Morning everyone, and thank you for joining us for our Second Quarter 2022 Earnings Call. We are very pleased with our financial results and operational execution in the quarter, particularly compared to how our peers have recently performed. Before I go into the overall and regional details, I would like to describe the big picture we are creating. We are a multi-market cannabis company with a leading position in each of the three largest federally legal markets in the world, Canada, Israel, and Germany. Our strength lies in our ability to work as one unit to meet and exceed customer demand and regulatory requirements in the different markets in which we operate. Our global supply chain and regional expertise set us apart from our peers, and we will apply that to upcoming growth opportunities, particularly in Germany.
This is by far one of the largest and the most exciting opportunities we have in front of us. The German government has suggested that it is considering the legalization of cannabis. When it comes to recreational cannabis consumption, our estimates suggest that the German market could be 2.5 x greater than that of Canada. Not only is Germany an economic leader in the European continent, but it is also a social and cultural leader. As such, we believe German legalization efforts could encourage similar initiatives in other European countries such as Italy, Spain, France, and the U.K. To say that the European cannabis market potential is immense would be an understatement. To have the early mover advantage is a key to successfully grabbing a large market share in the continent of almost 750 million people.
We are in a favorable position to scale up rapidly and in the untapped European market, and here is why. We have built a seamless international import and export model. We have cultivation facilities in Canada and manufacturing facilities in Germany. We also possess in-depth regulatory experience in all of the countries in which we operate. To turn our vision into reality, we will leverage the experience and the expertise we have accumulated in Canada and in Israel. In Canada, we have achieved significant market share in the all-important premium dried flower and pre-roll markets. We are now one of the top three most popular brands in two different market segments in Ontario. In Israel, we have been a category creator and a leader. We introduced ultra-premium cannabis to the country. We determined the standards of this new market segment as well as its price points.
Today, the suggested retail price for one gram of our ultra-premium product is ILS 34.9, which is around CAD 13.7. This is the highest price for any cannabis product in Israel today. The premium and ultra-premium market segments are large and rapidly growing. In Israel, we enjoyed an early mover advantage, which we expect to replicate in Germany. When it comes to our global operation and execution, as you may recall from the previous quarter, we have embraced an ambitious integration and restructuring plan. We began our efforts in Israel, where we enhanced organizational efficiency by integrating customer service centers and reducing operating costs. Our operations in Israel are now more centralized, both based on a self-supply model leveraging our Canadian yield. To further streamline our operations in Israel, Focus Medical closed the Sde Avraham cultivation farm.
If you recall, Focus Medical had an exclusive commercial agreement with IM Cannabis to distribute its production under the IMC brand. The closure of Sde Avraham allows IM Cannabis to utilize our in-house supply source of Canadian cultivated cannabis. The cash cost saving from the closure of the farm are expected to be approximately ILS 2.5 million per year. In Canada, we have also embarked on a thorough streamlining of our operation as part of our global integration efforts to enhance operational efficiency and reduce costs. To that end, we have finalized the sale of Sublime Culture subsidiary, immediately generating significant cost saving in our Canadian operation. We also implemented other operational efficiencies in Canada. Collectively, these initiatives are expected to yield approximately ILS 4 million in annual cash saving in Canada.
We expect the majority of these savings to begin materialize in the third quarter, with full realization in the fourth quarter of this year. We believe these are necessary steps as part of our ongoing efforts to optimize, synergize, and further integrate our acquisitions across the globe, as well as limit our costs. Our Canadian operations serve as an avenue to provide products to the Israeli and German markets, further demonstrating the power of our global model. We expect our global supply chain model to match the demand and supply for premium indoor-grown Canadian cannabis in each of our markets, resulting in higher margins and income. In Q2, we moved further along the path to profitability. It was yet another quarter of record revenues, which increased 114% year-over-year and 1% sequentially to ILS 23.8 million.
While we have not reached the break-even point, we have taken many initiatives and actions to achieve profitability. Based on these developments and rationalized capital allocation, we continue to expect 2022 to be a breakout year, and for the longer term, we believe we are very well-positioned for success and shareholder value creation. I will now provide an overview of each of our market segments, Israel, Canada, and Germany. I would like to reiterate that these countries are the three largest markets in the world where cannabis is federally legal, and we are the only multi-country operator active in all of them. After this overview, Shai will offer a review of our financial results before we open the call up for questions. In Israel, we successfully responded to the increased demand for premium indoor-grown Canadian cannabis from Israeli customers through our global and fully licensed export/import supply chain.
Our Canadian indoor cultivation facilities grow premium and ultra-premium products and have leading brands in the adult use recreational Canadian market, such as WAGNERS. We now seamlessly import these products into Israel and extensively provide consistent access and supply to Israeli medical cannabis patients. We expect an increase in this distribution in Q3 and Q4. In addition, based on the strong consumer demand for premium and ultra-premium medical cannabis, we have benefited from increased selling prices in Israel. In Canada, our leading brands continue to enjoy commercial leadership. We are a market leader in Canada, one of the most mature and competitive cannabis markets globally. We have continued to grow revenues, marking the fifth consecutive quarter of recreational revenue growth.
Canadian revenues grew by 5.2% from Q1 2022 to Q2 2022, and 340% from Q2 2021 to Q2 2022. Our brands hold a strong market share in key segments. WAGNERS and Highland Grow maintained commanding market share in Ontario, the largest and most important regional market in Canada. For the three-month period ending June 30, WAGNERS was 2 in the premium segment, and Highland Grow was 3 in the ultra-premium segment in Ontario. In response to market demand for highly popular brands, WAGNERS and Highland Grow will launch numerous new products at the end of Q2. In the first weeks of Q2, the WAGNERS pre-roll catalog at the OCS grew through the launch of Tiki Rain and Blue Lime Pie pre-rolls.
Two new 3.5 gram dried flower SKUs, Tiki Rain and Purple Clementine, will also launch in addition to the expansion of our concentrates portfolio with the introduction of soft Black Hash and 3.5 gram Soap Bar Hash. Highland added new dried flower SKUs to its OCS portfolio, Gas Tank and Diamond Breath, as well as White Lightning pre-rolls. New products rollout continue with the introduction of new strains including Frost Bite, Leviathan, and Space Jagger. In Germany, we are already one of the top companies among the 100 that operate in the country, reaching a market share of 3.5% in April. To date, May was our strongest sales month. We have achieved this with only four SKUs. We are going to introduce additional SKUs to boost sales in the coming quarters.
Growth is being driven by private payers in the high-THC segment. Of the three strains we have, our Indica strain was the top-selling T20 in the market with 20% market share. With our receipt of extended EU GMP license on May twenty-fourth, including additional production testing and release steps, we achieved another milestone that supports our strategy of product and brand variety, such as WAGNERS. We started several new products license applications, and we are now preparing for the launch of new high-quality and high-THC products in Q4 2022 and Q1 2023. Recently, the German Society for Pain Medicine launched the Pain Initiative Cannabinoids 2021 project. Through this program, doctors will be able to directly prescribe medical cannabis to their patients after completing a course. This will decrease bureaucracy for medical cannabis patients and providers.
It will also likely increase the number of physicians who are able and willing to allow their patients to access medical cannabis therapies. When this happens, we expect our strong positive reputation among German healthcare community through our IMC-branded products to position us well. While we continue to gain brand recognition on the global level, given the regulatory landscape, we are still in the very early stages of our growth trajectory. One thing our company does extremely well is to flexibly adapt to changing circumstances and regulations, and this gives me tremendous confidence as I look ahead. Lastly, I would like to comment that we are working with our legal team to address the notification the company received from the Nasdaq Stock Market with respect to maintaining the required minimum bid price. We have ample time to remedy the deficiency and regain compliance.
We have been provided 180 days or until January ninth, 2023, to regain compliance by maintaining the required minimum bid price for at least 10 consecutive business days. We feel that the matter will be resolved in due course. Please note that it does not currently impact our listing on the Nasdaq Capital Market or the Canadian Securities Exchange. I will now turn the call over to our Chief Financial Officer, Shai Shemesh, who will review our second quarter 2022 financial results. Shai?
Thank you, Oren. We continue to operate from a position of financial strength. As we continue to grow our revenue base, we are uncovering a variety of operational improvements that will allow us to scale sustainably. I will now provide an overview of our second quarter for 2022 financial and operational results. Revenues increased 114% to ILS 23.8 million in the second quarter of 2022, compared to approximately ILS 11.1 million in the second quarter of 2021. The increase in revenues is primarily attributed to an increase in the quantity of medical and recreational cannabis products sold, as well as from the higher average selling price per gram the company realized from its portfolio of premium-branded cannabis products in Israel and Canada.
Gross profit before fair value adjustment increased 830% to $5.6 million in the second quarter of 2022, compared to $0.6 million in the second quarter of 2021. Total operating expenses were $22.6 million in the second quarter of 2022, compared to $10.1 million in the second quarter of 2021. The increase in operating expenses were partly due to restructuring expenses of approximately $9.2 million, of which the vast majority are non-cash expenses associated with the closure of the facilities in Israel and Canada, as well as the growing corporate activities in Israel and Canada following the company's acquisition in 2021.
Net loss was $18.98 million in the second quarter of 2022, compared to a net loss of $5.01 million in the second quarter of 2021. Basic loss per share in the second quarter of 2022 was $0.27, compared to basic loss per share of $0.1 in the second quarter of 2021. Diluted loss per share in the second quarter of 2022 was $0.3 compared to diluted loss per share of $0.23 in the second quarter of 2021. Non-IFRS adjusted EBITDA was -$4.6 million in the second quarter of 2022, compared to an adjusted EBITDA loss of approximately $5.7 million in the second quarter of 2021.
Cash and cash equivalents totaled ILS 5.86 million at June 30, 2022, compared to ILS 34.05 million at June 30, 2021. In Q2, we begin to see our consolidated operation yield substantial synergies as reflected by our immense year-over-year revenue growth. We expect our operational enhancement to be increasingly visible as we move forward. As we have previously noted, we have reached positive adjusted EBITDA in Israel and approaching positive adjusted EBITDA on a group level. Finally, I would like to point out that while ours is an opportunistic approach to deploying capital, we currently do not have any new acquisition in the pipeline. Thus, we do not foresee any significant capital expenditures in the short term. I would like now to turn the call back to Oren for closing remarks. Oren?
Thank you, Shai. This is an important time for IMC growth trajectory, as we aim to rapidly capture market share while fully optimizing the components of our global model. By pursuing efficiencies while also introducing new and sought-after premium brands in different markets, our goal is to position ourselves as a leading consumer packaged goods company serving the cannabis industry. Our focus on operational competence is already yielding benefits that we believe will be more visible as the year unfolds.
As mentioned during our call last quarter, we are building our track record of success in Israel and product category leadership in our brands in Canada, while leveraging our distribution infrastructure in Germany. We are very well positioned to emerge as a major player in the European premium cannabis market. The opportunity in front of us is truly remarkable, and we are working diligently to seize it and to generate long-term value for our shareholders along the way. With that, I hand the call over to the operator to begin our question and answer session. Operator?
Thank you. In order to ask a question, please raise your hand using your mobile or desktop application and wait for your name to be announced. The Raise Hand toggle is located at center bottom of your screen. Once again, in order to ask a question, you will need to raise your hand using the Raise Hand button located in the center bottom of your screen. That way, we will receive an indication. Our first question comes from the line of Aaron Grey from AGP. Please go ahead.
I just want to confirm you guys can hear me.
Loud and clear.
All right.
Please go ahead.
Fantastic. Thank you. Just want to get some further color in terms of, you know, the Israeli market, you know, going forward. You know, we're hearing a lot from the LPs about, you know, there being too much product in the market. You know, we've talked historically about, you know, the demand for indoor. Just want to get your own, you know, color in terms of how you're looking at the Israeli market specifically going forward, you know, under the current regulatory medical conditions and how you see the growth opportunities both overall and as well within, you know, IMC. Thank you.
Hi, Aaron Grey. Thank you for the question. It's Oren Shuster. What we see in the Israeli market is that, on one hand, there is a overcapacity, I would say, of a greenhouse grow in Israel. On the other hand, a significant demand for premium indoor products. We launched in this quarter the ultra-premium segment in Israel, actually. What we've seen is a very high demand for the premium and ultra-premium products that we are importing, and the acceptance in the market is amazing. I think that there is an overcapacity of low-quality products and high demand for high-quality products in the market. I think that this will continue in Israel, the demand for high-quality products.
I believe that it will only increase because I think that now more patients understand the differences in quality and looking for high quality. I feel very comfortable about that. Regarding the general market in Israel, we don't have indication, strong indication for significant change in the market in the near future. However, I know that the Ministry of Health is speaking about changing the policy to a prescription only instead of prescription and license like it is today. If it will be prescription only, the number of patients will grow significantly in Israel in a very short time, but we don't have any assurance when it will happen and if it will happen. I don't know. I hope that answered your question, Aaron.
Oh, sorry. I was on mute.
Aaron.
Yeah, I'm here now. Sorry, I was on mute. No, appreciate that color, Oren. That was really helpful there. When we look at other, you know, international, you know, opportunities for you guys, you know, U.K. has been a market that, you know, a number of international operators, you know, have started to focus on a bit and seeing the growth opportunities there. We'd love to get, you know, your outlook on how you know, think about the U.K. and potentially, you know, increasing your exposure to the market. Thanks.
I think that the U.K. market is very interesting, and we see that, the market is starting to grow. It's still a small market relatively, but, definitely the potential is, huge. We are looking at the U.K. Market, and we want to approach the U.K. market, and probably we'll do that through our operation in Germany. In Germany, we just extended, our facility to be able to get products and to process it in our facility and then to distribute it in Germany or in other, European countries.
We also extended the logistics center to be able to get quite significant quantities of product. Now we are more focused on building the supply chain to be able to have a premium supply to our facility in Germany, and later we will start to distribute from Germany to U.K.
Okay, great. Thanks so much for the color, Oren. I'll go and drop back in the queue.
Thank you. As a reminder, in order to ask a question, you will need to raise your hand using the Raise Hand toggle, the center bottom of your screen, and wait for your name to be announced. Once again, please raise your hand using your mobile or desktop application and wait for your name to be announced. You have no further questions. Please proceed.
Thank you, operator.
Sorry. Go ahead.
Thank you, operator, and thank you all for joining our call today. Please continue to track our progress as we continue to execute on our growth strategy. I look forward to speaking with you in the coming quarters.
I'm sorry. We just have a Q&A question that came in. I am going to open the line for Adam Altberg. Please go ahead, Adam.
Hi. Sorry about that. I had sent the question over, the Zoom by text. I don't know if people are still on, but anyways, can you please comment further on cash in the bank? I know that Shai mentioned some segments of the business being cash flow positive and the overall business close to being cash flow positive, so maybe you can provide some more color around that, and any plans that you have to address the cash needs that the company may have in the short term, or if you don't have any cash needs, maybe you can comment on that as well. Thank you.
Hi, Adam. Thank you for your question. It's Shai. Well, as I previously said, first of all, currently we have sufficient cash in order to proceed with the operation, ongoing concern, and all this. We have sufficient cash levels to continue with our strategy. Of course that we keep on exploring additional financing as needed, as we progress with our strategy. Regarding the cash flow positive, yes, in Israel we are cash flow positive. We are in Germany not yet there. It's a little bit cash consuming. Canada is part of the restructuring and all the costs, the cash cost saving that we did. We are aiming to get there, I believe by the
most likely by the end of the year or even before that. This is it.
Okay. The bottom line is you do not need any cash right now. That's all that I wanna know.
We do not need cash, but we are always open for additional financing to support our strategy.
Okay, beautiful. Thank you very much for answering.
You have no further questions. Please proceed. Oren, would you like to add closing remarks?
Yes. Thank you, operator, and thank you all for joining our call today. Please continue to track our progress as we continue to execute on our growth strategy, and I look forward to speaking with you all in the coming quarters.
The recording has stopped.