscal year ended December 31, 2023 (compared to $11.5 million in 2022), representing an decrease of 6%
- Selling and marketing expenses decreased to $2.8 million for the three months ended December 31, 2023 (compared to $3.1 million in 2022), representing a decrease of 10%
- Primarily due to a decrease in share based compensation payments and a restructuring of the Company’s personnel.
- Net Loss from continuing operations for the fiscal year ended December 31, 2023 was $10.2 million, as compared to $24.9 million in 2022.
- Net Loss from continuing operations for the three months ended December 31, 2023 was $3.5 million, as compared to a Net Loss of $9.6 million in the fourth quarter of 2022.
- Diluted Loss per Share for the fiscal year ended December 31, 2023 was $0.74, compared to a loss of $3.81 per Share in 2022.
- Diluted Loss per Share for the three months ended December 31, 2023 was $(0.25), compared to a basic loss of $)2.94( per share and a diluted loss of $)3.55( per share in for the three months ended December 31, 2022.
- Cash and Cash Equivalents as of December 31, 2023, was $1.8 million, compared to $2.4 million as of December 31, 2022.
- Total assets were $48.8 million as of December 31, 2023, compared to $60.7 million as of December 31, 2022, representing a decrease of 20%.
- Primarily attributed to an inventory reduction of about $6.6 million, a reduction in other current assets of $1.8 million and a reduction of non-current assets of about $3.5 million.
- Total Liabilities were $35.1 million as of December 31, 2023, compared to $36.9 as of December 31, 2022, representing a decrease of about 5%.
- Primarily attributed to a reduction in trade payables of $6.1 million.
- Operating expenses decreased to $22.6 million for the year ended December 31, 2023 (compared to $40 million in 2022), representing a decrease of 43%
- Operating expenses decreased to $6 million for the three months ended December 31, 2023 (compared to $13.3 million in 2022), representing a decrease of 55%
- Adjusted EBITDA1 decreased to $8 million for the year ended December 31, 2023, (compared to $11.5 in 2022), representing a decrease of 30%
- Total Dried Flower sold in 2023 was approximately 8,609 kg with an average selling price of $5.14 per gram (compared to approximately 6,794kg, with an average selling price of $7.12 per gram in 2022).
- Primarily due to increased competition within the retail segment and the Company discounting certain outstanding inventory at lower prices.
- Total Dried Flower sold in the fourth quarter of 2023 was about 2,082kg with an average selling price of $4.52 per gram (compared to about 2,334kg with an average selling price of $5.19 per gram in 2022).
- Primarily due to increased competition within the retail segment and the Company discounting certain outstanding inventory at lower prices.
The Annual Financial Statements include a note regarding the Company’s ability to continue as a going concern. The Annual Financial Statements do not include any adjustments relating to the recoverability and classification of assets or liabilities that might be necessary should the Company be unable to continue as a going concern. For more information, please refer to the “Liquidity and Capital Resources” and “Risk Factors” sections in the 2023 Annual MD&A.
Management Commentary
“IMC Germany delivered accelerated growth in 2023, growing 181% from $252K in 2022 to $709K in 2023. During this time, IMC Germany was #1 in sales per stock keeping unit and posted the highest growth against its competitors in the German market.2 With the regulatory rescheduling of cannabis in Germany set to occur effective April 1st, the Company hopes to continue its growth in the market as the market evolves,” said Oren Shuster, Chief Executive Officer of IMC. “In addition, as we are constantly looking for opportunities to maximize shareholder value, we are hopeful that our potential reverse merger with Israel-based Kadimastem Ltd., a clinical cell therapy public company traded on the Tel Aviv stock exchange under the symbol (TASE: KDST) will proceed as expected, which we believe will create significant value for the shareholders.”
“As previously warned and as expected, unfortunately, the Israel-Hamas war had a negative impact on our fourth quarter 2023 results, which weighed on our full year results. Due to the ongoing conflict, there was a 6% decrease in our yearly revenue. Coupled with our fourth quarter of 2023 inventory reduction, the war caused our fourth quarter gross profit to decrease by 68% as compared to the fourth quarter of 2022. However, our gross profit for 2023 increased by 7.5% to $9.8 million as compared to last year,” said Uri Birenberg, Chief Financial Officer of IMC. “Partially offsetting these declines, we were able to reduce our operating costs in the fourth quarter of 2023 by 55% as compared to the fourth quarter of 2022, ending the year with a 43% reduction in our operating costs as compared to last year, as we leaned further into our goal of active cost management.”
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.
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 2023 MD&A.
We reconcile these non-IFRS financial measures to the most comparable IFRS measures as set out below:
About IM Cannabis Corp.
IM Cannabis Corp. (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 its commercial relationship with 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. Until recently, the Company also actively operated in Canada through Trichome Financial Corp and its wholly owned subsidiaries, where it cultivated, processed, packaged, and sold premium and ultra-premium cannabis at its own facilities under the WAGNERS and Highland Grow brands for the adult-use market in Canada. 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 Company leaving the Canadian cannabis market to pivot its focus and resources to achieve sustainable and profitable growth in its highest value markets, Israel and Germany; 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 partial legalization of medicinal cannabis in Germany, including, the Company having it “all in house”, the Company being positioned to take advantage of the partial legalization, the Company’s growth in 2024, the market growth for medicinal cannabis in Germany, and 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 partial 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 Focus Medical (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 partial 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.
1 Earnings before interest, taxes, depreciation, and amortization (“EBITDA“) and Adjusted EBITDA. These measures do not have a standardized meaning prescribed by International Financial Reporting Standards (“IFRS“) and are therefore unlikely to be comparable to similar measures presented by other issuers. Non-IFRS measures provide investors with a supplemental measure of the Company’s operating performance and therefore highlight trends in Company’s core business that may not otherwise be apparent when relying solely on IFRS measures. Management uses non-IFRS measures in measuring the financial performance of the Company.
2 Based on reporting by Insight Health’s as of December 31, 2023.
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
[email protected]
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
||||||
Canadian Dollars in thousands |
||||||
December 31, |
||||||
Note |
2023 |
2022 |
||||
ASSETS |
||||||
CURRENT ASSETS: |
||||||
Cash and cash equivalents |
$ 1,813 |
$ 2,449 |
||||
Trade receivables |
6 |
7,651 |
8,684 |
|||
Advances to suppliers |
936 |
1,631 |
||||
Other accounts receivable |
7 |
3,889 |
3,323 |
|||
Inventory |
9 |
9,976 |
16,585 |
|||
24,265 |
32,672 |
|||||
NON-CURRENT ASSETS: |
||||||
Property, plant and equipment, net |
10 |
5,058 |
5,221 |
|||
Investments in affiliates |
15c |
2,285 |
2,410 |
|||
Right-of-use assets, net |
12 |
1,307 |
1,929 |
|||
Deferred tax assets, net |
17 |
– |
763 |
|||
Intangible assets, net |
11 |
5,803 |
7,910 |
|||
Goodwill |
11 |
10,095 |
9,771 |
|||
24,548 |
28,004 |
|||||
Total assets |
$ 48,813 |
$ 60,676 |
||||
The accompanying notes are an integral part of the consolidated financial statements. |
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
||||||
Canadian Dollars in thousands |
||||||
December 31, |
||||||
Note |
2023 |
2022 |
||||
LIABILITIES AND EQUITY |
||||||
CURRENT LIABILITIES: |
||||||
Trade payables |
14 |
$ 9,223 |
$ 15,312 |
|||
Credit from banks and others |
13 |
12,119 |
9,246 |
|||
Other accounts payable and accrued expenses |
15 |
6,218 |
6,013 |
|||
Accrued purchase consideration liabilities |
5 |
2,097 |
2,434 |
|||
PUT Option liability |
2,697 |
|||||
Current maturities of operating lease liabilities |
12 |
454 |
814 |
|||
32,808 |
33,819 |
|||||
NON-CURRENT LIABILITIES: |
||||||
Warrants measured at fair value |
17 |
38 |
8 |
|||
Operating lease liabilities |
12 |
815 |
1,075 |
|||
Credit from banks and others |
394 |
399 |
||||
Employee benefit liabilities, net |
16 |
95 |
246 |
|||
Deferred tax liability, net |
19 |
963 |
1,332 |
|||
2,305 |
3,060 |
|||||
Total liabilities |
35,113 |
36,879 |
||||
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY: |
20 |
|||||
Share capital and premium |
253,882 |
245,776 |
||||
Translation reserve |
95 |
1,283 |
||||
Reserve from share-based payment transactions |
9,637 |
15,167 |
||||
Accumulated deficit |
(249,145) |
(239,574) |
||||
Total equity attributable to shareholders of the Company |
14,469 |
22,652 |
||||
Non-controlling interests |
(769) |
1,145 |
||||
Total equity |
13,700 |
23,797 |
||||
Total equity and liabilities |
$ 48,813 |
$ 60,676 |
||||
The accompanying notes are an integral part of the consolidated financial statements. |
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS |
||||||||
AND OTHER COMPREHENSIVE INCOME |
||||||||
Canadian Dollars in thousands |
||||||||
Year ended December 31, |
||||||||
Note |
2023 |
2022 |
*) 2021 |
|||||
Revenues |
21 |
$ 48,804 |
$ 54,335 |
$ 34,053 |
||||
Cost of revenues |
21 |
37,974 |
43,044 |
25,458 |
||||
Gross profit before fair value adjustments |
10,830 |
11,291 |
8,595 |
|||||
Fair value adjustments: |
||||||||
Unrealized change in fair value of biological assets |
– |
(315) |
6,308 |
|||||
Realized fair value adjustments on inventory sold in the year |
(984) |
(1,814) |
(8,570) |
|||||
Total fair value adjustments |
(984) |
(2,129) |
(2,262) |
|||||
Gross profit after fair value adjustments |
9,846 |
9,162 |
6,333 |
|||||
General and administrative expenses |
21 |
11,008 |
21,460 |
17,221 |
||||
Selling and marketing expenses |
21 |
10,788 |
11,473 |
6,725 |
||||
Restructuring expenses |
1 |
617 |
4,383 |
– |
||||
Share-based compensation |
20 |
225 |
2,637 |
5,422 |
||||
Total operating expenses |
22,638 |
39,953 |
29,368 |
|||||
Operating loss |
(12,792) |
(30,791) |
(23,035) |
|||||
Finance income |
7,006 |
6,703 |
23,544 |
|||||
Finance expenses |
(3,671) |
(1,972) |
(673) |
|||||
Finance income (expense), net |
3,335 |
4,731 |
22,871 |
|||||
Loss before income taxes |
(9,457) |
(26,060) |
(164) |
|||||
Income tax expense (benefit) |
18 |
771 |
(1,138) |
500 |
||||
Net loss from continuing operations |
(10,228) |
(24,922) |
(664) |
|||||
Net loss from discontinued operations, net of tax |
25 |
– |
(166,379) |
(17,854) |
||||
Net loss |
(10,228) |
(191,301) |
(18,518) |
|||||
*) Reclassified in respect of discontinued operations – see Note 25. |
||||||||
The accompanying notes are an integral part of the consolidated financial statements. |
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS |
||||||||
AND OTHER COMPREHENSIVE INCOME |
||||||||
Canadian Dollars in thousands, except per share data |
||||||||
Year ended December 31, |
||||||||
Note |
2023 |
2022 |
*) 2021 |
|||||
Other comprehensive income that will not be reclassified to profit or loss in subsequent periods: |
||||||||
Remeasurement gain on defined benefit plans |
38 |
59 |
21 |
|||||
Exchange differences on translation to presentation currency |
(894) |
(1,238) |
858 |
|||||
Total other comprehensive income that will not be reclassified to profit or loss in subsequent periods |
(856) |
(1,179) |
879 |
|||||
Other comprehensive income that will be reclassified to profit or loss in subsequent periods: |
||||||||
Adjustments arising from translating financial statements of foreign operation |
231 |
(246) |
530 |
|||||
Total other comprehensive income (loss) |
(625) |
(1,425) |
1,409 |
|||||
Total comprehensive loss |
$ (10,853) |
$ (192,726) |
$ (17,109) |
|||||
Net loss attributable to: |
||||||||
Equity holders of the Company |
$ (9,498) |
$ (188,890) |
$ (17,763) |
|||||
Non-controlling interests |
(730) |
(2,411) |
(755) |
|||||
$ (10,228) |
$ (191,301) |
$ (18,518) |
||||||
Total comprehensive loss attributable to: |
||||||||
Equity holders of the Company |
$ (10,648) |
$ (190,162) |
$ (16,357) |
|||||
Non-controlling interests |
$ (205) |
(2,564) |
(752) |
|||||
$ (10,853) |
$ (192,726) |
$ (17,109) |
||||||
Earnings (loss) per share attributable to equity holders of the Company from continuing operations: |
22 |
|||||||
Basic earnings (loss) per share (in CAD) |
$ (0.74) |
$ (3.13) |
$ 0.02 |
|||||
Diluted loss per share (in CAD) |
$ (0.74) |
$ (3.81) |
$ (3.62) |
|||||
Loss per share attributable to equity holders of the Company from discontinued operations: |
||||||||
Basic and diluted loss per share (in CAD) |
– |
$ (23.17) |
$ (3.08) |
|||||
Loss per share attributable to equity holders of the Company from net loss: |
||||||||
Basic earnings (loss) per share (in CAD) |
$ (0.74) |
$ (26.3) |
$ (3.06) |
|||||
Diluted loss per share (in CAD) |
$ (0.74) |
$ (26.98) |
$ (6.7) |
|||||
*) Reclassified in respect of discontinued operations – see Note 25. |
||||||||
The accompanying notes are an integral part of the consolidated financial statements. |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
||||||||||||||||
Canadian Dollars in thousands |
||||||||||||||||
Share capital and premium |
Treasury Stock |
Reserve from share-based payment transactions |
Translation reserve |
Accumulated deficit |
Total |
Non-controlling interests |
Total |
|||||||||
Balance as of January 1, 2021 |
$ 37,040 |
$ – |
$ 5,829 |
$ 1,229 |
$ (33,001) |
$ 11,097 |
$ 1,513 |
$ 12,610 |
||||||||
Net loss |
– |
– |
– |
– |
(17,763) |
(17,763) |
(755) |
(18,518) |
||||||||
Total other comprehensive income |
– |
– |
– |
1,385 |
21 |
1,406 |
3 |
1,409 |
||||||||
Total comprehensive income (loss) |
– |
– |
– |
1,385 |
(17,742) |
(16,357) |
(752) |
(17,109) |
||||||||
Issuance of common shares, net of issuance costs of $3,800 |
195,259 |
– |
– |
– |
– |
195,259 |
2,948 |
198,207 |
||||||||
Purchase of treasury common shares |
– |
(660) |
– |
– |
– |
(660) |
– |
(660) |
||||||||
Exercise of warrants and compensation options |
4,293 |
– |
– |
– |
– |
4,293 |
– |
4,293 |
||||||||
Exercise of options |
1,053 |
– |
(920) |
– |
– |
133 |
– |
133 |
||||||||
Share-based compensation |
– |
– |
7,471 |
– |
– |
7,471 |
– |
7,471 |
||||||||
Expired options |
32 |
– |
(32) |
– |
– |
– |
– |
– |
||||||||
Balance as of December 31, 2021 |
237,677 |
(660) |
12,348 |
2,614 |
(50,743) |
201,236 |
3,709 |
204,945 |
||||||||
Net loss |
– |
– |
– |
– |
(188,890) |
(188,890) |
(2,411) |
(191,301) |
||||||||
Total other comprehensive income (loss) |
– |
– |
– |
(1,331) |
59 |
(1,272) |
(153) |
(1,425) |
||||||||
Total comprehensive loss |
– |
– |
– |
(1,331) |
(188,831) |
(190,162) |
(2,564) |
(192,726) |
||||||||
Issuance of treasury common shares |
– |
660 |
– |
– |
– |
660 |
– |
660 |
||||||||
Issuance of shares, net of issuance costs of $178 |
6,818 |
– |
– |
– |
– |
6,818 |
– |
6,818 |
||||||||
Exercise of options |
992 |
– |
(659) |
– |
– |
333 |
– |
333 |
||||||||
Share-based compensation |
– |
– |
3,767 |
– |
– |
3,767 |
– |
3,767 |
||||||||
Expired options |
289 |
– |
(289) |
– |
– |
– |
– |
– |
||||||||
Balance as of December 31, 2022 |
245,776 |
– |
15,167 |
1,283 |
(239,574) |
22,652 |
1,145 |
23,797 |
||||||||
The accompanying notes are an integral part of the consolidated financial statements. |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
||||||||||||||
Canadian Dollars in thousands |
||||||||||||||
Share capital |
Reserve from |
Translation |
Accumulated |
Total |
Non-controlling interests |
Total |
||||||||
Balance as of December 31, 2022 |
245,776 |
15,167 |
1,283 |
(239,574) |
22,652 |
1,145 |
23,797 |
|||||||
Net loss |
– |
– |
– |
(9,498) |
(9,498) |
(730) |
(10,228) |
|||||||
Total other comprehensive income (loss) |
– |
– |
(1,188) |
38 |
(1,150) |
525 |
(625) |
|||||||
Total comprehensive loss |
– |
– |
(1,188) |
(9,460) |
(10,648) |
(205) |
(10,853) |
|||||||
Issuance of treasury common shares |
2,351 |
– |
– |
– |
2,351 |
– |
2,351 |
|||||||
Issuance of shares, net of issuance costs of $178 |
||||||||||||||
Exercise of options |
||||||||||||||
Other comprehensive income Classification |
– |
– |
– |
(111) |
(111) |
(1,709) |
(1,820) |
|||||||
Share-based compensation |
– |
225 |
– |
– |
225 |
– |
225 |
|||||||
Expired options |
5,755 |
(5,755) |
– |
– |
– |
– |
– |
|||||||
Balance as of December 31, 2023 |
253,882 |
9,637 |
95 |
(249,145) |
14,469 |
(769) |
13,700 |
|||||||
The accompanying notes are an integral part of the consolidated financial statements. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||
Canadian Dollars in thousands |
||||||
Year ended December 31, |
||||||
2023 |
2022 |
2021 |
||||
Cash provided from operating activities: |
||||||
Net loss |
$ (10,228) |
$ (191,301) |
$ (18,518) |
|||
Adjustments for non-cash items: |
||||||
Unrealized gain on changes in fair value of biological assets |
– |
(84) |
(7,210) |
|||
Fair value adjustment on sale of inventory |
984 |
4,342 |
8,796 |
|||
Fair value adjustment on warrants, investments, and accounts receivable |
(6,955) |
(6,000) |
(21,638) |
|||
Depreciation of property, plant and equipment |
644 |
3,044 |
3,021 |
|||
Amortization of intangible assets |
1,758 |
2,343 |
1,158 |
|||
Depreciation of right-of-use assets |
594 |
1,944 |
1,550 |
|||
Impairment of goodwill |
– |
107,854 |
275 |
|||
Impairment of property, plant and equipment |
– |
2,277 |
– |
|||
Impairment of intangible assets |
– |
7,199 |
– |
|||
Impairment of right-of-use assets |
– |
1,914 |
– |
|||
Finance income, net |
3,019 |
6,532 |
1,262 |
|||
Deferred tax payments (benefit), net |
394 |
(3,004) |
278 |
|||
Share-based payments |
225 |
3,767 |
7,471 |
|||
Share based acquisition costs related to business combination |
– |
– |
807 |
|||
Revaluation of other accounts receivable |
– |
3,982 |
– |
|||
Restructuring expenses |
– |
8,757 |
– |
|||
Loss from revaluation of investments |
601 |
– |
– |
|||
1,264 |
144,867 |
(4,230) |
||||
Changes in non-cash working capital: |
||||||
Increase (decrease) in trade receivables, net |
2,320 |
6,058 |
(6,602) |
|||
Increase (decrease) in other accounts receivable and advances to suppliers |
1,299 |
3,622 |
845 |
|||
Decrease in biological assets, net of fair value adjustments |
– |
565 |
6,412 |
|||
Increase (decrease) in inventory, net of fair value adjustments |
4,771 |
883 |
(19,707) |
|||
Increase (decrease) in trade payables |
(6,098) |
11,284 |
5,573 |
|||
Changes in employee benefit liabilities, net |
(139) |
(63) |
28 |
|||
Increase in other accounts payable and accrued expenses |
(750) |
12,126 |
2,661 |
|||
1,403 |
34,475 |
(10,790) |
||||
Taxes paid |
(514) |
(681) |
(834) |
|||
Net cash used in operating activities |
(8,075) |
(12,640) |
(34,372) |
|||
The accompanying notes are an integral part of the consolidated financial statements. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||
Canadian Dollars in thousands |
||||||
Year ended December 31, |
||||||
2023 |
2022 |
2021 |
||||
Cash flows from investing activities: |
||||||
Purchase of property, plant and equipment |
(581) |
(1,562) |
(4,578) |
|||
Proceeds from sales of property, plant and equipment |
– |
210 |
– |
|||
Proceeds from loans receivable |
– |
350 |
7,796 |
|||
Purchase of intangible assets |
– |
– |
(17) |
|||
Acquisition of businesses, net of cash acquired |
– |
– |
(12,536) |
|||
Deconsolidation of subsidiary (see Note 25) |
– |
(406) |
– |
|||
Investments in financial assets |
– |
– |
(13) |
|||
Proceeds from sale of investment |
– |
– |
319 |
|||
Proceeds from (investment in) restricted deposits |
– |
– |
17 |
|||
Investments in associates |
(601) |
(125) |
– |
|||
Net cash used in investing activities |
(1,182) |
(1,533) |
(9,012) |
|||
Cash provided by financing activities: |
||||||
Proceeds from issuance of share capital, net of issuance costs |
1,688 |
3,756 |
28,131 |
|||
Proceeds from issuance of warrants measured at fair value |
6,585 |
– |
11,222 |
|||
Proceeds from exercise of warrants |
– |
– |
3,682 |
|||
Proceeds from exercise of options |
– |
333 |
133 |
|||
Repayment of lease liability |
(586) |
(1,656) |
(633) |
|||
Payment of lease liability interest |
(63) |
(1,429) |
(1,347) |
|||
Proceeds from loans |
5,482 |
9,636 |
7,804 |
|||
Repayment of loans |
(4,827) |
(4,976) |
– |
|||
Interest paid |
(1,664) |
(902) |
(261) |
|||
Proceeds from discounted checks |
2,802 |
– |
– |
|||
Net cash provided by financing activities |
9,417 |
4,762 |
48,731 |
|||
Effect of foreign exchange on cash and cash equivalents |
(796) |
(2,043) |
(329) |
|||
Increase (decrease) in cash and cash equivalents |
(636) |
(11,454) |
5,018 |
|||
Cash and cash equivalents at beginning of year |
2,449 |
13,903 |
8,885 |
|||
Cash and cash equivalents at end of year |
$ 1,813 |
$ 2,449 |
$ 13,903 |
|||
Supplemental disclosure of non-cash activities: |
||||||
Right-of-use asset recognized with corresponding lease liability |
$ 309 |
$ 613 |
$ 1,678 |
|||
Conversion of warrant and compensation options into common shares |
$ – |
$ – |
$ 611 |
|||
Issuance of shares in payment of purchase consideration liability |
$ – |
$ 3,061 |
$ – |
|||
Issuance of shares in payment of debt settlement to a non-independent director of the company |
$ 1,061 |
$ – |
$ – |
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