November 14, 2024 IM Cannabis Reports Third Quarter Financial Results IMC pairs a +12% increase in revenue with a -16% decrease in the total operating expenses, building a solid foundation to deliver in 2025. TORONTO and GLIL YAM, Israel, Nov. 14, 2024 /PRNewswire/ -- IM Cannabis Corp. (the "Company" or "IMC") (NASDAQ: IMCC) (CSE: IMCC), an international medical cannabis company, announced its financial results today for the third quarter ended September 30, 2024. All amounts are reported in Canadian dollar ...

Financial Data and Key Metrics Changes - Revenue for Q3 2024 increased by 12.2% compared to Q3 2023, driven mainly by a 278% increase in German revenue [19][21] - Operating expenses decreased by 16% versus Q3 2023, resulting in an operating expenses ratio of 30% in Q3 2024 compared to 40% in Q3 2023, indicating a 25% increase in efficiency [13][30] - Net loss for Q3 2024 was $1.1 million, an improvement from a net loss of $2.1 million in Q3 2023 [32] Business Line Data and Key Metrics Changes - Sales in Germany increased by 66% from Q2 to Q3 2024, reaching $5.8 million, following a 200% increase from Q1 to Q2 [10][9] - The Israeli business faced challenges, with a 10% decline in the number of medical cannabis patients from July to October 2024 [16] Market Data and Key Metrics Changes - The German cannabis market has seen unprecedented growth since the partial legalization on April 1, driven by an increasing number of patients and better accessibility [7][8] - The average selling price per gram of dried flower increased by 42% to $6.2 per gram in Q3 2024 [19] Company Strategy and Development Direction - The company is focusing on building a solid foundation for accelerated growth in Germany in 2025, emphasizing the integration of German and Israeli teams [6][11] - A strategic shift to concentrate resources on the German market has proven successful, with plans to enhance supply chain efficiency [10][15] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of a stable supply chain and resource management to sustain growth, particularly in light of challenges in the Israeli market [12][14] - The company aims to continue leveraging its understanding of premium market drivers to maximize profitability in Israel while supporting growth in Germany [16][17] Other Important Information - The company reported a gross profit of $3.1 million for Q3 2024, an increase of 19% from Q3 2023 [25] - Total liabilities increased by 15% to $40.4 million as of September 30, 2024, primarily due to the cancellation of the Oranim agreement [35][36] Q&A Session Summary - There were no questions during the Q&A session, indicating a lack of immediate inquiries from participants [38]

Financial Performance - Total revenues for the nine months ended September 30, 2024, were CAD 40,696 thousand, an increase from CAD 38,106 thousand in the same period of 2023, representing a growth of approximately 4.2%[12] - Gross profit before fair value adjustments decreased to CAD 5,818 thousand for the nine months ended September 30, 2024, compared to CAD 9,715 thousand in 2023, reflecting a decline of about 40.5%[12] - Operating loss for the nine months ended September 30, 2024, was CAD 9,452 thousand, compared to CAD 7,627 thousand in the same period of 2023, indicating an increase in losses of approximately 23.9%[12] - Net loss for the nine months ended September 30, 2024, was CAD 10,558 thousand, compared to CAD 6,708 thousand in 2023, representing an increase in net losses of about 57.5%[12] - The company reported a total comprehensive loss of CAD 9,433 thousand for the nine months ended September 30, 2024, compared to CAD 6,670 thousand in the same period of 2023, indicating an increase of about 41.9%[12] - Net loss attributable to equity holders for the nine months ended September 30, 2024, was CAD (9,574) thousand, compared to CAD (6,209) thousand for the same period in 2023, representing an increase in loss of approximately 54%[13] - Total comprehensive loss attributable to equity holders for the nine months ended September 30, 2024, was CAD (8,458) thousand, compared to CAD (6,152) thousand for the same period in 2023, indicating a 37% increase in comprehensive loss[13] - Basic and diluted loss per share attributable to equity holders for the nine months ended September 30, 2024, was CAD (4.29), compared to CAD (2.95) for the same period in 2023, reflecting a 45% increase in loss per share[13] Assets and Liabilities - Total assets as of September 30, 2024, were CAD 44,635 thousand, a decrease from CAD 48,813 thousand as of December 31, 2023, reflecting a decline of approximately 8.9%[6] - Current liabilities increased to CAD 39,248 thousand as of September 30, 2024, compared to CAD 32,808 thousand as of December 31, 2023, marking an increase of about 19.0%[10] - Total liabilities as of September 30, 2024, were CAD 40,425 thousand, up from CAD 35,113 thousand as of December 31, 2023, indicating an increase of approximately 15.5%[10] - Total equity as of September 30, 2024, was CAD 5,954 thousand, a decrease from CAD 19,167 thousand as of September 30, 2023, reflecting a decline in shareholder equity[21] Cash Flow and Working Capital - Net cash provided by operating activities for the nine months ended September 30, 2024, was CAD 3,122 thousand, compared to a net cash used of CAD (7,857) thousand for the same period in 2023, indicating a significant improvement in cash flow[25] - The current working capital is $(11,605,000), indicating a negative liquidity position[41] Inventory and Expenses - The company reported inventory expensed to cost of goods sold of cannabis products was $32,853 thousand for the nine months ended September 30, 2024, compared to $26,359 thousand for the same period in 2023, reflecting an increase of approximately 24.8%[124] - As of September 30, 2024, the carrying value of total inventory was $4,310 thousand, which includes bulk cannabis valued at $733 thousand and packaged dried cannabis valued at $3,468 thousand[124] - The company recorded a depreciation and amortization expense of $1,642 for the nine months ended September 30, 2024, down from $2,265 in the same period of 2023[142] Corporate Actions and Developments - The Company has implemented a cost-saving plan that includes discontinuing loss-making operations and reducing payroll, which is expected to save costs in 2024[42] - The Company exited its operations in Canada, with the Canadian entities being wound down under CCAA proceedings[48] - The Company signed a convertible loan agreement with Telekana Ltd. for a total of $611,000, which will convert to 51% of shares upon receiving approval from the Israeli Ministry of Health[56] - The Company closed its cultivation facility in Israel, resulting in restructuring expenses of $4,383,000 related to impairment of assets[60] - The Company recorded restructuring expenses of $617,000 related to workforce reductions in Israel, completed by mid-2023[61] - The Company received a notification from Nasdaq regarding non-compliance with the minimum share price requirement, with a deadline to regain compliance by January 16, 2024[70] - The Company regained compliance with Nasdaq's minimum bid price requirement on July 26, 2024[71] Financing and Debt - The Company settled outstanding indebtedness of $838,776 (approximately US$615,615) through issuing 492,492 Units at a price of US$1.25 per Unit[47] - Kadimastem Ltd. will provide a loan of up to $650,000 to IMC, with $300,000 upon signing and $350,000 upon executing the definitive agreement[67] - The loan from Kadimastem accrues 9.00% interest per annum for 12 months and is secured by 10% of proceeds from any operation sale under the CVR[68] - The company has borrowed more than US$8,000,000 since October 2022, with a personal guarantee from the CEO, resulting in a benefit of approximately US$560,000[155] Regulatory and Compliance - The Company was assessed excise tax on insurance totaling $199 for 2020 and $73 for 2021, with objections filed for both assessments[74][75] - The Company announced the termination of the preliminary term sheet with Kadimastem, requiring repayment of a $300,000 loan by July 31, 2024[69] Market and Industry Developments - Germany legalized cannabis on April 1, 2024, which is expected to facilitate access to medical cannabis prescriptions[88]

Financial Data and Key Metrics Changes - Revenue for Q2 2024 increased by 11.7% to $14.8 million compared to $13.2 million in Q2 2023, driven by a 129% growth in Germany [10][11] - Average selling price per gram of dried flower rose by 21% to $6.09 in Q2 2024 [10][11] - Gross profit decreased by 75.6% to $0.8 million in Q2 2024, primarily due to inventory clearance and slow-moving stock accruals [12][13] - Non-IFRS adjusted EBITDA loss widened to $2.3 million in Q2 2024 from a loss of $0.5 million in Q2 2023 [13] Business Line Data and Key Metrics Changes - Total dried flower sold in Q2 2024 was approximately 2,333 kilograms, up from 2,128 kilograms in Q2 2023 [11] - The Israeli business is focusing on premium and ultra-premium markets, with new product launches aimed at enhancing market presence [8][9] Market Data and Key Metrics Changes - The German cannabis market is projected to reach approximately $1.5 billion in total sales in 2024 and grow to about $3.7 billion by 2027 [5] - IM Cannabis Corp. reported a 200% increase in sales in Germany in Q2 2024 compared to Q1 2024, reflecting the impact of legalization [6][16] Company Strategy and Development Direction - The company is reallocating resources to support growth in the German market, focusing on building a stable supply chain and enhancing team capabilities [7][9] - The strategy includes launching premium brands in Germany and leveraging existing supply channels from Israel [18][20] Management's Comments on Operating Environment and Future Outlook - Management highlighted the significant growth potential in the German market following legalization, emphasizing the need for adequate supply to meet demand [4][16] - The company is optimistic about its ability to navigate the competitive landscape in Germany, citing established relationships with pharmacies and a strong brand presence [26][27] Other Important Information - The planned reverse merger with Kadimastem was terminated, allowing the company to focus on its cannabis operations [9] - Cash and cash equivalents decreased to $0.7 million as of June 30, 2024, down from $1.8 million at the end of 2023 [14] Q&A Session Summary Question: Supply sourcing for the German market - Management acknowledged supply as a key issue in Germany and confirmed plans to increase orders and introduce new suppliers [17][18] Question: Impact of supply from Israel on the Israeli market - The company clarified that the supply sent from Israel would not detract from opportunities in Israel, as they focus on different market segments [19][20] Question: Infrastructure and cash outlays for German market growth - Management expressed confidence in their ability to support operations and cash flow for growth in the German market [22][23] Question: Key factors for success in the German market - Management attributed success to established market presence, strong relationships with pharmacies, and increased supply following legalization [25][26] Question: Future gross margin outlook - Management indicated that current gross margin reductions were due to inventory clearance, but they expect improvements in future quarters [28][31]

Financial Performance - IM Cannabis Corp. reported a quarterly loss of $0.17 per share, significantly better than the Zacks Consensus Estimate of a loss of $0.84, and an improvement from a loss of $1.14 per share a year ago, representing an earnings surprise of 79.76% [1] - The company posted revenues of $10.78 million for the quarter ended June 2024, exceeding the Zacks Consensus Estimate by 12.07%, and up from $9.83 million in the same quarter last year [2] Stock Performance - IM Cannabis shares have increased approximately 28.9% since the beginning of the year, outperforming the S&P 500's gain of 13.9% [3] - The current Zacks Rank for IM Cannabis is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.81 on revenues of $10.11 million, and for the current fiscal year, it is -$4.32 on revenues of $38.99 million [7] - The estimate revisions trend for IM Cannabis is mixed, and changes in earnings expectations may occur following the recent earnings report [6] Industry Context - The Medical - Products industry, to which IM Cannabis belongs, is currently ranked in the top 39% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

Financial Performance - Revenues for the six months ended June 30, 2024, increased to CAD 26,813 thousand, up from CAD 25,736 thousand for the same period in 2023, reflecting a growth of 4.2%[8] - Gross profit before fair value adjustments decreased to CAD 2,648 thousand for the six months ended June 30, 2024, compared to CAD 6,977 thousand in the prior year, a decline of 62.0%[8] - Operating loss increased to CAD 8,499 thousand for the six months ended June 30, 2024, compared to CAD 5,368 thousand in the same period of 2023, an increase of 58.8%[8] - Net loss for the six months ended June 30, 2024, was CAD 9,476 thousand, compared to a net loss of CAD 4,572 thousand for the same period in 2023, indicating an increase of 107.5%[8] - Total comprehensive loss for the six months ended June 30, 2024, was CAD 7,918 thousand, compared to CAD 4,731 thousand for the same period in 2023, an increase of 67.5%[8] - The net loss attributable to equity holders for the six months ended June 30, 2024, was CAD 8,652,000, compared to CAD 4,059,000 for the same period in 2023, representing an increase of 113%[9] - Basic and diluted loss per share for the six months ended June 30, 2024, was CAD 0.65, compared to CAD 0.33 for the same period in 2023, reflecting a 97% increase[9] Assets and Liabilities - Total assets decreased from CAD 48,813 thousand as of December 31, 2023, to CAD 40,216 thousand as of June 30, 2024, representing a decline of approximately 17.7%[2] - Current liabilities rose to CAD 33,403 thousand as of June 30, 2024, from CAD 32,808 thousand as of December 31, 2023, an increase of 1.8%[5] - Total liabilities decreased slightly from CAD 35,113 thousand as of December 31, 2023, to CAD 34,735 thousand as of June 30, 2024, a decrease of 1.1%[5] - The total equity as of June 30, 2024, was CAD 5,481,000, down from CAD 23,797,000 as of January 1, 2023, indicating a decline in equity[11] Cash Flow - Cash provided by operating activities for the six months ended June 30, 2024, was CAD 368,000, a significant improvement from a cash used of CAD 13,212,000 in the same period of 2023[14] - Net cash used in investing activities for the six months ended June 30, 2024, was CAD 398,000, compared to CAD 553,000 for the same period in 2023[16] - Net cash provided by financing activities for the six months ended June 30, 2024, was CAD 643,000, a decrease from CAD 10,677,000 in the same period of 2023[16] - The cash and cash equivalents at the end of the period on June 30, 2024, were CAD 700,000, down from CAD 1,321,000 at the end of June 30, 2023[16] Inventory and Cost of Goods Sold - As of June 30, 2024, total inventory amounted to $5,719 thousand, a decrease from $9,976 thousand as of December 31, 2023, reflecting a reduction of approximately 42.7%[97][98] - During the six months ended June 30, 2024, the cost of goods sold for cannabis products was $22,586 thousand, compared to $17,716 thousand for the same period in 2023, representing an increase of approximately 27.6%[98] Corporate Actions and Strategies - The Company exited its operations in Canada, with the Canadian entities sold for a purchase price of $3,375, resulting in no proceeds to the Company[40] - The Company recorded restructuring expenses of $4,383 related to the closure of the "Sde Avraham" cultivation facility in Israel[45] - A cost-saving plan was approved in 2023, focusing on reducing payroll, headcount, and operational efficiencies to save costs in 2024[29] - The Company announced a strategy plan in Israel to strengthen core activities and drive efficiencies, including workforce reductions completed by mid-2023[46] - A proposed business combination with Kadimastem Ltd. will result in a reverse merger, changing the Company's focus from medical cannabis to biotechnology[47] - The Legacy Business will be available for potential sale for up to 12 months from the closing of the proposed transaction, with proceeds used to settle debts[51] Financing and Debt - IM Cannabis Corp. signed a loan agreement with Kadimastem for up to US$650,000, with a 9% annual interest rate, to be funded in two installments[53][54] - The company announced the termination of the loan agreement with Kadimastem, requiring repayment of US$300,000 plus 9% interest in three installments by July 31, 2024[55] - A short-term loan agreement was entered into on July 1, 2024, for $1,113,000 with an annual interest rate of 12%[127] - The company closed a private placement of secured convertible debentures for aggregate proceeds of $2,092, convertible at $0.85 per share[75] Compliance and Regulatory Matters - Nasdaq notified the company that its share price fell below US$1.00 for 30 consecutive business days, requiring compliance by January 16, 2024[56] - The company received a 180-day extension from Nasdaq until July 29, 2024, to regain compliance with the minimum share price requirement[57] - IM Cannabis Corp. was assessed excise tax totaling CAD 199, with additional penalties, for the years 2020 and 2021, but objections were filed[59][60] Shareholder Information - As of June 30, 2024, the company had 13,394,136 common shares issued and outstanding, unchanged from December 31, 2023[106][112] - The company consolidated its common shares on July 12, 2024, reducing the total from 13,394,136 to 2,232,357 shares[128] - On July 26, 2024, the company received notice from Nasdaq confirming compliance with the minimum bid price requirement[129]

Core Insights - IM Cannabis Corp. will report its operational and financial results for Q2 2024 on August 14, 2024, before market opens [1] - A Zoom web conference will be held on the same day at 9:00 am ET to discuss the results, followed by a Q&A session for investors [2] Company Overview - IM Cannabis Corp. is a leading international cannabis company focused on providing premium cannabis products to medical patients in Israel and Germany, which are significant medical cannabis markets [3] - The company aims for sustainable and profitable growth by leveraging a data-driven approach and a globally sourced product supply chain [3] - IM Cannabis is committed to responsible growth and compliance with strict regulatory environments to enhance its commercial and brand power [3] Operations - In Israel, the company operates through Focus Medical Herbs Ltd., which imports and distributes cannabis to medical patients, utilizing proprietary data and patient insights [4] - The company also runs medical cannabis retail pharmacies, online platforms, distribution centers, and logistical hubs in Israel to ensure safe delivery and quality control of its products [4] - In Germany, IM Cannabis operates through Adjupharm GmbH, distributing cannabis to pharmacies for medical cannabis patients [4]

This press release contains forward-looking information or forward-looking statements under applicable Canadian and U.S. 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. Forwardlooking 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 e ...

After giving effect to the Consolidation, the Common Shares were reduced from 13,394,136 to 2,232,357 Common Shares. No fractional Common Shares were issued in connection with the Consolidation. Instead, all fractional Common Shares equal to or greater than one-half resulting from the Consolidation were rounded to the next whole number, otherwise, the fractional Common Share were cancelled. The exercise price and/or conversion price and number of Common Shares issuable under any of the Company's outstanding ...

IMC Germany's accelerated growth potential leans strongly on its supply strategy through its ability to partner with cannabis growers for EU-GMP certification, bolstering the company's supply chain with exclusive product TORONTO and GLIL YAM, Israel, June 5, 2024 /PRNewswire/ -- IM Cannabis Corp. (CSE: IMCC) (NASDAQ: IMCC) (the "Company," "IMCannabis," or "IMC"), a leading medical cannabis company with operations in Israel and Germany, is experiencing accelerated growth in Germany after the April 1st partia ...