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| Statement |
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| This is exactly the development the Israeli market has been going through for the past two years, which is why we have a clear advantage in the German market |
| I am very proud of the team, how they are coming together to work through this horrific situation |
| We believe the new legislation will have the ability to accelerate market growth in Israel |
| And the players that are in the market for a few years have a huge advantage in the German market |
| Premium and super premium cannabis are not subjected to the same price pressure as mid range cannabis allowing us to achieve higher gross margins |
| What drove this decision was twofold, premium pricing and better gross margins |
| But what we learned is that things are taking slower, okay? So we strongly believe in the market |
| If it were not for the negative currency effect, we would have had an 11.5% improvement in our gross margin instead of the 10% improvement we are reporting this quarter |
| We believe that by combining our cannabis experience, we will be able to further our position within the cannabis market, especially in Germany |
| In addition, the team further [solidified] two new high THC strains that were launched in Q1 of this year |
| We think that the market will grow and will grow significantly, but it won't be in one minute |
| Our average selling price for our ultra premium brands this quarter is 25 shekels per gram or CAD9 per gram, the highest in the Israeli market |
| We are in good position to take advantage of all the regulatory changes on the horizon for the medical cannabis industry in Germany, and we will see what the impact of the war will be on the Israeli cannabis industry and on IM Cannabis |
| We are leveraging our proven Israeli strategy to drive results in the German market |
| In Q3, we reinforced our position as number one in the premium market through the launch of two new Lot420 high THC strains, Gelato 33 and Xeno, as well as additional IMC product Chemchew |
| While our revenue and gross margin were impacted by the negative currency effect,unfavorable exchange rates and the cleansing of the slow-moving stock in Q3, we increased volumes and can see clear progress towards our goal of sustainable profitability |
| For the last four quarters, we focused on restructuring as well as accelerating the path to profitability through active cost management and margin improvement in both the Israeli and Germany individually |
| By working closely with the Israeli team, we were able to ensure that this launch was our strongest launch in Germany so far |
| I think that '24 will be -- the focus would be more on growth once the company is more stable, it will be a very responsible growth |
| We anticipate that market growth will accelerate significantly as a result of the regulatory rescheduling |
| This is a massive step forward for the medical cannabis industry as it will greatly facilitate patient by simplifying the prescription process for physicians and easing storage and transport regulations for both producers as well as pharmacies |
| The decrease is mainly attributed to improved performance of the company's gross margin and general and administrative expenses, such as cost reduction, cost efficiencies and other corporate expenses reduction |
| First, we further streamlined our patient delivery service to improve cost |
| Gross margin before fair value adjustments in the third quarter of 2023 was 22% compared to 20% in the third quarter of 2022, an increase of 10% |
| While this move will result in approximately 300,000 Canadians in savings per year we had a two month transition period during this quarter, doubling the delivery costs during this time |
| Net loss from continuing operations in the third quarter of 2023 was $2.1 million compared to a net loss of $4.5 million in the third quarter of 2022, driven mostly by the higher gross margin and reduction in operating expenses and offset by finance income in the third quarter of 2022 |
| We see that the market is growing constantly |
| So this is the segment that we see that is growing, it's growing constantly and that's before the change in the market |
| The main goal of the restructuring is to drive efficiencies and realize sustainable profitability |
| The increase attributed mainly to the increased higher margin sales of important premium cannabis products and reduction of cost of sales |
| Statement |
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| So I think that it would be very difficult for newcomers to succeed in the market and it will take them time |
| Because the majority of our sales are in shekels and we report in Canadian dollars, this had a significant impact on our Q3 revenue, leading directly to CAD900,000 or 6.4% decrease in revenue versus Q3 2022 |
| Adjusted EBITDA loss in the third quarter of 2023 was $1.3 million compared to an adjusted EBITDA loss of $3.7 million in the third quarter of 2022, a decrease of 65% |
| The decrease in average selling price was caused by increased competition within the retail segment and mid-range stock discounts |
| As I mentioned earlier, the Israeli shekel fell significantly versus the Canadian dollar over the course of Q3, declining 2.6% in average versus Q2 with an overall decline of 19.6% since the beginning of the year |
| Revenues for the third quarter of 2023 were $12.4 million compared to $14.2 million in the third quarter of 2022, a decrease of 13% |
| We have lost 1.5% of our gross margin since Q3 2022 |
| Total assets as of September 30, 2023 were $52.4 million compared to $60.7 million in December 31, 2022, a decrease of 14% |
| Operating loss in the third quarter of 2023 was $2.3 million compared to $5.5 million in the third quarter of 2022, a decrease of 58% |
| When we take a look at results of the strategic shift, we can see that the revenue stays mostly stable even taking into the account the negative currency effect of the Israeli shekel, which has declined 19.6% since the beginning of the year versus the Canadian dollar |
| We also estimate that the transition period caused the short term interruption of sales |
| It's very difficult to estimate that |
| In Israel, we made a cautious decision to focus on the premium and super premium segments over a year ago |
| This has not been easy |
| However, in the absence of any official governmental communication, we expect all new cannabis legalization will be put on hold for the near future because of the war |
| Of this 13%, almost half 6.4% or $0.9 million of the decrease is coming from negative currency and fluctuations |
| Third, while our focus has been on growing the premium and super premium business, we have had to adjust our portfolio and inventory accordingly |
| The decline in the gross margin, Itay, do you want to take lead on that |
| It has been a challenging journey but we are moving towards sustainable profitability |
| On the other hand, we have seen an impact on the logistics mainly, especially in the beginning |
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