IM Cannabis Corp. Q3 FY2023 earnings call

• Mentioned support for Israelis affected by the Hamas massacre and full support for the Israeli Defense Forces. - Discussed regulatory changes in Germany where medical cannabis will be rescheduled to a prescription medication in Q1 2024, simplifying processes. - Outlined restructuring efforts in Israel to focus on premium and super premium segments, with cost management and integration of Israel and Germany operations. - Noted impact of currency fluctuations, inventory cleansing of slow-moving stock, and the war in Israel on operations.

In the Israeli market, revenues for Q3 2023 were $12.4 million compared to $14.2 million in Q3 2022, a decrease of 13%. Gross margin before fair value adjustments was 22% in Q3 2023 vs 20% in Q3 2022, an increase of 10%. Adjusted EBITDA loss was $1.3 million in Q3 2023 vs $3.7 million in Q3 2022, a decrease of 65%. Total operating expenses in Q3 2023 were $4.9 million vs $7.5 million in Q3 2022, a decrease of 34%. Dried flower sold in Q3 2023 was approximately 2,558 kilograms with an average selling price of $4.35 per gram compared to 1,453 kilograms in Q3 2022 with an average selling price of $9.08 per gram. In the German market, they launched high-THC strains leveraging Israeli branding, focusing on growing the premium segment similar to their strategy in Israel.

• Anticipates regulatory changes in Germany to accelerate medical cannabis market growth. - Expects negative impact from the war in Israel on Q4 2023 operations but potential positive effects in the medium term. - Focuses on achieving sustainable profitability through ongoing restructuring and cost management.

• Impact of the war in Israel on the Israeli cannabis industry and IM Cannabis' operations. - Currency fluctuations affecting revenue and gross margin. - Market competition and saturation in the German medical cannabis market.

Q: Scott asks about the supply chain and inventory clearance.

A: Oren says logistics were initially impacted by the war but are now streamlined; inventory clearing of slow-moving stock will continue in Q4.

Q: Aaron asks about pricing impact and normalization.

A: Oren and Itay discuss that inventory clearance of low-mid range stock caused a one-time price impact in Q3, with expected normalization in Q4 and beyond as the focus shifts to the premium segment