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United States securities and exchange commission logo
May 18, 2021
Alexander Rabinovich
Chief Executive Officer
Intercure Ltd.
85 Medinat ha-Yehudim Street
Herzliya, 4676670, Israel
Re: Intercure Ltd.
Draft Registration
Statement on Form 20-F
Submitted April 21,
2021
CIK No. 0001857030
Dear Mr. Rabinovich:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Draft Registration Statement on Form 20-F filed April 21, 2021
Summary Risk Factors, page 10
1. Please revise this
section to only include the risks that are applicable to your business and
this registration
statement, or otherwise explain your referenced risks. In this regard, we
note by example, that
you include here risks associated with being a "controlled
company," with sharing
certain officers and directors with Intercure, and "the use of the
net proceeds from this
offering."
Alexander Rabinovich
FirstName LastNameAlexander Rabinovich
Intercure Ltd.
Comapany
May NameIntercure Ltd.
18, 2021
May 18,
Page 2 2021 Page 2
FirstName LastName
Risks Related to Our Pharmaceutical-Grade Cannabis Business and the Medical-Use
Cannabis
Industry
We are, and will continue to be, dependent upon regulatory approvals and
licenses for our ability
to produce..., page 13
2. Revise this risk factor or include a new risk factor to clarify, if
true, that your products
have not yet been distributed through any of your partnerships and
that none of your
partnerships are currently operational.
D. Risk Factors
Risks Related to this Offering and Ownership of Our Ordinary Shares, page 36
3. Please add a risk factor that address the concentration of your
beneficial ownership
and voting power with your Chief Executive Officer, Alexander
Rabinovich.
A. History and Development of the Company., page 40
4. Please revise your disclosure to clarify where you currently conduct
your operations and
ensure that you have consistently described it throughout your
registration statement. In
this regard, we note your disclosure here indicates that you operate
production facilities in
northern and southern Israel. However, on page 18 you state that you
operate a facility in
northern Israel which to date has been the only active site for
your operations. In
addition, on page 52, you indicate that your production system
includes an active facility
abroad.
5. You disclose that assuming that the Southern Kibbutz is fully
operational at its maximum
capacity of 1.7 million square feet, and after all regulatory
approvals are received, full
operation of this facility will allow you to produce 88 tons of
pharmaceutical-grade
cannabis per year. On page 54 you disclose that the development of the
southern site is
carried out in a modular manner in accordance with the regulatory
developments
concerning the export of medical cannabis from Israel, and on page 63
that you intend to
continue to develop the facility based on demand for your products. On
page 63 you
further disclose that your 2021 production plan target is set at 3.5
metric ton. Please
discuss any timeline you expect to reach maximum capacity, and funding
required to
reach this capacity. If you do not intend to develop to maximum
capacity in the near term,
please make that clear.
Item 4. Information on the Company
Business Overview, page 40
6. We note that you have exclusive distribution rights of Charlotte s
Web s products in
Israel, but that the noted partnership is subject to the receipt of
the required regulatory
approvals and the removal of CBD from the Israeli Dangerous Drug
Ordinance ( DDO ).
Please discuss your expectation as to if CBD will be removed from the
Israeli Dangerous
Drug Ordinance, and any time frame you expect.
Alexander Rabinovich
FirstName LastNameAlexander Rabinovich
Intercure Ltd.
Comapany
May NameIntercure Ltd.
18, 2021
May 18,
Page 3 2021 Page 3
FirstName LastName
7. You disclose that one of your strengths is your strategic partnerships
and your global
distribution network. We note that you currently sell your products
through licensed retail
pharmacy locations in Israel. To diversify and expand your operations
outside Israel, you
appear to have entered into partnerships, joint ventures and
distribution agreements in the
European Union and Canada with local licensed producers and
distributors. However, you
disclose that as of the date of this registration statement, your
products have not been
distributed through your partnerships, nor are the joint venture
entities established
thereunder active as of this date, and that your partnerships and
distribution agreements
outside Israel have no effect on your operations. Please revise your
"Business
Overview" to better reflect your current operations, and adequately
discuss the risks to
your global expansion plans. For example, please disclose in more
detail the amendments
to import and export laws with respect to cannabis that you disclose
these partnerships
depend upon, and discuss your expectation as to if such import and
export laws will be
amended in your favor, and if so, what time frame you expect, for each
country or
regulatory regime governing such import or export of cannabis.
8. You disclose on page 42 that you plan to maximize operational
efficiency through vertical
integration, but on page 46 disclose that you continue to explore the
costs and benefits of
your current contract manufacturing relationships against the costs
and benefits of
conducting those activities in house. Please revise to consistently
disclose your intention
to become vertically integrated, and if you plan to do so in the next
twelve months, please
discuss the costs to become vertically integrated.
Research and Development
Clinical Trials, page 49
9. Please disclose the timeline of the planned and current clinical
trials. If you have received
results from any trial, please clarify whether or not the trial
achieved its primary and
secondary endpoints.
Recent Developments, page 65
10. You disclose that on April 7, 2021, Subversive LP obtained the final
order of the British
Columbia Supreme Court approving the Plan of Arrangement, and that
closing of the
transaction is expected to occur as soon as practicable after the
outstanding conditions to
closing are met. From your SEDAR filings, it appears that this
transaction closed on April
23, 2021. Please disclose the funds raised from this transaction after
redemptions and the
private placement.
Alexander Rabinovich
FirstName LastNameAlexander Rabinovich
Intercure Ltd.
Comapany
May NameIntercure Ltd.
18, 2021
May 18,
Page 4 2021 Page 4
FirstName LastName
Item 5. Operating and Financial Review and Prospects
Results of Operations
Comparison of the year ended December 31, 2020 to the year ended December 31,
2019, page
69
11. Revise to separately discuss and quantify each of the factors you
identify as drivers of the
significant increase in revenues from fiscal 2019 to 2020, including
the impact of the
initial consolidation of Cannolam s results as of the second quarter
of 2020, the increase
in demand for your products, and any other factors.
Item 6. Directors, Senior Management and Employees
B. Compensation, page 74
12. Please clarify if the compensation information is disclosed in NIS in
thousands.
Item 16F. Change In Registrant's Certifying Accountant, page 114
13. We note that your auditor, Somekh Chaikin, has served as your auditor
since 2021. Please
address the need to provide the information required by Item 16F.
Consolidated Statements of Financial Position, page F-3
14. Please disclose the date when the financial statements were authorised
for issue. Refer to
IAS 10.17.
Note 1 - General
A. The Company's activity, page F-10
15. With reference to the Northern and Southern Kibbutz Partnership
Agreements discussed
on pages 52 through 54, please address the need to provide a
discussion of these
partnerships and the relevant accounting for these partnerships within
your financial
statements. In this regard, it would appear necessary to discuss the
accounting for
each Kibbutz's voting rights and rights to profits and losses in these
partnerships.
Note 2.H. Revenue Recognition, page F-14
16. We note the discussion that when you are the primary provider and
control the guaranteed
goods or services before they are transferred to the customer you
recognize revenue as the
gross amount of proceeds. In addition, when you function as an agent
you recognize the
revenue as a net amount, after deducting the amounts which are owed to
the primary
provider. Please further discuss any material arrangements where you
are acting as an
agent and the nature of your performance obligations under such
arrangements. Please
also tell us what consideration was given to disclosing the net
amounts as a disaggregated
revenue disclosure given the timing of recognition and type of
customer appear to
be different. Refer to IFRS 15:114-115 and 119(c). See also IFRS
15:B89.
Alexander Rabinovich
FirstName LastNameAlexander Rabinovich
Intercure Ltd.
Comapany
May NameIntercure Ltd.
18, 2021
May 18,
Page 5 2021 Page 5
FirstName LastName
Note 24. Subsequent Events, page F-61
17. We note that on January 3, 2021, and as revised on February 9, 2021,
you entered into a
merger agreement with Subversive Real Estate Acquisition REIT LP
(Subversive LP) to
acquire all of the outstanding units of Subversive LP in exchange for
your ordinary
shares. Please expand your disclosures to (i) address the material
terms of this agreement;
(ii) provide information regarding the business of Subversive LP;
(iii) quantify the number
of ordinary shares issued; and (iv) indicate the anticipated
accounting treatment for the
merger. In addition, tell us your consideration of the guidance in
Item 8 of Form 20-F and
Articles 3-05 and 11-01 of Regulation S-X in assessing whether audited
financial
statements of Subversive LP and the related pro forma financial
information reflecting the
merger should be provided.
18. You indicate on page 64 that on March 29, 2021, Cannolam entered into
an agreement to
purchase rights to four additional pharmacies (two branches in
southern Israel where
Cannolam will hold 51% of all outstanding shares of the company that
will operate the
pharmacy s two branches in Tel Aviv and in northern Israel where
Cannolam will
purchase the entire business of the pharmacy). If material, please
discuss these
transactions herein and disclose the consideration to be transferred
and how you will
account for these transactions.
Exhibits
19. Please file the loan agreement with Mr. Avner Barak as an exhibit to
your registration
statement.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
Alexander Rabinovich
Intercure Ltd.
May 18, 2021
Page 6
You may contact Jeanne Baker, Staff Accountant, at (202) 551-3691 or
Jeanne Bennett,
Accounting Branch Chief, at (202) 551-3606 if you have questions regarding
comments on the
financial statements and related matters. Please contact Anuja A. Majmudar,
Attorney- Advisor,
at (202) 551-3844 or, in her absence, Kevin Dougherty, Attorney- Advisor, at
(202) 551-
3271 with any other questions.
Sincerely,
FirstName LastNameAlexander Rabinovich
Division of
Corporation Finance
Comapany NameIntercure Ltd.
Office of Life
Sciences
May 18, 2021 Page 6
cc: Mark S. Selinger, Esq.
FirstName LastName