LEVERAGING ISRAELI CANNABIS EXPERTISE FOR GLOBAL EXPANSION
CSE:IMCC IM Cannabis Corp. LEVERAGING ISRAELI CANNABIS EXPERTISE - - PowerPoint PPT Presentation
CSE:IMCC IM Cannabis Corp. LEVERAGING ISRAELI CANNABIS EXPERTISE - - PowerPoint PPT Presentation
CSE:IMCC IM Cannabis Corp. LEVERAGING ISRAELI CANNABIS EXPERTISE FOR GLOBAL EXPANSION Q3 2020 Disclaimer General The information found herein, and any other materials provided by IM Cannabis Corp.( IMC or the Company ), are
Disclaimer
General The information found herein, and any other materials provided by IM Cannabis Corp.(“IMC” or the “Company”), are intended solely for discussion purposes and are not intended as, and do not constitute, an offer to sell or a solicitation of an offer to buy any security, and should not be relied upon by you in evaluating the merits of investing in any securities. This investor presentation is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use is contrary to local law or regulation. The Company believes the information contained in this document to be reliable but makes no warranty or representation, whether express or implied, in respect of, and assumes no legal liability for, the accuracy, completeness or usefulness of any information disclosed. Any estimates, investment strategies, and views expressed in this document are based upon current market conditions, and/or data and information provided by unaffiliated third parties, and are subject to change without notice. All currency values are denominated in Canadian dollars unless otherwise specified. Market and Industry Data This presentation includes market and industry data and forecasts that were obtained from third-party sources, industry publications and publicly available information. Third-party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. Although we believe it to be reliable, we have not independently verified any of the data from third-party sources referred to in this presentation, or analyzed or verified the underlying studies or surveys relied upon or referred to by such sources, or ascertained the underlying economic assumptions relied upon by such sources. Forward-Looking Statements This investor presentation contains forward-looking statements within the meaning of applicable Canadian securities laws. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", "likely" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. The forward-looking statements in this investor presentation include, without limiting the foregoing, statements relating to the Company’s projected revenues, profitability and supply capacity, anticipated licenses and the Company’s strategic business and expansion plans. Forward-looking statements are subject to business and economic risks and uncertainties and other factors that could cause actual results of operations to differ materially from those contained in the forward-looking statements, including, without limitation: the ability of the Company to comply with applicable government regulations in a highly regulated industry; unexpected changes in governmental policies and regulations affecting the production, distribution, manufacture or use of medical cannabis in Israel, Germany, Portugal, Greece or any other foreign jurisdictions in which the Company intends to operate; the risk that regulatory authorities in Israel may view the Company as the deemed owner of more than 5% of Focus Medical Herbs Ltd. (“Focus Medical”) in contravention to Israeli rules restricting the ownership of Israeli cannabis cultivators and thereby jeopardizing Focus Medical’s cannabis cultivation license; reliance on management; inconsistent public opinion and perception regarding the use of cannabis; engaging in activities considered illegal under US federal law; political instability and conflict in the Middle East; adverse market conditions; unexpected business disruptions due to the COVID-19 global pandemic and other disease outbreaks; the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses; currency fluctuations; competition; and loss of key management and/or employees. Please see the Company's Form 2A Listing Statement, which is available under the Company's profile on SEDAR for additional related risks factors that could materially affect the Company's operations and financial results. 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. This presentation also contains financial projections. Financial projections are forward-looking statements, and actual results could vary materially from the projected results. Our financial projections were not prepared with a view toward compliance with IFRS and have not been examined, reviewed or compiled by our accountants. Our projections represent our estimates as of the date of this presentation. Although our projections are based upon estimates and assumptions that we believe are reasonable, they are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. Further, the degree of uncertainty inherent in our projections may significantly increase as any projections become out of date. There can be no assurance that we will achieve the results indicated. Indeed, actual results will vary from our projections, and the variations may well be material. Consequently, the fact that we have provided financial projections to you should not be regarded as a representation by anyone that they will be realized. You should not place undue reliance on these forward-looking statements. Except to the extent required by applicable laws or rules, we undertake no obligation to update or revise any forward-looking statements included in this presentation.
Disclaimer
United States Securities Laws This investor presentation is not a prospectus or an offering memorandum pursuant to applicable US securities laws. The securities of IMC have not been and will not be registered under the United States federal or state securities laws and may not be offered or sold in the United States, or to, or for the account or benefit of, “U.S. Persons” as such term is defined in Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), unless an exemption from registration is available. Israel Business Structure IMC currently operates in the Israeli medical cannabis market by providing intellectual property, know-how and other related services to licensed producers. Focus Medical, a licensed medical cannabis producer in Israel with whom IMC has exclusive commercial agreements, was the first major Israeli licensed producer to utilize IMC’s intellectual property, know-how and expertise. Focus Medical is controlled by Messrs. Oren Shuster and Rafi Gabay. Neither the Company nor any of its subsidiaries currently hold, directly or indirectly, any licenses to engage in the cultivation, production, processing, distribution or sale of medical cannabis in Israel. However, under IFRS, IMC is required to consolidate the results of Focus Medical, a licensed propagator and cultivator of medical cannabis under the current Israeli regulatory regime, in its current financial results (see Note Regarding IMC’s Accounting Practices below). Israeli regulatory authorities impose certain restrictions on the ownership of Israeli licensed producers intended to protect the integrity of the cannabis industry in Israel. These requirements preclude, among other things, any shareholder from directly or indirectly acquiring, holding or maintaining control or direction over 5% or more of the issued and outstanding share capital of an Israeli licensed producer without obtaining Ministry of Health (“MOH”) approval. The ramifications of breaching this requirement without MOH approval may include, among other things, suspension or cancellation of a medical cannabis license. Based on the foregoing, regulatory authorities in Israel may view IMC as the deemed owner of more than 5% of Focus Medical, and as such subject to the 5% ownership restriction applicable to Israeli licensed producers. A determination of this nature could jeopardize the cultivation license held by Focus Medical and require action from IMC and its shareholders to restructure their affairs to comply with such restrictions and/or seek the MOH’s approval of the current structure. Any sanctions resulting from Israeli regulatory authorities deeming IMC as the owner of more than 5% of Focus may have a material adverse effect on IMC’s business, financial condition and results of operations. Note Regarding IMC’s Accounting Practices IMC complies with IFRS 10, which applies a single consolidation model using a definition of “control” that requires an investor (as defined in IFRS 10) to consolidate an investee (as defined in IFRS 10) where: (i) the investor has power over the investee; (ii) the investor has exposure or rights to variable returns from involvement with the investee; and (iii) the investor can use its power over the investee to affect the amount of the investor’s returns. Under IFRS 10, consolidation occurs when an investor can exercise control over an investee. Control may be achieved through voting rights or other evidence of
- power. Where there are no direct holdings, under IFRS 10, an investor (as defined in IFRS 10) should consider other evidence of power and ability to unilaterally direct an investee's (as defined in IFRS 10)
relevant activities. In view of the exclusive commercial agreements and the guidance in IFRS 10, notwithstanding that IMC has no direct or indirect shareholding of Focus Medical, it has sufficient rights to unilaterally direct the relevant activities (a concept known as "de facto control"), mainly due to the following: (a) IMC receives economic benefits from Focus Medical (and the terms of the exclusive commercial agreements with Focus Medical cannot be changed without the approval of IMC); (b) the Company has an option to purchase Focus Medical; (c) the CEO of the Company is a director of Focus Medical (while simultaneously a substantial shareholder of the Company); and (d) the Company provides management and support activities to Focus Medical through its exclusive commercial agreements. Accordingly, under IFRS 10, the Company has "de facto control" over Focus Medical, and therefore consolidates the financial results of Focus Medical in the Company’s financial statements.
IMC – Investment Highlights
4
Proven Israeli Operator
» $193.5 million in binding sales agreements for next 3 years signed by Focus Medical* » 10 years operating experience » Strong support for decriminalization in Israel: on June 21, 2020, Israeli Ministerial Committee on Legislation approved a bill for the decriminalization of cannabis » Applications for export have begun: on May 13, 2020, the Israeli Ministry of Economy signed a Free Export order for medical cannabis companies to apply for export permits
Established EU Platform
» Network for IMC brand distribution across Germany with 7 binding sales agreements in place » EU-GMP facility fully-licensed and equipped for cannabis import, storage and distribution » EU-GMP supply partner in Spain, capacity of 18,000kg
Brand Focused
» All products in Israel and Europe are sold to patients under the IMC brand
Financially disciplined
» Strong balance sheet: no debt, $ 11.8 million in cash (2)
*Licensed LP with exclusive commercial relationship with IMC (1) Prohibition Partners – The European Cannabis Report 4th Edition January 2019 (2) As of March 31, 2020
IMC: Facts and Figures
Financially Sound Leadership Position Capacity and Expansion
Good Agricultural
Practices 1
58,220 KG
Supply from Israeli and European partners in 2020-2023
$9.1 million
2019 revenue 1
75% YOY growth
(1) Financial results are consolidated to include operations of Focus. GAP licensing applies to Focus, with which IMC has a commercial agreement and service agreement (2) Before fair value adjustments
5
$0
Debt as of March 31, 2020
13,575 KG
Israel’s leading pharmacy chain, for 2020-2022 valued at $80.4 million
$4.3 million
2019 gross profit 1,2
48% margin2 $193.5 million
Consolidated revenue over next 3 years from sales agreements signed by Focus Medical in Israel
$11.8 million
Cash as of March 31, 2020 Supply to
7 Binding Sales Agreements in Germany
Leadership position in Israel EU Platform out
- f Germany
EU-GMP product and
- perating
standards
6
IMC at a Glance
Summary of Assets
- Exclusive commercial agreement with licensed
producer, Focus Medical Herbs Ltd., for IMC’s IP and branding
- $193.5 million in consolidated revenue over next 3
years from sales agreements signed by Focus Medical
- Total Israeli capacity by Focus and third parties:
40,220 kg throughout 2020-2023 (with options for extension), plus imports from Europe and Canada
- Export-ready
Supply Chain Flow
European Union Platform
- Germany: EU-GMP distribution subsidiary, licensed
for medical cannabis import and sale, hub for EU expansion
- Binding Sales agreements signed with 7 German
distributors
- Spain: Strategic supply agreement with EU-GMP
facility, up to 18,000kg of capacity, can serve the German market or be distributed to other EU markets Distribution (export) to Germany Distribution (export) to EU
Israel
IMC - Expansion Strategy Implementation
7
Operating since 2010 Focus Total Production Capacity of 40,220Kg 2020-2023 with NO Extra CAPEX Total Production Capacity of 40,220Kg 2020-2023 with NO Extra CAPEX Spanish Partner - 18,000kg of production capacity Spanish Partner - 18,000kg of production capacity Total Production Capacity of 58,220 kg by the end of 2022 with no extra CAPEX Total Production Capacity of 58,220 kg by the end of 2022 with no extra CAPEX Way of Life Intelicana Cannation Cannomed Ever Green
8
Inflorescences
IMC Branded Products
Extracts
9
Established Operations in Israel
Focus Medical Herbs Ltd. is licensed to cultivate, produce and sell cannabis and cannabis oil for medical purposes Focus commenced operations in 2010
- IMC holds a license agreement and a commercial agreement with Focus for IMC’s IP and
branding
- $193.5 million in consolidated revenue and gross margins of 50% over next 3 years from
sales agreements signed by Focus Medical
- 13,575kg supply to Super-Pharm, Israel’s leading pharmacy chain, for 2020-2022, valued
at $80.4 million
- Capacity for distribution in Israel through Focus Medical and third-party agreements of
40,220kg, plus demonstrated ability to import from European Union and Canada
Highlights of IMC’s Israeli Operations
10
Decriminalization of Cannabis
Regulatory Developments in Israel
On May 13, 2020 Israeli Ministry of Economy signed a Free Export Order for medical cannabis
- Allows for implementation of January 2019 government decision approval medical cannabis exports
- Israeli government began taking application for export in June 2020, subject to meeting Ministry of Health
criteria On June 21, 2020 Israeli Ministerial Committee on Legislation approved a bill for decriminalization
- Legislation proposes: cannabis to be permitted for those over the age of 21, excluding those in security-
related occupations; prohibiting driving under the influence; placing limitation on advertising consistent with tobacco; and developing an advocacy fund for students
- The bill will need to pass three reading in order to become law
Export Reform
Since September 2019, Israel is implementing a regulatory reform in order to standardize the industry
- Setting more stringent quality controls and adding pharmacies as point of sale for patients
- Pricing changes from fixed to market driven, inducing significant price increases
Over 1 million
patients forecast
by 2024
€ 7.7 billion
Total value of German Medical Market by 2028(1)
IMC’s goal is to be the market leader. Physicians become more comfortable prescribing a brand that is widespread therefore it is vital that IMC gain brand recognition before other players enter the market
11
The Goal: Market Leadership
IMC’s German Strategy
(1) Prohibition Partners – The Germany Cannabis Report October 2019 (2) Pharmacy data as of end of 2017; Source: Federal Union of German Associations of Pharmacists 2018 German Pharmacies Report
The Strategy: Wholesale Partnerships
With ~20,000 pharmacies across the country, most of which are independent, IMC will partner with other distributors in order to increase IMC branded product reach throughout Germany
12
IMC Germany - Adjupharm Positioned for Market Leadership
12
Sales B2C
Reaching over 6,000 pharmacies Sales of Bedrocan since December 2019 Robust patient-centered marketing plan and budget for 2020-21 Binding sales agreements with 7 distributors EU-sourced EU-GMP supply expected August 2020 Expected gross margin of ~ 40% on B2B sales Sales to licensed distributors expected Q3 2020
Sales B2B
13
IMC Germany - Adjupharm Positioned Leadership
13
Winning Team
Decades of accumulated pharmaceutical distribution experience Senior quality managers and personnel MD, PhD on staff Top tier marketing management
Licenses & Permits
Cannabis and narcotics import, handling and distribution licenses EU-GMP certification Licensed to package cannabis bulk
Facility
Storage space in construction for
- ver 5,000kg of cannabis
Off the shelf supply availability expected August 2020 Vaults installed with capacity of 500kg Clean room Cannabis bulk re-packaging room 1,320 sq. ft. facility in expansion to 3,280 sq.ft.
IMC - Company Milestones and Capital Raised
Feb 2019 Nov 2019
IMC Holdings reaches $4.4M in 2017 revenues IMC Holdings completes its first capital raise, raising total of $9.1M in Canada IMC Holdings completes its second capital raise of $ 20.4M in Canada IMC lists shares on the Canadian Stock Exchange CSE:IMCC IMC Holdings reaches $9.1M in 2019 revenues . Focus Medical receives the IMC-GAP from Israeli regulatory agency enabling IMC to export and to serve patients under new reform IMC Holdings reaches $5.2M in revenues for 2018 Focus Medical signs 3-year sales agreements in Israel for total of $178.5M 3 binding sales agreements signed in Germany with distributors Successful import from Spain and Canada into Israel
14
Focus Medical signs 3- year sales agreements valued at $15M, and increases production capabilities in Israel by 8,800kg for 2020-2022 through third party agreements with no CAPEX
Q4 2017 Q2 2018 Q4 2018 Q4 2019 Q1 2020 Q2 2020 Q4 2019 Q3 2019 Q1 2019
IMC Holdings reaches $6.6M in Q3 YTD 2019 revenues IMC Holdings completes the acquisition of German distribution company, Adjupharm IMC Holdings reaches milestone of serving ~5,000 patients in Israel per month
Q3 2020
Adjupharm signs 4 distribution agreements Focus Medical signs supply agreement increasing capacity to 40,220kg through to 2023
IMC Leadership Team
15 15
- Experienced CFO with nearly 15 years
- f
business experience in the pharmaceutical, infrastructure, energy, information technology and services industries
- Since 2011 and until recently, has led all
finance and operations management of Sadyt Israel and IVM Minrav-Sadyt, an international multi-million-dollar water treatment project in Ashdod, Israel
- Served as Financial Controller of the
Israeli branch of Boston Scientific in 2007-2009
- Worked as Supervising Auditor at PwC
Israel between 2005 and 2009
- Holds a Certified Public Accountant
(Isr.) diploma, a Bachelor of Arts in Accounting, Economics and Management from the University of Tel-Aviv, and an MBA from IE Business School
- Experienced entrepreneur, CEO and
COO
- Lieutenant Colonel (Ret.)
- Mr. Berger brings over 10 years of
experience in managing large-scale
- perations in the government and
private sectors including as the head
- f
a leading telemedicine and pharmaceutical distribution company.
- Mr. Berger was the Chief Executive
Officer
- f
Telepharma Ltd. ("Telepharma," doing business as epharma), a leading wholesaler, direct marketer of prescription drugs and chain of pharmacies in Israel.
- Mr. Berger established Greenpharma,
- ne of Israel's first online pharmacies
focused on medical cannabis patients
- Richard Balla, Germany CEO, has
13 years of experience as owner and CEO
- f
a German pharmaceutical distribution company
- Expertise includes pharmaceutical
sales and parallel import
- Involved in the cannabis industry
since its inception in Germany
- Track
record in regulatory, logistic, and sales management in medical cannabis
Shai Shemesh, CPA
Chief Financial Officer
Yaron Berger
Managing Director Israel Operation
Richard Balla
CEO and Director Adjupharm GmbH
- Co-founder of IMC and leading figure
in Israeli medical cannabis industry
- Successful
serial entrepreneur and businessman in the fields of global software development, technology, med-tech and more
- Co-founded
E-wave group, an international software house, in 1999 employing over 1000 employees in multiple markets worldwide
Oren Shuster
Chief Executive Officer & Director
IMC Board Members
16 16
- Founder and CEO of Cannabis
Royalties & Holdings Corp. (dba Origin House)
- Began his professional career
in the pharmaceutical industry at Merck & Co before transitioning to a capital markets career in institutional equity research in the Life Sciences sector at Orion Securities
- Worked
as a senior professional at GMP Securities L.P. and as Head of Capital Markets at Dundee Capital Markets before becoming Principal at KES 7 Capital
- Holds MSc and MBA degrees
from McGill University.
- Financial
consultant in a variety of industries including mining,
- il
and gas, real estate and cannabis
- Currently
President
- f
St. Germain Capital Corp. a private consulting and investment firm as well as Principal and CFO
- f
the Minkids Group, a family investment and real estate development company
- Experience spans a variety of
financial and management areas
- f
expertise from accounting in large firms to bankruptcy and insolvency
- Obtained his C.A. designation
in June of 1992 and Trustee in Bankruptcy license in 1995
- Currently a director of several
public companies.
- Mr. Gabay is Chairman and
Co-Founder of Ewave Group
- Ltd. ("Ewave") since 1999
- Mr. Gabay enjoys over 20
years
- f
experience in management positions in the technology sector.
- Owns
and manages a portfolio of companies in various fields including real estate, internet
- f
things, healthcare and mobile technology
- Co founder and director of
Focus Medical Herbs, since 2010
Marc Lustig
Chairman
Steve Mintz, CPA
Director
Rafi Gabay
Director
- Co-founder of IMC and leading
figure in Israeli medical cannabis industry
- Successful
serial entrepreneur and businessman in the fields of global software development, technology, med-tech and more
- Co-founded E-wave group, an
international software house, in 1999 employing
- ver
1000 employees in multiple markets worldwide.
Oren Shuster
Chief Executive Officer & Director
- Former
Canada's Ambassador to Israel from 2014 through 2016.
- Ms.
Bercovici was the Managing Director, Europe and Israel at Nuuvera Inc., a Toronto-based medical cannabis company that was acquired by Aphria Inc.
- Ms.
Bercovici has vast experience of over 20 years practicing law in Toronto, specializing in media, defense and financial services regulatory law.
- An experienced consultant
to various medical cannabis and device entities specializing in
- perational
and market opportunities in Israel, Europe and Canada.
Vivian Bercovici
Director
IMC – COVID-19 Update
17
Focus Medical declared essential service by Israeli government, no interruption in cultivation activities
» Spanish supply partner continues to cultivate without interruption
Operations update:
» Complete transition to work from home » Reduction in discretionary operational expenses and consulting services
Emergency Preparedness:
» Management of Focus Medical emergency teams for operations and cultivation » Construction of on-site housing for Focus Medical teams
Global impact may result in competitive advantage due to:
» Suspension of new EU-GMP accreditations and supply agreements » Logistical advantage in transporting EU-sourced GMP supply within Europe