IM Cannabis Announces Change of Auditors

Rhea-AI Summary

IM Cannabis Corp. (NASDAQ: IMCC) (CSE: IMCC), a medical cannabis company operating in Israel and Germany, has announced a change in its auditors. The company has transitioned from Kost Forer Gabbay & Kasierer (Ernst & Young Global member) to Fahn Kanne & Co. Grant Thornton Israel, effective January 16, 2025.

The previous auditor resigned at the company's request, and the new appointment was made based on the audit committee's recommendation. The board of directors has appointed the new auditor until the next annual shareholders' meeting. The company confirms there were no reservations, modified opinions, or reportable events in the previous auditor's reports. All required documentation has been filed on SEDAR+ in accordance with National Instrument 51-102.

Insights

Financial Audit Expert

The change in auditors from Ernst & Young to Grant Thornton Israel represents a significant shift in the company's financial oversight structure. While auditor changes are not uncommon, the timing and circumstances warrant attention. The resignation came at the company's request, which could indicate various strategic considerations including potential cost optimization given IMCC's modest market cap of $7.07M. Grant Thornton Israel, while a reputable firm, typically services smaller to mid-sized companies compared to Big Four firms like Ernst & Young. The clean transition without reservations or modified opinions in previous audits suggests there were no underlying accounting concerns or disagreements. However, for a publicly traded company on both NASDAQ and CSE, this shift to a smaller auditing firm might impact investor perception of the company's financial reporting robustness. This development should be monitored in context with future financial statements and audit fees disclosures.

Corporate Governance Analyst

From a governance perspective, the proper procedural steps were followed with the audit committee's recommendation and board approval, adhering to regulatory requirements under NI 51-102. The absence of reportable events or modified opinions provides assurance of compliance and transparency. However, for a dual-listed cannabis company operating in multiple jurisdictions (Israel and Germany), the transition from a Big Four to a mid-tier audit firm requires careful scrutiny. The change could signal a strategic realignment of corporate services or cost management initiatives, particularly relevant given the company's current market valuation. Shareholders should pay attention to any subsequent changes in internal control frameworks or reporting processes that might emerge under the new auditor relationship.

TORONTO and GLIL YAM, Israel, Jan. 17, 2025 /PRNewswire/ -- IM Cannabis Corp. ("IMC" or the "Company") (NASDAQ: IMCC) (CSE: IMCC), a leading medical cannabis company with operations in Israel and Germany, announces that it has changed its auditor from Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global (the "Predecessor Auditor") to Fahn Kanne & Co. Grant Thornton Israel (the "Successor Auditor") effective January 16, 2025. The Predecessor Auditor resigned effective January 16, 2025, at the Company's request, and the Company's board of directors, upon the audit committee's recommendation, appointed the Successor Auditor to fill the resulting vacancy until the close of the next annual meeting of the Company's shareholders.

The change of auditor notice required pursuant to National Instrument 51-102 – Continuous Disclosure Obligations ("NI 51-102") and associated material have been filed on SEDAR+ (www.sedarplus.ca) under the Company's profile within the prescribed time period. There were no reservations or modified opinions in any auditor's reports nor any reportable events as defined in NI 51-102 in connection with the audits by the Predecessor Auditor of the Company's most recently completed financial year or any subsequent period.

About IM Cannabis Corp.

IMC (Nasdaq: IMCC) (CSE: IMCC) is an international cannabis company that provides premium cannabis products to medical patients in Israel and Germany, two of the largest medical cannabis markets. The Company has focused its resources to achieve sustainable and profitable growth in its highest value markets, Israel and Germany. The Company leverages a transnational ecosystem powered by a unique data-driven approach and a globally sourced product supply chain. With an unwavering commitment to responsible growth and compliance with the strictest regulatory environments, the Company strives to amplify its commercial and brand power to become a global high-quality cannabis player.

The IMC ecosystem operates in Israel through its subsidiaries, which imports and distributes cannabis to medical patients, leveraging years of proprietary data and patient insights. The Company also operates medical cannabis retail pharmacies, online platforms, distribution centers, and logistical hubs in Israel that enable the safe delivery and quality control of IMC products throughout the entire value chain. In Germany, the IMC ecosystem operates through Adjupharm GmbH, where it distributes cannabis to pharmacies for medical cannabis patients.

Disclaimer for Forward-Looking Statements

This press release contains forward-looking information or forward-looking statements under applicable Canadian and United States securities laws (collectively, "forward-looking statements"). All information that addresses activities or developments that we expect to occur in the future are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", "likely" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. Forward-looking statements are based on the estimates and opinions of management on the date the statements are made. In the press release, such forward-looking statements include, but are not limited to, statements relating to: the Company's commitment to driving growth in the German market while focusing on sustainable profitability.

The above lists of forward-looking statements and assumptions are not exhaustive. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated or implied by such forward-looking statements due to a number of factors and risks. These include: the failure of the Company to comply with applicable regulatory requirements in a highly regulated industry; unexpected changes in governmental policies and regulations in the jurisdictions in which the Company operates; the Company's ability to continue to meet the listing requirements of the Canadian Securities Exchange and the NASDAQ Capital Market; any unexpected failure to maintain in good standing or renew its licenses; the ability of the Company and its subsidiaries (collectively, the "Group") to deliver on their sales commitments or growth objectives; the reliance of the Group on third-party supply agreements to provide sufficient quantities of medical cannabis to fulfil the Group's obligations; the Group's possible exposure to liability, the perceived level of risk related thereto, and the anticipated results of any litigation or other similar disputes or legal proceedings involving the Group; the impact of increasing competition; any lack of merger and acquisition opportunities; adverse market conditions; the inherent uncertainty of production quantities, qualities and cost estimates and the potential for unexpected costs and expenses; risks of product liability and other safety-related liability from the usage of the Group's cannabis products; supply chain constraints; reliance on key personnel; the risk of defaulting on existing debt; risks surrounding war, conflict and civil unrest in Eastern Europe and the Middle East, including the impact of the Israel-Hamas war on the Company, its operations and the medical cannabis industry in Israel; risks associated with the Company focusing on the Israel and Germany markets; the inability of the Company to achieve sustainable profitability and/or increase shareholder value; the inability of the Company to actively manage costs and/or improve margins; the inability of the company to grow and/or maintain sales; the inability of the Company to meet its goals and/or strategic plans; the inability of the Company to reduce costs and/or maintain revenues; the Company's inability to take advantage of the legalization of medicinal cannabis in Germany.

Please see the other risks, uncertainties and factors set out under the heading "Risk Factors" in the Company's annual report dated March 28, 2024, which is available on the Company's issuer profile on SEDAR+ at www.sedarplus.ca and Edgar at www.sec.gov/edgar. Any forward-looking statement included in this press release is made as of the date of this press release and is based on the beliefs, estimates, expectations and opinions of management on the date such forward looking information is made. The Company does not undertake any obligation to update forward-looking statements except as required by applicable securities laws. Investors should not place undue reliance on forward-looking statements. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

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Company Contact:
Anna Taranko, Director Investor & Public Relations
IM Cannabis Corp.
+49 157 80554338
a.taranko@imcannabis.de

Oren Shuster, CEO
IM Cannabis Corp.
info@imcannabis.com

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SOURCE IM Cannabis Corp.

FAQ

Why did IM Cannabis (IMCC) change its auditor in January 2025?

IM Cannabis requested the resignation of their previous auditor and appointed Fahn Kanne & Co. Grant Thornton Israel as their new auditor, effective January 16, 2025, following the audit committee's recommendation.

Were there any issues with IMCC's previous auditor reports before the change?

No, there were no reservations, modified opinions, or reportable events in the auditor's reports from the previous auditor, Kost Forer Gabbay & Kasierer (Ernst & Young Global member).

How long will IMCC's new auditor Fahn Kanne & Co. serve?

Fahn Kanne & Co. Grant Thornton Israel will serve as IMCC's auditor until the close of the next annual meeting of the Company's shareholders.

What regulatory requirements did IMCC fulfill for the auditor change?

IMCC filed the required change of auditor notice and associated materials on SEDAR+ within the prescribed time period, in compliance with National Instrument 51-102.