Cannabis
cbdMD Delivers on its Promise of Operating Improvement, adds Regulatory Depth to the Board
Management delivers on operating improvements while investing in future growth. cbdMD board appoints Dr. Sibyl Swift to the Board of Directors to fill Vacancy.
Charlotte, North Carolina–(Newsfile Corp. – August 11, 2022) – cbdMD, Inc. (NYSE American: YCBD) (NYSE American: YCBDpA), one of the nation’s leading and most highly trusted and recognized CBD companies, and operator of three of the leading CBD brands — its flagship brand cbdMD, its animal health brand Paw CBD and its beauty and skincare brand cbdMD Botanicals, today announced our financial results for June 30, 2022. Excluding one-time Goodwill Impairment charges we cut our GAAP operating loss in half from the prior year quarter and made strong sequential gains.
“On our last investor call, we committed to deliver stronger earnings and realize $10 million in annual cost savings against our December 2021 quarter. Despite the many challenges faced this quarter – from the challenging macro environment for consumers including 30-year high inflation rates, to the retirement of Mr. Coffman, our brand founder and co-CEO, and the distraction of our former CEO’s separation from our company we were able to deliver on our commitments. While we incurred a GAAP loss from operations of $33.1 million, the loss was mostly attributed to a one-time goodwill impairment charge of $30.8 million. The impairment was triggered because of the strong downward movement in our stock price during June as we dealt with leadership separation noise. Excluding this goodwill charges, this is the third sequential quarter of improvement in our non-GAAP operating income and the fourth consecutive quarter of Net Adjusted Operating Income gains, improving $1 million compared to the quarter ending in March 2022. We are building momentum. No stone was left unturned, and ongoing efforts have identified further opportunities to improve our operations.
“We have developed and are executing a multi-channel strategy to deliver sustained profitable revenue growth. The new leadership team is focused on new product development, improved efficacy for our consumers, optimizing product assortment, business fundamentals and delivering results. The organization has coalesced around a plan based on product differentiation, capturing greater share of the online market, strategically entering new food, drug and mass channels, and growing market share. Our number one priority is to become profitable by the end of the calendar year and grow from a stable base,” said Ronan Kennedy, CFO and COO.
“While it was a major decision for me to step back this last quarter, as the Company’s largest shareholder and Board member, I am more excited about the Company’s strategy than I have been in years, and confident in leadership’s ability to execute and take cbdMD to the next level. I founded the cbdMD brand based on the powerful benefits cannabinoids can have for its users and take comfort in the efforts our team is making to substantiate these benefits. Appointing Dr. Swift to the Board shows our commitment to lead with science and regulatory rigor second-to-none in the industry,” said Scott Coffman, brand founder and board member.
Financial Highlights from our June 30, 2022 Quarter:
- We reported that our net sales for the June 30, 2022, quarter were $8.6 million versus net sales of $9.6 million quarter ending March 31, 2022, a decrease of 11%. Our net sales for the quarter ended June 30 2022 were down 19% compared to the prior year quarter ended June 30, 2021.
- We reported that our quarter ending June 30, 2022, direct to consumer (DTC) net sales were $6.5 million, versus $6.6 million for our quarter ending March 31, 2022, or a sequential decline of 1%. Our e-commerce net sales were down 17% compared to the prior year quarter ended June 30, 2021. We have made significant changes as well as reductions to our marketing investments over the last two quarters including a $1 million or 20% reduction sequentially and $1.9 million or 32% reduction year over year. Despite these reductions we began seeing strong website traffic gains starting in May with this trend continuing in June and July. We are acquiring more traffic at lower overall investments levels and are working to optimize our traffic and conversion rates.
- We reported that our quarter ending June 30, 2022, wholesale sales (including brick and mortar retail customers) were $2.1 million, versus $3.0 million for quarter ending March 31, 2022, or sequential decrease of 32%. Some of the declines were associated with the benefits tied to pipeline fills that occurred during the March 2022 quarter. Wholesale net sales were down 24% compared to the prior year quarter ended June 30, 2021. We have added a number of specific food, drug, mass, and convenience channel focused resources during the quarter and anticipate building wholesale inertia as we execute our plan over the next 2 quarters and beyond.
- We reported that our quarter ending June 30, 2022, gross profit margin was 69.0% versus 66.9% for the quarter ending March 31, 2022. Our gross profit margin was 68.1% in prior year quarter ended June 30, 2021. Significant action was taken to reduce our high-fixed overhead costs and make our cost of sale more variable and predictable.
- We committed to $10 million in annual cost reductions and SG&A expense of $9.7 million on our call in May. For the quarter ending June 30, 2022, the Company achieved the cost savings goals and recorded SG&A Costs of $8.3 million for the quarter. Excluding a contra-expense of $1.5 million related to RSUs and stock options forfeited during the quarter, our SG&A is down $4.1 million or 30% compared to the prior year quarter ended June 30, 2021. We anticipate further reduction in SG&A during the fiscal fourth quarter tied to realization of a full quarter of benefits from adjustments made during the fiscal third quarter as well as additional cost saving initiatives. We anticipate SG&A expense to be approximately $8 million for the fiscal fourth quarter.
- We reported a GAAP loss from operations of approximately $33.1 million which includes a one-time goodwill impairment of approximately $30.8 million in our quarter ending June 30, 2022. Excluding this impairment our non-GAAP loss from operations totaled $2.3 million. This compares to a $6.7 million GAAP loss from operations for our quarter ending June 30, 2021, a decrease of approximately 65% year over year. This decrease is primarily related to a $4.1 million reduction in operating expenses. Sequentially, our operating loss improved 54% from a $5.1 million loss.
- We reported non-GAAP adjusted operating loss of approximately $2.7 million in our June 30, 2022 quarter, compared to $5.2 million for the June 30, 2021 quarter. This decrease was primarily related to management’s actions taken on our cost structure over the last 2 quarters. Additionally, we saw a sequential improvement of approximately $1.0 million over the quarter ending March 31, 2022, despite the decrease in revenue. We expect further reductions in the fourth quarter and are targeting positive non-GAAP adjusted operating income during the first quarter of fiscal 2023.
- We reported that as of June 30, 2022, we had working capital of approximately $14.1 million and cash on hand of approximately $9.6 million. Cash on hand used during our quarter ending June 30, 2022 was approximately $2.7 million to fund operations (which was a 26% improvement from our quarter ending March 31, 2022) and $1.0 million to pay our Series A Preferred Dividend.
Notable Business Updates
- The Company completed the sale of its manufacturing assets to Steady State, LLC, significantly reducing its fixed overhead costs, migrating to a more variable cost structure. Participating in Steady State’s Series C preferred equity round provides the Company a strategic position in a not only a great supply chain partner, it broadens our product development capabilities. We believe this investment has upside potential as Steady State executes their business plan.
- The Company signed an agreement with Adara Acquisition, LLC to redeem our position subject to its transaction closing with Alliance Entertainment, Inc. This became a condition of Adara’s transaction with the target and subject to closing, locks in the return of our capital to strengthen our balance sheet and use in a manner more strategically aligned with our core business and avoids the 6-month lock-up where our investment is subject to ongoing market risks.
- Company successfully launched a marketing campaign on its 2018 Farm Act compliant hemp extracted Delta 9 product assortment with the Joe Rogan Experience podcast and the Dan Lebatard Show with Stugotz in July and seeing strong sequential monthly category growth.
- Earlier this year, the Company filed a citizen’s petition with the assistance of the National Products Association (NPA). The citizen’s petition response from FDA is due on August 22, 2022. We are prepared and have several administrative options that we are considering depending on their response.
- Our Novel Food Applications were Validated and are now in the Risk Assessment phase in both the UK and EU. In the EU, EFSA put a clockstop hold on all applications preventing them from moving into the Risk Assessment phase. The Company presented EFSA with our data and demonstrated that our application was not deficient, like the other applications and now CBDMD is the only company with an application in the Risk Assessment phase. We believe this provides the Company with a significant lead on obtaining Novel Food approval in the EU for its core broad spectrum formulation and a wide range of products. We anticipate full Novel Foods approval after the Risk Assessment phase is completed in 9-12 months.
- Our separate Human and Animal clinical trials are concluding this month and showing positive preliminary results for both studies. We anticipate publishing our findings during the first fiscal quarter of 2023 and using clinical results to launch marketing campaigns focused on our products’ proven benefits.
We will host a conference call at 4:30 p.m., Eastern Time, on Thursday, August 11, 2022, to discuss our June 30, 2022, second quarter financial results and business progress.
CONFERENCE CALL DETAILS
Thursday August 11, 2022, 4:30 p.m. Eastern Time | |
USA/Canada: | 800-319-4610 |
International: | 604-638-5340 |
Teleconference Replay dial in: | |
USA/Canada: | 855-669-9658 |
International: | 412-317-0088 |
Replay Passcode: | 8972 |
Webcast/Webcast Replay link- available through August 11, 2023: https://www.gowebcasting.com/11834 |
About cbdMD, Inc.
cbdMD, Inc. is one of the leading and most highly trusted and most recognized cannabidiol (CBD) brands with a comprehensive line of U.S. produced, THC-free1 CBD products as well as our new Full Spectrum products. Our cbdMD brand currently includes high-grade, premium CBD products including CBD tinctures, CBD gummies, CBD topicals, CBD capsules, CBD bath bombs, CBD sleep aids and CBD drink mixes and an array of Farm Act compliant Delta 9 products. Our Paw CBD brand of pet products includes veterinarian-formulated products including tinctures, chews, topicals products in varying strengths, and our CBD Botanicals brand of beauty and skincare products including facial oil and serum, toners, moisturizers, clear skin, facial masks, exfoliants and body care. To learn more about cbdMD and our comprehensive line of U.S. grown, THC-free1 CBD oil and Full Spectrum products, please visit www.cbdmd.com, follow cbdMD on Instagram and Facebook, or visit one of the thousands of retail outlets that carry cbdMD’s products.
Forward-Looking Statements
This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements can be identified using words such as ”should,” ”may,” ”intends,” ”anticipates,” ”believes,” ”estimates,” ”projects,” ”forecasts,” ”expects,” ”plans,” and ”proposes.” These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict. You are urged to carefully review and consider any cautionary statements, including but not limited to expectations on cost reductions, investment in Steady State, future profitability, results from clinical studies and other disclosures, including the statements made under the heading “Risk Factors” in cbdMD, Inc.’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021 as filed with the Securities and Exchange Commission (the “SEC”) on December 17, 2021 and our other filings with the SEC. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of cbdMD, Inc. and are difficult to predict. cbdMD, Inc. does not undertake any duty to update any forward-looking statements except as may be required by law. The information which appears on our websites and our social media platforms, including, but not limited to, Instagram and Facebook, is not part of this press release.
1 THC-free is defined as below the level of detection using validated scientific analytical methods.
Non-GAAP Financial Measures
This press release includes a financial measure that excludes the impact of certain items and therefore has not been calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). cbdMD, Inc. has included adjusted loss from operations because management uses this measure to assess operating performance in order to highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. The adjusted operating loss has not been prepared in accordance with GAAP. This non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, net loss from operations as an indicator of our operating performance. Further, this non-GAAP financial measure, as presented by cbdMD, Inc., may not be comparable to similarly titled measures reported by other companies. cbdMD, Inc. has attached to this press release a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure.
cbdMD, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
JUNE 30, 2022 AND SEPTEMBER 30, 2021 | ||||||||
(Unaudited) | ||||||||
June 30, | September 30, | |||||||
2022 | 2021 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 9,553,670 | $ | 26,411,424 | ||||
Accounts receivable | 1,630,233 | 1,113,372 | ||||||
Accounts receivable – discontinued operations | 1,375 | 10,967 | ||||||
Marketable securities | - | 33,351 | ||||||
Investment other securities | 1,000,000 | 1,000,000 | ||||||
Inventory | 4,318,204 | 5,021,867 | ||||||
Inventory prepaid | 548,580 | 551,519 | ||||||
Prepaid sponsorship | 1,749,083 | 1,212,682 | ||||||
Prepaid expenses and other current assets | 1,057,183 | 1,147,178 | ||||||
Total current assets | 19,858,328 | 36,502,360 | ||||||
Other assets: | ||||||||
Property and equipment, net | 775,477 | 2,561,574 | ||||||
Operating lease assets | 4,751,192 | 5,614,960 | ||||||
Deposits for facilities | 244,606 | 529,583 | ||||||
Intangible assets, net | 18,111,903 | 23,003,929 | ||||||
Goodwill | 11,996,249 | 56,670,970 | ||||||
1,400,000 | – | |||||||
Total other assets | 37,279,427 | 88,381,016 | ||||||
Total assets | $ | 57,137,755 | $ | 124,883,376 | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
JUNE 30, 2021 AND SEPTEMBER 30, 2021 | ||||||||
(continued) | ||||||||
(Unaudited) | ||||||||
June 30, | September 30, | |||||||
2022 | 2021 | |||||||
Liabilities and shareholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,310,244 | $ | 2,978,914 | ||||
Deferred revenue | 2,250,549 | 2,727,612 | ||||||
Accrued expenses | 1,155,020 | 1,151,150 | ||||||
Note payable | 9,461 | 59,470 | ||||||
Total current liabilities | 5,725,274 | 6,917,146 | ||||||
Long term liabilities: | ||||||||
Long term liabilities | 127,949 | 108,985 | ||||||
Operating leases – long term portion | 3,982,532 | 4,859,058 | ||||||
Contingent liability | 702,000 | 9,856,000 | ||||||
Total long term liabilities | 4,812,481 | 14,824,043 | ||||||
Total liabilities | 10,537,755 | 21,741,189 | ||||||
shareholders’ equity: | ||||||||
Preferred stock, authorized 50,000,000 shares, $0.001 | ||||||||
par value, 5,000,000 and 500,000 shares issued and outstanding, respectively | 5,000 | 5,000 | ||||||
Common stock, authorized 150,000,000 shares, $0.001 | ||||||||
par value, 59,946,110 and 57,783,340 shares issued and outstanding, respectively | 59,946 | 57,783 | ||||||
Additional paid in capital | 178,326,685 | 176,417,269 | ||||||
Accumulated deficit | (131,791,631) | (73,337,865) | ||||||
Total shareholders’ equity | 46,600,000 | 103,142,187 | ||||||
Total liabilities and shareholders’ equity | $ | 57,137,755 | $ | 124,883,376 | ||||
cbdMD, INC. | ||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2022 AND 2021 | ||||||||||||||
Three Months | Three Months | Nine Months | Nine Months | |||||||||||
Ended | Ended | Ended | Ended | |||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
Gross Sales | $ | 8,868,093 | $ | 11,352,585 | $ | 28,673,718 | $ | 36,941,917 | ||||||
Allowances | (275,200 | ) | (792,062) | (1,130,117 | ) | (2,254,481 | ) | |||||||
Total Net Sales | 8,592,893 | 10,560,523 | 27,543,601 | 34,687,436 | ||||||||||
Cost of sales | 2,660,185 | 3,370,952 | 10,176,085 | 10,444,353 | ||||||||||
Gross Profit | 5,932,708 | 7,189,571 | 17,367,516 | 24,243,083 | ||||||||||
Operating expenses | 8,282,931 | 13,865,191 | 31,690,915 | 36,846,371 | ||||||||||
Impairment of Goodwill and other intangible assets | 30,776,436 | – | 48,959,721 | – | ||||||||||
Loss from operations | (33,126,659) | ) | (6,675,620) | (63,283,120 | ) | (12,603,288 | ) | |||||||
Realized and Unrealized gain (loss) on marketable and other securities, including impairments | – | (18,623) | (33,352 | ) | 526,940 | |||||||||
Gain (loss) on extinguishment of debt | – | 1,466,113 | – | 1,466,113 | ||||||||||
Decrease (increase) of contingent liability | 1,943,000 | 6,871,000 | 8,246,000 | (10,500,000 | ) | |||||||||
Gain (loss) on sale of assets | 88,769 | – | 88,769 | – | ||||||||||
Restructuring expense | (602,092) | – | (602,092 | ) | – | |||||||||
Other income | 64,390 | – | 137,377 | – | ||||||||||
Interest (expense) income | (1,551 | ) | (2,582) | (6,871 | ) | (23,573 | ) | |||||||
Loss before provision for income taxes | (31,634,143 | ) | 1,640,288 | (55,453,289 | ) | (21,133,808 | ) | |||||||
Benefit for income taxes | – | (103,000) | – | 765,000 | ||||||||||
Net (Loss) Income | (31,634,143 | ) | 1,537,288 | (55,453,289 | ) | (20,368,808 | ) | |||||||
Preferred dividends | 1,000,501 | 560,281 | 3,001,503 | 1,220,610 | ||||||||||
Net Loss attributable to cbdMD, Inc. common shareholders | $ | (32,634,644 | ) | $ | 977,007 | $ | (58,454,792 | ) | $ | (21,589,418 | ) | |||
Net Loss per share: | ||||||||||||||
Basic earnings per share | (0.55 | ) | 0.02 | (0.99 | ) | (0.40 | ) | |||||||
Diluted earnings per share | (0.55 | ) | 0.02 | (0.99 | ) | (0.40 | ) | |||||||
Weighted average number of shares Basic: | 59,316,762 | 56,676,326 | 59,229,208 | 54,089,263 | ||||||||||
Weighted average number of shares Diluted: | 59,316,762 | 61,431,643 | 59,229,208 | 54,089,263 | ||||||||||
cbdMD, INC. | ||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||||||||||||
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2022 AND 2021 | ||||||||||||||
Three Months | Three Months | Nine Months | Nine Months | |||||||||||
Ended | Ended | Ended | Ended | |||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
Net (Loss) Income | $ | (31,634,143) | $ | 1,537,288 | $ | (55,453,289 | ) | $ | (20,368,808 | ) | ||||
Comprehensive (Loss) Income | (31,634,143) | 1,537,288 | (55,453,289 | ) | (20,368,808 | ) | ||||||||
Preferred dividends | (1,000,501) | (560,281) | (3,001,503 | ) | (1,220,610 | ) | ||||||||
Comprehensive (Loss) Income attributable to cbdMD, inc. common shareholders | $ | (32,634,644) | $ | 977,007 | $ | (58,454,792 | ) | $ | (21,589,418 | ) | ||||
cbdMD, INC. | ||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||
FOR THE NINE MONTHS ENDED JUNE 30, 2022 and 2021 | ||||||
Nine Months | Nine Months | |||||
Ended | Ended | |||||
June 30, | June 30, | |||||
2022 | 2021 | |||||
Cash flows from operating activities: | ||||||
Net Loss | $ | (55,453,289 | ) | $ | (20,368,808 | ) |
Adjustments to reconcile net (income) loss to net | ||||||
cash used by operating activities: | ||||||
Stock based compensation | 424,455 | 807,523 | ||||
Restricted stock expense | 504,650 | 1,137,583 | ||||
Marketing stock amortization | 717,174 | 660,232 | ||||
Issuance of stock / warrants for service | – | 98,605 | ||||
Inventory and materials impairment | 878,142 | – | ||||
Intangibles amortization | 607,025 | – | ||||
Depreciation | 770,335 | 719,856 | ||||
Impairment of Goodwill and other intangible assets | 48,959,721 | – | ||||
Increase/(Decrease) in contingent liability | (8,246,000 | ) | 10,500,000 | |||
Realized and unrealized loss of Marketable and other securities | 33,350 | (526,939 | ) | |||
Termination benefit | – | 495,568 | ||||
Extinguishment of Paycheck Protection Program Loan | – | (1,466,113 | ) | |||
Amortization of operating lease asset | 863,768 | 922,057 | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | (116,861 | ) | (556,116 | ) | ||
Deposits | 284,977 | 261,125 | ||||
Inventory | (174,479 | ) | (135,058 | ) | ||
Prepaid inventory | 2,939 | (385,410 | ) | |||
Prepaid expenses and other current assets | (1,088,579 | ) | (141,393 | ) | ||
Accounts payable and accrued expenses | (1,149,456 | ) | (603,216 | ) | ||
Operating lease liability | (872,656 | ) | (846,914 | ) | ||
Deferred revenue / customer deposits | 3,723 | 4,478 | ||||
Collection on discontinued operations accounts receivable | 9,592 | 428,667 | ||||
Deferred tax liability | – | (765,000 | ) | |||
Cash used by operating activities | (13,041,469 | ) | (9,759,273 | ) | ||
Cash flows from investing activities: | ||||||
Proceeds from sale of other investment securities | – | 540,000 | ||||
Purchase of other investment securities | – | (750,000 | ) | |||
Proceeds from sale of assets | (322,017 | ) | – | |||
Purchase of property and equipment | (462,221 | ) | (311,572 | ) | ||
Cash provided (used) by investing activities | (784,238 | ) | (521,572 | ) | ||
Cash flows from financing activities: | ||||||
Proceeds from issuance of preferred stock | – | 15,798,115 | ||||
Note payable | (31,044 | ) | (137,292 | ) | ||
Preferred dividend distribution | (3,001,003 | ) | (1,220,610 | ) | ||
Cash provided by financing activities | (3,032,047 | ) | 14,440,213 | |||
Net increase (decrease) in cash | (16,857,754 | ) | 4,159,367 | |||
Cash and cash equivalents, beginning of period | 26,411,424 | 14,824,644 | ||||
Cash and cash equivalents, end of period | $ | 9,553,670 | $ | 18,984,012 | ||
Supplemental Disclosures of Cash Flow Information: | ||||||
2022 | 2021 | |||||
Cash Payments for: | ||||||
Interest expense | $ | 6,817 | $ | 23,573 | ||
Non-cash financial activities: | ||||||
Issuance of Contingent earnout shares: | $ | 908,000 | $ | 12,596,089 | ||
Warrants issued to representative | $ | – | $ | 254,950 | ||
cbdMD, Inc. | |||||||||||||
SUPPLEMENTAL FINANCIAL INFORMATION | |||||||||||||
RECONCILIATION OF NON-GAAP ADJUSTED INCOME (LOSS) FROM OPERATIONS | |||||||||||||
Three Months | Three Months | Nine Months | Nine Months | ||||||||||
Ended | Ended | Ended | Ended | ||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
GAAP (loss) from operations | $ | (33,126,659) | $ | (6,675,620) | $ | (63,283,120) | $ | (12,603,288) | |||||
Adjustments: | |||||||||||||
Depreciation & Amortization | 435,910 | 246,533 | 1,377,361 | 719,856 | |||||||||
Employee and director stock compensation (1) | (938,285) | 959,319 | 851,517 | 2,049,326 | |||||||||
Other non-cash stock compensation for services (2) | – | 28,650 | – | 97,721 | |||||||||
Inventory adjustment (3) | – | 50,000 | 878,142 | 50,000 | |||||||||
Write down of legacy accounts receivable (4) | – | – | – | – | |||||||||
Impairment of goodwill and other intangible assets (5) | 30,776,436 | – | 48,805,436 | – | |||||||||
Accrual for severance | 107,261 | – | 129,761 | 703,022 | |||||||||
Accrual / expenses for discretionary bonus | – | 150,000 | 150,000 | 450,000 | |||||||||
Non-GAAP adjusted (loss) from operations | $ | (2,745,337) | $ | (5,241,118) | $ | (11,090,903) | $ | (8,533,363) | |||||
(1) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.
(2) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.
(3) Represents an operating expense related to inventory loss related to regulatory changes impacting labels and packaging and obsolete/expired inventory.
(4) Write down of legacy accounts receivable.
(5) Represents non-cash goodwill impairment of $44,520,436 and impairment of the cbdMD trademark of $4,285,000.
Contacts:
Investors:
cbdMD, Inc.
John Weston
Director of Investor Relations
[email protected]
(704) 249-9515
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/133543
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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