From everyone's good friend, Ted Ohashi:
IM Cannabis Corp. (CSE: IMCC) announced a record harvest by Focus Medical and provided an update on Israeli operations. All amounts are in Canadian dollars unless otherwise specified.
Focus Medical (FM) recently completed a semi-annual record harvest of over 3,000 kg of medical cannabis at its cultivation facility at Sde Avraham, Israel or an annualized production rate of 6,000 kg.
If you include production from its third-party supply agreements, FM estimates supply capacity of 8,000 kg in 2020 and 11,000 kg in 2021. This is medical cannabis to be sold under the IMC brand.
Focus Medical’s first two months of shipments of IMC-branded medical cannabis products to SuperPharm and Panaxia totalled over 250 kg
Approximately 450 kg of medical cannabis is expected for shipment in Q2 2020 under sales agreements with Super-pharm and Panaxia and 2,550 kg of medical cannabis is expected for shipment in the latter half of 2020 under previously announced pharmacy sales.
If we refer to the table above (sorry, was not able to cut and paste the table) that I have published previously, we can use the value per kg to get an approximate idea of the gross value IMCC is talking about. These do not represent sales forecasts. I am simply trying to indicate the value of the sales we are talking about.
I will use an average value per kg of $5,500.
The 3,000 kg record harvest represents an end value of approximately $16.5 million. The annualized rate is double that or $33.0 million.
The total supply capacity of 8,000 kg for 2020 represents $44.0 million and the 11,000 kg for 2021
represents $60.5 million.
The 250 kg for two months sales represents about $1.375 million
The 450 kg for Q2 is approximately $2.475 million
The 2,550 kg for the latter half of 2020 is worth around $14.0 million.
Total 2020 deliveries to Israeli pharmacies is expected to be approximately 3,000 kg with a value of
$16.5 kg at $5,500 per kg.
The total sales estimate from all binding sales agreements in Israel to date is 33,075 kg of medical cannabis with a value of $193.5 million between Q2 of 2020 and the end of 2023 or approximately $5,850 per kg.
Supply of medical cannabis to fulfill these pharmacy sales agreements is now fully contracted. Focus Medical has signed and announced supply agreements with Cannomed Medical Cannabis Industries Ltd. (TASE:CNMD), Intelicanna Ltd. (TASE:INTL), Way of Life and Cannation to supplement its own production and international supply from its EU-GMP certified partner in Spain.
Conclusion: although these are not forecasts, they represent an indication of what we can reasonably expect from a sales perspective. So for the balance of 2020 revenue from Israeli sales agreements should be in the order of $16.5 million. I don’t expect anything special from the first quarter report that was just delayed until around mid-June. But after that we should see a healthy acceleration in sales. We should not forget, management anticipates a 50% gross margin on Israeli sales and a 40% gross margin on the German contracts.
For the next three years from the existing Israeli contracts, sales are forecast at $193.5 million with a 50% gross margin. These numbers do not include any allowance for sales from the German agreements announced or any new sales/distribution agreements moving forward. I think we have every reason to expect a significant level of additional sales in that time period.
As the 5-day chart shows, IMCC’s share price advanced as the
week progressed. As I suggested, this is likely related at least in part to the fact that the $0.50 warrants were expiring and selling pressure declined as the week progressed.
From this point on, it should be wind at our backs until the stock gets to the $1.00 to $1.05 level. The $1.00 level is often one of those investor psychological resistance points but I have to warn that given the strong news flow we have seen, it might just blow through that mark. But we will like see some selling come in at around $1.05 which is the price of the last financing done while IMCC was private. There are always some investors who can’t resist the chance to break even.
If for some reason you’ve been holding off or moving in slowly, I think this is an excellent time to be adding to your IMCC holdings. There should be an easy 25% ahead (if there is such a thing!)
For the full article, please visit:
https://4495825a-d729-4d8f-ade8-e78f828e1c8d.usrfiles.com/ugd/449582_1bf3971416204494ae5d38f55a9bb362.pdf