Full Press Release Details
the year ended December 31, 2021
| INTRODUCTION | 1 |
| CORPORATE STRUCTURE | 6 |
| GENERAL DEVELOPMENT OF THE BUSINESS | 7 |
| DESCRIPTION OF THE BUSINESS | 11 |
| REGULATORY OVERVIEW | 27 |
| RISK FACTORS | 33 |
| DIVIDENDS | 59 |
| DESCRIPTION OF CAPITAL STRUCTURE | 59 |
| ISSUED SHARES HELD BY INTERESTED PARTIES | 61 |
| MARKET FOR SECURITIES | 62 |
| PRIOR SALES | 63 |
| ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTIONS ON TRANSFER | 63 |
| DIRECTORS AND EXECUTIVE OFFICERS | 64 |
| LEGAL PROCEEDINGS AND REGULATORY ACTIONS | 73 |
| INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 76 |
| TRANSFER AGENT AND REGISTRAR | 76 |
| MATERIAL CONTRACTS | 76 |
| INTEREST OF EXPERTS | 76 |
| ADDITIONAL INFORMATION | 77 |
| GLOSSARY OF TERMS | 77 |
| APPENDIX A | 81 |
this Annual Information Form, unless the context otherwise requires, "Intercure", the "Company", "we",
"us" or "our" refers to Intercure Ltd., its subsidiaries and divisions and their respective predecessors. All
references to "dollars", "$" and "US$" are to United States dollars, all references to "NIS"
are to the Israeli New Shekel, the currency of Israel, and all references to "C$" are to Canadian dollars. All capitalized
terms not otherwise defined have the meanings ascribed to them in the "Glossary of Terms" at the end of this Annual Information
Form. Unless otherwise indicated, the information contained herein is given as at December 31, 2021.
statements contained in this Annual Information Form constitute "forward-looking information" for the purpose of applicable
Canadian securities legislation, which reflect management's expectations regarding the Company's future growth, results from
operations (including, without limitation, future production and capital expenditures), performance (both operational and financial)
and business prospects, future business plans and opportunities. All information other than statements of current and historical fact
contained in this Annual Information Form is forward-looking information. In certain cases, forward-looking information can be identified
by the use of words such as "plans", "targets", "expects", "budget", "scheduled",
"estimates", "outlook", "forecasts", "intends", "anticipates", "projects",
"believes", "pro forma" or variations of such words and phrases or state that certain actions, events or results
"may", "could", "would", "might" or "will", "occur" or "be
achieved" and similar words or the negative thereof. In addition, any statements that refer to expectations, intentions, projections
or other characterizations of future events or circumstances contain forward-looking information.
containing forward-looking information are not historical facts but instead represent management's expectations, estimates and
projections regarding future events or circumstances.
information in this Annual Information Form includes, but is not limited to, statements pertaining to the following, among other things:
| our ability to obtain, and the timing of, regulatory approvals to produce, manufacture, distribute, export and import pharmaceutical-grade cannabis and cannabis-based products; | ||
| our partner's ability to obtain, and the timing of, regulatory approvals to produce, manufacture, distribute, export and import pharmaceutical-grade cannabis and cannabis-based products; | ||
| the development and regulation of cannabis and, more specifically, the medical-use cannabis industry; | ||
| the outcomes of preclinical studies, clinical trials and other research regarding the safety and efficacy of cannabis and the ability of such trials to increase acceptance of cannabis in the medical community; | ||
| the commercialization and pricing of our products; | ||
| our competitors' development, marketing and sale of products that compete with our products; | ||
| our expectations regarding future growth, including our ability to complete the expansion of our facilities in northern Israel, southern Israel, the European Union and Canada, as well as the overall expansion of the Cannolam pharmacy chain in 2022; |
| our estimates regarding the growth of the Israeli medical cannabis market (including the number of patients); | ||
| our ability to enter into arrangements with distributors, including any required regulatory approvals; | ||
| our ability to develop an active trading market for the Ordinary Shares and whether the market price of the Ordinary Shares is volatile; | ||
| our expectations regarding future growth; | ||
| our ability to execute our growth strategies; | ||
| our competitive position within the industry; | ||
| expectations for regulatory and/or competitive factors related to the cannabis industry generally, including the permanent export permit from the Israeli Medical Cannabis Agency (the "IMCA ") and Israeli authorities, as well as the ability to obtain import permits into Israel for future cannabis shipments; | ||
| the continued listing of the Ordinary Shares; | ||
| the provisions in the Articles; | ||
| our expectations regarding our revenue, expenses and operations; | ||
| expectations regarding future director and executive compensation levels and plans; | ||
| the time and attention each executive officer and director will devote to our business; | ||
| the continuing anticipated and potential adverse impacts resulting from the COVID-19 pandemic; | ||
| expected industry trends; | ||
| general economic trends; | ||
| fluctuations in foreign exchange rates; and | ||
| fluctuations in interest rates. |
forward-looking information is based on our opinions, estimates and assumptions in light of our experience and perception of historical
trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable
in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that
the underlying opinions, estimates and assumptions will prove to be correct. Certain assumptions include: our ability to build our market
share and enter new markets and industry verticals; our ability to attract and retain key personnel; our ability to maintain and expand
geographic scope; our ability to execute on our expansion plans; our ability to continue investing in infrastructure to support our growth;
our ability to obtain and maintain existing financing on acceptable terms; our ability to execute on profitability initiatives; currency
exchange and interest rates; our ability to respond to the changes and trends in our industry or the global economy; our ability to maintain
sufficient and effective production and R&D capabilities; the impact of competition; future production and supply levels, and future
consumer demand levels; the price of cannabis and cannabis related products; the demand for our products will grow for the foreseeable
future; the effectiveness of mitigation strategies undertaken with respect to COVID-19, and the severity, duration and impacts of COVID-19
on the economy and our business, which is highly uncertain and cannot reasonably be predicted; and the changes in laws, rules, regulations,
and global standards are material factors made in preparing forward-looking information and management's expectations.
information is necessarily based on a number of opinions, estimates and assumptions that, while considered by the Company to be appropriate
and reasonable as of the date of this Annual Information Form, are subject to known and unknown risks, uncertainties, assumptions and
other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those
expressed or implied by such forward-looking information, including but not limited to:
| the medical-use cannabis industry in Israel and other countries is highly regulated; | ||
| we are dependent upon regulatory approvals and licenses for our ability to produce and distribute our pharmaceutical-grade cannabis products; | ||
| research on the effects of cannabis has been limited; | ||
| we compete for market share with companies that may have longer operating histories, more financial resources, and greater manufacturing and marketing experience than us; | ||
| legal and illegal use of cannabis for non-medical purposes may have a significant negative effect on the medical-use cannabis industry and our pharmaceutical-grade cannabis business; | ||
| our business is subject to, or may become subject to, a variety of Canadian, U.S. and foreign laws relating to the production and distribution of cannabis, many of which are unsettled and still developing, and which could subject us to claims or otherwise harm our business; | ||
| we are subject to risks inherent in an agricultural business, which include the risk of crop failure; | ||
| we have a limited operating history upon which investors can evaluate our future prospects; | ||
| we may be adversely impacted by the failure of any of our joint ventures; | ||
| we may be unable to comply with all safety, health and environmental regulations applicable to our operations and the medical-use cannabis industry; | ||
| our pharmaceutical-grade cannabis-based products may be subject to recalls and we may be subject to product liability claims; | ||
| we may experience breaches of security at our facilities or losses as a result of, but not limited to, theft; | ||
| if we sustain cyber-attacks or other privacy or data security incidents that result in security breaches that disrupt our operations or result in the unintended dissemination of protected personal information or proprietary or confidential information, or we are found by regulators to be non-compliant with statutory requirements for protection and storage of personal data, we could suffer a loss of revenue and increased costs, exposure to significant liability, reputational harm and other serious negative consequences; | ||
| third-party manufacturers and distributors may not successfully carry out their contractual duties or meet regulatory requirements; | ||
| we may not be able to secure adequate or reliable sources of funding required to operate our business or increase our production to meet patient demand for our products; |
| we may not be able to successfully execute strategic alliances or transactions; | ||
| international expansion of our business exposes us to business, regulatory, political, operational, financial, economic and other potential risks associated with doing business outside of Israel; | ||
| tax and accounting requirements may change in ways that are unforeseen to us and we may face difficulty or be unable to implement or comply with any such changes; | ||
| a breakdown in our information technology systems could result in a significant disruption to our business; | ||
| future sales or distributions of our securities could cause the market price for our Ordinary Shares to fall; | ||
| we may be subject to risks related to the protection and enforcement of intellectual property rights, and may become subject to allegations that we or our joint venture partners are in violation of intellectual property rights of third parties; | ||
| a competitor may discover or misappropriate our trade secrets and other intellectual property; | ||
| intellectual property rights of third parties could adversely affect our ability to commercialize our products; | ||
| we may not realize the full benefit of preclinical studies or clinical trials using our GMP-certified products for various indications; | ||
| we may not own intellectual property developed under joint venture arrangements; | ||
| potential political, economic and military instability in the State of Israel, where our senior management, our head executive office and production facilities are located, may adversely affect our results of operations; | ||
| our operations may be disrupted as a result of the obligation of Israeli citizens to perform military service; | ||
| the rights and responsibilities of our shareholders will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of Canadian or U.S. corporations; | ||
| provisions of Israeli law may delay, prevent or otherwise impede a merger with us, or an acquisition of us, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders; | ||
| we may not be able to enforce covenants not to compete under applicable laws, and therefore we may be unable to prevent our competitors from benefiting from the expertise of some of our former employees, which in turn could impact our future profitability; | ||
| investors may have difficulties enforcing foreign judgments against us or our executive officers and directors, or asserting Canadian securities laws claims in Israel; | ||
| our results of operations may be harmed by currency fluctuations and inflation; | ||
| our operations may be affected by negative labor conditions in Israel; |
| under our amended and restated Articles, if any person acquires, holds, or has control of or direction over more than 4.99% of our outstanding Ordinary Shares at any time without receiving prior approval from the IMCA, the Ordinary Shares held by that person in excess of such limit will automatically become dormant shares; | ||
| we have not paid dividends on our Ordinary Shares and, therefore, unless our traded securities appreciate in value, our investors may not benefit from holding our securities; | ||
| the extent of the impact of COVID-19 and measures taken to contain the virus on our results of operations and overall financial performance; | ||
| the extent of the impact of the war between Russia and Ukraine, any escalation thereto and its impacts on the global economy on our results of operations and overall financial performance; and | ||
| such other factors discussed in greater detail under "Risk Factors" in this Annual Information Form. |
any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information
prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The
opinions, estimates or assumptions referred to above and described in greater detail in "Risk Factors" should be considered
carefully by readers of this Annual Information Form.
addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. Forward-looking
information is provided for the purpose of presenting information about management's current expectations and plans relating to
the future and allowing investors and others to get a better understanding of our anticipated financial position, results of operations
and operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking
information, there may be other risk factors not presently known to us or that we presently believe are not material that could also
cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no
assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated
in such information. Accordingly, readers should not place undue reliance on forward-looking information, which speaks only as of the
date made. The forward-looking information contained in this Annual Information Form represents our expectations as of the date specified
herein, and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise
any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable
of the forward-looking information contained in this Annual Information Form is expressly qualified by the foregoing cautionary statements.
Address and Incorporation
Ltd. is a company established under the Israeli Companies Law (5759-1999) (the "Companies Law").
Company's head office and registered office is located at 85 Medinat ha-Yehudim Street, Herzliya, 4676670, Israel.
April 1, 2021, the Articles of the Company were amended to consolidate the Ordinary Shares and increase the Company's registered
share capital in connection with the SPAC Transaction.
following chart sets out the organizational structure of Intercure, excluding non-active and immaterial entities, as at the date of this
Annual Information Form:
Each of the above entities were incorporated or formed under the laws of Israel. The Company has no material subsidiaries incorporated
or formed outside of Israel.
currently own all of the issued and outstanding shares of Canndoc and Pharma-zone, and a majority interest of the issued and outstanding
shares of Cannolam and other holdings in additional pharmacies and trade houses. Unless otherwise specified, references in this section
to "we", "our" and "us" refer to the business of Intercure and its subsidiaries.
Development of the Business
Year 2019 (January 1, 2019 to December 31, 2019)
April 2019, we entered into a partnership agreement with Kibbutz Nir-Oz, a kibbutz located in the southern region of Israel (the "Southern
Kibbutz"), to establish a large-scale production facility in southern Israel, which will also utilize climatized greenhouses
and operate in tandem with our facility in northern Israel.
May 2019, we entered into a partnership with a Canadian company that is in the advanced stages of building an indoor complex for the
production and distribution of cannabis products for medical use in Canada. We established a joint venture with the Canadian partner,
which pursuant to the joint venture agreement, will entitle us to 51% of the profits generated from the sale of our products. The production
and distribution of the products will be done under the "CANNDOC" brand while the marketing of the products will be done
by the partner. While this facility is operational for cultivation, it has not yet received all of the licenses and permits required
for the sale of products.
June 2019, we entered into a non-exclusive distribution agreement with a licensed distributor in Germany, for the purpose of distributing
our pharmaceutical-grade products within Germany. During the first quarter of 2021, our German partner obtained an import license to
import cannabis products from Denmark. The first shipment of Canndoc-branded products cultivated under the agreement was delivered to
our German partner during the last quarter of 2021. As the products are now available for sale in Germany, the Company is focused on
locating potential buyers for the products.
September 2019, we entered into a distribution agreement with SLE, a subsidiary of Teva Group Pharmaceutical Industries Ltd. Pursuant
to the distribution agreement, SLE will provide us with logistics, storage, collection and distribution services for our medical cannabis
products throughout Israel for a term of three years, with two optional extensions of two years each. SLE holds an IMC-GDP distribution
license and possesses an advanced logistics facility.
November 2019, we entered into an agreement with the R&D Fund of Shamir (Assaf Harofeh) Medical Center, a lead research facility,
for the purposes of examining the effect of our products for medical uses on approximately 75 pediatric autism examinees. The research
will be conducted at Assaf Harofeh Hospital over a period of three years.
December 2019, we established a strategic collaboration with Tilray and Tilray Portugal for the purpose of providing us with access to
existing and potential markets in Tilray's operating territories and pursuant to which Tilray will import GMP-quality medical cannabis
Year 2020 (January 1, 2020 to December 31, 2020)
January 2020, we successfully completed the first ever commercial import of medical cannabis into Israel as part of the agreements with