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Tilray Brands, Inc. Reports Record Fiscal Year 2022 Results

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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

Published

on

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
equity

Balance as of January 1, 2021

$     37,040

$              –

$       5,829

$       1,229

$   (33,001)

$     11,097

$       1,513

$     12,610

Net loss

(17,763)

(17,763)

(755)

(18,518)

Total other comprehensive income

1,385

21

1,406

3

1,409

Total comprehensive income (loss)

1,385

(17,742)

(16,357)

(752)

(17,109)

Issuance of common shares, net of issuance costs of $3,800

195,259

195,259

2,948

198,207

Purchase of treasury common shares

(660)

(660)

(660)

Exercise of warrants and compensation options

4,293

4,293

4,293

Exercise of options

1,053

(920)

133

133

Share-based compensation

7,471

7,471

7,471

Expired options

32

(32)

Balance as of December 31, 2021

237,677

(660)

12,348

2,614

(50,743)

201,236

3,709

204,945

Net loss

(188,890)

(188,890)

(2,411)

(191,301)

Total other comprehensive income (loss)

(1,331)

59

(1,272)

(153)

(1,425)

Total comprehensive loss

(1,331)

(188,831)

(190,162)

(2,564)

(192,726)

Issuance of treasury common shares

660

660

660

Issuance of shares, net of issuance costs of $178

6,818

6,818

6,818

Exercise of options

992

(659)

333

333

Share-based compensation

3,767

3,767

3,767

Expired options

289

(289)

Balance as of December 31, 2022

245,776

15,167

1,283

(239,574)

22,652

1,145

23,797

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*)

Reserve from
share-based
payment
transactions

Translation
reserve

Accumulated
deficit

Total

Non-controlling interests

Total
equity

Balance as of December 31, 2022

245,776

15,167

1,283

(239,574)

22,652

1,145

23,797

Net loss

(9,498)

(9,498)

(730)

(10,228)

Total other comprehensive income (loss)

(1,188)

38

(1,150)

525

(625)

Total comprehensive loss

(1,188)

(9,460)

(10,648)

(205)

(10,853)

Issuance of treasury common shares

2,351

2,351

2,351

Issuance of shares, net of issuance costs of $178

Exercise of options

Other comprehensive income Classification

(111)

(111)

(1,709)

(1,820)

Share-based compensation

225

225

225

Expired options

5,755

(5,755)

Balance as of December 31, 2023

253,882

9,637

95

(249,145)

14,469

(769)

13,700

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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