UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16

Under the Securities Exchange Act of 1934

 

For the Month of November 2022

 

001-40614

(Commission File Number)

 

INTERCURE LTD.

(Exact name of Registrant as specified in its charter)

 

85 Medinat ha-Yehudim Street

Herzliya, 4676670, Israel

Tel: +972 77 460 5012

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F ☒ Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

 

 

 

Exhibit Index

 

Exhibit No.		Description
99.1		Unaudited Interim Consolidated Financial Statements for the Period Ended September 30, 2022
99.2		Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Period Ended September 30, 2022
99.3		Form 52-109F2 – Certifications of Interim Filings
99.4		Press Release dated November 15, 2022: InterCure Announces Record Breaking Third Quarter Financial Results

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Intercure Ltd.
Date: November 16, 2022	By:	/s/ Amos Cohen
		Amos Cohen
		Chief Financial Officer

 

 

 

Exhibit 99.1

 

Intercure Ltd.

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

As of September 30, 2022

(Unaudited)

 

 

Intercure Ltd.

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

As of September 30, 2022

 

(Unaudited)

 

INDEX

 

	Page
Condensed Consolidated Interim Statements of Financial Position	3-4
Condensed Consolidated Interim Statements of Profit or Loss and Other Comprehensive Income	5
Condensed Consolidated Interim Statements of Changes in Equity	6
Condensed Consolidated Interim Statements of Cash Flows	7-8
Notes to Condensed Consolidated Interim Financial Statements	9-18

 

 

				September 30				December 31
				2022				2021
		Note		NIS in thousands
Current assets
Cash and cash equivalents					215,255				196,217
Restricted cash					24,271				21,083
Trade receivables					40,227				17,407
Other receivables					74,689				33,244
Inventory		5			126,156				62,313
Biological assets		6			9,139				5,566
Financial assets measured at fair value through profit or loss		7			200				330
					489,937				336,160
Non-current assets
Property, plant and equipment and right-of-use asset					94,703				86,509
Goodwill					285,209				*268,291
Deferred tax assets					2,407				3,020
Financial assets measured at fair value through profit or loss					2,565				2,565
					384,884				360,385
Total assets					874,821				696,545

 

* Immaterial adjustment of comparative data, see Note 2 (2)

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

 

 

		September 30				December 31
		2022				2021
Current liabilities
Short term loan and current maturities			134,998				70,559
Trade payables			97,796				64,474
Other payables			37,673				41,050
Contingent consideration			23,648				15,780
Short term loan from non-controlling interest			1,232				1,722
			295,347				193,585
Non-current liabilities
Borrowings			45,591				11,877
Liabilities in respect of employee benefits			1,005				224
Loan from related party			-				76
Lease liability			19,415				21,371
			66,011				33,548
Total liabilities			361,358				227,133
Equity
Share capital, premium and other reserves			629,290				623,567
Capital reserve for transactions with controlling shareholder			2,388				2,388
Receipts on account of shares			8,541				8,541
Accumulated losses			(150,200	)			(186,468	)
Equity attributable to owners of the Company			490,019				448,028
Non-controlling interests			23,444				*21,384
Total equity			513,463				469,412
Total equity and liabilities			874,821				696,545

 

* Immaterial adjustment of comparative data, see Note 2 (2)

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

 

 

		Nine months ended September 30,								Three months ended September 30,								Year ended December 31
		2022				2021				2022				2021				2021
		NIS in thousands
Revenue			283,078				139,976				100,572				61,695				219,677
Cost of revenue before fair value adjustments			161,605				80,600				56,498				37,013				123,688
Gross income before impact of changes in fair value			121,473				59,376				44,074				24,682				95,989
Unrealized changes to fair value adjustments of biological assets			4,567				3,761				(3,314	)			1,316				6,574
Loss (profit) from fair value changes realized in the current year			(3,183	)			6,372				(5,453	)			3,942				11,432
Gross Profit			129,223				56,765				46,213				22,056				91,131
Research and development expenses			458				1,015				120				298				1,235
General and administrative expenses			27,206				15,598				10,248				7,825				27,206
Selling and marketing expenses			40,886				14,668				16,774				6,245				23,214
Other expenses (income), net			227				1,401				(897	)			1,692				2,971
Changes in the fair value of financial assets through loss or (profit), net.			177				(333	)			54				(8	)			1,868
Share based payments			6,172				5,281				3,731				1,463				6,452
Operating Profit			54,097				19,135				16,183				4,541				28,185
Financing expenses			10,496				2,956				4,397				2,464				9,581
Financing income			8,966				-				161				-				130
Profit before tax on income			52,567				16,179				11,947				2,077				18,734
Tax on income			(14,084	)			(5,846	)			(3,639	)			(1,537	)			(11,441	)
Total comprehensive Profit			38,483				10,333				8,308				540				7,293
Attribution of net profit for the quarterly:
To the Company’s shareholders			36,268				7,761				7,256				(1,644	)			4,690
To non-controlling interests			2,215				2,572				1,052				2,184				2,603
Total			38,483				10,333				8,308				540				7,293
Profit per share
Basic Profit			0.80				0.18				0.16				(0.04	)			0.12
Diluted Profit			0.80				0.16				0.16				(0.03	)			0.11

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

 

 

		Share capital, premium and other reserves				Capital reserve for transactions with controlling shareholder				Receipts on account of shares				Accumulated losses				Equity attributable to owners of the Company				Non-controlling interests				Total equity
		NIS in thousands
As of January 1, 2022			623,567				2,388				8,541				(186,468	)			448,028				21,384				469,412
Profit for the period			-				-				-				36,268				36,268				2,215				38,483
Acquisitions of subsidiaries			-				-				-				-				-				(155	)			(155	)
Settlement in cash of an obligation to issue shares			(449	)			-				-				-				(449	)			-				(449	)
Share-based payment			6,172				-				-				-				6,172				-				6,172
As of September 30, 2022			629,290				2,388				8,541				(150,200	)			490,019				23,444				513,463
As of January 1, 2021			452,259				2,388				11,017				(191,158	)			274,506				17,603				292,109
Profit for the period			-				-				-				7,761				7,761				2,572				10,333
Exercise of share options			8,359								(1,963	)			-				6,396				-				6,396
Share-based payment			5,282				-				-				-				5,282				-				5,282
Issuance of shares, net			135,997				-				-				-				135,997				-				135,997
As of September 30, 2021			601,897				2,388				9,054				(183,397	)			429,942				20,175				450,117

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

 

 

		Nine months ended September 30,
		2022				2021
		NIS in thousands
Cash flows from operating activities
Profit for the period			38,483				10,333
Taxes on income paid			(6,397	)			(1,853	)
Adjustments required to present cash flows from operating activities (A)			(23,978	)			13,720
Net cash provided by (used in) operating activities			8,108				22,200
Cash flows from investing activities
Purchase of property, plant and equipment			(15,059	)			(6,555	)
Grant of loan			(44,732	)			(4,972	)
Acquisition of Subsidiary and activities, net of cash acquired			797				(28,288	)
Settlement in cash of an obligation to issue shares			(449	)			-
Investment in assets measured at fair value through profit or loss			-				(281	)
Decrease in deposit			-				11
Increase in deposit			(1,651	)			(11	)
Payment for contingent consideration			(6,168	)			-
Payment for deferred consideration for the acquisitions of subsidiaries			(12,716	)			-
Net cash used in investing activities			(79,978	)			(40,096	)
Cash flows from financing activities
Exercise of share options			-				6,396
Lease payments			(957	)			(582	)
Receipt of loans from banks			175,138				63,200
Repayment of loans from banks			(77,955	)			(100	)
Receipt of loan to related party and controlling shareholder			158				-
Repayment of loan from related party and controlling shareholder			(711	)			(4,534	)
Proceeds from issuance of shares as part of private issuance, net of issuance costs			-				128,221
Interest paid			*(12,357	)			*(2,894	)
Net cash provided by financing activities			83,316				189,707
Increase in cash and cash equivalents			11,446				171,811
Exchange differences in respect of balances of cash and cash equivalents			8,204				(720	)
Balance of cash and cash equivalents at beginning of year			195,272				37,888
Balance of cash and cash equivalents at end of year			214,922				208,979

 

* Reclassified due to change in accounting policy, see Note 2(3).

 

 

		Nine months ended September 30,
		2022				2021
		NIS in thousands
A) Adjustments required to present cash flows from operating activities
Adjustments to items in the consolidated statement of comprehensive income:
Depreciation			7,348				4,185
Share-based payment			6,172				5,282
Changes in the fair value of financial assets through profit or loss, net			177				(333	)
Finance expenses (income), net			1,530				2,956
Change in liabilities in respect of employee benefits, net			398				-
Contingent consideration			1,255				-
Tax expense			14,084				5,846
			30,964				17,936
Changes in assets and liabilities items:
Decrease (increase) in trade receivables			(21,878	)			459
Decrease (increase) in other receivables			4,412				(6,606	)
Increase in inventory			(61,812	)			(6,620	)
Increase in biological assets			(3,573	)			(904	)
Increase (decrease) in trade payables			29,661				(7,730	)
Increase (decrease) in other payables			(1,752	)			17,185
			(54,942	)			(4,216	)
			(23,978	)			13,720

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

 

 

Note 1 - General

 

A.

The Company’s activity

 

Intercure Ltd. (hereinafter: the “Company”) is a public company which is listed on the Tel Aviv Stock Exchange, Toronto Stock Exchange and Nasdaq, domiciled in Israel. Its offices are located in Herzliya. The Company is engaged in the medical cannabis sector mainly through its holdings of the entire issued and paid-up capital of Canndoc Ltd. (hereinafter: “Canndoc”), the entire issued and paid-up capital of Pharmazone Ltd. (hereinafter: “Pharmazone”) and through its 50.1% stake in the issued and paid-in capital of Cannolam Ltd. (hereinafter: “Cannolam”). The Company also has additional holdings in the biomed sector.

 

During 2022, the Company engaged in 4 agreements for the acquisition of pharmacies. See note 3A.

 

Investments in the biomed sector:

 

The Company invested in three companies in the biomed sector: Regenera Pharma Ltd. (hereinafter: “Regenera”), F.O.R.E Biotherapeutics Ltd. (formerly known as NovellusDX Ltd., hereinafter: “Fore”) and Cavnox Ltd. (hereinafter: “Cavnox”). For additional details regarding investments in the biomed sector, see Note 7.

 

B.

Definitions:

 

In these consolidated financial statements:

 

	Company	-	Intercure Ltd.
	Group	-	The Company and its subsidiaries.
	Related Parties	-	As defined in IAS 24.
	USD	-	U.S. dollars.
	NIS	-	New Israeli shekel.
	Subsidiaries	-	Companies which are controlled by the Company (as defined in IFRS 10), directly or indirectly, and whose financial statements are fully consolidated with the Company’s reports.

 

 

Note 2 - Significant Accounting Policies

 

1.

Basis of Preparation of the financial statements

 

The Group’s condensed consolidated financial statements (hereinafter: the “Interim Financial Statements”) have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting” (hereinafter: “IAS 34”).

 

These financial statements have been prepared in a condensed format as of September 30, 2022, and for the nine months then ended (“condensed consolidated interim financial statements”). These financial statements should be read in conjunction with the Company’s annual financial statements as of December 31, 2021 and accompanying notes (“annual consolidated financial statements”).

 

These condensed consolidated interim financial statements were authorized for issue by the Group’s Board of Directors on November 14 ,2022.

 

2.

Immaterial adjustment of comparative data

 

Subsequent to release of the Company’s annual consolidated financial statements and prior to the release date of these interim condensed consolidated financial, an error was discovered in the accounting treatment of Non-controlling interests.

 

The Company examined the materiality of the error that was discovered in its financial statements with respect to the relevant reporting periods, and after examining the quantitative and qualitative parameters it reached the conclusion that the aforesaid error has no effect on how the users of the consolidated financial statements make economic decisions and/or analyze the aforesaid financial statements. Therefore, the error is not a material error that requires issuing revised consolidated financial statements of the Group.

 

Presented hereunder are the effects of the correction, which was included in the comparative data in these interim financial statements by marking the corrected items with “immaterial adjustment”.

 

(1)

Effect of the correction on the statement of financial position

 

December 31, 2021

As presented in

As presented

Effect of

these financial

in the past

correction

statements

NIS thousands

NIS thousands

NIS thousands

Goodwill

258,070

10,221

268,291

Non-controlling interests

11,163

10,221

21,384

 

 

Note 2 - Significant Accounting Policies (Cont’d)

 

3.

Change in accounting policy, IAS 7

 

During the reporting period, the Company changed the classification of interest paid to be presented under financing activities instead of operating activities.

 

The Company considered this classification more appropriate and provides more relevant information about the Company’s transactions on the cash flow statements.

 

(1)

Effect of the classification on the statements of cash flows:

 

		Nine months ended September 30, 2021
										As presented in
		As presented				Effect of				these financial
		in the past				correction				statements
		NIS thousands				NIS thousands				NIS thousands
Profit for the period			10,333								10,333
Interest paid			(2,894	)			2,894
Taxes on income paid			(1,853	)							(1,853	)
Adjustments required to present cash flows from operating activities (A)			13,720								13,720
Net cash provided by (used in) operating activities			19,306				2,894				22,200
Net cash provided by financing activities			192,601				(2,894	)			189,707

 

Note 3 - Transactions and Events During the Reporting Period

 

A.

Acquisitions:

 

On January 19, 2022, the Company engaged in an agreement to purchase 51% of “Orni” pharmacy located in Tel Aviv.

 

On February 5, 2022, the Company engaged in an agreement to purchase 100% of “Maayan Haim” pharmacy located in Ashdod.

 

On April 24, 2022, the Company engaged in an agreement to purchase 51% of “Amidar” pharmacy located in Naharia.

 

On May 15, 2022, the Company opened a pharmacy in Vienna, Austria, which is fully owned by Cannolam.

 

On July 27, 2022, the Company engaged in an agreement to purchase 51% of “Refua Center” pharmacy located in Bnei Brak.

 

 

Note 3 - Transactions and Events During the Reporting Period (Cont’d)

 

A.

Acquisitions: (Cont’d)

 

Measurement of fair values

 

Presented hereunder is information regarding the techniques the Gcn:

 

A.

Contingent consideration in business combination

 

The Group has NIS 12,780 thousand of contingent considerations.

 

B.

Presented below is the fair value, as of the acquisition’s date, of the transferred consideration:

 

		NIS in thousands
Consideration paid in cash			1,000
Deferred consideration in cash			3,322
Contingent consideration			12,780
Non-controlling interests			(155	)
			16,947

 

C.

Net cash flow in the acquisition

 

		NIS in thousands
Consideration paid in cash			1,000
Less - acquired cash and cash equivalents			1,797
			797

 

D.

Amounts recognized on the acquisition date in respect of assets and liabilities:

 

		NIS in thousands
Cash and cash equivalents			1,797
Trade and other receivables			2,115
Inventory			2,032
Property, plant and equipment and right-of-use asset			275
Goodwill			150
Current maturities			(75	)
Trade and other payable			(4,463	)
Loan from non-controlling interest			(92	)
Liabilities in respect of employee benefits			(383	)
Borrowings			(1,169	)
Total identifiable net assets			187

 

 

Note 3 - Transactions and Events During the Reporting Period (Cont’d)

 

A.

Acquisitions: (Cont’d)

 

E.

Goodwill

 

The consideration which was paid in the business combination included amounts associated with the expected benefits from synergy (collaboration), growth in revenue, and future developments in the Subsidiaries operating market. These benefits are not recognized separately from goodwill, since the future economic benefits which are expected to arise from them are not reliably measurable. All of the above led to the recognition of goodwill in the amount of NIS 16,761 thousand.

 

F.

Non-controlling interests

 

The total sum of non-controlling interests in the Subsidiaries which was recognized on the acquisitions date is NIS )155) thousand. The non-controlling interests measured at the date of the business combination at their proportionate interest in the identifiable assets and liabilities of the acquiree.

B.

During the reporting period, the Company borrowed loans in an aggregate amount of NIS 175 million for periods of 0.25 - 5 years at interest rates ranging from Prime +1.97% to Prime +2.05%.

 

During the reporting period the Company repaid loans in an aggregate amount of NIS 78 million.

 

C.

On February 16, 2022, the Company engaged in an agreement with Cann Pharmaceutical Ltd. (“Better”), a Israeli medical cannabis multi-national operator known as “Better” to acquire 100% of Better’s shares, which includes “Better’s” unique strains, cultivation site, intellectual property, and commercial operations in Israel as well it’s international activities. Purchase price of USD 35 million: paid with Intercure shares at the valuation of USD 10 per share. The acquisition closing is subject to customary closing conditions as well as specific approvals of the Israel

 

Medical Cannabis Agency (IMCA), the Toronto Stock Exchange (TSX), as well as the approval of the court in Israel.

 

D.

On March 1, 2022, the company signed a definitive agreement (hereinafter: “Agreement”) with Altman Health LP (“Altman Health”), the market leader of OTC and nutritional supplements in over 1,700 points of sale, including all major pharmacies across Israel. The newly formed company will focus on the new Israeli CBD product market, following the Israeli Minister of Health’s announcement On February 28, 2022, that CBD will be removed from the Dangerous Drugs Act.

 

E.

On May 15, 2022, the Company’s board of directors authorized management to offer a total of up to 596,937 options to an officer (the Company’s CFO) and 7 Canndoc employees, which constitute 1.3% of the Company’s shares in accordance with the Company 2015 ESOP plan.

 

F.

On September 15, 2022, the company held an annual Special General Meeting of Shareholders, that approved an extension of the exercise period for 1,030,325 options previously granted to the Company’s chairman of the board, for an additional 3 years until December 31, 2026.

 

 

Note 4 - Cultivating Facilities

 

Canndoc has an advanced propagation and growing facility which is located in Kibbutz Beit HaEmek, in which it develops and grows a wide variety of unique strains of medical cannabis (hereinafter: the “Northern Facility”). As of the reporting date, the northern facility is spread over an area of approximately 5 dunams, whereby Canndoc has the right of first refusal regarding an option to expand the area of the northern facility to a total area of approximately 16 dunams. The northern facility includes a greenhouse for propagating, growing and florescence, as well as a processing facility and operational areas. During the reporting period, Canndoc performed extension, upgrade and adjustment works on the northern facility, for the purpose of ensuring the northern facility’s compliance with the high-quality standards required to export from Israel and adjusting the quality of the products to the level required in Israel and in the target countries. The performance of the upgrade works was concluded in the fourth quarter of 2019; On May 21, 2020, an addendum to the agreement was signed, which formalized, inter alia, the investment in the Company’s facility in Beit HaEmek. As of the publication date of the report, the suspensory conditions for the fulfillment of the agreement have not yet been met.

 

In Kibbutz Beit HaEmek, as of September 30, 2022 the Company had approximately NIS 11 million in Property, plant and equipment, net, in respect of facilities that are used by the activity. Held inventory and biological assets of approximately NIS 2 million, with immaterial amount of liabilities that are directly attributed to the activity. During the reporting period the activity generated revenue of approximately NIS 2 million and generated a net loss of approximately NIS 1 million (30% of these results is attributable to Kibbutz Beit HaEmek).

 

In Kibbutz Nir-Oz, as of September 30, 2022 the Company had approximately NIS 54 million in Property, plant and equipment, net, in respect of facilities that are used by the activity. Held inventory and biological assets of approximately NIS 43 million, with immaterial amount of liabilities that are directly attributed to the activity.

 

During the reporting period the activity generated revenue of approximately NIS 9 million and generated a net income of approximately NIS 1 million (26% of these results is attributable to Kibbutz Nir-Oz).

 

Note 5 - Inventory:

 

Inventory is comprised of finished goods of dry packaged or rolled medical cannabis and cannabis oil, as well as the outputs of processing procedures, which include, inter alia, agricultural produce which has been transferred from biological assets, where the procedure of processing into finished goods has not yet been completed.

 

		September 30,				December 31,
		2022				2021
		NIS in thousands
Finished goods			81,502				39,256
Goods in process and dried inflorescence			44,654				23,057
Total inventory			126,156				62,313

 

 

 

Note 6 - Biological Assets:

 

The Company measured biological assets (level 3), which are mostly comprised of medical cannabis plants and agricultural produce, at fair value less selling costs up to the point of harvest. This value serves as the cost basis of inventory after the harvest.

 

The Company’s biological assets are primarily comprised of medical cannabis seedlings and medical cannabis. Presented below are the changes in biological assets during the reporting period:

 

		September 30,				December 31,
		2022				2021
		NIS in thousands
Balance as of January 1			5,566				3,153
Costs of growing medical cannabis plants			46,998				24,556
Change in fair value less selling costs			11,196				6,574
Transfer to inventory			(54,621	)			(28,717	)
Balance as of the end of the period			9,139				5,566

 

Disclosure regarding assumptions which were used to estimate the net fair value of biological assets

 

A.

below are the main assumptions used:

 

		September 30				December 31
		2022				2021
Net growing area (in thousands of square meters)			10.5				10.5
Estimate net yield as of the reporting date (tons) (1)			2.4				1.6
Estimated net selling price (NIS per gram) (2)			17.4				17.4
Estimated growing cycle length (in weeks) (4)			13				13
Estimated growing cycle completion rate (in percent) (5)			32	%			29	%
Proportion of plants which do not reach the harvesting stage			8	%			8	%

 

	(1)	According to the number of seedlings as of the end of the reporting period
	(2)	According to the price range of the Company’s existing products as of the end of the reporting period
	(3)	The Company’s estimate regarding the future ratio of sales
	(4)	In accordance with the Company’s experience, and according to the strains which exist as of the reporting date
	(5)	By planting date vs. growing cycle length

 

B.

Below is a sensitivity analysis on the fair value of the biological assets (in NIS thousands) in respect of a 10% increase in each of the following variables:

 

		September 30				December 31
		2022				2021
		NIS in thousands
Change of average selling price			1,105				673
Change of proportion of oil products			60				50
Change of proportion of plants which do not reach harvest			(73	)			(445	)

 

 

Note 7 - Investments in Financial Assets Measured at Fair Value Through Profit or Loss:

 

A.

As of September 30, 2022 and as of December 31, 2021, the Company holds 3,840,617 shares of XTL Biopharmaceuticals Ltd. (hereinafter: “XTL”), which constitute 0.70% of XTL’s issued and paid-up capital.

 

XTL is a public traded company listed in the Tel-Aviv stock exchange.

 

On January 19, 2022, the Company engaged in an agreement to purchase 51% of “Orni” pharmacy. As of this date, Orni held an investment in financial assets measured at fair value through profit or loss, in amount of NIS 47 thousand in various tradable stocks.

 

The fair value of these two financial assets as of the end of the reporting period was estimated based on the quoted share price (level 1).

 

The fair value and changes in securities which were classified “Financial assets measured at fair value through profit or loss” during the reporting periods was as follows:

 

		September 30				December 31
		2022				2021
		NIS in thousands
Balance for the beginning of the period			330				376
Acquisition of subsidiary			47				-
Changes in fair value carried to the statement of income			(177	)			(46	)
Balance for the end of the period			200				330

 

B.

The Company’s investments in biomed companies are revalued at fair value through profit and loss. The fair value is determined according to valuations, which are mostly performed using the OPM method.

 

		September 30				December 31
		2022				2021
		NIS in thousands
Fair value of the investment in Regenera			-				-
Fair value of the investment in Fore			1,600				1,600
Fair value of the investment in Cavnox			965				965
			2,565				2,565

 

Note 8 - Other receivables:

 

The balance includes an amount of approximately NIS 34 million loaned to third parties in connection with potential acquisitions which have not yet been materialized.

 

 

Note 9 - Operating segment data:

 

Reconciliation of operating segment data include cancellation of assets of the cannabis segment, addition of the investment in accordance with the equity method, and addition of assets and liabilities which were not attributed to segments.

 

		NIS in thousands
		Cannabis segment				Biomed segment				Reconciliations				Total
Nine months ended September 30, 2022
External revenue			283,078				-				-				283,078
Segment profit (loss)			65,999				(173	)			-				65,826
General and administrative expenses not attributable to segments															(11,502	)
Other expenses, net															(227	)
Operating profit															54,097
Segment assets			745,221				2,766				126,834				875,821
Segment liabilities			394,575				-				(33,217	)			361,358
Nine months ended September 30, 2021
External revenue			139,976				-				-				139,976
Segment profit (loss)			29,010				333				-				29,343
General and administrative expenses not attributable to segments															(8,807	)
Other expenses, net															(1,401	)
Operating Profit															19,135
Segment assets			513,202				4,132				138,269				655,602
Segment liabilities			231,838				-				(26,352	)			205,486
Three months ended September 30, 2022
External revenue			100,572				-				-				100,572
Segment profit (loss)			21,606				(50	)			-				21,556
General and administrative expenses not attributable to segments															(6,270	)
Other expenses, net															897
Operating profit															16,183
Segment assets			67,970				(49	)			14,836				81,757
Segment liabilities			40,344				-				30,040				70,384

 

 

Note 9 - Operating segment data: (Cont’d)

 

		NIS in thousands
		Cannabis segment				Biomed segment				Reconciliations				Total
Three months ended September 30, 2021
External revenue			61,695				-				-				61,695
Segment profit (loss)			9,731				8				-				9,739
General and administrative expenses not attributable to segments															(3,506	)
Other expenses, net															(1,692	)
Operating Profit															4,541
Segment assets			513,202				4,132				138,269				655,603
Segment liabilities			231,838				-				(26,353	)			205,485
Year ended December 31, 2021
External revenue			219,677				-				-				219,677
Segment profit (loss)			44,646				(1,868	)			-				42,778
General and administrative expenses not attributable to segments															(11,620	)
Other expenses, net															(2,971	)
Operating Profit															28,187
Segment assets			551,435				2,895				131,994				686,324
Segment liabilities			132,562				-				94,571				227,133

 

Note 10 - Subsequent events:

 

	A.	In October 2022, the Company purchase 51% of “Amirim Pharm” pharmacy located in Hadera for an immaterial consideration.
	B.	In October 2022, Fore has initiated an investment round. If the Company chooses not to participate it will be diluted from 0.44% to 0.10% on a fully diluted basis.

 

- - - - - - - - - - - -

 

 

 

 

Exhibit 99.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.3

 

Form 52-109F2

Certification of Interim Filings

Full Certificate

 

I, Alexander Rabinovitch, Chief Executive Officer of InterCure Ltd., certify the following:

 

1.

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of InterCure Inc. (the “issuer”) for the interim period ended September 30, 2022.

 

2.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4.

Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5.

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1

Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

5.2

ICFR – material weakness relating to design: N/A.

 

5.3

Limitation on scope of design: N/A.

 

6.

Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on June 30, 2022 and ended on September 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

Date: November 15, 2022
/s/ Alexander Rabinovitch
Alexander Rabinovitch
Chief Executive Officer

 

 

Form 52-109F2

Certification of Interim Filings

Full Certificate

 

I, Amos Cohen, Chief Financial Officer of InterCure Ltd., certify the following:

 

1.

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of InterCure Ltd. (the “issuer”) for the interim period ended September 30, 2022.

 

2.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4.

Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5.

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1

Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

5.2

ICFR – material weakness relating to design: N/A.

 

5.3

Limitation on scope of design: N/A.

 

6.

Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on June 30, 2022 and ended on September 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

Date: November 15, 2022
/s/ Amos Cohen
Amos Cohen
Chief Financial Officer

 

 

 

Exhibit 99.4

 

 

InterCure Announces Record Breaking Third Quarter Financial Results with 63% growth YOY and 6% QoQ growth.

 

Eleventh consecutive quarter of sequential profitable revenue growth

 

Annualized revenue run rate of $155 million

 

Adjusted EBITDA¹ run rate of $34 million

 

Achieved Run Rate Net Profit of 12$ million

 

Strong balance sheet with $92 million cash supporting future profitable growth

 

NEW YORK, TORONTO, and HERZLIYA, Israel – November 15, 2022 – InterCure Ltd. (NASDAQ: INCR) (TSX: INCR.U) (TASE: INCR) (dba Canndoc)(“InterCure” or the “Company”) is pleased to announce its financial and operating results for the third quarter ended September 30, 2022.

 

All amounts are expressed in New Israeli Shekels (NIS) or Canadian dollars ($), unless otherwise noted.

 

Third Quarter 2022 Key Financial & Operating Highlights

 

●

Record revenue of $39 million (NIS 101 million), which represent a 63% growth than the third quarter of 2021 and representing sequential growth of 6%.

 

●

Eleventh consecutive quarter of growth representing an annualized run rate of over $ 155 million (Over NIS 402 million).

 

●

Revenue growth expected to continue in Q4 2022.

 

●

Adjusted EBITDA increased 58% year-over-year to $9 million, representing 22% of revenues.

 

 

●

Solid demand for Canndoc’s branded products and expansion of the Company’s medical cannabis dispensing operations.

 

●

Record of new product launches with more than 10 new GMP SKUs added to the company’s portfolio of products during the quarter.

 

 

 

●

First company to comply with the new strict 109 import regulations of the Israel Medical Cannabis Agency, resuming importation of medical cannabis to Israel.

 

●

Expansion of the Company’s medical cannabis dedicated pharmacy chain to a of total 25 locations as of the end of the third quarter.

 

●

Continued scaling up production cultivation and production of the Southern facility as the largest and most advanced facility of its kind in the region.

 

●

Driving forward with the execution of the company’s global expansion plan.

 

“I am proud of our team delivering our eleventh consecutive quarter of profitable growth with strong operating and financial performance.” said InterCure CEO Alexander Rabinovich “We continued to execute on our international expansion plans building our footprint organically and exploring strategic acquisitions in key markets, to meet the solid demand for our high-quality branded products. We expect 2022 to be another millstone year for InterCure, solidifying our leadership position in the pharmaceutical cannabis market.”

 

“Our third quarter results reflect our ability to deliver on our strategic initiatives, translating into continued profitable growth.” said InterCure CFO Amos Cohen “In addition to delivering on strong financial results we also managed to maintain our profitability while executing expansion plan expansion in all key markets. We are very pleased with the progress and remain focused and committed to building our shareholders value and improving quality of life for patients and communities globally are continuing to see that same momentum carry into the fourth quarter.”

 

⁽¹⁾Means EBITDA adjusted for changes in the fair value of inventory, share-based payment expense, impairment losses (and gains) on financial assets, non-controlling interest and other expenses (or income);

 

Key Q3 2022 Financial Highlights – Cannabis Sector

 

(In thousands NIS)

 

Third quarter		Q3 2022				Q3 2021
Revenues			100,572				61,695
Gross Profit (1)			44,074				24,682
Adjusted EBITDA (2)			22,188				14,040

 

 

 

		Q3-22				Q2-22				Q1-22				Q4-21				Q3-21				Q2-21				Q1-21
Revenues			100,572				95,277				87,229				79,701				61,695				45,230				33,051
Gross Profit (1)			44,074				41,542				35,857				36,613				24,682				19,267				15,427
GP Margin			44	%			43	%			41	%			46	%			40	%			42	%			46	%
Adjusted EBITDA(2)			19,652				20,709				19,911				19,446				11,999				10,814				9,468
Adjusted EBITDA Margin			20	%			21	%			22	%			24	%			19	%			24	%			28	%

 

(1)

Gross profit before effect of fair value.

 

(2)

EBITDA adjusted for changes in the fair value of inventory, share-based payment expense, impairment losses (and gains) on financial assets, non-controlling interest and other expenses (or income). This is a non-IFRS financial measure and does not have a standardized meaning prescribed by IFRS, please see “Non-IFRS Measures” below.

 

		For the 3-month ended on September 30
		2022				2021
Revenues			100,572				61,695
Gross profit before effect of fair value			44,074				24,682
Gross profit after effect of fair value			46,213				22,056
Research and development expenses			(120	)			(298	)
General and administrative expenses			(13,979	)			(9,288	)
Marketing and selling expenses			(16,774	)			(6,245	)
Impairment gains and (losses) on financial assets through profit or loss			(54	)			8
Other income (expenses), net			897				(1,692	)
Consolidated operating profit			16,183				4,541
Comprehensive income			8,308				540
Interest / Financing expenses (income) net			4,236				2,464
Tax expenses			3,639				1,537
Depreciation and amortization			2,719				1,684
EBITDA			18,903				6,225
Share-based payment expenses			3,731				1,464
Other expenses (income), net			(897	)			1,692
Impairment losses and (gains) on financial assets through profit and loss			54				(8	)
Fair value adjustment to inventory			(2,139	)			2,626
Adjusted EBITDA			19,652				11,999
Basic earnings (loss) per share			0.16				(0.04	)
Diluted earnings per share			0.16				(0.03	)

 

 

 

Consolidated Financial Statements and Management’s Discussion and Analysis

 

The publication of InterCure’s audited financial statements and accompanying notes for the quarter ended September 30, 2022 and related management’s discussion and analysis of financial condition and results of operations (“MD&A”) and analysis of financial condition and results of operations (“MD&A”) are available under the Company’s profile on SEDAR.

 

About InterCure (dba Canndoc)

 

InterCure (dba Canndoc) (NASDAQ: INCR) (TSX: INCR.U) (TASE: INCR) is the leading, profitable, and fastest growing cannabis company outside of North America. Canndoc, a wholly owned subsidiary of InterCure, is Israel’s largest licensed cannabis producer and one of the first to offer Good Manufacturing Practices (GMP) certified and pharmaceutical-grade medical cannabis products. InterCure leverages its international market leading distribution network, best in class international partnerships and a high-margin vertically integrated “seed-to-sale” model to lead the fastest growing cannabis global market outside of North America.

 

For more information, visit: http://www.intercure.co.

 

Non-IFRS Measures

 

This press release makes reference to certain non-IFRS financial measures. Adjusted EBITDA, as defined by InterCure, means earnings before interest, income taxes, depreciation, and amortization, adjusted for changes in the fair value of inventory, share-based payment expense, impairment losses (and gains) on financial assets, non-controlling interest and other expenses (or income). This measure is not a recognized measure under IFRS, does not have a standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. InterCure’s method of calculating this measure may differ from methods used by other entities and accordingly, this measure may not be comparable to similarly titled measured used by other entities or in other jurisdictions. InterCure uses this measure because it believes it provides useful information to both management and investors with respect to the operating and financial performance of the company. A reconciliation of Adjusted EBITDA to an IFRS measure (comprehensive income) is available below:

 

 

 

Forward-Looking Statements

 

This press release may contain forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating to InterCure’s objectives plans and strategies, as well as statements, other than historical facts, that address activities, events or developments that InterCure intends, expects, projects, believes or anticipates will or may occur in the future. These statements are often characterized by terminology such as “believes,” “hopes,” “may,” “anticipates,” “should,” “intends,” “plans,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy” and similar expressions and are based on assumptions and assessments made in light of management’s experience and perception of historical trends, current conditions, expected future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Many factors could cause InterCure’s actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the following: the Company’s future revenue growth and profitability, the success of its global expansion plans, , its continued growth, the expected operations, financial results business strategy, competitive strengths, goals and expansion and growth plans, expansion strategy to major markets worldwide, the impact of the COVID-19 pandemic and the war in Ukraine. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond InterCure’s control, which could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to: changes in general economic, business and political conditions, changes in applicable laws, the U.S. and Canadian regulatory landscapes and enforcement related to cannabis, changes in public opinion and perception of the cannabis industry, reliance on the expertise and judgment of senior management, as well as the factors discussed under the heading “Risk Factors” in InterCure’s Annual Information Form dated April 5, 2022, which is available on SEDAR at www.sedar.com, and under the heading “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the registration statement on Form 20-F, filed with the Securities Exchange Commission on July 14, 2021, as amended August 3, 2021 and August 18, 2021. InterCure undertakes no obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

 

Due to participation in the upcoming November conferences, the company will be update on a later date a Q3 2022 result conference call.

 

	●	MJBizCon – Marijuana Business Conference & Cannabis Expo
	●	InterCure’s management will be hosting investor meetings.

 

To schedule a one-on-one investor meeting with InterCure’s management team, or for any inquiries please contact us:

 

	●	amos@intercure.co
	●	+972-58-666-8686

 

https://www.intercure.co/