Full Press Release Details
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
CANADIAN DOLLARS IN THOUSANDS
| Page | |
| Condensed Interim Consolidated Statements of Financial Position | 3 - 4 |
| Condensed Interim Consolidated Statements of Profit or Loss and Other Comprehensive Income | 5 - 6 |
| Condensed Interim Consolidated Statements of Changes in Equity | 7 |
| Condensed Interim Consolidated Statements of Cash Flows | 8 - 9 |
| Notes to Condensed Interim Consolidated Financial Statements | 10 - 27 |
- - - - - - - - - - -
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Canadian Dollars in thousands
| June 30, 2021 | December 31, 2020 | |||||||
| Note | Unaudited | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 34,050 | $ | 8,885 | ||||
| Restricted bank deposit | - | 18 | ||||||
| Trade receivables | 11,927 | 5,501 | ||||||
| Advances to suppliers | 2,782 | 3,602 | ||||||
| Other accounts receivable | 3 | 14,135 | 689 | |||||
| Loans receivable | 617 | - | ||||||
| Biological assets | 4 | 1,042 | 78 | |||||
| Inventories | 5 | 16,657 | 8,370 | |||||
| 81,210 | 27, 143 | |||||||
| NON-CURRENT ASSETS: | ||||||||
| Property, plant and equipment, net | 21,391 | 5,532 | ||||||
| Investments | 3,557 | 2,341 | ||||||
| Derivative assets | 45 | - | ||||||
| Right-of-use assets, net | 13,066 | 935 | ||||||
| Deferred tax assets | 397 | 769 | ||||||
| Intangible assets, net | 3 | 8,018 | 1,092 | |||||
| Goodwill | 3 | 72,352 | 304 | |||||
| 118,826 | 10,973 | |||||||
| Total assets | $ | 200,036 | $ | 38,116 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Canadian Dollars in thousands
| June 30, 2021 | December 31, 2020 | |||||||
| Note | Unaudited | |||||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Trade payables | $ | 4,902 | $ | 2,605 | ||||
| Bank loans | 1,429 | - | ||||||
| Other accounts payable and accrued expenses | 3 | 15,030 | 3,497 | |||||
| Accrued purchase consideration | 3 | 5,002 | - | |||||
| Current maturities of lease liabilities | 526 | 167 | ||||||
| 26,889 | 6,269 | |||||||
| NON-CURRENT LIABILITIES: | ||||||||
| Warrants measured at fair value | 6 | 14,643 | 16,540 | |||||
| Lease liabilities | 12,993 | 823 | ||||||
| Employee benefit liabilities, net | 387 | 371 | ||||||
| Deferred tax liability, net | 1,493 | 1,503 | ||||||
| 29,516 | 19,237 | |||||||
| Total liabilities | 56,405 | 25,506 | ||||||
| EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY: | 7 | |||||||
| Share capital and premium | 168,196 | 37,040 | ||||||
| Translation reserve | 231 | 1,229 | ||||||
| Reserve from share-based payment transactions | 7,047 | 5,829 | ||||||
| Retained earnings (accumulated deficit) | (33,126 | ) | (33,001 | ) | ||||
| Total equity attributable to equity holders of the Company | 142,348 | 11,097 | ||||||
| Non-controlling interests | 1,283 | 1,513 | ||||||
| Total equity | 143,631 | 12,610 | ||||||
| Total liabilities and equity | $ | 200,036 | $ | 38,116 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Canadian Dollars in thousands
| Six months ended June 30, | Three months ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Unaudited | ||||||||||||
| Revenues | $ | 19,879 | $ | 5,097 | $ | 11,112 | $ | 3,757 | ||||
| Cost of revenues | 14,650 | 2,441 | 10,510 | 1,732 | ||||||||
| Gross profit before fair value adjustments | 5,229 | 2,656 | 602 | 2,025 | ||||||||
| Fair value adjustments: | ||||||||||||
| Unrealized change in fair value of biological assets | 4,361 | 6,755 | 2,018 | 2,284 | ||||||||
| Realized fair value adjustments on inventory sold in the period | (5,130 | ) | (2,831 | ) | (3,188 | ) | (2,321 | ) | ||||
| Total fair value adjustments | (769 | ) | 3,924 | (1,170 | ) | (37 | ) | |||||
| Gross profit (loss) | 4,460 | 6,580 | (568 | ) | 1,988 | |||||||
| General and administrative expenses | 12,388 | 5,026 | 7,475 | 3,096 | ||||||||
| Selling and marketing expenses | 2,485 | 1,184 | 1,296 | 707 | ||||||||
| Research and development expenses | 6 | 134 | 5 | 107 | ||||||||
| Share-based compensation | 2,003 | 1,427 | 1,373 | 933 | ||||||||
| Total operating expenses | 16,882 | 7,771 | 10,149 | 4,843 | ||||||||
| Operating loss | (12,422 | ) | (1,191 | ) | (10,717 | ) | (2,855 | ) | ||||
| Finance income | 13,434 | 427 | 6, 208 | 203 | ||||||||
| Finance expense | (846 | ) | (7,588 | ) | (543 | ) | (7,081 | ) | ||||
| Finance income (expenses), net | 12, 588 | (7,161 | ) | 5, 665 | (6,878 | ) | ||||||
| Income (loss) before income taxes | 166 | (8,352 | ) | (5,052 | ) | (9,733 | ) | |||||
| Income tax expense (benefit) | 540 | 1,144 | 37 | (37 | ) | |||||||
| Net loss | (374 | ) | (9,496 | ) | (5,089 | ) | (9,696 | ) | ||||
| Other comprehensive income (loss) that will not be reclassified to profit or loss in subsequent periods: | ||||||||||||
| Exchange differences on translation to presentation currency | (1,238 | ) | 1,038 | 152 | (610 | ) | ||||||
| Other comprehensive loss that will not be reclassified to profit or loss in subsequent periods | - | (33 | ) | - | (33 | ) | ||||||
| Other comprehensive income (loss) that will be reclassified to profit or loss in subsequent periods: | ||||||||||||
| Adjustments arising from translating financial statements of foreign operation | 259 | (60 | ) | 27 | (50 | ) | ||||||
| Total other comprehensive income (loss) | (979 | ) | 945 | 179 | (693 | ) | ||||||
| Total comprehensive loss | $ | (1,353 | ) | $ | (8,551 | ) | $ | (4,910 | ) | $ | (10,389 | ) |
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Canadian Dollars in thousands, except per share data
| Six months ended June 30, | Three months ended June 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| Note | Unaudited | |||||||||||||
| Net income (loss) attributable to: | ||||||||||||||
| Equity holders of the Company | $ | (125 | ) | $ | (9,996 | ) | $ | (4,630 | ) | $ | (9,579 | ) | ||
| Non-controlling interests | (249 | ) | 500 | (459 | ) | (117 | ) | |||||||
| $ | (374 | ) | $ | (9,496 | ) | $ | (5,089 | ) | $ | (9,696 | ) | |||
| Total comprehensive net income (loss) attributable to: | ||||||||||||||
| Equity holders of the Company | $ | (1,123 | ) | $ | (9,155 | ) | $ | (4,459 | ) | $ | (10,261 | ) | ||
| Non-controlling interests | (230 | ) | 604 | (451 | ) | (128 | ) | |||||||
| $ | (1,353 | ) | $ | (8,551 | ) | $ | (4,910 | ) | $ | (10,389 | ) | |||
| Loss per share attributable to equity holders of the Company: | ||||||||||||||
| Basic loss per share (in CAD): | 9 | $ | - | $ | (0.07 | ) | $ | (0.10 | ) | $ | (0.52 | ) | ||
| Diluted loss per share (in CAD): | 9 | $ | (0.28 | ) | $ | (0.07 | ) | $ | (0.23 | ) | $ | (0.52 | ) |
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Canadian Dollars in thousands
| Attributable to equity holders of the Company | |||||||||||||||||||||
| Share capital and premium | Reserve for share-based payment transactions | Translation reserve | Retained earnings (deficit) | Total | Non- controlling interests | Total equity | |||||||||||||||
| Balance as of January 1, 2021 | $ | 37,040 | $ | 5,829 | $ | 1,229 | $ | (33,001 | ) | $ | 11,097 | $ | 1,513 | $ | 12,610 | ||||||
| Issuance of shares related to Trichome acquisition | 98,028 | - | - | - | 98,028 | - | 98,028 | ||||||||||||||
| Issuance of shares, net of approximately $3,200 issuance costs | 28,131 | - | - | - | 28,131 | - | 28,131 | ||||||||||||||
| Exercise of warrants | 4,151 | - | - | - | 4,151 | - | 4,151 | ||||||||||||||
| Exercise of options | 832 | (771 | ) | - | - | 61 | - | 61 | |||||||||||||
| Share based payment | - | 2,003 | - | - | 2,003 | - | 2,003 | ||||||||||||||
| Expired options | 14 | (14 | ) | - | - | - | - | - | |||||||||||||
| Net loss | - | - | - | (125 | ) | (125 | ) | (249 | ) | (374 | ) | ||||||||||
| Other comprehensive income (loss) | - | - | (998 | ) | - | (998 | ) | 19 | (979 | ) | |||||||||||
| - | - | (998 | ) | (125 | ) | (1,123 | ) | (230 | ) | (1,353 | ) | ||||||||||
| Balance as of June 30, 2021 (unaudited) | 168,196 | 7,047 | 231 | (33,126 | ) | 142,348 | 1,283 | 143,631 | |||||||||||||
| Balance as of January 1, 2020 | $ | 25,947 | $ | 2,677 | $ | 309 | $ | (4,273 | ) | $ | 24,660 | $ | 1,449 | $ | 26,109 | ||||||
| Exercise of warrants | 9,904 | - | - | - | 9,904 | - | 9,904 | ||||||||||||||
| Exercise of options | 131 | (52 | ) | - | - | 79 | - | 79 | |||||||||||||
| Share based payment | - | 1,427 | - | - | 1,427 | - | 1,427 | ||||||||||||||
| Expired options | 3 | (3 | ) | - | - | - | - | - | |||||||||||||
| Net income (loss) | - | - | - | (9,996 | ) | (9,996 | ) | 500 | (9,496 | ) | |||||||||||
| Other comprehensive income (loss) | - | - | 874 | (33 | ) | 841 | 104 | 945 | |||||||||||||
| - | - | 874 | (10,029 | ) | (9,155 | ) | 604 | (8,551 | ) | ||||||||||||
| Balance as of June 30, 2020 (unaudited) | $ | 35,985 | $ | 4,049 | $ | 1,183 | $ | (14,302 | ) | $ | 26,915 | $ | 2,053 | $ | 28,968 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Canadian Dollars in thousands
| Six months ended June 30, | ||||||
| 2021 | 2020 | |||||
| Unaudited | ||||||
| Cash flows from operating activities: | ||||||
| Net loss for the period | $ | (374 | ) | $ | (9,496 | ) |
| Adjustments for non-cash items: | ||||||
| Unrealized gain on changes in fair value of biological assets | (4,361 | ) | (6,755 | ) | ||
| Fair value adjustment on sale of inventory | 5,130 | 2,831 | ||||
| Fair value adjustment of warrants measured at fair value | (13,049 | ) | 7,021 | |||
| Depreciation of property, plant and equipment | 967 | 317 | ||||
| Amortization of intangible assets | 242 | 8 | ||||
| Depreciation of right-of-use assets | 434 | 103 | ||||
| Finance expenses, net | 46 1 | 34 | ||||
| Changes in employee benefit liabilities, net | 32 | 4 | ||||
| Deferred tax expense, net | 398 | 1,160 | ||||
| Share-based payment | 2,003 | 1,427 | ||||
| Share based acquisition costs related to business combination | 989 | - | ||||
| Non-cash interest income on loans receivable | 233 | - | ||||
| (6,521 | ) | 6,150 | ||||
| Changes in working capital: | ||||||
| Increase in trade receivables, net | (5,688 | ) | (850 | ) | ||
| Increase in other accounts receivable | (4,330 | ) | (465 | ) | ||
| Decrease in biological assets, net of fair value adjustments | 4,100 | 6,809 | ||||
| Increase in inventories, net of fair value adjustments | (9,516 | ) | (8,251 | ) | ||
| Increase in trade payables | 1,8 29 | 1,063 | ||||
| Increase (decrease) in other accounts payable and accrued expenses | (1,996 | ) | 28 | |||
| (15,601 | ) | (1,666 | ) | |||
| Taxes paid | (515 | ) | (295 | ) | ||
| Net cash used in operating activities | (23,011 | ) | (5,307 | ) | ||
| Cash flows from investing activities: | ||||||
| Purchase of property, plant and equipment | (1,837 | ) | (1,321 | ) | ||
| Repayment of loans receivable | 7,620 | - | ||||
| Acquisition of business, net of cash acquired - TFC (Schedule A) | 362 | - | ||||
| Acquisition of business, net of cash acquired - Panaxia (Schedule B) | (2,079 | ) | - | |||
| Investments in financial assets | (13 | ) | (274 | ) | ||
| Change in restricted bank deposit | 18 | - | ||||
| Net cash provided by (used in) investing activities | $ | 4,071 | $ | (1,595 | ) |
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Canadian Dollars in thousands
| Six months ended June 30, | ||||||
| 2021 | 2020 | |||||
| Unaudited | ||||||
| Cash flow from financing activities: | ||||||
| Proceeds from exercise of warrants | $ | 3,292 | $ | 6,032 | ||
| Proceeds from exercise of options | 61 | 79 | ||||
| Proceeds from issuance of share capital, net of issuance costs | 39,353 | - | ||||
| Repayment of lease liability | (31 | ) | (89 | ) | ||
| Payment of lease liability interest | (578 | ) | (35 | ) | ||
| Borrowing proceeds under bank loan | 1,424 | - | ||||
| Net cash provided by financing activities | 43,521 | 5,987 | ||||
| Effect of foreign exchange on cash and cash equivalents | 584 | 210 | ||||
| Increase (decrease) in cash and cash equivalents | 25,165 | (705 | ) | |||
| Cash and cash equivalents at beginning of the period | 8,885 | 13,926 | ||||
| Cash and cash equivalents at end of the period | $ | 34,050 | $ | 13,221 | ||
| Schedule A - Acquisition of TFC: | ||||||
| The subsidiary's assets and liabilities at date of acquisition: | ||||||
| Working capital (excluding cash and cash equivalents) | $ | 9,927 | ||||
| Investments | 319 | |||||
| Property, plant and equipment | 15,193 | |||||
| Right of use assets | 11,130 | |||||
| Lease liability | (11,130 | ) | ||||
| Deferred tax liability | (1,677 | ) | ||||
| Intangible assets | 6,458 | |||||
| Goodwill | 68,446 | |||||
| Common shares issued upon the acquisition | (99,028 | ) | ||||
| $ | (362 | ) | ||||
| Schedule B - Acquisition of Panaxia: | ||||||
| The subsidiary's assets and liabilities at date of acquisition: | ||||||
| Inventory | $ | 19 | ||||
| Investments | 958 | |||||
| Property, plant and equipment | 88 | |||||
| Goodwill and intangible assets | 5,895 | |||||
| Accrued purchase consideration | (4,881 | ) | ||||
| $ | 2,079 |
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Canadian Dollars in thousands, except share and per share data
a. Corporate information:
IM Cannabis Corp. (the "Company" or "IMCC) is listed for trading on the Canadian Securities Exchange ("CSE") and, commencing from March 1, 2021, on NASDAQ under the ticker symbol "IMCC". IMCC's main office is located in Kibutz Glil-Yam, Israel.
IMCC operates in the field of medical cannabis, through Focus Medical Herbs Ltd. ("Focus"), which is licensed under the regulations of medical cannabis by the Israeli Ministry of Health through its Israel Medical Cannabis Agency ("IMCA") to breed, grow and supply medical cannabis product in Israel and all of its operations are performed pursuant to the Israeli Dangerous Drugs Ordinance (New Version), 1973 (the "Dangerous Drugs Ordinance"), and the related regulations issued by IMCA.
In Europe, IMCC operates through Adjupharm, a German-based subsidiary acquired by IMC Holdings on March 15, 2019. Adjupharm is an EU-GMP certified medical cannabis producer and distributor with wholesale, narcotics handling, manufacturing, procurement, storage and distribution licenses granted by German regulatory authorities that allow for import/export capability with requisite permits.
In Canada, IMCC operates through Trichome JWC Acquisition Corp. ("TJAC") d/b/a JWC, a Canadian federally licensed producer of cannabis products in the adult-use recreational cannabis market in Canada.
The Company, its subsidiaries and Focus (collectively: the "Group"), operate in one reporting segment. The majority of the Group's revenues are generated from sales of medical cannabis products to customers in Israel. The remaining revenues are generated from sales of recreational cannabis in Canada and medical cannabis, as well as other products, to customers in Germany. The Company and its subsidiaries do not engage in any U.S. cannabis-related activities as defined in Canadian Securities Administrators Staff Notice 51-352.
These financial statements have been prepared in a condensed format as of June 30, 2021, and for the six and three months then ended (the "condensed interim consolidated financial statements"). These financial statements should be read in conjunction with the Company's annual financial statements as of December 31, 2020, and for the year then ended and accompanying notes (the "annual consolidated financial statements").
Since March 31, 2020, the outbreak of the novel strain of coronavirus ("COVID-19") and the ongoing pandemic, has resulted in governments worldwide enacting various emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods, closing of non-essential businesses and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Canadian Dollars in thousands, except share and per share data
NOTE 1:- GENERAL (Cont.)
The Group has taken proactive measures to protect the health and safety of its employees in order to continue delivering high quality medical cannabis products to its patients and to maintain its financial health, including postponed planned investments in certain jurisdictions until global economic risks subside.
To date, the Company's cannabis operations, results and financial position have not been materially impacted by COVID-19 related issues. The Company has not experienced material disruptions in its labor inputs and cultivation and processing activities, there have been no indicators of material issues to the Company's supply chain, and on the consumer side, product demand has remained stable and medical cannabis has been declared an essential service across Israel, Germany and Canada, as such, the Company's distribution remains relatively unimpacted.
While the precise impact of the COVID-19 outbreak on the Company remains unknown, the rapid spread of COVID-19 and declaration of the outbreak as a global pandemic have resulted in travel advisories and restrictions, certain restrictions on business operations, social distancing precautions and restrictions on group gatherings which are having direct impacts on businesses in Canada, Israel, Germany and elsewhere in the world. Such additional precautionary measures could also impact the Group's business. The spread of COVID-19 may also have a material adverse effect on global economic activity and could result in volatility and disruption to global supply chains and the financial and capital markets. These disruptions could cause interruptions in supplies and other services from third parties upon which the Group relies; decrease demand for products; and cause staff shortages, reduced customer traffic, and increased government regulation, all of which may materially and negatively impact the business, financial condition and results of operations of the Group.
Liquidity and capital resources:
On May 10, 2021, the Company completed an overnight marketed offering (the "Offering") of 6,086,956 Common Shares (each an "Offered Share") at a price of US$5.75 per Offered Share for aggregate gross proceeds of approximately US$35 million ($44,111) (see Note 7b).
As of June 30, 2021, the Company's cash position (cash and cash equivalents) totaled $34,050. The Company's current operating plan includes various assumptions concerning the level and timing of cash receipts from sales and cash outlays for operating expenses and capital expenditures.
b. Approval of interim condensed consolidated financial statements:
These interim condensed consolidated financial statements of the Company were authorized for issue by the board of directors on August 15, 2021.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Canadian Dollars in thousands, except share and per share data
NOTE 1:- GENERAL (Cont.)
c. Strategic developments:
1. On March 1, 2021, the Company's Common Shares commenced trading on NASDAQ under the ticker symbol "IMCC".
2. On March 8, 2021, the Company announced that Focus signed a multi-year supply agreement with GTEC Holdings Ltd. ("GTEC"), a Canadian licensed producer of handcrafted and high-quality cannabis (the "GTEC Agreement"). According to the GTEC Agreement, Focus will import GTEC's high-THC medical cannabis inflorescence into Israel to be sold under the IMC brand. With the arrival of these commercial shipments, the Company will launch a new category of imported premium indoor medical cannabis products under its well-established brand.
The import of the Canadian-grown high-THC strains from GTEC's subsidiary, Grey Bruce Farms Incorporated ("GBF"), is expected to commence in the third quarter of 2021, subject to fulfilling all regulatory requirements in relation to such import, including compliance with MOH regulations and receipt of a valid export license from Health Canada. According to the GTEC Agreement, Focus will purchase a minimum quantity of 500kg of high-THC medical cannabis inflorescence from GBF and will be the exclusive recipient of GTEC cannabis products in the Israeli market for a period of 12 months from the date that the first shipment of GTEC products arrives in Israel (the "Exclusive Term"). The Exclusive Term can be extended under the terms of the GTEC Agreement by an additional 6 months.
3. On March 12, 2021, the Company filed a preliminary short form base shelf prospectus (the "Preliminary Shelf Prospectus") with the securities commissions or similar securities regulatory authorities in each of the provinces and territories of Canada (the "Securities Commissions"), and on March 15, 2021, the Company filed a corresponding shelf registration statement on Form F-10 with the SEC, under the Multijurisdictional Disclosure System ("MJDS") established between Canada and the United States.
On March 31, 2021, in connection with the Preliminary Shelf Prospectus, the Company filed a final short form base shelf prospectus (the "Final Shelf Prospectus") with the Securities Commissions and a corresponding shelf registration statement on Form F-10 (the "Registration Statement") with the SEC. The Final Shelf Prospectus and the Registration Statement enable the Company to offer up to US$250 million (or its equivalent in other currencies) of Common Shares, warrants, subscription receipts, debt securities, units (collectively, the "Qualified Securities"), or any combination of such Qualified Securities from time to time, during the 25-month period that the Final Shelf Prospectus is effective. The specific terms of any offering under the Final Shelf Prospectus and the intended use of the net proceeds will be established in a prospectus supplement, which will be filed with the Securities Commissions and the SEC in connection with any such offering.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Canadian Dollars in thousands, except share and per share data
NOTE 1:- GENERAL (Cont.)
4. On March 12, 2021, Adjupharm entered into a supply agreement with Northern Green Canada Inc. ("NGC") (the "NGC Supply Agreement"). Under the terms of the NGC Supply Agreement, NGC will provide Adjupharm with three new strains of medical cannabis products, to be distributed under the IMC brand to German pharmacies pursuant to Adjupharm's distribution agreements with its German distribution partners. Shipments from NGC are expected to commence in the fourth quarter of 2021.
5. On March 18, 2021, the Company acquired all of Trichome Financial Corp.'s ("Trichome" or "TFC") issued and outstanding shares (the "Trichome Shares") and closed the Trichome transaction (the "Trichome Transaction") that was previously announced on December 30, 2020. Pursuant to the terms of the Trichome Transaction, former holders of Trichome Shares and former holders of Trichome convertible instruments (the "Trichome Securityholders") received 0.24525 of a Common Share for each Trichome Share held and each in-the-money convertible instrument of Trichome. As a result of the Trichome Transaction, a total of 10,104,901 Common Shares were issued to the Trichome Securityholders, resulting in former Trichome Securityholders holding approximately 20.06% of the total number of issued and outstanding Common Shares immediately after closing. In addition, 100,916 Common Shares were issued to financial advisors for advisory fees in connection with the Trichome Transaction (see Note 3).
6. On March 29, 2021, Adjupharm entered into a supply agreement with MediPharm Labs Corp. ("MediPharm Labs") for certain medical cannabis extract products to be delivered by MediPharm Labs over an initial two-year term with an automatic two-year extension period.
7. On March 30, 2021, Zur Rose Pharma GmbH ("Zur Rose") and the Company entered into a termination settlement agreement in connection with the sales agreements announced in July 2020 according to Zur Rose's request, and under which Adjupharm received a termination fee. According to the termination agreement, no inventory will be transferred from Zur Rose to Adjupharm or vice versa.
8. During March 2021, Adjupharm entered into two supply agreements with supply partners in China, under which Adjupharm shall buy COVID-19 rapid antigen test kits. Concurrently, Adjupharm entered into several resale agreements with reseller partners in Germany, under which Adjupharm shall sell the COVID-19 antigen test kits, to be distributed to pharmacies and retailers in Germany (see Note 8).
9. On April 1, 2021, the Company entered into a definitive agreement to acquire MYM Nutraceuticals Inc. (the "MYM Transaction") and its licensed producer subsidiary Highland Grow Inc., pursuant to a plan of arrangement to be completed under the Business Corporations Act in British Columbia. Under the terms of the MYM Transaction, the shareholders of MYM will receive 0.022 Common Shares of IMCC for each common share of MYM.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Canadian Dollars in thousands, except share and per share data
NOTE 1:- GENERAL (Cont.)
MYM operates two licensed, craft cultivation facilities in Canada; SublimeCulture Inc. in Laval, Quebec, and Highland Grow Inc., in Antigonish, Nova Scotia. MYM's flagship brand, Highland, is an ultra-premium brand sold in most provinces throughout Canada.
On July 9, 2021, subsequent to the reporting period, the Company closed the MYM Transaction.
10. On April 30, 2021, the Company announced that its wholly-owned Israeli subsidiary, IMC Holdings, signed a definitive agreement (the "Panaxia Agreement") with Panaxia Pharmaceutical Industries Israel Ltd. and Panaxia Logistics Ltd. (collectively "Panaxia") (the "Panaxia Transaction"). Pursuant to the Panaxia Agreement, IMC Holdings will acquire Panaxia's trading house license and in-house pharmacy activities, certain distribution assets and an option to purchase a pharmacy with licenses to sell medical cannabis to patients, for an aggregate purchase price of NIS 18.7 million (approximately $7,200), comprised of NIS 7.6 million (approximately $2,900) in cash and NIS 11.1 million (approximately $4,300) in Common Shares (the "Panaxia Consideration Shares"). NIS 5.6 million (approximately $2,100) of the cash consideration was paid and additional NIS 2 million (approximately $800) was paid subsequent to reporting period. The Common Shares will be issued in five installments within 4 months of the transaction closing.
Panaxia Transaction will be finalized in two stages, with an option of a third stage. Upon the initial closing, on May 30, 2021, all online-related activities and intellectual property will be transferred to IMC Holdings. The second stage, which is subject to MOH approval, is expected to occur by August 31, 2021. The second stage requires that Panaxia will transfer its IMC-GDP license, which allows the holder to store and distribute medical cannabis in Israel to IMC Holdings or its subsidiary (the "Panaxia IMC-GDP License"). Panaxia Transaction includes an option to acquire Panaxia's pharmacy (the "Panaxia Option"), including licenses to dispense and sell products to cannabis patients (the "Panaxia Pharmacy Licenses") for additional payment in the amount equal to the medical cannabis inventory of the pharmacy at the time of exercise, which will become effective on February 15, 2022. On the date of the initial closing the total aggregate purchase price changed to $7 million due to changes in the currency exchange rate.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Canadian Dollars in thousands, except share and per share data
NOTE 1:- GENERAL (Cont.)
In these financial statements:
| The Company, or IMCC | - | IM Cannabis Corp. |
| The Group | - | IM Cannabis Corp., its Subsidiaries and Focus |
| Subsidiaries | - | Companies that are controlled by the Company (as defined in IFRS 10) and whose accounts are consolidated with those of the Company |
| CAD or $ | - | Canadian Dollar |
| NIS | - | New Israeli Shekel |
| USD or US$ | - | United States Dollar |
| EURO or | - | Euro |
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
a. Basis of presentation and measurement:
The interim condensed consolidated financial statements of the Company have been prepared in accordance with International Accounting Standards 34, "Interim Financial Reporting" ("IAS 34").
The interim condensed consolidated financial statements are presented in Canadian dollars and are prepared in accordance with the same accounting policies, described in the Company's annual consolidated financial statements.
b. Significant accounting judgements and estimates:
The preparation of the Company's interim condensed consolidated financial statements under IFRS requires management to make judgements, estimates, and assumptions about the carrying amounts of certain assets and liabilities. Estimates and related assumptions are based on historical experience and other relevant factors. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis for reasonableness and relevancy. Where revisions are required, they are recognized in the period in which the estimate is revised as well as future periods that are affected.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Canadian Dollars in thousands, except share and per share data
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
c. Disclosure of new standards in the period prior to their adoption:
Amendment to IAS 8, "Accounting Policies, Changes to Accounting Estimates and Errors":
In February 2021, the IASB issued an amendment to IAS 8, "Accounting Policies, Changes to Accounting Estimates and Errors" (the "Amendment"), in which it introduces a new definition of "accounting estimates".
Accounting estimates are defined as "monetary amounts in financial statements that are subject to measurement uncertainty". The Amendment clarifies the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors.
The Amendment is to be applied prospectively for annual reporting periods beginning on or after January 1, 2023, and is applicable to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period. Earlier application is permitted.
Covid-19-Related Rent Concessions beyond June 30, 2021 Amendments to IFRS 16