IM Cannabis Reports First Quarter Financial Results
IM Cannabis Corp. reported its financial results for Q1 2024, showing a 13% revenue increase compared to Q4 2023. Gross profit increased by 125% but dropped by 39% compared to Q1 2023. Operating expenses decreased by 29%, with a 12% increase in Non-IFRS Adjusted EBITDA loss. The Company plans a private placement of secured convertible debentures. Despite revenue effects from the Israel-Hamas war, IMC expects growth in the German market post-legalization.
13% revenue increase in Q1 2024 compared to Q4 2023.
125% gross profit increase in Q1 2024 compared to Q4 2023.
29% decrease in operating expenses in Q1 2024 compared to Q1 2023.
12% increase in Non-IFRS Adjusted EBITDA loss in Q1 2024.
Plans for a private placement of secured convertible debentures.
Expected growth in the German market post-legalization.
39% gross profit decrease in Q1 2024 compared to Q1 2023.
Revenue affected by an unfavorable exchange rate and price reductions.
Net loss from continuing operations of $6.0 million in Q1 2024.
Basic and diluted loss per share of $0.42 in Q1 2024.
Decrease in total assets and liabilities from December 31, 2023, to March 31, 2024.
Company's financial statements raise concerns about continuing as a going concern.
Insights
IMC prepares for accelerated growth after legalization in
Q1 2024 Financial Highlights
13% Revenue increase vs. Q4 2023 of vs.$12.1M and$10.7M 4% decrease vs. Q1 2023 of$12.5M
125% Gross profit increase vs. Q4 2023 of vs.$1.8M and$0.8 39% Gross profit decrease vs. Q1 2023 of$2.9M
29% decrease in operating expenses vs. Q1 2023 excluding the one-time Oranim revoke related losses of vs.$4.6M and$6.5M 14% increase including Oranim
12% increase of Non-IFRS Adjusted EBITDA loss to$2.1M
Operational Highlights
The Company intends to complete a non-brokered private placement (the "Offering") of secured convertible debentures of the Company (each, a "Debenture") for aggregate proceeds of up to
Management Commentary
"With the April 1st cannabis legalization in
"In 2023 we completely restructured, becoming a very lean and agile company, leaning into active cost management. This process is reflected in the numbers, our G&A decreased
Q1 2024 Conference Call
The Company will host a Zoom web conference call today at 9:00 a.m. ET to discuss the results, followed by a question-and-answer session for the investment community. Investors are invited to register by clicking here. All relevant information will be sent upon registration.
If you are unable to join us live, a recording of the call will be available on our website at https://investors.imcannabis.com/ within 24 hours after the call.
Q1 2024 Financial Results
- Revenues for the first quarter of 2024 were
compared to$12.1 million in the first quarter of 2023, a decrease of$12.5 million 3% . The decrease is mainly due an exchange rate effect of about and decrease in avg. price per sale due to increased competition.$0.2 million
- Gross profit for the first quarter of 2024 was
, compared to$1.8 million in Q1 2024, a decrease of$2.9 million 39% . The downside is attributed mainly to the slow-moving stock that was moved out at a lower price and an exchange rate difference totaling and$0.4 million cost of sales loss due to an inventory erase of the slow-moving stock. Company fair value adjustment was$0.64 million and$0 for the Q1 2024 and Q1 2023 respectively.$0.4 million
- Total Dried Flower sold in Q1 2024 was approximately 1,873 kg with an average selling price of
per gram, compared to approximately 1,842kg in Q1 2023, with an average selling price of$5.68 per gram. This difference is mainly due to increased competition within the retail segment, and mid-range stock discounts to move out slow moving stock.$6.59
- Total operating expenses in Q1 2024 were
compared to$7.4 million in Q1 2023. The increase is due to the other operating expenses related to Oranim Deal revoke, with an expected losses of$6.5 million . Adjusting for this one-time losses, Q1 2024 operating expenses were$2.8 million compared to$4.6 million in Q1 2023, a decrease of$6.5 million 29% .
- G&A Expenses in Q1 2024 were
, compared to$2.3 million in Q1 2023, a decrease of$3.2 million 28% . The decrease in the G&A expense is attributable mainly to salaries and professional services of .$0.64 million
- Selling and Marketing Expenses in Q1 2024 were
, compared to$2.3 million in Q1 2023, a decrease of$2.8 million 18% mainly due to a decrease in Salaries and professional services of .$0.5 million
- Net Loss from continuing operations in Q1 2024 was
, compared to$6.0 million in Q12023.$0.9 million
- Basic and diluted Loss per Share in Q1 2024 was
, compared to a loss of$0.42 per Share in Q1 2023.$0.05
- Non-IFRS Adjusted EBITDA loss in Q1 2024 was
, compared to an Adjusted EBITDA loss of$2.1 million in Q1 2023 an increase of$1.9 million 10% .
- Cash and Cash Equivalents as of March 31, 2024, were
compared to$1.0 million in December 31, 2023.$1.8 million
- Total assets as of March 31, 2024, were
, compared to$41.1 million in December 31, 2023, a decrease of$48.8 million 16% . The decrease is mainly attributed to the goodwill reduction due to Oranim agreement cancelation of about , a reduction in Inventory of$2.8M , reduction of Cash and cash equivalents of$2.1 million and reduction in Trade payables of$0.8M .$1.2 million
- Total Liabilities as of March 31, 2024, were
, compared to$32.8 million in December 31, 2023, a decrease of about$35.1 7% . The decrease was mainly due to the reduction in other accounts payables and accrued expenses of and reduction in the PUT option liability of$1.8 million .$0.7 million
The Company's financial statements as of March 31, 2024 includes a note regarding the Company's ability to continue as a going concern. The Company's Q1 2024 financial results do not include any adjustments relating to the recoverability and classification of assets or liabilities that might be necessary should the Company be unable to continue as a going concern. For more information, please refer to the "Liquidity and Capital Resources" and "Risk Factors" sections in the Company's management's discussion and analysis for the quarter ended March 31, 2024.
Non-IFRS Measures
This press release makes reference to "Gross Margin" and "Adjusted EBITDA", which are financial measures that are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. These measures are provided as complementary information to the Company's IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should neither be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.
For an explanation of how management defines Gross Margin and Adjusted EBITDA, see the Company's management's discussion and analysis for the period ended March 31, 2024, available under the Company's SEDAR+ profile at www.sedarplus.ca on EDGAR at www.sec.gov/edgar.
We reconcile these non-IFRS financial measures to the most comparable IFRS measures as set out below.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||
Canadian Dollars in thousands | ||||||
March 31, | December 31, | |||||
Note | (Unaudited) | |||||
ASSETS | ||||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents | $ 1,048 | $ 1,813 | ||||
Trade receivables | 6,506 | 7,651 | ||||
Advances to suppliers | 780 | 936 | ||||
Other accounts receivable | 3,732 | 3,889 | ||||
Inventories | 3 | 7,901 | 9,976 | |||
19,967 | 24,265 | |||||
NON-CURRENT ASSETS: | ||||||
Property, plant and equipment, net | 4,939 | 5,058 | ||||
Investments in affiliates | 2,078 | 2,285 | ||||
Right-of-use assets, net | 1,243 | 1,307 | ||||
Intangible assets, net | 5,440 | 5,803 | ||||
Goodwill | 7,442 | 10,095 | ||||
21,142 | 24,548 | |||||
Total assets | $ 41,109 | $ 48,813 | ||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||
Canadian Dollars in thousands | ||||||
March 31, | December 31, | |||||
Note | (Unaudited) | |||||
LIABILITIES AND EQUITY | ||||||
CURRENT LIABILITIES:
| ||||||
Trade payables | $ 9,511 | $ 9,223 | ||||
Bank loans and credit facilities | 11,941 | 12,119 | ||||
Other accounts payable and accrued expenses | 4,440 | 6,218 | ||||
Accrued purchase consideration liabilities | 2,165 | 2,097 | ||||
PUT Option liability | 1,967 | 2,697 | ||||
Current maturities of operating lease liabilities | 461 | 454 | ||||
30,485 | 32,808 | |||||
NON-CURRENT LIABILITIES:
| ||||||
Warrants measured at fair value | 4 | 137 | 38 | |||
Operating lease liabilities | 744 | 815 | ||||
Long-term loans | 401 | 394 | ||||
Employee benefit liabilities, net | 96 | 95 | ||||
Deferred tax liability, net | 902 | 963 | ||||
2,280 | 2,305 | |||||
Total liabilities | 32,765 | 35,113 | ||||
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY: | 5 | |||||
Share capital and premium | 253,887 | 253,882 | ||||
Translation reserve | 1,399 | 95 | ||||
Reserve from share-based payment transactions | 9,664 | 9,637 | ||||
Accumulated deficit | (255,431) | (249,145) | ||||
Total equity attributable to equity holders of the Company | 9,519 | 14,469 | ||||
Non-controlling interests | (1,175) | (769) | ||||
Total equity | 8,344 | 13,700 | ||||
Total liabilities and equity | $ 41,109 | $ 48,813 | ||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS | ||||||
AND OTHER COMPREHENSIVE INCOME (UNAUDITED) | ||||||
Canadian Dollars in thousands, except per share data | ||||||
Three months ended March 31, | ||||||
Note | 2024 | 2023 (*) | ||||
Revenues | $ 12,063 | $ 12,529 | ||||
Cost of revenues | 10,274 | 9,286 | ||||
Gross profit before fair value adjustments | 1,789 | 3,243 | ||||
Fair value adjustments: | ||||||
Realized fair value adjustments on inventory sold in the period | (10) | (339) | ||||
Total fair value adjustments | (10) | (339) | ||||
Gross profit | 1,779 | 2,904 | ||||
General and administrative expenses | 2,332 | 3,175 | ||||
Selling and marketing expenses | 2,292 | 2,805 | ||||
Restructuring expenses | - | 283 | ||||
Share-based compensation | 32 | 258 | ||||
Other operating expenses | 9 | 2,753 | - | |||
Total operating expenses | 7,409 | 6,521 | ||||
Operating loss | 5,630 | 3,617 | ||||
Finance income | 4 | (14) | 3,530 | |||
Finance expense | (487) | (795) | ||||
Finance income, net | (501) | 2,735 | ||||
Gain (loss) before income taxes | (6,131) | (882) | ||||
Income tax benefit | (111) | (16) | ||||
Net )loss( gain | (6,020) | (866) | ||||
Other comprehensive income that will not be reclassified to profit or loss in | ||||||
Total other comprehensive income that will not be reclassified to profit or loss | 67 | 36 | ||||
Exchange differences on translation to presentation currency | 1,330 | (562) | ||||
Total other comprehensive income (loss) that will not be reclassified to profit | 1,397 | (526) | ||||
Other comprehensive income that will be reclassified to profit or loss in | ||||||
Adjustments arising from translating financial statements of foreign operation | (35) | 155 | ||||
Total other comprehensive income (loss) that will be reclassified to profit or loss | (35) | 155 | ||||
Total other comprehensive income (loss) | 1,362 | (371) | ||||
Total comprehensive loss | $ (4,658) | $ (1,237) |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS | ||||||
AND OTHER COMPREHENSIVE INCOME (UNAUDITED) | ||||||
Canadian Dollars in thousands, except per share data | ||||||
Three months ended March 31, | ||||||
Note | 2024 | 2023 (*) | ||||
Net income (loss) attributable to: | ||||||
Equity holders of the Company | (5,623) | (600) | ||||
Non-controlling interests | (397) | (266) | ||||
$ (6,020) | $ (866) | |||||
Total comprehensive income (loss) attributable to: | ||||||
Equity holders of the Company | (4,252) | (959) | ||||
Non-controlling interests | (406) | (278) | ||||
$ (4,658) | $ (1,237) | |||||
Net income (loss) per share attributable to equity holders of the Company: | 7 | |||||
Basic and diluted (loss) gain per share (in CAD) | $ (0.42) | $ (0.05) | ||||
Earnings (loss) per share attributable to equity holders of the Company | ||||||
Basic and diluted (loss) gain per share (in CAD) | $ (0.42) | $ (0.05) | ||||
(*) See note 1 regarding figures disclosure. | ||||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements. | ||||||
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||
Canadian Dollars in thousands | ||||
Three months ended March 31, | ||||
2024 | 2023 (*) | |||
Cash provided by operating activities: | ||||
Net income (loss) for the period | $ (6,020) | $ 43 | ||
Adjustments for non-cash items: | ||||
Fair value adjustment on sale of inventory | 10 | 339 | ||
Fair value adjustment on Warrants, investments and accounts receivable | 100 | (3,636) | ||
Depreciation of property, plant and equipment | 147 | 174 | ||
Amortization of intangible assets | 452 | 456 | ||
Depreciation of right-of-use assets | 118 | 179 | ||
Impairment of goodwill | 2,753 | - | ||
Finance expenses, net | 401 | 635 | ||
Deferred tax liability, net | (69) | (150) | ||
Share-based payment | 32 | 258 | ||
Restructuring expense | - | 283 | ||
3,944 | (1,462) | |||
Changes in working capital: | ||||
Decrease (increase) in trade receivables | 1,332 | 1,937 | ||
Decrease (increase) in other accounts receivable and advances to suppliers | 159 | (940) | ||
Decrease (increase) in inventories, net of fair value adjustments | 2,159 | 90 | ||
Decrease (increase) in trade payables | 663 | (6,021) | ||
Changes in employee benefit liabilities, net | - | (22) | ||
Increase in other accounts payable and accrued expenses | (2,745) | (14) | ||
1,568 | (4,970) | |||
Taxes (paid) received | (121) | 328 | ||
Net cash used in operating activities | (629) | (6,061) | ||
Cash flows from investing activities: | ||||
Purchase of property, plant and equipment | (2) | (411) | ||
Payment of purchase consideration | - | (56) | ||
Net cash used in investing activities | $ (2) | $ (467) | ||
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||
Canadian Dollars in thousands | ||||
Three months ended March 31, | ||||
2024 | 2023 | |||
Cash flow from financing activities: | ||||
Proceeds from issuance of share capital, net of issuance costs | 176 | 825 | ||
Proceeds from issuance of warrants | (176) | 7,027 | ||
Repayment of lease liability | (118) | (175) | ||
Interest paid - lease liability | (15) | (18) | ||
Receipt (repayment) of bank loan and credit facilities | (2,856) | (1,046) | ||
Cash paid for interest | (444) | (56) | ||
Proceeds from discounted checks | 2,581 | |||
Net cash (used in) provided by financing activities | (852) | 6,557 | ||
Effect of foreign exchange on cash and cash equivalents | 718 | (1,059) | ||
Decrease in cash and cash equivalents | (765) | (1,030) | ||
Cash and cash equivalents at beginning of the period | 1,813 | 2,449 | ||
Cash and cash equivalents at end of the period | $ 1,048 | $ 1,419 | ||
Supplemental disclosure of non-cash activities: | ||||
Right-of-use asset recognized with corresponding lease liability | $ 40 | $ 49 | ||
Issuance of shares in payment of debt settlement to a non-independent director of the company | $ - | $ 222 | ||
(*) See note 1 regarding Figures disclosure. | ||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
About IM Cannabis Corp.
IMC (Nasdaq: IMCC) (CSE: IMCC) is an international cannabis company that provides premium cannabis products to medical patients in
The IMC ecosystem operates in
Disclaimer for Forward-Looking Statements
This press release contains forward-looking information or forward-looking statements under applicable Canadian and
Forward-looking statements are based on assumptions that may prove to be incorrect, including but not limited to: the Company's ability to focus and resources to achieve sustainable and profitable growth in its highest value markets; the Company's ability to mitigate the impact of the Israel-Hamas war on the Company; the Company's ability to take advantage of the legalization of medicinal cannabis in
The above lists of forward-looking statements and assumptions are not exhaustive. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated or implied by such forward-looking statements due to a number of factors and risks. These include: the failure of the Company to comply with applicable regulatory requirements in a highly regulated industry; unexpected changes in governmental policies and regulations in the jurisdictions in which the Company operates; the Company's ability to continue to meet the listing requirements of the Canadian Securities Exchange and the NASDAQ Capital Market; any unexpected failure to maintain in good standing or renew its licenses; the ability of the Company and its subsidiaries (collectively, the "Group") to deliver on their sales commitments or growth objectives; the reliance of the Group on third-party supply agreements to provide sufficient quantities of medical cannabis to fulfil the Group's obligations; the Group's possible exposure to liability, the perceived level of risk related thereto, and the anticipated results of any litigation or other similar disputes or legal proceedings involving the Group; the impact of increasing competition; any lack of merger and acquisition opportunities; adverse market conditions; the inherent uncertainty of production quantities, qualities and cost estimates and the potential for unexpected costs and expenses; risks of product liability and other safety-related liability from the usage of the Group's cannabis products; supply chain constraints; reliance on key personnel; the risk of defaulting on existing debt; risks surrounding war, conflict and civil unrest in
Please see the other risks, uncertainties and factors set out under the heading "Risk Factors" in the Company's annual report dated March 28, 2024, which is available on the Company's issuer profile on SEDAR+ at www.sedarplus.ca and Edgar at www.sec.gov/edgar. Any forward-looking statement included in this press release is made as of the date of this press release and is based on the beliefs, estimates, expectations and opinions of management on the date such forward looking information is made. The Company does not undertake any obligation to update forward-looking statements except as required by applicable securities laws. Investors should not place undue reliance on forward-looking statements. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
Company Contact:
Anna Taranko, Director Investor & Public Relations
IM Cannabis Corp.
+49 157 80554338
a.taranko@imcannabis.de
Oren Shuster, CEO
IM Cannabis Corp.
+972-77-3603504
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SOURCE IM Cannabis Corp.
FAQ
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