[10-Q] Flora Growth Corp. Quarterly Earnings Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____________ to _____________
Commission file number
(Exact name of registrant as specified in its charter)
| Province of |
Not Applicable |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
|
|
|
|
|
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|
|
|
|
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
|
|
☒ | Smaller reporting company |
|
| Emerging growth company |
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐ No
As of October 30, 2025, the registrant had
Table of Contents
| Page | |
| Cautionary Statement Regarding Forward-Looking Statements | 2 |
| PART I | |
| Item 1. Financial Statements | 4 |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 29 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 41 |
| Item 4. Controls and Procedures | 41 |
| PART II | |
| Item 1. Legal Proceedings | 42 |
| Item 1A. Risk Factors | 42 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 49 |
| Item 3. Defaults Upon Senior Securities | 50 |
| Item 4. Mine Safety Disclosures | 50 |
| Item 5. Other Information | 50 |
| Item 6. Exhibits | 51 |
| Signatures | 53 |
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this "Quarterly Report") contains "forward-looking statements," as that term is defined under the Private Securities Litigation Reform Act of 1995 ("PSLRA"), Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements may include projections and estimates concerning our possible or assumed future results of operations, financial condition, business strategies and plans, market opportunity, competitive position, industry environment, and potential growth opportunities. In some cases, you can identify forward-looking statements by terms such as "may", "will", "should", "believe", "expect", "could", "intend", "plan", "anticipate", "estimate", "continue", "predict", "project", "potential", "target," "goal" or other words that convey the uncertainty of future events or outcomes. You can also identify forward-looking statements by discussions of strategy, plans or intentions. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, because forward-looking statements relate to matters that have not yet occurred, they are inherently subject to significant business, competitive, economic, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These and other important factors, including, among others, those discussed in this Quarterly Report, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements in this Quarterly Report. Risks and uncertainties, the occurrence of which could adversely affect our business, include, but are not limited to, the following:
- our limited operating history and net losses;
- fluctuations in the market price of $0G, the native token of the 0G Chain, a layer-1 blockchain designed to enable users to deploy and operate decentralized artificial intelligence ("AI") applications and data ("0G Tokens", each a "0G Token"or "0G") or any other digital assets we might hold;
- the possibility that any one of the Cryptocurrencies (as defined below) may be classified as a "security";
- decrease in liquidity of 0G Tokens or any other digital assets we might hold;
- our ability to continue as a going concern absent access to sources of liquidity;
- damage to our reputation as a result of negative publicity;
- exposure to product liability claims, actions and litigation;
- risks associated with product recalls;
- continuing research and development efforts to respond to technological and regulatory changes;
- our ability to successfully integrate businesses that we acquire;
- our ability to achieve economies of scale;
- our ability to fund overhead expenses, including costs associated with being a publicly-listed company
- maintenance of effective quality control systems;
- changes to energy prices and supply;
- risks associated with expansion into new jurisdictions;
- regulatory compliance risks;
- potential delisting resulting in reduced liquidity of our common shares; and
- the other risks described under Part I, Item 1A, "Risk Factors" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "2024 Annual Report") filed with the Securities and Exchange Commission (the "SEC") on March 24, 2025, as well as described from time to time in our other filings with the SEC.
Given the foregoing risks and uncertainties, you are cautioned not to place undue reliance on the forward-looking statements in this Quarterly Report. The forward-looking statements contained in this Quarterly Report are not guarantees of future performance and our actual results of operations and financial condition may differ materially from such forward-looking statements. In addition, even if our results of operations and financial condition are consistent with the forward-looking statements in this Quarterly Report, they may not be predictive of results or developments in future periods.
Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of this Quarterly Report. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements in this Quarterly Report, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report.
2
PART I
Item 1. Financial Statements
Flora Growth Corp.
Table of Contents
| Unaudited Condensed Interim Consolidated Financial Statements: | Page | |
| Unaudited Condensed Interim Consolidated Statements of Financial Position as of September 30, 2025 and December 31, 2024 | 4 | |
| Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss for the Three and Nine Months Ended September 30, 2025 and 2024 | 5 | |
| Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (Deficiency) for the Three and Nine Months Ended September 30, 2025 and 2024 | 6 | |
| Unaudited Condensed Interim Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 | 7 | |
| Notes to Unaudited Condensed Interim Consolidated Financial Statements | 8 |
3
| Flora Growth Corp. |
| Unaudited Condensed Interim Consolidated Statements of Financial Position |
| (in thousands of United States dollars, except share amounts which are in thousands of shares) |
| As at: | September 30, 2025 | December 31, 2024 | ||||
| ASSETS | ||||||
| Current | ||||||
| Cash | $ | $ | ||||
| Restricted cash | ||||||
| Trade and amounts receivable, net of $ |
||||||
| Prepaid expenses and other current assets | ||||||
| Indemnification receivables | ||||||
| Inventory | ||||||
| Digital assets | ||||||
| Current assets held for sale | ||||||
| Total current assets | ||||||
| Non-current | ||||||
| Property, plant and equipment | ||||||
| Operating lease right of use assets | ||||||
| Restricted digital assets | ||||||
| Other assets | ||||||
| Noncurrent assets held for sale | ||||||
| Total assets | $ | $ | ||||
| LIABILITIES | ||||||
| Current | ||||||
| Trade payables | $ | $ | ||||
| Contingencies | ||||||
| Current portion of debt | ||||||
| Current portion of operating lease liability | ||||||
| Contingent purchase considerations | ||||||
| Other accrued liabilities | ||||||
| Current liabilities held for sale | ||||||
| Total current liabilities | ||||||
| Non-current | ||||||
| Non-current portion of debt | ||||||
| Non-current operating lease liability | ||||||
| Deferred tax | ||||||
| Noncurrent liabilities held for sale | ||||||
| Total liabilities | ||||||
| SHAREHOLDERS' EQUITY | ||||||
| Share capital, no par value, unlimited authorized, |
||||||
| Additional paid-in capital | ||||||
| Accumulated other comprehensive income (loss) | ( |
) | ||||
| Deficit | ( |
) | ( |
) | ||
| Total shareholders' equity | ||||||
| Total liabilities and shareholders' equity | $ | $ |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Commitments and contingencies - see Note 16. Going concern - see Note 2.
4
| Flora Growth Corp. |
| Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss |
| (in thousands of United States dollars, except per share amounts which are in thousands of shares) |
| For the three months ended September 30, 2025 |
For the three months ended September 30, 2024 |
For the nine months ended September 30, 2025 |
For the nine months ended September 30, 2024 |
||||||||||
| Revenue | $ | $ | $ | $ | |||||||||
| Cost of sales | |||||||||||||
| Gross profit | |||||||||||||
| Operating expenses | |||||||||||||
| Consulting and management fees | |||||||||||||
| Professional fees | |||||||||||||
| General and administrative | |||||||||||||
| Travel expenses | |||||||||||||
| Share based compensation | |||||||||||||
| Operating lease expense | |||||||||||||
| Depreciation and amortization | |||||||||||||
| Bad debt expense | ( |
) | |||||||||||
| Asset impairment | |||||||||||||
| Gain on disposal of insolvent subsidiaries | ( |
) | |||||||||||
| Other (income) expenses, net | |||||||||||||
| Total operating expenses | |||||||||||||
| Operating loss | ( |
) | ( |
) | ( |
) | ( |
) | |||||
| Interest expense | |||||||||||||
|
Foreign exchange loss (gain) |
( |
) | ( |
) | |||||||||
|
Unrealized loss (gain) from changes in fair value |
( |
) | |||||||||||
| Net loss before income taxes and discontinued operations | ( |
) | ( |
) | ( |
) | ( |
) | |||||
|
Income tax expense (benefit) |
( |
) | |||||||||||
| Net loss from continuing operations | ( |
) | ( |
) | ( |
) | ( |
) | |||||
| Loss from discontinued operations, net of taxes | ( |
) | ( |
) | ( |
) | ( |
) | |||||
| Net loss for the period | ( |
) | ( |
) | ( |
) | ( |
) | |||||
| Net loss attributable to noncontrolling interest | ( |
) | ( |
) | |||||||||
| Net loss attributable to Flora Growth | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Basic loss per share from continuing operations | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Diluted loss per share from continuing operations | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Basic loss per share attributable to Flora Growth Corp. | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Diluted loss per share attributable to Flora Growth Corp. | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Weighted average number of common shares outstanding - basic | |||||||||||||
| Weighted average number of common shares outstanding - diluted | |||||||||||||
| Other comprehensive loss | |||||||||||||
| Net loss for the period | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Derecognition of equity related to insolvent subsidiaries, net of income taxes of $ |
( |
) | |||||||||||
| Derecognition of equity related to discontinued operations, net of income taxes of $ |
|||||||||||||
| Foreign currency translation, net of income taxes of $ |
( |
) | |||||||||||
| Comprehensive loss for the period | ( |
) | ( |
) | ( |
) | ( |
) | |||||
| Comprehensive loss attributable to noncontrolling interest | ( |
) | ( |
) | |||||||||
| Comprehensive loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
5
| Flora Growth Corp. |
| Unaudited Condensed Interim Consolidated Statement of Shareholders' Equity (Deficiency) |
| (in thousands of United States dollars, except for share amounts which are in thousands of shares) |
| Common Shares |
Additional paid-in Capital |
Accumulated other comprehensive (loss) income |
Accumulated deficit |
Non- controlling interests in subsidiaries (deficiency) |
Shareholders' equity (deficiency) |
||||||||||||||||
| # | |||||||||||||||||||||
| For the nine months ended September 30, 2025 | |||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||
| Equity offerings | - | - | - | - | |||||||||||||||||
| Equity offering issuance costs | - | - | ( |
) | - | - | - | ( |
) | ||||||||||||
| Equity issued for business combinations | - | - | - | - | |||||||||||||||||
| Exercise of pre-funded warrants | - | - | - | - | - | - | |||||||||||||||
| Options forfeited | - | - | ( |
) | - | - | |||||||||||||||
| Restricted stock vested | - | - | - | - | - | ||||||||||||||||
| SARs vested | - | - | - | - | - | ||||||||||||||||
| Derecognition of equity related to insolvent subsidiaries | - | - | - | ( |
) | - | - | ( |
) | ||||||||||||
| Derecognition of equity related to discontinued operations | - | - | - | - | - | ||||||||||||||||
| Other comprehensive loss - exchange differences (net of income taxes of $ |
- | - | - | - | - | ||||||||||||||||
| Net loss | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( |
) | $ | $ | |||||||||||||
| For the three months ended September 30, 2025 | |||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( |
) | $ | $ | |||||||||||||
| Equity offerings | - | - | - | - | |||||||||||||||||
| Equity offering issuance costs | - | - | ( |
) | - | - | - | ( |
) | ||||||||||||
| Exercise of pre-funded warrants | - | - | - | - | - | - | |||||||||||||||
| Options forfeited | - | - | ( |
) | - | - | |||||||||||||||
| Restricted stock vested | - | - | - | - | - | ||||||||||||||||
| SARs vested | - | - | - | - | - | ||||||||||||||||
| Derecognition of equity related to discontinued operations | - | - | - | - | - | ||||||||||||||||
| Other comprehensive loss - exchange differences (net of income taxes of $ |
- | - | - | ( |
) | - | - | ( |
) | ||||||||||||
| Net loss | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( |
) | $ | $ | |||||||||||||
| For the nine months ended September 30, 2024 | |||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||
| Common stock offerings | - | - | - | ||||||||||||||||||
| Common stock offering issuance costs | - | - | ( |
) | - | - | - | ( |
) | ||||||||||||
| Equity issued for business combinations | - | - | - | ||||||||||||||||||
| Equity issued for other agreements | - | - | - | - | |||||||||||||||||
| Options vested | - | - | - | - | - | ||||||||||||||||
| Options forfeited | - | - | ( |
) | - | - | |||||||||||||||
| Restricted stock vested | - | - | - | - | - | ||||||||||||||||
| Restricted stock cancelled | - | - | ( |
) | - | - | - | ( |
) | ||||||||||||
| SARs vested | - | - | - | - | - | ||||||||||||||||
| Other comprehensive loss - exchange differences (net of income taxes of $ |
- | - | - | - | - | ||||||||||||||||
| Net loss | - | - | - | - | ( |
) | ( |
) | ( |
) | |||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | ( |
) | $ | $ | |||||||||||||
| For the three months ended September 30, 2024 | |||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||
| Restricted stock vested | - | - | - | - | - | ||||||||||||||||
| SARs vested | - | - | - | - | - | ||||||||||||||||
| Share issuance costs | - | - | ( |
) | - | - | - | ( |
) | ||||||||||||
| Other comprehensive loss - exchange differences (net of income taxes of $ |
- | - | - | - | - | ||||||||||||||||
| Net loss | - | - | - | - | ( |
) | ( |
) | ( |
) | |||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | ( |
) | $ | $ | |||||||||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
6
| Flora Growth Corp. | ||||
| Unaudited Condensed Interim Consolidated Statement of Cash Flows | ||||
| (in thousands of United States dollars) | ||||
| For the nine months ended September 30, 2025 |
For the nine months ended September 30, 2024 |
||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | ( |
) | $ | ( |
) | |
| Adjustments to net loss: | |||||||
| Depreciation and amortization | |||||||
| Share based compensation | |||||||
| Inventory impairments through costs of sales | |||||||
| Asset impairments | |||||||
| Changes in financial instruments at fair value | ( |
) | |||||
| Bad debt expense | |||||||
| Loss on asset disposals | |||||||
| Gain on disposal of insolvent subsidiaries | ( |
) | |||||
| Interest expense | |||||||
| Interest paid | ( |
) | ( |
) | |||
| Income tax | ( |
) | |||||
| ( |
) | ( |
) | ||||
| Net change in non-cash working capital: | |||||||
| Trade and other receivables | ( |
) | |||||
| Inventory | ( |
) | |||||
| Prepaid expenses and other assets | |||||||
| Trade payables and accrued liabilities | ( |
) | |||||
| Net cash used in operating activities | ( |
) | ( |
) | |||
| Cash flows from financing activities: | |||||||
| Equity instruments issued | |||||||
| Equity issue costs | ( |
) | ( |
) | |||
|
Payment of contingent consideration |
( |
) |
|||||
| Loan borrowings | |||||||
| Loan repayments | ( |
) | ( |
) | |||
| Net cash provided by financing activities | |||||||
| Cash flows from investing activities: | |||||||
| Purchase and sale of digital assets | |||||||
| Purchases of property, plant and equipment and intangible assets | ( |
) | ( |
) | |||
| Net cash on disposal of Cannabis Business | ( |
) | |||||
| Cash acquired in business combination | |||||||
|
Net cash provided by investing activities |
|||||||
| Effect of exchange rate on changes on cash | |||||||
| Change in cash during the period | ( |
) | |||||
| Cash and restricted cash at beginning of period | |||||||
| Cash and restricted cash at end of period | $ | $ | |||||
| Supplemental disclosure of non-cash investing and financing activities | |||||||
|
Equity issued for digital assets |
$ |
$ |
|||||
| Common shares issued for business combinations |
|
||||||
| Debt issued for business combinations | |||||||
| Common shares issued for other agreements | |||||||
| Option cancellations reclassified to equity | |||||||
| Operating lease additions to right of use assets | |||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
7
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
1. NATURE OF OPERATIONS
Flora Growth Corp. (the "Company" or "Flora") was incorporated under the laws of the Province of Ontario, Canada on March 13, 2019. The Company, which will be rebranded as ZeroStack, is a decentralized AI treasury company that is investing in the future of AI infrastructure through strategic ownership in 0G Tokens (as defined below), an AI infrastructure company that has created an open and decentralized AI network fueled by the 0G Token. The Company is a global pharmaceutical distributor through its wholly owned subsidiary Phatebo GmbH. The Company's registered office is located at 40 King Street, W Suite 2400, Toronto, Ontario, M5H 3S1, Canada and our principal place of business in the United States is located at 3230 W. Commercial Boulevard, Suite 180, Fort Lauderdale, Florida 33309.
2. BASIS OF PRESENTATION
These unaudited condensed interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP. The Company believes that the disclosures made are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2024. These unaudited condensed interim consolidated financial statements reflect all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.
These unaudited condensed interim consolidated financial statements apply the same accounting policies as those used in the financial statements included in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2024, except as noted below.
Cryptocurrency Treasury Strategy
In early 2025 following a due diligence process, the Company began implementing an expansion strategy focused on identifying and pursuing complementary growth opportunities within the global digital asset market.
On May 2, 2025, the Company entered into a securities purchase agreement (the "May 2025 Securities Purchase Agreement") with certain investors (the "May 2025 Investors") in connection with the issuance and sale by the Company to the May 2025 Investors via a private placement (the "May 2025 Private Placement") of an aggregate of
The net proceeds from the sale of the Common Shares and May 2025 Pre-funded Warrants were approximately $
On September 19, 2025, the Company entered into securities purchase agreements with certain investors pursuant to which the Company agreed to sell and issue the following securities in private placement offerings (collectively, the "PIPE Offering"): (i)
On September 26, 2025, in connection with the first closing of the PIPE Offering, the Company issued
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
On September 19, 2025, the Company entered into an arrangement with Zero Gravity Labs Inc. ("Zero Gravity") pursuant to which the Company agreed to (i) borrow
The Company intends to use the net proceeds from the PIPE Offering and the Zero Gravity Convertible Note (collectively, the "Cryptocurrency Offering") to further the Company's new digital asset treasury strategy linked to $0G, the native tokens of the Zero Gravity (0G) blockchain ("0G Tokens" or "0G"), and to explore and expand the use of the native AI functionality of the 0G Tokens to enhance the business of the Company and the balance of the net proceeds will be used for general corporate and working capital purposes.
In connection with the Cryptocurrency Offering, on October 1, 2025, Mr. Clifford Starke resigned as a director and the Chief Executive Officer of the Company and Mr. Sammy Dorf resigned as the Executive Chairman of the Company. On October 1, 2025, the Board of Directors (the "Board") appointed Mr. Daniel Reis-Faria and Michael Heinrich as non-independent directors of the Board, and in connection with their appointments to the Board, Mr. Reis-Faria, was also appointed as the Chief Executive Officer of the Company and Mr. Heinrich was also appointed as Executive Chairman effective October 1, 2025.
Adoption of accounting standards and amendments
In December 2023, the FASB issued ASU 2023-08, Crypto Assets (Subtopic 350-60), which addresses the accounting and disclosure requirements for certain crypto assets. The guidance required entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. For all entities, the ASU's amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those years. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. The Company has adopted ASU 2023-08 effective as of January 1, 2025 and the disclosures around the Company's digital assets are reflective of that adoption.
Going concern
The accompanying unaudited condensed interim consolidated financial statements have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that the Company will continue one year after the date these unaudited condensed interim consolidated financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.
The Company had cash of $
Basis of consolidation
These unaudited condensed interim consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions were eliminated on consolidation. Subsidiaries are entities the Company controls when it is exposed, or has rights, to variable returns from its involvement in the entity and can affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are included in the consolidated financial results of the Company from the date of acquisition up to the date of disposition or loss of control. At September 30, 2025, the Company's subsidiaries and respective ownership percentages have not changed from the year ended December 31, 2024, except as noted below.
On February 4, 2025, the Company completed the closing of the acquisition of
During the nine months ended September 30, 2025, each of Franchise Global Health Inc. ("FGH"), Franchise Cannabis Corp., CBDMed Therapeutics Inc., Harmony Health One Inc., 1200325 B.C. Ltd., Fayber Technologies Inc., ACA Mueller ADAG Pharma Vertriebs GmbH, Sativa Verwaltungs GmbH, and Sativa Verwaltungs GmbH and Co. KG (together, the "Insolvent Subsidiaries") made insolvency filings in the appropriate jurisdictions. Each of the Insolvent Subsidiaries was a direct or indirect subsidiary of the Company and was part of the Company's acquisition of FGH in December 2022. See discussion in Note 4.
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
On September 26, 2025, the Company transferred
Minimum bid price requirement
On February 25, 2025, the Company was notified by the Nasdaq Stock Market, LLC ("Nasdaq") that it was not in compliance with the minimum bid price requirement of $
On August 4, 2025, the Company effected a
From August 4, 2025 through August 18, 2025, a period of 10 consecutive trading days, the closing bid price of the Company's Common Shares was greater than $
Corporate governance requirement
On August 25, 2025, Harold Wolkin, a director of the Company passed away. Prior to his passing, Mr. Wolkin served as an "Independent Director", as defined in Nasdaq Listing Rule 5605(a)(2), of the Company's audit committee, the compensation committee, and the nominating and corporate governance committee of the Board. On August 26, 2025, Nasdaq was informed that because of Mr. Wolkin's passing, the Company is no longer in compliance with certain Corporate Governance Requirements as set forth in Nasdaq Listing Rule 5605.
Pursuant to Nasdaq Listing Rule 5605(b)(1), a majority of the Board of a listed company must be comprised of Independent Directors. With Mr. Wolkin's passing, the Board is currently comprised of only four members, Daniel Reis-Faria, Michael Heinrich, Edward Woo and Manfred Leventhal. Only two of the four, Mr. Woo and Mr. Leventhal, qualify as Independent Directors. Therefore, the Company's Board is no longer comprised of a majority of Independent Directors as required by Nasdaq Listing Rule 5605(b)(1).
Pursuant to Nasdaq Listing Rule 5605(c)(2)(A), a listed company must have an audit committee of at least three members, each of whom must be an Independent Director and meet the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). With Mr. Wolkin's passing, the Company's audit committee is currently comprised of only two members, Mr. Woo and Mr. Leventhal, each of whom meet the independence requirements set forth in Nasdaq Rule 5605(a)(2) and Rule 10-A3(b)(1) of the Exchange Act. Therefore, the Company's audit committee is no longer comprised of at least three members meeting the aforementioned independence requirements as required by Nasdaq Listing Rule 5605(c)(2)(A).
The Company is in the process of reviewing and evaluating potential options to regain compliance with Nasdaq Listing Rules 5605(b)(1) and 5605(c)(2)(A) within the cure period set forth in 5605(b)(1)(A), which will be before the earlier of one year from August 25, 2026 and the next annual meeting.
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
3. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
On September 20, 2025, the Company entered into an Equity Transfer and Debt Repayment Agreement (the “Agreement”) with a group of investors (the “Investors”), which included Clifford Starke and Sammy Dorf, each of whom are directors of Flora, and Dany Vaiman, the Company’s chief financial officer. Under the Agreement, the Investors acquired assets from the Company relating to the Company’s hemp and cannabis related businesses, including Just Brands LLC, Just Brands FL LLC, Just Brands International LTD, High Roller Private Label LLC (together with Just Brands LLC, Just Brands FL LLC, Just Brands International LTD (“JustCBD”), Vessel Brand Inc., Vessel Brand Canada Inc. (together with Vessel Brand Inc. “Vessel”), United Beverage Distribution Inc. (“United”), Klokken Aarhus Inc., Rangers Pharmaceuticals A/S (together with Klokken Aarhus Inc. “Klokken”), TruHC Pharma GmbH (“TruHC”), Australian Vaporizers Pty LTD and the Company’s investment in an early-stage European cannabis company (collectively the “Cannabis Business”). The sale of the Cannabis Business occurred following signing on September 26, 2025.
The consideration received by the Company for the sale of the Cannabis Business consisted of the cancellation by the Investors of all of the Company's obligations pursuant to promissory notes owed to the Investors with five year maturities currently held by the Company with an aggregate amount of principal and accrued interest of approximately $
The sale enabled the Company to concentrate on its international pharmaceutical distribution business. The sale was part of several strategic changes to become a digital assets treasury company.
The Company has presented the associated assets and liabilities of the Cannabis Business as held for sale. The major classes of assets and liabilities classified as held for sale as of September 30, 2025 and December 31, 2024 were as follows:
| September 30, 2025 | December 31, 2024 | |||||
| Assets held for sale | ||||||
| Cash | $ | $ | ||||
| Trade and amounts receivable | ||||||
| Prepaid expenses and other current assets | ||||||
| Inventory | ||||||
| Total current assets held for sale | ||||||
| Property, plant and equipment | ||||||
| Operating lease right of use assets | ||||||
| Intangible assets | ||||||
| Goodwill | ||||||
| Other assets | ||||||
| Total noncurrent assets held for sale | ||||||
| Total assets held for sale | $ | $ | ||||
| Liabilities held for sale | ||||||
| Trade and other payables | $ | $ | ||||
| Contingencies | ||||||
| Current portion of operating lease liability | ||||||
| Current portion of contingent purchase considerations | ||||||
| Other accrued liabilities | ||||||
| Total current liabilities held for sale | ||||||
| Non-current operating lease liability | ||||||
| Deferred tax | ||||||
| Total liabilities held for sale | $ | $ |
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
The following table summarizes the major classes of line items included in loss from discontinued operations, net of tax, for the three and nine months ended September 30, 2025 and 2024:
|
For the three months ended September 30, 2025 |
For the three months ended September 30, 2024 |
For the nine months ended September 30, 2025 |
For the nine months ended September 30, 2024 |
|||||||||
| Revenue | $ | $ | $ | $ | ||||||||
| Cost of sales | ||||||||||||
| Gross profit from discontinued operations | ||||||||||||
| Operating expenses | ||||||||||||
| Consulting and management fees | ||||||||||||
| Professional fees | ||||||||||||
| General and administrative | ||||||||||||
| Promotion and communication | ||||||||||||
| Travel expenses | ||||||||||||
| Research and development | ||||||||||||
| Operating lease expense | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Bad debt expense | ||||||||||||
| Asset impairment | ||||||||||||
| Other expense | ||||||||||||
| Operating loss from discontinued operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Interest expense | ||||||||||||
|
Foreign exchange loss (gain) |
( |
) | ( |
) | ( |
) | ||||||
| Unrealized gain from changes in fair value | ( |
) | ( |
) | ( |
) | ||||||
| Net loss before income taxes | ( |
) | ( |
) | ( |
) | ( |
) | ||||
|
Income tax benefit |
( |
) | ( |
) | ( |
) | ||||||
|
Loss from discontinued operations |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
| Basic and diluted loss per share from discontinued operations | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
The following table summarizes the significant operating and investing items related to the Cannabis Business for the nine months ended September 30, 2025 and 2024:
|
For the nine months ended September 30, 2025 |
For the nine months ended September 30, 2024 |
|||||
| Operating activities of discontinued operations | ||||||
| Depreciation and amortization | $ | $ | ||||
| Bad debt expense | ||||||
| Asset impairment | ||||||
| Investing activities of discontinued operations | ||||||
| Purchases of property, plant and equipment | $ | $ |
The subsidiaries sold included TruHC Pharma GmbH, Klokken Aarhus Inc. and Rangers Pharmaceuticals A/S, which were part of the commercial and wholesale segment; Just Brands LLC, Just Brands FL LLC, Just Brands International LTD, High Roller Private Label LLC, Vessel Brand Inc., Vessel Brand Canada Inc., United Beverage Distribution Inc. and Australian Vaporizers Pty LTD which made up the entirety of the house of brands segment; and the Company's investment in an early stage European cannabis company which was part of the Company's corporate segment.
The Company applies significant judgement in determining whether a disposal meets the criteria to present as held for sale at the reporting date, and whether the disposal represents a strategic shift that has (or will have) a major effect on its operations and financial results in order to be classified as a discontinued operation. The criteria evaluated are both quantitative and qualitative in nature, to evaluate the significance of the disposal relative to the operations of the Company as a whole. The Company has determined this disposition represents a strategic shift in operations that will have a major effect on the Company's operations and financial results, and accordingly, has been presented as discontinued operations.
During the three and nine months ended September 30, 2025, the Company recorded a gain on disposal of $
During the three and nine months ended September 30, 2025, the Company recorded a gain on disposal of $
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
4. INSOLVENCY AND DECONSOLIDATION OF CERTAIN SUBSIDIARIES
On March 14, 2025, each of Franchise Global Health Inc., Franchise Cannabis Corp., CBDMed Therapeutics Inc., Harmony Health One Inc., 1200325 B.C. Ltd., and Fayber Technologies Inc. (collectively, the "Canadian insolvent entities") made a voluntary assignment in bankruptcy pursuant to section 49 Bankruptcy and Insolvency Act (Canada) in the Ontario Superior Court of Justice (the "Ontario Court"). On March 14, 2025, the Ontario Court appointed a trustee of the estate of each of the Canadian insolvent entities.
On March 18, 2025, ACA Mueller ADAG Pharma Vertriebs GmbH, Sativa Verwaltungs GmbH, and Sativa Verwaltungs GmbH and Co. KG (together "the German insolvent entities") each made filings for insolvency proceedings under German insolvency laws in the Constance Regional Court (the "German Court"). On March 18, 2025, the German Court appointed a trustee of the estate of each of the German insolvent entities.
The trustees have been appointed by the respective courts and the trustees have assumed and will continue to exercise control over all assets and liabilities of the Insolvent Subsidiaries. The assets of the Insolvent Subsidiaries will be liquidated for distribution in accordance with the priorities established by the courts. The Company expects that no distributions will be available in the Insolvent Subsidiaries' liquidation.
Each of the Canadian insolvent entities and the German insolvent entities was a direct or indirect subsidiary of the Company and was part of the Company's acquisition of FGH in December 2022. As a result of the insolvencies, the Company concluded that it no longer controls the Insolvent Subsidiaries for accounting purposes as of March 14, 2025, in accordance with ASC Topic 810, and, therefore, deconsolidated all assets and liabilities of the Insolvent Subsidiaries during the three months ended March 31, 2025 from the Company's financial statements. Subsequent to the deconsolidation, the Company accounted for its investment in the Insolvent Subsidiaries using the cost method of accounting, which was recorded at $
The following table provides the combined carrying value of assets and liabilities of Insolvent Subsidiaries that have been deconsolidated during the nine months ended September 30, 2025:
| Cash | $ | ||
| Trade and amounts receivable | |||
| Indemnification receivables | |||
| Total assets | $ | ||
| Trade and other payables | $ | ||
| Contingencies | |||
| Current portion of long term debt | |||
| Current portion of operating lease liability | |||
| Total liabilities | $ | ||
| Net liabilities deconsolidated | |||
| Impairment of receivables from Insolvent Subsidiaries | ( |
) | |
| Gain on deconsolidation of Insolvent Subsidiaries | $ |
The gain on deconsolidation of Insolvent Subsidiaries is recorded in gain on disposal of insolvent subsidiaries in the unaudited condensed interim consolidated statements of loss and comprehensive loss. The Insolvent Subsidiaries reported a combined net loss and comprehensive loss of $
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
As part of the deconsolidation of the Insolvent Subsidiaries, the Company reported a gain of $
The contingencies and indemnification receivables relate to a legal claim filed against FGH, which was covered under an indemnification agreement between the Company and the former Chief Executive Officer and shareholder of FGH. The voluntary assignment in bankruptcy of FGH triggered an automatic stay on the related legal proceedings.
5. TRADE AND AMOUNTS RECEIVABLE
The Company's trade and amounts receivable are recorded at amortized cost. The trade and other receivables balance as at September 30, 2025 and December 31, 2024 consists of trade accounts receivable, amounts recoverable from the Government of Canada for Harmonized Sales Taxes ("HST"), as well as Value Added Tax ("VAT") from various jurisdictions, and other receivables.
| September 30, 2025 | December 31, 2024 | |||||
| Trade accounts receivable | $ | $ | ||||
| Allowance for expected credit losses | ( |
) | ||||
| HST/VAT receivable | ||||||
| Other receivables | ||||||
| Total | $ | $ |
Changes in the trade accounts receivable allowance in the three and nine months ended September 30, 2025 relate to establishing an allowance for expected credit losses. There was less than $
| September 30, 2025 | December 31, 2024 | |||||
| Current | $ | $ | ||||
| 1-30 Days | ||||||
| 31-60 Days | ||||||
| 61-90 Days | ||||||
| 91-180 Days | ||||||
| Total trade receivables | $ | $ |
6. INVENTORY
Inventory is comprised of the following:
| September 30, 2025 | December 31, 2024 | |||||
| Raw materials and supplies | $ | $ | ||||
| Finished goods | ||||||
| Total | $ | $ |
During the three and nine months ended September 30, 2025, the Company recorded inventory impairment as a write-down to cost of sales in the amount of $
7. DIGITAL ASSETS
As discussed in Note 2, the Company received
The Company's digital assets consist of the following as of September 30, 2025:
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
| Digital Assets | Restricted Digital Assets | |||||||||||||||||
| Number of Units | Cost Basis | Fair Value | Number of Units | Cost Basis | Fair Value | |||||||||||||
| Bitcoin (BTC) | $ | $ | $ | $ | ||||||||||||||
| Zero Gravity (0G) | ||||||||||||||||||
| Total digital assts | $ | $ | $ | $ | ||||||||||||||
The following table presents a reconciliation of the fair values of the Company's investments in digital assets for the nine months ended September 30, 2025:
| Digital Assets |
Restricted Digital Assets |
Total | |||||||
| Balance as of December 31, 2025 | $ | $ | $ | ||||||
| Purchases | |||||||||
| Dispositions | ( |
) | ( |
) | |||||
| Realized gains on dispositions | |||||||||
| Unrealized gains from changes in fair value of digital assets | |||||||||
| Balance as of September 30, 2025 | $ | $ | $ |
In accordance with ASC Topic 820, Fair Value Measurement, the Company measures the fair value of its digital assets based on the quoted end-of-day price on the measurement date for a single digital asset on an active trading platform, Bitgo.com. Management has determined that Bitgo.com, an active exchange market, represents a principal market for the digital assets it holds and the end-of-day quoted price is both readily available and representative of fair value (Level 1 inputs). The Company recorded a gain of $
8. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
| September 30, 2025 | December 31, 2024 | |||||
| Buildings | $ | $ | ||||
| Machinery and office equipment | ||||||
| Vehicles | ||||||
| Total | ||||||
| Less: accumulated depreciation | ( |
) | ( |
) | ||
| Property, plant and equipment, net | $ | $ |
Depreciation expense was less than $
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
9. BUSINESS COMBINATIONS
United Beverage Distribution Inc. business combination
On January 30, 2025, the Company and United Beverage Distribution Inc. ("United"), a South Dakota corporation, entered into a Share Purchase Agreement (the "Purchase Agreement") pursuant to which the Company purchased
United was founded in 2024 and is a distributor of cannabis-infused drinks. The acquisition will allow the Company to drive synergies with its existing portfolio of brands.
The purchase is accounted for as a business combination with amounts recognized as at the February 4, 2025 acquisition date for each major class of assets acquired and liabilities assumed are as follows:
| (Thousands of Untied States dollars) | |||
| Current assets | |||
| Cash | $ | ||
| Trade receivables | |||
| Inventory | |||
| Prepaid expenses and other current assets | |||
| Total current assets | |||
| Non-current assets | |||
| Property, plant and equipment, net | |||
| Goodwill | |||
| Total assets | |||
| Current liabilities | |||
| Trade and amounts payables | ( |
) | |
| Loan payable | ( |
) | |
| Other accrued liabilities | ( |
) | |
| Total current liabilities | ( |
) | |
| Total net assets acquired | $ |
As discussed in Note 2 and Note 3, the Company transferred
10. ASSET IMPAIRMENT
Discontinued operations
As discussed in Note 3, the Company sold the Cannabis Business on September 26, 2025. Prior to the sale, the Company assessed the goodwill and long-lived assets of each of the Cannabis Businesses for indicators of impairment. While no indicators of impairment were noted, the Company determined the fair value of the disposal group was less than the carrying value of the net assets. The carrying value of the TruHC reporting unit was $
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
11. DEBT
Euro credit facility
The Company, through Phatebo, has credit facilities totaling
United promissory notes (Related Parties)
As discussed in Note 9, the Company issued promissory notes with five-year maturities that accrue interest at a rate of
12. LEASES
The Company's leases primarily consist of administrative real estate leases in Germany and the United States. Management has determined all the Company's leases are operating leases through September 30, 2025. Information regarding the Company's leases is as follows:
|
Three months ended September 30, 2025 |
Three months ended September 30, 2024 |
Nine months ended September 30, 2025 |
Nine months ended September 30, 2024 |
|||||||||
| Components of lease expense | ||||||||||||
| Operating lease expense | $ | $ | $ | $ | ||||||||
| Short-term lease expense | ||||||||||||
| Sublease income | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Total lease expense | $ | $ | $ | $ | ||||||||
| Other Information | ||||||||||||
| Operating cash flows from operating leases | $ | $ | $ | $ | ||||||||
| ROU assets obtained in exchange for new operating lease liabilities | ||||||||||||
| Weighted-average remaining lease term in years for operating leases |
|
|
||||||||||
| Weighted-average discount rate for operating leases |
Maturities of operating lease liabilities as of September 30, 2025 are as follows:
| Thousands of United States dollars | Operating Leases | ||
| 2025 | $ | ||
| 2026 | |||
| 2027 | |||
| 2028 | |||
| 2029 | |||
| Thereafter | |||
| Total future lease payments | |||
| Less: imputed interest | ( |
) | |
| Total lease liabilities | |||
| Less: current lease liabilities | ( |
) | |
| Total non-current lease liabilities | $ |
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
Some of the Company's leases contain renewal options to continue the leases for another term equivalent to the original term, which are generally up to five years. The lease liabilities above include renewal terms that management has executed or is reasonably certain of renewing, which only included leases that would have expired in 2025.
In March 2025, the Company began leasing 10,400 sq. ft. of warehouse and office space in Hilzingen, Germany, for $
The Company began subleasing retail space in Miami, Florida to a third party during the third quarter of 2023. The sublease agreement was effective through November 30, 2026 and contains one option to renew for five more years. The Company received notification from the sublessor in March 2025 of its intention to exit the sublease. In July 2025, the Company began subleasing the retail space to a new third party with the new sublease agreement effective through November 30, 2026 and contains one option to renew for five more years.
13. SHARE CAPITAL
The Company had the following significant common share transactions:
Nine months ended September 30, 2025
SEPTEMBER PRIVATE PLACEMENT
As discussed in Note 2, the Company issued
SEPTEMBER AT THE MARKET ("ATM") OFFERING
On September 23, 2025, the Company entered into an ATM sales agreement (the "Sales Agreement") with Revere Securities LLC (the "Agent") pursuant to which the Company may sell from time to time, at its option, common shares through the Agent in its capacity as sales agent. The sale of common shares, if any, will be made under the Company's Registration Statement, by any method that is deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act.
Subject to the terms and conditions of the Sales Agreement, the Agent will use its commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the Nasdaq Capital Market, to sell on the Company's behalf all of the Common Shares requested to be sold by the Company. The Company may instruct the Agent not to sell Common Shares if the sales cannot be effected at or above the price designated by the Company in any such instruction. The Company or the Agent may suspend the offering of Common Shares being made through the Agent under the Sales Agreement upon proper notice to the other parties.
Unless otherwise agreed between the Company and the Agent, settlement for sales of the Common Shares will occur on the first trading day following the date on which any sales are made. Sales of the Common Shares will be settled through the facilities of The Depository Trust Company or by such other means as the Company and the Sales Agents may agree.
The aggregate compensation payable to the Agent, in cash, upon each sale of Common Shares through the Agent pursuant to the Sales Agreement, is an amount equal to:
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
The Company is not obligated to make any sales of Common Shares under the Sales Agreement. The offering of Common Shares pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement by the Company or by the Agent, only with respect to itself, under the circumstances specified in the Sales Agreement.
The Company issued a total of
REVERSE STOCK SPLIT
On August 4, 2025, the Company filed an Articles of Amendment to the Company's amended and restated Articles of Incorporation with the Ontario Ministry of Public and Business Service Delivery and Procurement to effect a reverse stock split of the Company's common shares, no par value per share (the "common shares"), at a ratio of
As a result of the Reverse Stock Split,
All common shares and per share amounts have been restated to give retroactive effect to the share consolidation.
MAY PRIVATE PLACEMENT
On May 2, 2025, the Company entered into a securities purchase agreement with certain investors (the "Investors") in connection with the issuance and sale by the Company to the Investors via a private placement (the "Private Placement") of an aggregate of
FEBRUARY PAYMENT TO UNITED OWNERS
As discussed in Note 9, the Company issued
Nine months ended September 30, 2024
JUNE 2024 PAYMENT TO Australian Vaporizers ("AV") OWNERS
The Company issued
APRIL 2024 PAYMENT TO TRUHC OWNERS
The Company issued
APRIL 2024 EQUITY OFFERING
On April 8, 2024, the Company closed an offering of
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
The offering of the securities described above was made pursuant to the Company's effective shelf registration statement on Form S-3 (Registration No. 333-274204) (the "Registration Statement"), filed with the SEC on August 25, 2023 and amended on August 30, 2023, which was declared effective, on September 6, 2023, and the base prospectus included therein, as supplemented by the preliminary prospectus supplement filed with the SEC on April 4, 2024 and the final prospectus supplement filed with the SEC on April 5, 2024.
APRIL ATM OFFERING
On April 26, 2024, the Company entered into an ATM Issuances Sales Agreement (the "Sales Agreement") with Aegis Capital Corp. (the "Agent") pursuant to which the Company may sell from time to time, at its option, common shares through the Agent in its capacity as sales agent. The sale of common shares, if any, will be made under the Company's Registration Statement, by any method that is deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act.
Subject to the terms and conditions of the Sales Agreement, the Agent will use its commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the Nasdaq Capital Market to sell on the Company's behalf all of the common shares requested to be sold by the Company. The Agent will offer the common shares, subject to the terms and conditions of the Sales Agreement, on a daily basis or as otherwise agreed upon by the Company and the Agent. The Company will designate the maximum amount of common shares to be sold through the Agent on a daily basis or otherwise determine such maximum amount, together with the Agent. The Company may instruct the Agent not to sell common shares if the sales cannot be effected at or above the price designated by the Company in any such instruction. The Company or the Agent may suspend the offering of common shares being made through the Agent under the Sales Agreement upon proper notice to the other parties.
The aggregate compensation payable to the Agent is up to
The Company is not obligated to make any sales of common shares under the Sales Agreement. The offering of common shares pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement by the Company or by the Agent, only with respect to itself, under the circumstances specified in the Sales Agreement. The Company has yet to sell any of its common shares under the Sales Agreement.
OTHER ISSUANCES
On March 8, 2024, the Company entered into a settlement agreement with a third party pursuant to which the Company issued
14. SHARE BASED COMPENSATION
The Company's 2022 Incentive Compensation Plan (the "2022 Plan") and its previous "'rolling" stock option plan (the "Prior Plan") are described in the Company's 2024 Form 10-K. The 2022 Plan was amended to increase the number of shares issuable thereunder from
OPTIONS
Stock options granted under the Prior Plan are non-transferable and non-assignable and may be granted for a term not exceeding five years. Under the 2022 Plan, stock options may be granted with a term of up to ten years and in the case of all stock options, the exercise price may not be less than 100% of the fair market value of a common share on the date the award is granted. Stock option vesting terms are subject to the discretion of the Compensation Committee of the Company's Board of Directors (the "Committee"). Common shares are newly issued from available authorized shares upon exercise of awards. The Company no longer makes new grants of stock options under the Prior Plan.
Information relating to share options outstanding and exercisable as at September 30, 2025 and December 31, 2024 is as follows:
| Options Outstanding | ||||||||||||
|
Number of options |
Weighted average exercise price |
Weighted average remaining life (years) |
Aggregate intrinsic value |
|||||||||
| Outstanding balance, December 31, 2024 | $ |
|
$ | |||||||||
| Expired | ( |
) | $ | - | - | |||||||
| Outstanding balance, September 30, 2025 | $ |
|
$ | |||||||||
| Exercisable balance, September 30, 2025 | $ |
|
$ | |||||||||
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
The total expense related to the options granted in the three and nine months ended September 30, 2025 was $
At September 30, 2025 the total remaining stock option cost for nonvested awards is $
RESTRICTED STOCK AWARDS
Restricted stock is a grant of common shares which may not be sold or disposed of, and which is subject to such risks of forfeiture and other restrictions as the Committee, in its discretion, may impose. A participant granted restricted stock generally has all of the rights of a shareholder of the Company, unless otherwise determined by the Committee. Subject to certain exceptions, the vesting of restricted stock awards is subject to the holder's continued employment or engagement through the applicable vesting date. Unvested restricted stock awards will be forfeited if the holder's employment or engagement ceases during the vesting period and may, in certain circumstances, be accelerated. The Company values restricted stock awards based on the closing share price of the Company's common shares as of the date of grant. The fair value of the restricted stock award is recorded as expense over the vesting period.
Information relating to restricted stock awards outstanding as at September 30, 2025 and December 31, 2024:
|
Number of restricted stock awards |
Weighted average grant date fair value |
|||||
| Balance, December 31, 2024 | $ | |||||
| Vested | ( |
) | ||||
| Balance, September 30, 2025 | $ |
The total expense related to the restricted stock awards in the three and nine months ended September 30, 2025 was less than $
The outstanding restricted stock awards vest over the next year provided the award holder is still employed or engaged by the Company. As of September 30, 2025, the Company had less than $
STOCK APPRECIATION RIGHTS ("SARs")
SARs grant a right to receive, upon exercise thereof, the excess of the fair market value of one common share on the date of exercise over the grant price of the SAR. The grant price of a SAR shall not be less than 100% of the fair market value of a common share on the date of the grant. SARs generally vest over a period of zero to three years and have a term of ten or eleven years. The SARS granted by the Company to date are only payable in the Company's common shares and have no cash payments options.
On August 14, 2024, the Company granted
On December 15, 2024, the Company granted
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
On June 30, 2025, Flora's shareholders approved the repricing and amendment of vesting terms of certain outstanding SARS granted to certain employees and executive officers of the Company, including the SARs granted on August 14, 2024 and on December 15, 2024. The new base price of these SARs will be $
The vesting terms of the SARs granted on August 14, 2024 to the Company's Chief Executive Officer were amended such that the first of nine tranches
The SARS granted on December 15, 2024 were vested at the grant date and the expense was accelerated at that time. There is no incremental fair value for these awards.
As discussed in Note 2, Mr. Clifford Starke resigned as director and Chief Executive Officer of the Company on October 1, 2025. Under terms of Mr. Starke's SARs agreement, this triggered the full vesting of his remaining outstanding SARS.
Information relating to SARs outstanding at September 30, 2025 and December 31, 2024 is as follows:
| SARs Outstanding | ||||||||||||
|
Number of SARS |
Weighted average exercise price |
Weighted average remaining life (years) |
Aggregate intrinsic value |
|||||||||
| Outstanding balance, December 31, 2024 | ||||||||||||
| Outstanding balance, September 30, 2025 | $ |
|
$ | |||||||||
| Exercisable balance, September 30, 2025 | $ |
|
$ | |||||||||
The total expense related to SARs granted in the three and nine months ended September 30, 2025 was $
15. WARRANTS
MAY PRIVATE PLACEMENT
As discussed in Note 13, the May 2, 2025 Private Placement included
SEPTEMBER PRIVATE PLACEMENT
As discussed in Note 2, the Company issued an aggregate of
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
The PIPE Pre-Funded Warrants and the PIPE Warrants are classified as equity because the Company has the ability to settle the instrument in its own shares and the settlement is not based on a variable monetary amount.
Of the total PIPE Pre-Funded Warrants issued,
The remaining PIPE Pre-Funded Warrants and PIPE Warrants were issued for cash proceeds in bundled transactions that, in certain cases, also included PIPE Common Shares. For each transaction, cash proceeds were allocated among the underlying securities based on relative fair values at issuance. The fair values of the PIPE Common Shares and PIPE Pre-Funded Warrants reflect the Company's common share closing price of $
There were no PIPE Pre-Funded Warrants exercised during the three and nine months ending September 30, 2025, and the total number of PIPE Pre-Funded Warrants outstanding was
The following summarizes the number of warrants outstanding as of September 30, 2025, excluding the Pre-Funded Warrants:
| Number of warrants |
Weighted average exercise price |
|||||
| Balance, December 31, 2024 | $ | |||||
| Issued | ||||||
| Balance, September 30, 2025 | $ |
| Date of expiry |
Warrants outstanding |
Exercise price |
Grant date fair value |
Remaining life in years |
||||||||
|
|
$ | $ |
|
|||||||||
|
|
|
|||||||||||
|
|
|
|||||||||||
|
|
|
|||||||||||
|
|
|
|||||||||||
|
|
|
|||||||||||
|
|
|
|||||||||||
| $ | $ |
|
(1) Estimated date of expiry for PIPE Warrants based on 1,825 days from the date of shareholder approval.
16. COMMITMENTS AND CONTINGENCIES
Provisions
The Company's current known provisions and contingent liabilities consist of the following as of September 30, 2025:
| Legal disputes | |||
| Balance as at December 31, 2024 | $ | ||
| Payments/settlements | ( |
) | |
| Additional provisions | |||
| Foreign currency translation | |||
| Balance as at September 30, 2025 | $ |
The legal disputes balance as of September 30, 2025 involves a legal proceeding that was brought against the Company and Vessel Brand Inc., which was formerly a wholly owned subsidiary of the Company, by the lessor of the warehousing and office space in Carlsbad, CA on June 2, 2025, in the Superior Court of California, County of San Diego. The lessor is claiming breach of lease and written guaranty agreements by the Company and is seeking damages for $
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
On April 30, 2024, a group representing the sellers of Just Brands LLC to Flora in February 2022 (the "Plaintiffs") brought an action against the Company in the United States District Court for the Southern District of New York (the "Court") claiming that the Company failed to promptly issue additional shares in accordance with a specific formula set forth in the securities purchase agreement after the two-year anniversary of the closing, which occurred on February 24, 2024. The plaintiffs claim that they are entitled to
Legal proceedings
The Company records liabilities for legal proceedings in those instances where it can reasonably estimate the amount of the loss and where liability is probable. The Company is engaged from time to time in various legal proceedings and claims that have arisen in the ordinary course of business. The outcome of all the proceedings and claims against the Company is subject to future resolution, including the uncertainties of litigation. Based on information currently known to the Company and after consultation with outside legal counsel, management believes that the probable ultimate resolution of any such proceedings and claims, individually or in the aggregate, will not have a material adverse effect on the financial condition of the Company, taken as a whole as at September 30, 2025.
As discussed above, on June 2, 2025, Vessel Brand, Inc., and Flora Growth Corp. were served by the plaintiffs in the Superior Court of California in the County of San Diego for breach of lease and written guaranty agreement in a civil case for $
On May 31, 2023, Maria Beatriz Fernandez Otero and Sara Cristina Jacome De Torres brought an action against the Company in the Ontario Superior Court of Justice claiming that the Company is obligated to issue
On May 31, 2023, Ramon Ricardo Castellanos Saenz and Miriam Ortiz brought an action against the Company in the Ontario Superior Court of Justice claiming that the Company is obligated to issue
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
17. LOSS PER SHARE
The Company calculates basic earnings per share based upon the weighted average number of common shares outstanding during the period, while the calculation of diluted earnings per share includes the dilutive effect of potential common shares outstanding during the period. The calculation of diluted earnings per share excludes all potential common shares if their inclusion would have an anti-dilutive effect. Restricted stock award recipients under the 2022 Plan have a non-forfeitable right to receive dividends declared by the Company and are therefore included in computing earnings per share. A total of
|
Three months ended |
Three months ended |
Nine months ended |
Nine months ended |
|||||||||
|
September 30, 2025 |
September 30, 2024 |
September 30, 2025 |
September 30, 2024 |
|||||||||
| Stock options | ||||||||||||
| Warrants | ||||||||||||
| Restricted stock awards | ||||||||||||
| Stock appreciation rights | ||||||||||||
| JustCBD potential additional shares to settle contingent consideration | ||||||||||||
| Total anti-dilutive |
18. FINANCIAL INSTRUMENTS
Fair value
The Company's financial instruments measured at amortized cost as at September 30, 2025 and December 31, 2024 consist of cash, trade and amounts receivable, trade payables, contingencies, accrued liabilities, lease liabilities, and debt and loans payable. The amounts reflected in the unaudited condensed interim consolidated statements of financial position approximate fair value due to the short-term maturity of these instruments.
Financial instruments recorded at the reporting date at fair value are classified into one of three levels based upon the fair value hierarchy. Items are categorized based on inputs used to derive fair value based on:
Level 1 - quoted prices that are unadjusted in active markets for identical assets or liabilities
Level 2 - inputs other than quoted prices included in level 1 that are observable for the asset/liability either directly or indirectly; and
Level 3 - inputs for the instruments are not based on any observable market data.
The Company's contingent purchase considerations consisted of the estimated fair value of contingent purchase consideration from the acquisition of JustCBD in February 2022. The amount for JustCBD was measured at FVPL as a Level 2 fair value financial instrument within the fair value hierarchy in prior periods. The fair value was determined using a simplified calculation which took the expected shares to be issued (
As valuations of investments for which market quotations are not readily available are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Such changes may have a significant impact on the Company's financial condition or operating results.
The following tables present information about the Company's financial instruments and their classifications as at September 30, 2025 and December 31, 2024 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value.
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
| Fair value measurements at September 30, 2025 using: | ||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||
| Financial liabilities: | ||||||||||||
| Contingent purchase consideration from asset acquisitions and business combinations | $ | $ | $ | $ |
| Fair value measurements at December 31, 2024 using: | ||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||
| Financial liabilities: | ||||||||||||
| Contingent purchase consideration from asset acquisitions and business combinations | $ | $ | $ | $ |
19. SEGMENTED INFORMATION
The Company formerly reported its financial results for the following two operating segments, which are also its reportable segments: commercial and wholesale (primarily the Phatebo and TruHC subsidiaries), which sell pharmaceutical products, and house of brands (JustCBD, Vessel, United and AV subsidiaries), which sells a mix of products across multiple categories including food and beverage, cannabis accessories and technology, personal care and wellness. As discussed in Note 3, the Company disposed of the entirety of the house of brands segment on September 26, 2025. As a result, the Company had only one operating segment, commercial and wholesale, through September 30, 2025. This segment reflects how the Company's operations are managed, how the Company Chief Executive Officer, who is the chief operating decision maker, allocates resources and evaluates performance, and how the Company's internal management financial reporting is structured. The chief operating decision maker uses net income to evaluate income generated from segment assets in deciding whether to reinvest profits into the segment or into other parts of the Company, such as for acquisitions. Net income is used to monitor actual results versus budget and prior year, which is used to assess the performance of the segment.
The Company's operates its distribution business within its Germany subsidiary. The Corporate segment reflects balances and expenses that do not directly influence business unit operations and includes the Company's digital assets.
As discussed in Note 2, the Company began implementing an expansion strategy focused on identifying and pursuing complimentary growth opportunities within the global digital asset market in 2025. As a result of this strategy, management has re-evaluated its segment reporting structure and determined that a new segment, digital asset treasury, would be created. As of the three and nine months ended September 30, 2025, the digital asset treasury segment would have reported gains of $
The following table shows information regarding the Company's segments for the nine months ended September 30, 2025.
|
Commercial & Wholesale |
Corporate & Eliminations |
Total | |||||||
| Revenue | $ | $ | $ | ||||||
| Cost of sales | |||||||||
| Gross profit | |||||||||
| Consulting and management fees | |||||||||
| Share based compensation | |||||||||
| Depreciation and amortization | |||||||||
| Impairment expense | |||||||||
| Gain on disposal of insolvent subsidiaries | ( |
) | ( |
) | |||||
| Changes in financial instruments fair value | ( |
) | ( |
) | |||||
| Interest expense, net | |||||||||
| Other segment items (1) | |||||||||
| Net income (loss) before income taxes | ( |
) | ( |
) | |||||
| Income taxes | |||||||||
| Net income (loss) from continuing operations | $ | $ | ( |
) | $ | ( |
) |
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
The following table shows information regarding the Company's segments for the three months ended September 30, 2025.
|
Commercial & Wholesale |
Corporate & Eliminations |
Total | |||||||
| Revenue | $ | $ | $ | ||||||
| Cost of sales | |||||||||
| Gross profit | |||||||||
| Consulting and management fees | |||||||||
| Share based compensation | |||||||||
| Depreciation and amortization | |||||||||
| Changes in financial instruments fair value | |||||||||
| Interest expense, net | |||||||||
| Other segment items (1) | |||||||||
| Net loss before income taxes | ( |
) | ( |
) | ( |
) | |||
| Income taxes | |||||||||
| Net loss from continuing operations | $ | ( |
) | $ | ( |
) | $ | ( |
) |
The following table shows information regarding the Company's segments for the nine months ended September 30, 2024.
|
Commercial & Wholesale |
Corporate & Eliminations |
Total | |||||||
| Revenue | $ | $ | $ | ||||||
| Cost of sales | |||||||||
| Gross profit | |||||||||
| Consulting and management fees | |||||||||
| Share based compensation | |||||||||
| Depreciation and amortization | |||||||||
| Impairment expense | |||||||||
| Interest expense (income), net | ( |
) | |||||||
| Changes in financial instruments fair value | |||||||||
| Other segment items (1) | |||||||||
| Net loss before income taxes | ( |
) | ( |
) | ( |
) | |||
| Income taxes | |||||||||
| Net loss from continuing operations | $ | ( |
) | $ | ( |
) | $ | ( |
) |
The following table shows information regarding the Company's segments for the three months ended September 30, 2024.
| Commercial & Wholesale | Corporate & Eliminations | Total | |||||||
| Revenue | $ | $ | $ | ||||||
| Cost of sales | |||||||||
| Gross profit | |||||||||
| Consulting and management fees | |||||||||
| Share based compensation | |||||||||
| Depreciation and amortization | |||||||||
| Interest expense (income), net | ( |
) | |||||||
| Changes in financial instruments fair value | |||||||||
| Other segment items (1) | ( |
) | |||||||
| Net loss before income taxes | ( |
) | ( |
) | ( |
) | |||
| Income taxes | ( |
) | ( |
) | |||||
| Net loss from continuing operations | $ | ( |
) | $ | ( |
) | $ | ( |
) |
(1) Other segment items include professional fees, general and administrative, travel expenses, research and development, operating lease expense, bad debt expense, other expenses (net), and foreign exchange loss (gain).
| Flora Growth Corp. Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 and 2024 (In thousands of United States dollars, except shares and per share amounts) |
Other significant items and disaggregation by geographic area:
| As at | September 30, 2025 | December 31, 2024 | ||||
| Assets | ||||||
| Commercial & Wholesale | $ | $ | ||||
| House of Brands | ||||||
| Corp & Eliminations | ||||||
| $ | $ |
All of the Company's sales during the three and nine months ended September 30, 2025 and the three and nine months ended September 30, 2024 were generated at Phatebo, the Company's German subsidiary.
20. SUBSEQUENT EVENTS
SECOND CLOSING OF THE SEPTEMBER PRIVATE PLACEMENT
On October 9, 2025, the final
On October 9, 2025, in connection with the second closing of the PIPE Offering, the Company issued the remaining
NOTE PRIVATE PLACEMENT
On October 24, 2025, in connection with the third and final closing of the PIPE Offering, the Company issued the PIPE Note in exchange for its principal amount of
ZERO GRAVITY PRIVATE PLACEMENT
On October 23, 2025, the Company issued the Zero Gravity Convertible Note in exchange for its principal amount of
The Company's Executive Chairman of the Board, Michael Heinrich, is the Chief Executive Officer of Zero Gravity.
OTHER
On October 15, 2025,
In October 2025, Company issued a total of
28
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information we believe is relevant to an assessment and understanding of our results of operations, financial condition, liquidity and cash flows for the periods presented. This discussion should be read in conjunction with (a) our unaudited condensed consolidated financial statements and related notes contained elsewhere in Part I, Item 1, "Financial Statements" of this Quarterly Report, and (b) Part I, Item 1A "Risk Factors", Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited consolidated financial statements and related notes in our 2024 Annual Report. As discussed in the section above titled "Cautionary Statement Regarding Forward-Looking Statements," the following discussion contains forward-looking statements that are based upon our current expectations, including with respect to our future revenues and operating results. Our actual results may differ materially from those anticipated in such forward-looking statements as a result of various factors. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included under Part II, Item 1A below and included under Part I, Item 1A in our 2024 Annual Report.
Amounts are expressed in United States dollars ("$" or "USD") unless otherwise stated to be in Euro ("€"). Amounts stated in foreign currencies include approximate USD amounts based on exchange rates on September 30, 2025. Variance, ratio, and percentage changes in this section are based on unrounded numbers. This section reports the Company's activities through September 30, 2025, unless otherwise indicated.
Overview of our Business
Flora Growth Corp. ("Flora" or the "Company"), which will be rebranded as ZeroStack, is the first and largest decentralized AI treasury company that is investing in the future of AI infrastructure through strategic ownership in 0G Tokens, an AI infrastructure company that has created an open and decentralized AI network fueled by the 0G Token.
The Company is a global pharmaceutical distributor through its wholly owned subsidiary Phatebo. Based in Germany, Phatebo is a wholesale pharmaceutical distribution company with import and export capabilities of a wide range of pharmaceutical goods and medical products to treat a variety of health indications, including drugs related to cancer therapies, ADHD, multiple sclerosis and anti-depressants, among others. Phatebo is focused on distributing pharmaceutical products within 28 countries globally, primarily in Europe, but also with sales to Asia, Latin America, and North America. Additionally, the Phatebo warehouse provides a logistics outpost for Flora's growing product portfolio and distribution network within the European Union. On September 20, 2025, we entered into an agreement for the disposition of certain components of our existing hemp and cannabis business, as described below under the header "Sale of Legacy Hemp and Cannabis Business."
Cryptocurrency Treasury Strategy
On May 2, 2025, the Company entered into a securities purchase agreement (the "May 2025 Securities Purchase Agreement") with certain investors (the "May 2025 Investors") in connection with the issuance and sale by the Company to the May 2025 Investors via a private placement (the "May 2025 Private Placement") of an aggregate of 80,340 common shares at a purchase price of $11.70 per share (the "May 2025 Common Shares") and 18,642 pre-funded warrants of the Company at a purchase price of $11.6961 per warrant (the "May 2025 Pre-funded Warrants") each to purchase one common share (each, a "May 2025 Pre-funded Warrant Share") which were immediately exercisable and expire when exercised in full, at an exercise price of $0.0039 per share.
The net proceeds from the sale of the May 2025 Common Shares and the May 2025 Pre-funded Warrants were approximately $1.1 million after deducting estimated expenses relating to the May 2025 Private Placement. The Company used $0.4 million of the net proceeds from the May 2025 Private Placement to purchase Solana, $0.4 million of the net proceeds from the May 2025 Private Placement to purchase Ethereum, $0.1 million of the net proceeds from the May 2025 Private Placement to purchase Sui, $0.1 million of the net proceeds from the May 2025 Private Placement to purchase Ripple (collectively, the "Owned Cryptocurrencies"), and the balance of the net proceeds from the May 2025 Private Placement for general corporate and working capital purposes and to pay any fees and expenses in connection with the issuance of the May 2025 Common Shares and the May 2025 Pre-funded Warrants.
On September 19, 2025, the Company entered into securities purchase agreements with certain investors pursuant to which the Company agreed to sell and issue the following securities in private placement offerings (collectively, the "PIPE Offering"): (i) 116,340 common share units ("PIPE Common Share Units") at a unit price of $25.19, payable in cash, for aggregate gross proceeds of $2.9 million, with each unit consisting of one common share ("PIPE Common Share") and 0.2 of a warrant to purchase one common share at an exercise price of $25.19 ("PIPE Warrant"); (ii) 412,037 pre-funded warrant units ("PIPE Pre-Funded Warrant Units") at a unit price of $25.1899, payable in cash, for aggregate gross proceeds of $10.4 million, with each unit consisting of one pre-funded warrant to purchase one common share at an exercise price of $0.0001 ("PIPE Pre-Funded Warrant") and 0.2 of a PIPE Warrant; (iii) 8,546,955 PIPE Pre-Funded Warrants at a unit price of $25.1899, payable in 71,766,135 0G Tokens based on an agreed value of $3 per 0G Token; and (iv) an unsecured convertible note in an aggregate original principal amount of 95,333 Solana (the "PIPE Note").
29
On September 26, 2025, in connection with the first closing of the PIPE Offering, the Company issued 116,340 PIPE Common Share Units and 412,037 PIPE Pre-Funded Warrant Units for aggregate gross cash proceeds of $13.3 million, and 2,592,212 PIPE Pre-Funded Warrants for 21,766,135 0G Tokens, valued at $54.7 million on the issuance date. The remaining 5,954,473 PIPE Pre-Funded Warrant Units were issued on October 9, 2025, for 50,000,000 0G Tokens. The PIPE Note was issued on October 24, 2025, at which date the original principal amount of 95,333 Solana was received.
On September 19, 2025, the Company entered into an arrangement with Zero Gravity Labs Inc. ("Zero Gravity") pursuant to which the Company agreed to (i) borrow 50,000,000 0G Tokens from Zero Gravity under a term loan agreement ("Loan Agreement"), and (ii) issue to Zero Gravity in a private placement offering 1,786,423 warrants to purchase one common share at an exercise price of $0.01 ("Loan Agreement Warrants"). On September 22, 2025, the Company entered into a securities purchase agreement with Zero Gravity for the issuance of an unsecured convertible note in an aggregate original principal amount of 50,000,000 0G Tokens (the "Zero Gravity Convertible Note") that will replace the Loan Agreement and Loan Agreement Warrants, subject to closing. The Zero Gravity Convertible Note was issued on October 23, 2025, at which date the 50,000,000 0G Tokens were received.
The Company intends to use the net proceeds from the PIPE Offering and the Zero Gravity Convertible Note (collectively, the "Cryptocurrency Offering") to further the Company's new digital asset treasury strategy linked to 0G Tokens, and to explore and expand the use of the native AI functionality of the 0G Tokens to enhance the business of the Company. The balance of the net proceeds will be used for general corporate and working capital purposes.
In connection with the Cryptocurrency Offering, on October 1, 2025, Mr. Clifford Starke resigned as a director and the Chief Executive Officer of the Company and Mr. Sammy Dorf resigned as the Executive Chairman of the Company.
On October 1, 2025, the Board of Directors (the "Board") appointed Mr. Daniel Reis-Faria and Michael Heinrich as non-independent directors of the Board, and in connection with their appointments to the Board, Mr. Reis-Faria, was also appointed as the Chief Executive Officer of the Company and Mr. Heinrich was also appointed as Executive Chairman effective October 1, 2025.
Sale of Legacy Hemp and Cannabis Business
On September 26, 2025, the Company transferred 100% of the issued and outstanding equity interests of the following direct and indirect wholly-owned subsidiaries, which collectively comprise the Company's legacy hemp and cannabis business: (i) Australian Vaporizers Pty LTD, an Australian limited company; (ii) Vessel Brand Canada Inc., a Canadian corporation; (iii) Klokken Aarhus Inc., a Canadian corporation; (iv) Rangers Pharmaceuticals A/S, a Danish stock-based corporation; (v) TruHC Pharma GmbH, a German limited company; (vi) Vessel Brand Inc., a Delaware corporation; (vii) High Roller Private Label LLC, a Florida limited liability company; (viii) Just Brands LLC, a Florida limited liability company; (ix) Just Brands FL LLC, a Florida limited liability company; (x) Just Brands International LTD, a United Kingdom limited company; and (xi) United Beverage Distribution Inc., a South Dakota corporation (collectively, the "Transferred Interests") to Flora Growth US Holdings LLC, a Florida limited liability company and certain noteholders ("Noteholders") of the Company, in exchange for full satisfaction of the balance receivable under the promissory notes issued by the Company to such Noteholders as part of the Company's acquisition of United Beverage Distribution Inc. on January 30, 2025.
Public Company Costs
We are a public company which requires additional staff and the implementation of processes and procedures to address public company regulatory requirements and customary practices. We expect to continue to incur substantial additional annual expenses for, among other things, directors' and officers' liability insurance and additional internal and external costs for investor relations, accounting, audit, legal, and other functions.
Minimum Bid Price Requirement
On February 25, 2025, the Company was notified by the Nasdaq Stock Market, LLC ("Nasdaq") that it was not in compliance with the minimum bid price requirement of $1.00 per share for 30 consecutive business days as set forth in Rule 5550(a)(2) of the Nasdaq Listing Rules (the "Minimum Bid Price Requirement"). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has 180 calendar days, or until August 25, 2025, to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the Company will need to maintain a minimum closing bid price of $1.00 or more for at least 10 consecutive trading days before August 25, 2025, unless Nasdaq Listing Qualifications Department exercises its discretion to extend this 10-day period pursuant to Nasdaq Listing Rule 5810(c)(3)(H). If the common shares do not achieve compliance by August 25, 2025, the Company may be eligible for an additional 180-day period to regain compliance, provided that it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards of the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and provides written notice to Nasdaq of its intention to cure the deficiency during the second compliance period, for example, by effecting a reverse stock split, if necessary.
30
On August 4, 2025, the Company filed an Articles of Amendment to the Company's amended and restated Articles of Incorporation with the Ontario Ministry of Public and Business Service Delivery and Procurement to effect a reverse stock split of the Company's common shares at a ratio of 1-for-39, which became effective at 5:00 p.m. Eastern Time on August 3, 2025 (the "Reverse Stock Split"). As a result of the Reverse Stock Split, every 39 common shares issued and outstanding were automatically reclassified into one new common share. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split were automatically rounded up to the nearest whole common share. From August 4, 2025 through August 18, 2025, a period of 10 consecutive trading days, the closing bid price of the Company's common shares was greater than $1.00 per share. Accordingly, on August 19, 2025, the Company received formal notice from Nasdaq that it had regained compliance with the Minimum Bid Price Requirement and that the matter has been closed. Flora is now in compliance with all applicable continued listing standards and its common shares continue to be listed and traded on Nasdaq.
Minimum Independent Directors Requirement
On August 25, 2025, Harold Wolkin, a director of the Company, passed away. Prior to his passing, Mr. Wolkin served as an "Independent Director", as defined in Nasdaq Listing Rule 5605(a)(2), of the Company's audit committee, the compensation committee, and the nominating and corporate governance committee of the Board. On August 26, 2025, Nasdaq was informed that because of Mr. Wolkin's passing, the Company is no longer in compliance with certain Corporate Governance Requirements as set forth in Nasdaq Listing Rule 5605.
Pursuant to Nasdaq Listing Rule 5605(b)(1), a majority of the Board of a listed company must be comprised of Independent Directors. With Mr. Wolkin's passing, the Board is currently comprised of only four members, Daniel Reis-Faria, Michael Heinrich, Edward Woo and Manfred Leventhal. Only two of the four, Mr. Woo and Mr. Leventhal, qualify as Independent Directors. Therefore, the Company's Board is no longer comprised of a majority of Independent Directors as required by Nasdaq Listing Rule 5605(b)(1).
Pursuant to Nasdaq Listing Rule 5605(c)(2)(A), a listed company must have an audit committee of at least three members, each of whom must be an Independent Director and meet the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). With Mr. Wolkin's passing, the Company's audit committee is currently comprised of only two members, each of whom meet the independence requirements set forth in Nasdaq Rule 5605(a)(2) and Rule 10-A3(b)(1) of the Exchange Act. Therefore, the Company's audit committee is no longer comprised of at least three members meeting the aforementioned independence requirements as required by Nasdaq Listing Rule 5605(c)(2)(A).
The Company is in the process of reviewing and evaluating potential options to regain compliance with Nasdaq Listing Rules 5605(b)(1) and 5605(c)(2)(A) within the cure period set forth in 5605(b)(1)(A), which will be before the earlier of one year from August 25, 2026 and the next annual meeting.
Key Components of Results of Operations
Revenue
The Company primarily generates revenue as a global pharmaceutical distributor through its wholly owned subsidiary Phatebo.
The Company operates its global pharmaceutical distribution business through its subsidiary in the Germany.
The Company uses the following five-step contract-based analysis of transactions to determine if, when and how much revenue can be recognized:
31
1. Identify the contract with a customer;
2. Identify the performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to the performance obligations in the contract; and
5. Recognize revenue when or as the Company satisfies the performance obligations.
Revenue is recognized at the transaction price, which is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods to a customer. Gross revenue excludes duties and taxes collected on behalf of third parties. Revenue is presented net of expected price discounts, sales returns, customer rebates and other incentives.
The Company's contracts with customers for the sales of products consist of one performance obligation. Revenue from product sales is recognized at the point in time when control is transferred to the customer, which is on shipment or delivery, depending on the contract terms. The Company's payment terms generally range from 0 to 30 days from the transfer of control, and sometimes up to six months.
Cost of Sales
The Company includes the cost of raw materials and supplies, purchased finished goods and changes in inventory reserves in cost of sale. Raw materials include the purchase cost of the materials, freight-in and duty. Finished goods include the cost of products purchased from suppliers. Inventory reserves for excess and obsolete inventory are based upon quantities on hand, projected volumes from demand forecasts and net realizable value. The primary factors that can impact cost of goods sold on a period-to-period basis include the volume of products sold, the mix of products sold, third-party quality costs, transportation, overhead allocations and changes in inventory provisions.
Operating Expenses
The Company's operating expenses are apportioned based on the following categories:
- Consulting and management fees include salary and benefit expenses for employees, directors and consultants for the Company's corporate activities, other than those included in one of general and administrative, share-based compensation, and research and development.
- Professional fees include legal, audit and other expenses incurred by third-party service providers.
- General and administrative include certain public company costs and temporary labor and subcontractor costs for the Company's operating subsidiaries.
- Travel expenses relate to flight, lodging and incidental expenses for attending conferences, events and key business meetings.
- Share-based compensation includes the cost of vesting of the Company's equity awards, including share options, restricted share awards, and stock appreciation rights ("SARs").
- Operating lease expense represents the cost of the Company's operating leases, primarily consisting of real estate and equipment.
- Depreciation and amortization expense is provided on a straight-line basis over the corresponding assets' estimated useful lives.
- Bad debt expense consists of changes in the provision for the Company's expected credit losses. The Company utilizes a provision matrix to estimate lifetime expected credit losses.
- Asset impairment includes the difference between the fair value and carrying amount of the asset group. An impairment loss is recognized when the sum of projected undiscounted cash flows is less than the carrying value of an asset group.
- Gain on disposal of insolvent subsidiaries includes the difference between the fair value of any consideration received and the carrying values of the net assets of subsidiaries that have been deconsolidated as a result of filing for bankruptcy.
- Other expenses (income), net include miscellaneous expenses that do not fit the criteria for recognition in another category.
Non-Operating Loss (Income)
Non-operating expenses include interest income and expenses, foreign exchange (gains) losses and unrealized losses (gains) from changes in fair value. Interest is primarily related to the Company's lease liabilities and operating lines of credit. Foreign exchange is largely related to the revaluation of balances denominated in foreign currencies to U.S. dollars. Unrealized losses (gains) from changes in fair value pertain to fluctuations in the fair values of the Company's digital assets and liabilities.
32
Income Tax
Income tax consists primarily of income taxes related to U.S. federal and state income taxes and income taxes in foreign jurisdictions in which we conduct business.
Loss from Discontinued Operations
Loss from discontinued operations includes the net loss, net of tax, of the Company's legacy hemp and cannabis business sold on September 26, 2025. It also includes an expected gain on the disposal as the expected sale price exceeded the carrying value of the assets being sold.
Results of Operations
The following tables provide sets forth the Company's consolidated results of operations for the three and nine months ended September 30, 2025 and 2024 (in thousands). The period-to-period comparisons of the Company's historical results are not necessarily indicative of the results that may be expected in the future. The results of operations data have been derived from our unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2025 and 2024 included elsewhere in this Quarterly Report.
| For the three months ended September 30, 2025 |
For the three months ended September 30, 2024 |
For the Nine |
For the Nine |
|||||||||
| Revenue | $ | 9,748 | $ | 7,238 | $ | 26,323 | $ | 28,219 | ||||
| Cost of sales | 9,413 | 6,743 | 24,834 | 26,309 | ||||||||
| Gross profit | 335 | 495 | 1,489 | 1,910 | ||||||||
| Consulting and management fees | 1,240 | 1,130 | 2,793 | 2,803 | ||||||||
| Professional fees | 445 | 512 | 1,611 | 2,019 | ||||||||
| General and administrative | 473 | 409 | 1,061 | 821 | ||||||||
| Travel expenses | 31 | 53 | 141 | 105 | ||||||||
| Share based compensation | 541 | 406 | 885 | 428 | ||||||||
| Operating lease expense | 38 | 28 | 114 | 72 | ||||||||
| Depreciation and amortization | 7 | 8 | 19 | 25 | ||||||||
| Bad debt expense | (10 | ) | - | - | - | |||||||
| Asset impairment | - | - | 46 | 31 | ||||||||
| Gain on disposal of insolvent subsidiaries | - | - | (1,119 | ) | - | |||||||
| Other expenses, net | 836 | 65 | 1,350 | 828 | ||||||||
| Operating loss | (3,266 | ) | (2,116 | ) | (5,412 | ) | (5,222 | ) | ||||
| Non-operating loss (income) | 343 | 276 | (18 | ) | 245 | |||||||
| Net loss before taxes and discontinued operations | (3,609 | ) | (2,392 | ) | (5,394 | ) | (5,467 | ) | ||||
| Income tax | 18 | (66 | ) | 113 | 80 | |||||||
| Net loss from continuing operations | (3,627 | ) | (2,326 | ) | (5,507 | ) | (5,547 | ) | ||||
| Loss from discontinued operations, net of tax | (3,032 | ) | (1,474 | ) | (4,322 | ) | (4,284 | ) | ||||
| Net loss for the period | $ | (6,659 | ) | $ | (3,800 | ) | $ | (9,829 | ) | $ | (9,831 | ) |
For the Three Months Ended September 30, 2025 and 2024
Revenue
Revenue totaled $9.8 million and $7.2 million for the three months ended September 30, 2025 and 2024, respectively. The revenue for both the three months ended September 30, 2025 and 2024 was generated entirely by the Company's Phatebo subsidiary.
33
Gross Profit
Gross profit totaled $0.3 million and $0.5 million for the three months ended September 30, 2025 and 2024, respectively. The decrease was primarily driven by the decreased margins at the Phatebo subsidiary in the three months ended September 30, 2025. As a percentage of net sales, or gross margin, the Company reported 3% and 7% for the three months ended September 30, 2025 and 2024, respectively. The decrease is primarily due to unfavorable mix, with a higher percentage of lower margin sales at Phatebo.
Operating Expenses
Operating expenses totaled $3.6 million and $2.6 million for the three months ended September 30, 2025 and 2024, respectively. The increase is driven by a contingency loss.
Consulting and Management Fees
Consulting and management fees were $1.2 million for the three months ended September 30, 2025 compared to $1.1 million for the three months ended September 30, 2024. These fees are related to employment and consulting contracts with most of the Company's management, as well as directors.
Professional Fees
Professional fees totaled $0.4 million for the three months ended September 30, 2025 compared to $0.5 million for the three months ended September 30, 2024. These expenses are associated with legal, accounting and audit services.
General and Administrative Expenses
General and administrative expenses totaled $0.5 million for the three months ended September 30, 2025 compared to $0.4 million for the three months ended September 30, 2024. The primary expenses included in both periods were filing services and shareholder communications, as well as professional dues and subscriptions.
Travel Expenses
Travel expenses were less than $0.1 million for the three months ended September 30, 2025 compared to $0.1 million for the three months ended September 30, 2024. These expenses were for various trips related to the subsidiaries and the Company's promotional activities.
Share-based Compensation Expenses
Share-based compensation expenses totaled $0.5 million for the three months ended September 30, 2025 compared to $0.4 million for the three months ended September 30, 2024. These expenses represent the amortization of the fair value of share-based payments. The increase is due to the grants of SARs to key employees during the year ended December 31, 2024.
Operating Lease Expenses
Operating lease expenses totaled less than $0.1 million for both the three months ended September 30, 2025 and the three months ended September 30, 2024.
Depreciation and Amortization Expense
Depreciation and amortization expenses were less than $0.1 million for both the three months ended September 30, 2025 and the three months ended September 30, 2024.
Bad Debt Expense
Bad debt expense totaled less than $0.1 million for the three months ended September 30, 2025 compared to $nil for the three months ended September 30, 2024. The amounts reflect the Company's estimate of lifetime expected losses related to outstanding trade receivables.
34
Other Expenses
Other expenses totaled $0.8 million for the three months ended September 30, 2025 compared to other expense of $0.1 million for the three months ended September 30, 2024. For both periods, this income and expense consists mainly of insurance, repairs and maintenance and royalties partially offset by miscellaneous incomes. The increase in expense in the three months ended September 30, 2025 was driven by a $0.6 million contingency loss recorded for a legal proceeding brought against Vessel Brand Inc, a former subsidiary of the Company, and the Company on June 2, 2025.
Non-operating Loss (Income)
Flora realized $0.3 million in non-operating loss for both the three months ended September 30, 2025 and the three months ended September 30, 2024. This loss consists of unrealized losses from changes in fair value, interest (income) expense and foreign exchange loss (gain).
Income Tax
We recognized less than $0.1 million in income tax expense for the three months ended September 30, 2025 compared to $0.1 million in income tax benefit for the three months ended September 30, 2024. Our effective tax rate during the periods ended September 30, 2025 and 2024 was -0.5% and 2.8%, respectively. We maintain valuation allowances when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in the tax provision in the period of change. In determining whether a valuation allowance is required, we consider such factors as prior earnings history, expected future earnings, carry-back and carry-forward periods and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. We continue to believe our deferred tax assets are not more-likely-than-not to be realized and a full valuation allowance remains recorded against net deferred taxes as of September 30, 2025 and 2024.
Loss from Discontinued Operations
Loss from discontinued operations totaled $3.0 million in the three months ended September 30, 2025 compared to $1.5 million in the three months ended September 30, 2024. The increase in loss in the three months ended September 30, 2025 was driven by $1.4 million in goodwill impairment recorded at the former TruHC subsidiary.
Net Loss
The Company recorded a net loss of $6.7 million for the three months ended September 30, 2025 compared to a net loss of $3.8 million for the three months ended September 30, 2024. This increase in net loss is driven by increased loss from discontinued operations and higher operating expenses.
For the Nine Months Ended September 30, 2025 and 2024
Revenue
Revenue totaled $26.3 million and $28.2 million for the nine months ended September 30, 2025 and 2024, respectively. The revenue for both the nine months ended September 30, 2025 and 2024 was generated entirely by the Company's Phatebo subsidiary.
Gross Profit
Gross profit totaled $1.5 million and $1.9 million for the nine months ended September 30, 2025 and 2024, respectively. The decrease was primarily driven by the decreased margins at the Phatebo subsidiary in the nine months ended September 30, 2025. As a percentage of net sales, or gross margin, the Company reported 6% and 7% for the nine months ended September 30, 2025 and 2024, respectively. The decrease is primarily due to unfavorable mix, with a higher percentage of lower margin sales at Phatebo.
Operating Expenses
Operating expenses totaled $6.9 million and $7.1 million for the nine months ended September 30, 2025 and 2024, respectively. The decrease is driven by a $1.2 million gain on the disposal and deconsolidation of insolvent subsidiaries.
35
Consulting and Management Fees
Consulting and management fees were $2.8 million for both the nine months ended September 30, 2025 and the nine months ended September 30, 2024. These fees are related to employment and consulting contracts with most of the Company's management, as well as directors.
Professional Fees
Professional fees totaled $1.6 million for the nine months ended September 30, 2025 compared to $2.0 million for the nine months ended September 30, 2024. These expenses are associated with legal, accounting and audit services.
General and Administrative Expenses
General and administrative expenses totaled $1.1 million for the nine months ended September 30, 2025 compared to $0.8 million for the nine months ended September 30, 2024. The primary expenses included in both periods were filing services and shareholder communications, as well as professional dues and subscriptions.
Travel Expenses
Travel expenses totaled $0.1 million for both the nine months ended September 30, 2025 and the nine months ended September 30, 2024. These expenses were for various trips related to the subsidiaries and the Company's promotional activities.
Share-based Compensation Expenses
Share-based compensation expenses totaled $0.9 million for the nine months ended September 30, 2025 compared to $0.4 million for the nine months ended September 30, 2024. These expenses represent the amortization of the fair value of share-based payments. The increase is due to the grants of SARs to key employees during the year ended December 31, 2024.
Operating Lease Expenses
Operating lease expenses totaled $0.1 million for both the nine months ended September 30, 2025 and the nine months ended September 30, 2024.
Depreciation and Amortization Expense
Depreciation and amortization expenses totaled less than $0.1 million for both the nine months ended September 30, 2025 and the nine months ended September 30, 2024.
Asset Impairment
Asset impairment totaled less than $0.1 million for both the nine months ended September 30, 2025 and the nine months ended September 30, 2024. The amount in 2025 represents impairment of an operating lease right of use asset in Florida. The amount in 2024 represents impairment of the long-lived assets in Germany.
Gain on Disposal of Insolvent Subsidiaries
Gain on disposal of insolvent subsidiaries totaled $1.1 million for the nine months ended September 30, 2025 compared to $nil for the nine months ended September 30, 2024. The gain was the result of certain subsidiaries of the Company filing for bankruptcy during March 2025. The Company deconsolidated these subsidiaries when it lost control upon each subsidiary's filing for bankruptcy.
Other Expenses
Other expense totaled $1.4 million for the nine months ended September 30, 2025 compared to $0.8 million for the nine months ended September 30, 2024. For both periods, this expense consists mainly of insurance, repairs and maintenance and royalties partially offset by miscellaneous incomes. The increase in expense in the nine months ended September 30, 2025 was driven by a $0.6 million contingency loss recorded for a legal proceeding brought against Vessel Brand Inc, a former subsidiary of the Company, and the Company on June 2, 2025.
36
Non-operating (Income) Loss
We realized less than $0.1 million in non-operating income for the nine months ended September 30, 2025 compared to non-operating loss of $0.2 million for the nine months ended September 30, 2024. This income and expense consist of unrealized (gains) losses from changes in fair value, interest (income) expense and foreign exchange loss (gain). The increase in income is primarily due to a $1.3 million gain on the revaluation of the Company's digital assets partially offset by $1.1 million in loss related to the settlement of the JustCBD contingent consideration recorded during the nine months ended September 30, 2025.
Income Tax
We recognized $0.1 million in income tax expense for both the nine months ended September 30, 2025 and the nine months ended September 30, 2024. Our effective tax rate during the periods ended September 30, 2025 and 2024 was -2.1% and -1.5%, respectively. We maintain valuation allowances when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in the tax provision in the period of change. In determining whether a valuation allowance is required, we consider such factors as prior earnings history, expected future earnings, carry-back and carry-forward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. We continue to believe our deferred tax assets are not more-likely-than-not to be realized and a full valuation allowance remains recorded against net deferred taxes as of September 30, 2025 and 2024.
Loss from Discontinued Operations
Loss from discontinued operations totaled $4.3 million for both the nine months ended September 30, 2025 and the nine months ended September 30, 2024.
Net Loss
The Company recorded a net loss of $9.8 million for both the nine months ended September 30, 2025 and the nine months ended September 30, 2024.
Liquidity and Capital Resources
Since the Company's inception, we have funded our operations and capital spending through cash flows from product sales and proceeds from the sale of our capital stock. The Company is generating cash from sales and is deploying its capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term to support our business growth and expansion. While we have generated significant operating losses and negative cash flows from operations as reflected in our accumulated deficit and unaudited condensed interim consolidated statements of cash flows mainly through our legacy hemp and cannabis businesses, we began implementing an expansion strategy focused on identifying and pursuing complementary growth opportunities within the global digital asset market in early 2025. This has resulted in $55.4 million in restricted and unrestricted digital assets on the Company's condensed consolidated balance sheet as of September 30, 2025. Our current principal sources of liquidity are cash and cash equivalents provided by our operations and prior equity offerings. Cash consists primarily of cash on deposit with banks. Cash was $13.1 million and $5.2 million as of September 30, 2025, and December 31, 2024, respectively. As a result of the PIPE Offering that closed on September 26, 2025, the Company believes that its existing sources of liquidity are and will be sufficient in both the short and long term to meet our working capital requirements and future obligations.
The Company's primary uses of cash are for working capital requirements and capital expenditures. Additionally, from time to time, it may use capital for acquisitions and other investing and financing activities. Working capital is used principally for the Company's personnel as well as costs related to the distribution of pharmaceutical products. The Company's capital expenditures consist primarily of additional facilities, improvements in existing facilities and product development.
Cash Flows
The following table sets forth the major components of the Company's unaudited condensed interim consolidated statements of cash flows for the periods presented.
37
| (In thousands of United States dollars) | For the nine months ended September 30, 2025 |
For the nine months ended September 30, 2024 |
||||
| Cash used in operating activities | $ | (5,516 | ) | $ | (3,686 | ) |
| Cash from financing activities | 12,067 | 3,111 | ||||
| Cash from investing activities | 647 | 203 | ||||
| Effect of exchange rate change | 679 | 231 | ||||
| Change in cash during the period | 7,877 | (141 | ) | |||
| Cash, beginning of period | 5,248 | 4,385 | ||||
| Cash, end of period | $ | 13,125 | $ | 4,244 |
Cash used in Operating Activities
Net cash used in operating activities in the nine months ended September 30, 2025 was $5.5 million compared to net cash used in operating activities of $3.7 million for the nine months ended September 30, 2024. Cash flows used in operating activities for the periods ended September 30, 2025 and 2024 were due primarily to operating expenses exceeding the gross profit for the periods.
Cash provided by Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2025 totaled $12.1 million compared to $3.1 million for the nine months ended September 30, 2024. Cash flows provided from financing activities for the period ending September 30, 2025 were due to the sale of common shares of the Company in May 2025 and September 2025 as well as net borrowings on the credit facilities in Germany through the Company's Phatebo subsidiary. Cash flows provided from financing activities for the period ending September 30, 2024 were due to the sale of common shares of the Company in April 2024 as well as net borrowings on the credit facilities in Germany through the Company's Phatebo subsidiary.
Cash provided by Investing Activities
Net cash provided by investing activities for the nine months ended September 30, 2025 totaled $0.6 million compared to $0.2 million for the nine months ended September 30, 2024. Cash flows provided by investing activities for the period ended September 30, 2025 were primarily related to the acquisition and sale of digital assets. Cash flows provided by investing activities for the period ended September 30, 2024 were primarily proceeds from the sale of property, plant and equipment.
Working Capital
As of September 30, 2025, we had working capital of $9.4 million, including $13.1 million of cash. The Company's primary cash flow needs are for the development of its operating activities, administrative expenses and for general working capital to support growing sales with related receivables and payables.
Funding Requirements
Our continued existence is dependent on our ability to generate positive cash flows through synergies within our operations, expanding our production capacity and geographic footprint, exploring strategic partnerships and pursuing accretive acquisitions to supplement our organic growth. We are committed to attaining a level of sustained growth that will effectively offset our overhead costs, thereby paving the path to achieving profitability. We will be required in the future to raise additional capital through either equity or debt financings. To date, we have raised capital through multiple equity offerings.
On September 19, 2025, the Company entered into the PIPE Offering pursuant to which the Company agreed to sell and issue the following securities in private placement offerings: (i) 116,340 PIPE Common Share Units at a unit price of $25.19, payable in cash, for aggregate gross proceeds of $2.9 million, with each unit consisting of one PIPE Common Share and 0.2 PIPE Warrants to purchase one common share at an exercise price of $25.19; (ii) 412,037 PIPE Pre-Funded Warrant Units at a unit price of $25.1899, payable in cash, for aggregate gross proceeds of $10.4 million, with each unit consisting of one PIPE Pre-Funded Warrant to purchase one common share at an exercise price of $0.0001 and 0.2 of a PIPE Warrant; (iii) 8,546,955 PIPE Pre-Funded Warrants at a unit price of $25.1899, payable in 71,766,135 0G Tokens based on an agreed value of $3 per 0G Token; and (iv) the PIPE Note in an aggregate original principal amount of 95,333 Solana.
On September 26, 2025, in connection with the first closing of the PIPE Offering, the Company issued 116,340 PIPE Common Share Units and 412,037 PIPE Pre-Funded Warrant Units for aggregate gross cash proceeds of $13.3 million, and 2,592,212 PIPE Pre-Funded Warrants for 21,766,135 0G Tokens, valued at $54.7 million on the issuance date. The remaining 5,954,473 PIPE Pre-Funded Warrant Units were issued on October 9, 2025, for 50,000,000 0G Tokens. The PIPE Note was issued on October 24, 2025, at which date the original principal amount of 95,333 Solana was received.
38
On September 19, 2025, the Company entered into an arrangement with Zero Gravity pursuant to which the Company agreed to (i) borrow 50,000,000 0G Tokens from Zero Gravity under the Loan Agreement, and (ii) issue to Zero Gravity in a private placement offering 1,786,423 Loan Agreement Warrants. On September 22, 2025, the Company entered into an agreement with Zero Gravity for the issuance of the Zero Gravity Convertible Note in an aggregate original principal amount of 50,000,000 0G Tokens that will replace the Loan Agreement and Loan Agreement Warrants, subject to closing. The Zero Gravity Convertible Note was issued on October 23, 2025, at which date the 50,000,000 0G Tokens were received.
On May 2, 2025, the Company closed a private placement offering of 80,340 common shares of the Company at a price of $11.70 per common share and 18,642 pre-funded warrants at a price of $11.6961 per warrant for gross proceeds of $1.2 million, of which the Company immediately invested $1.0 million in digital assets. On December 16, 2024, the Company closed a registered direct offering of 73,077 units of the Company at a price of $48.75 per unit for gross proceeds of $3.6 million. On December 10, 2024 and December 11, 2024, the Company sold an aggregate of 10,899 of the Company's common shares at a price of $65.13 per common share for gross proceeds of $0.7 million pursuant to separate subscription agreements entered into between the Company and certain institutional investors. On April 8, 2024, the Company closed a registered direct offering of 43,590 common shares of the Company at a price of $74.10 per common share for gross proceeds of $3.2 million. There were no other equity offerings in the periods ended September 30, 2025 and September 30, 2024.
Debt
In addition to the equity offerings described above, the Company also has access to credit facilities through its Phatebo subsidiary. The credit facilities total €2.4 million with three different German banks and are secured by default guarantees. On September 30, 2025, the outstanding amount was €2.3 million ($2.7 million USD) and was due within the next 12 months. The credit facilities have interest rates ranging from 4.76% to 5.08% per year and does not have a set maturity date. The interest rate is reset every time a new amount is drawn.
Off-Balance Sheet Arrangements
As of September 30, 2025, the Company did not have any off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on its results of operations or financial condition, including, and without limitation, such considerations as liquidity and capital resources.
Contractual Obligations
At September 30, 2025, the Company had the following contractual obligations to make future payments, representing contracts and other commitments that are known and committed:
| (In thousands of United States dollars) | Total | Less than 1 Year |
1 - 3 Years | More than 3 Years |
||||||||
| Legal disputes (1) | $ | 639 | $ | 639 | $ | - | $ | - | ||||
| Operating lease obligations (2) | 565 | 55 | 304 | 206 | ||||||||
| Debt (3) | 2,761 | 2,697 | 54 | 10 | ||||||||
| Total | $ | 3,965 | $ | 3,391 | $ | 358 | $ | 216 |
(1) See Note 16 of the Company's unaudited condensed interim consolidated financial statements, included elsewhere in this Quarterly Report.
(2) See Note 12 of the Company's unaudited condensed interim consolidated financial statements, included elsewhere in this Quarterly Report.
(3) See Note 11 of the Company's unaudited condensed interim consolidated financial statements, included elsewhere in this Quarterly Report.
Critical Accounting Estimates
For information regarding our critical accounting policies and estimates, see "Critical Accounting Estimates" included in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Annual Report.
39
Recently Adopted Accounting Principles
Except as discussed below, there were no new accounting standards issued during the nine months ended September 30, 2025 that impacted the Company. See Note 3, Significant Accounting Policies, of the notes to the consolidated financial statements for the year ended December 31, 2024 for a discussion of recently issued accounting standards.
Adoption of Accounting Standards and Amendments
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2023-08, Crypto Assets (Subtopic 350-60) ("ASU 2023-08"), which addresses the accounting and disclosure requirements for certain crypto assets. The guidance required entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. For all entities, the ASU's amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those years. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period.. The Company has adopted ASU 2023-08 effective as of January 1, 2025 and the disclosures around the Company's digital assets are reflective of that adoption.
40
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act and the regulations promulgated thereunder) as of September 30, 2025 (the "Evaluation Date"). Based on such evaluation, those officers have concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
41
PART II
Item 1. Legal Proceedings
There have been no material changes to the legal proceedings described in Item 3 of our 2024 Annual Report, other than as disclosed in Note 16 of the Company's unaudited condensed interim consolidated financial statements, included in Item 1 of Part I of this Quarterly Report.
Item 1A. Risk Factors
Except as discussed below, there have been no material changes to the risk factors described in the 2024 Annual Report.
Risks Related to Investing in Cryptocurrency
0G is a highly volatile asset, and fluctuations in the price of 0G may influence our financial results and the market price of our listed securities.
Our financial results and the market price of our listed securities would be adversely affected, and our business and financial condition would be negatively impacted, if the price of 0G decreased substantially, including as a result of:
- decreased user and investor confidence in 0G;
- investment and trading activities such as (i) activities of highly active retail and institutional users, speculators and investors or (ii) actual or expected significant dispositions of 0G by large holders, including the expected liquidation of digital assets seized by governments or associated with entities that have filed for bankruptcy protection, or associated with tokens vested by the Zero Gravity core team;
- a decrease in the price of other digital assets, to the extent the decrease in the price of such other digital assets may cause a decrease in the price of 0G or adversely affect investor confidence in digital assets generally;
- changes in consumer preferences and the perceived value or prospects of 0G or the utility of Zero Gravity;
- negative publicity, media or social media coverage, or sentiment due to events in or relating to, or perception of, 0G, Zero Gravity or the broader digital assets industry;
- competition from other decentralized exchanges or digital assets that exhibit comparable or better speed, security, scalability or energy efficiency, or that feature other more favored characteristics that are backed by governments, including the U.S. government, or reserves of fiat currencies, or that represent ownership or security interests in physical assets;
- developments relating to the Zero Gravity blockchain (the "0G Blockchain"), including (i) changes to the 0G Blockchain that impact its security, speed, scalability, usability or value, such as changes to the cryptographic security protocol underpinning the 0G Blockchain, changes to the maximum number of 0G Tokens outstanding, changes to the mutability of transactions, changes relating to the size of blockchain blocks, and similar changes; (ii) failures to make upgrades to the 0G Blockchain and the 0G interface to adapt to security, technological, legal or other challenges; and (iii) changes to the 0G Blockchain that introduce software bugs, security risks or other elements that adversely affect 0G;
- disruptions, failures, unavailability, or interruptions in services of venues for acquiring 0G;
- the filing for bankruptcy protection by, liquidation of, or market concerns about the financial viability of digital asset custodians, trading venues, lending platforms, investment funds, or other digital asset industry participants;
- regulatory, legislative, enforcement and judicial actions that adversely affect access to, functionality of or performance of Zero Gravity or associated products such as cryptocurrency perpetual futures, the price, ownership, transferability, trading volumes, legality or public perception of, 0G, Zero Gravity or other similar blockchains, or that adversely affect the operations of or otherwise prevent digital asset custodians, trading venues, lending platforms or other digital assets industry participants from (i) accessing 0G or Zero Gravity or associated products or (ii) operating in a manner that allows them to continue to deliver services to the digital assets industry;
42
- transaction congestion and fees associated with processing transactions on the Zero Gravity network;
- macroeconomic changes, such as changes in the level of interest rates and inflation, fiscal and monetary policies of governments, trade restrictions and fiat currency devaluations; and
- changes in national and international economic and political conditions, including, without limitation, federal government policies, trade tariffs and trade disputes and the adverse impacts attributable to global conflicts, including those between Russia and Ukraine and in the Middle East.
Moreover, the price of our listed securities has been and is likely to continue to be volatile, and with the adoption of our new cryptocurrency treasury strategy, we expect to see additional volatility in our stock price. In addition, if investors view the value of our listed securities as dependent upon or linked to the value or change in the value of our 0G holdings, the price of 0G may significantly influence the market price of our listed securities. The price of 0G has been, and is likely to continue to be, volatile.
We plan to use a portion of our capital raised that is not required to provide working capital for our ongoing operations to acquire 0G, which may adversely affect our financial results and the market price of our securities.
We plan to use a portion of our capital raised that is not required to provide working capital for our ongoing operations to acquire 0G. For example, we plan to use net proceeds from the Cryptocurrency Offering to further our new digital asset treasury strategy linked to 0G, and to explore and expand the use of the native AI functionality of the 0G to enhance the business of the Company and the balance of the net proceeds will be used for general corporate and working capital purposes. The price of 0G is newly established and highly volatile. Moreover, digital assets are relatively novel, and the application of securities laws and other regulations to such assets is unclear in many respects. It is possible that regulators may interpret laws in a manner that adversely affects the liquidity or value of our 0G holdings. Further, the acquisition of large amounts of 0G may become difficult or more costly, which would make it more difficult for us to implement our strategy. In addition, the application of generally accepted accounting principles in the United States with respect to digital assets remains uncertain in some respects, and any future changes in the manner in which we account for our 0G holdings could have a material adverse effect on our financial results and the market price of our securities. In addition, if investors view the value of our securities as dependent upon or linked to the value or change in the value of our 0G holdings, the price of such digital assets may significantly influence the market price of our securities.
Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our 0G holdings.
Because we only recently initiated our 0G treasury strategy, our historical financial statements do not reflect the potential variability in earnings that we may experience in the future from holding or selling significant amounts of 0G. The price of digital assets has historically been subject to dramatic price fluctuations and is highly volatile. In December 2023, the FASB issued ASU 2023-08, which we have adopted. ASU 2023-08 requires us to measure our 0G holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of our 0G in net income each reporting period. ASU 2023-08 also requires us to provide certain interim and annual disclosures with respect to our 0G holdings. As a result, volatility in our earnings may be significantly more than what we experienced in prior periods.
The concentration of our 0G holdings could enhance the risks inherent in our 0G treasury strategy.
The concentration of our 0G holdings limits the risk mitigation that we could achieve if we were to purchase a more diversified portfolio of treasury assets, and the absence of diversification enhances the risks inherent in our 0G treasury strategy. Any future significant declines in the price of 0G would have a more pronounced impact on our financial condition than if we used our cash to purchase a more diverse portfolio of assets.
Absent federal regulations, there is a possibility that 0G may be classified as a "security." Classification of 0G as a "security" would subject us to additional regulation and could materially impact the operation of our business.
Neither the SEC nor any other U.S. federal or state regulator has formally stated whether they agree that any of the Owned Cryptocurrencies, 0G Tokens and any other digital asset we might hold (collectively, the "Cryptocurrencies") are a "security." Despite the Executive Order titled "Strengthening American Leadership in Digital Financial Technology" which includes as an objective, "protecting and promoting the ability of individual citizens and private sector entities alike to access and ... to maintain self-custody of digital assets," the Cryptocurrencies have not yet been formally classified with respect to U.S. federal securities laws. Therefore, while (for the reasons discussed below) we believe that none of the Cryptocurrencies, other than Solana, are a "security" within the meaning of the U.S. federal securities laws, and registration of the Company under The Investment Company Act of 1940, as amended (the "Investment Company Act"), is therefore not required under the applicable securities laws, we acknowledge that a regulatory body or federal court may determine otherwise. Our belief, even if reasonable under the circumstances, would not preclude legal or regulatory action based on such a finding that any of the Cryptocurrencies, other than Solana, are a "security" which would require us to register as an investment company under the Investment Company Act.
43
We have also adapted our process for analyzing the U.S. federal securities law status of the Cryptocurrencies and other cryptocurrencies over time, as guidance and case law have evolved. As part of our U.S. federal securities law analytical process, we take into account a number of factors, including the various definitions of "security" under U.S. federal securities laws and federal court decisions interpreting the elements of these definitions, such as the U.S. Supreme Court's decisions in the Howey and Reves cases, as well as court rulings, reports, orders, press releases, public statements, and speeches by the SEC Commissioners and the SEC Staff providing guidance on when a digital asset or a transaction to which a digital asset may relate may be a security for purposes of U.S. federal securities laws. Our position that none of the Cryptocurrencies, other than Solana, are a "security" is premised, among other reasons, on our conclusion none of Cryptocurrencies meet the elements of the Howey test. Among the reasons for our conclusion none of Cryptocurrencies are a security, other than Solana, is that holders of the Cryptocurrencies do not have a reasonable expectation of profits from our efforts in respect of their holding of the Cryptocurrencies. Also, ownership of the Cryptocurrencies does not convey the right to receive any interest, rewards, or other returns.
We acknowledge, however, that the SEC, a federal court or another relevant entity could take a different view. The regulatory treatment of the Cryptocurrencies is such that it has drawn significant attention from legislative and regulatory bodies, in particular the SEC which has previously stated it deemed the certain digital assets a security. Application of securities laws to the specific facts and circumstances of digital assets is complex and subject to change. Our conclusion, even if reasonable under the circumstances, would not preclude legal or regulatory action based on a finding that any of the Cryptocurrencies is a "security." As such, we are at risk of enforcement proceedings against us, which could result in potential injunctions, cease-and-desist orders, fines, and penalties if any of the Cryptocurrencies are determined to be a security by a regulatory body or a court. Such developments could subject us to fines, penalties, and other damages, and adversely affect our business, results of operations, financial condition, and prospects.
If we were deemed to be an investment company under the Investment Company Act, applicable restrictions likely would make it impractical for us to continue segments of our business as currently contemplated.
Under Sections 3(a)(1)(A) and (C) of the Investment Company Act, a company generally will be deemed to be an "investment company" if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act and cash items) on an unconsolidated basis. Rule 3a-1 under the Investment Company Act generally provides that notwithstanding the Section 3(a)(1)(C) test described in clause (ii) above, an entity will not be deemed to be an "investment company" for purposes of the Investment Company Act if no more than 45% of the value of its assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act and cash items) consists of, and no more than 45% of its net income after taxes (for the past four fiscal quarters combined) is derived from, securities other than U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, securities issued by employees' securities companies, securities issued by qualifying majority owned subsidiaries of such entity, and securities issued by qualifying companies that are controlled primarily by such entity. We do not believe that we are an "investment company" as such term is defined in either Section 3(a)(1)(A) or Section 3(a)(1)(C) of the Investment Company Act.
Recently, we have begun focusing on pursuing opportunities to expand our portfolio into digital assets. With respect to Section 3(a)(1)(A), following the Cryptocurrency Offering, approximately 95% of the proceeds of the Cryptocurrency Offering will be used to acquire Cryptocurrencies, which is an amount in excess of 40% of our total assets. Since we believe none of the Cryptocurrencies are an investment security, other than Solana, our holdings of which will not exceed 40% of our total assets, we do not hold ourselves out as being engaged primarily, or propose to engage primarily, in the business of investing, reinvesting, or trading in securities within the meaning of Section 3(a)(1)(A) of the Investment Company Act.
With respect to Section 3(a)(1)(C), we believe we satisfy the elements of Rule 3a-1 and therefore are deemed not to be an investment company under, and we intend to conduct our operations such that we will not be deemed an investment company under, Section 3(a)(1)(C). We believe that we are not an investment company pursuant to Rule 3a-1 under the Investment Company Act because, on a consolidated basis with respect to wholly-owned subsidiaries but otherwise on an unconsolidated basis, no more than 45% of the value of the Company's total assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, and cash items) consists of, and no more than 45% of the Company's net income after taxes (for the last four fiscal quarters combined) is derived from, securities other than U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, securities issued by employees' securities companies, securities issued by qualifying majority owned subsidiaries of the Company and securities issued by qualifying companies that are controlled primarily by the Company.
44
The Cryptocurrencies and other digital assets, as well as new business models and transactions enabled by blockchain technologies, present novel interpretive questions under the Investment Company Act. There is a risk that assets or arrangements that we have concluded are not securities could be deemed to be securities by the SEC or another authority for purposes of the Investment Company Act, which would increase the percentage of securities held by us for Investment Company Act purposes. The SEC has requested information from a number of participants in the digital assets ecosystem, regarding the potential application of the Investment Company Act to their businesses. For example, in an action unrelated to the Company, in February 2022, the SEC issued a cease-and-desist order under the Investment Company Act to BlockFi Lending LLC, in which the SEC alleged that BlockFi was operating as an unregistered investment company because it issued securities and also held more than 40% of its total assets, excluding cash, in investment securities, including the loans of digital assets made by BlockFi to institutional borrowers.
If we were deemed to be an investment company, Rule 3a-2 under the Investment Company Act is a safe harbor that provides a one-year grace period for transient investment companies that have a bona fide intent to be engaged primarily, as soon as is reasonably possible (in any event by the termination of such one-year period), in a business other than that of investing, reinvesting, owning, holding, or trading in securities, with such intent evidenced by the company's business activities and an appropriate resolution of its board of directors. The grace period is available not more than once every three years and runs from the earlier of (i) the date on which the issuer owns securities and/or cash having a value exceeding 50% of the issuer's total assets on either a consolidated or unconsolidated basis or (ii) the date on which the issuer owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer's total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Accordingly, the grace period may not be available at the time that we seek to rely on Rule 3a-2; however, Rule 3a-2 is a safe harbor and we may rely on any exemption or exclusion from investment company status available to us under the Investment Company Act at any given time. Furthermore, reliance on Rule 3a-2, Section 3(a)(1)(C), or Rule 3a-1 could require us to take actions to dispose of securities, limit our ability to make certain investments or enter into joint ventures, or otherwise limit or change our service offerings and operations. If we were to be deemed an investment company in the future, restrictions imposed by the Investment Company Act - including limitations on our ability to issue different classes of stock and equity compensation to directors, officers and employees and restrictions on management, operations and transactions with affiliated persons - likely would make it impractical for us to continue our business as contemplated, and could have a material adverse effect on our business, results of operations, financial condition and prospects.
The Cryptocurrencies are created and transmitted through the operations of the peer-to-peer networks, decentralized networks of computers running software following the respective protocols. If the networks of any of the Cryptocurrencies is disrupted or encounters any unanticipated difficulties, the value of the Cryptocurrencies could be negatively impacted.
If the network of any of the Cryptocurrencies is disrupted or encounters any unanticipated difficulties, then the processing of transactions on such network may be disrupted, which in turn may prevent us from depositing or withdrawing the Cryptocurrencies from our accounts with our custodian or otherwise effecting transactions of the Cryptocurrencies. Such disruptions could include, for example: the price volatility of the Cryptocurrencies; the insolvency, business failure, interruption, default, failure to perform, security breach or other problems of participants, custodians or others; the closing of trading platforms of the Cryptocurrencies due to fraud, failures, security breaches or otherwise; or network outages or congestion, power outages or other problems or disruptions affecting the networks of the Cryptocurrencies.
In addition, although we do not currently intend to mine any of the Cryptocurrencies, digital asset validating operations can consume significant amounts of electricity, which may have a negative environmental impact and give rise to public opinion against allowing, or government regulations restricting, the use of electricity for validating operations. Additionally, validators may be forced to cease operations during an electricity shortage or power outage.
We face risks relating to the custody of the Cryptocurrencies, including the loss or destruction of private keys required to access our Cryptocurrencies and cyberattacks or other data loss relating to our Cryptocurrencies, including smart contract related losses and vulnerabilities.
45
We hold our Cryptocurrencies with regulated custodians that have duties to safeguard our private keys. Our custodial services contracts do not restrict our ability to reallocate our Cryptocurrencies among our custodians, and our holdings of the Cryptocurrencies may be concentrated with a single custodian from time to time. In light of the significant amount of the Cryptocurrencies we anticipate that we will hold, we continually seek to engage additional custodians to achieve a greater degree of diversification in the custody of our Cryptocurrencies as the extent of potential risk of loss is dependent, in part, on the degree of diversification. However, multiple custodians may utilize similar wallet infrastructure, cloud service providers or software systems, which could increase systemic technology risk.
If there is a decrease in the availability of digital asset custodians that we believe can safely custody our Cryptocurrencies, for example, due to regulatory developments or enforcement actions that cause custodians to discontinue or limit their services in the United States, we may need to enter into agreements that are less favorable than our current agreements or take other measures to custody our Cryptocurrencies, and our ability to seek a greater degree of diversification in the use of custodial services would be materially adversely affected. While we conduct due diligence on our custodians and any smart contract platforms we may use, there can be no assurance that such diligence will uncover all risks, including operational deficiencies, hidden vulnerabilities or legal noncompliance.
As of September 22, 2025, the insurance that covers losses of our holdings of the Cryptocurrencies may cover none or only a small fraction of the value of the entirety of our holdings of the Cryptocurrencies, and there can be no guarantee that such insurance will be maintained as part of the custodial services we have or that such coverage will cover losses with respect to our Cryptocurrencies. Moreover, our use of custodians exposes us to the risk that the Cryptocurrencies our custodians hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such Cryptocurrencies. Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our Cryptocurrencies. The legal framework governing digital asset ownership and rights in custodial or insolvency contexts remains uncertain and continues to evolve, which could result in unexpected losses, protracted recovery processes or adverse treatment in insolvency proceedings.
Each of the respective Cryptocurrencies is controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet in which the respective Cryptocurrency is held. While the certain blockchain ledger requires a public key relating to a digital wallet to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the certain Cryptocurrencies held in such wallet. To the extent the private key(s) for a digital wallet are lost, destroyed or otherwise compromised and no backup of the private key(s) is accessible, neither we nor our custodians will be able to access the Cryptocurrencies held in the related digital wallet. Furthermore, we cannot provide assurance that our digital wallets, nor the digital wallets of our custodians held on our behalf, will not be compromised as a result of a cyberattack. The Cryptocurrencies and blockchain ledger, as well as other digital assets and blockchain technologies, have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities.
As part of our treasury management strategy, we may engage in staking, restaking or other permitted activities that involve the use of "smart contracts" or decentralized applications. The use of smart contracts or decentralized applications entails certain risks including risks stemming from the existence of an "admin key" or coding flaws that could be exploited, potentially allowing a bad actor to issue or otherwise compromise the smart contract or decentralized application, potentially leading to a loss of our Cryptocurrencies. Like all software code, smart contracts are exposed to risk that the code contains a bug or other security vulnerability, which can lead to loss of assets that are held on or transacted through the contract or decentralized application. Smart contracts and decentralized applications may contain bugs, security vulnerabilities or poorly designed permission structures that could result in the irreversible loss of the Cryptocurrencies or other digital assets. Exploits, including those stemming from admin key misuse, admin key compromise or protocol flaws, have occurred in the past and may occur in the future.
Our 0G treasury strategy subjects us to enhanced regulatory oversight.
There has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist activities or circumvent sanctions regimes, including those sanctions imposed in response to the ongoing conflict between Russia and Ukraine. We intend to implement and maintain policies and procedures reasonably designed to promote compliance with applicable anti-money laundering ("AML") and sanctions laws and regulations and to only acquire our 0G through entities subject to anti-money laundering regulation and related compliance rules in the United States. Our initial 0G transactions will be executed by working together with reputable digital asset trading service providers that have what we believe to be comprehensive and robust AML policies and procedures. In addition, we plan to adopt policies and procedures to help ensure AML compliance with respect to any potential 0G transactions handled by us directly, including conducting comprehensive, enterprise-wide AML risk assessments, taking steps to identify investors and beneficial owners, performing ongoing sanctions screening, monitoring transactions for suspicious activities, providing training to employees and directors and managing third-party service provider risks through due diligence and contractual requirements. Notwithstanding these planned efforts, if we are found to have purchased any of our 0G from bad actors that have used 0G to launder money or persons subject to sanctions, we may be subject to regulatory proceedings and any further transactions or dealings in 0G by us may be restricted or prohibited.
46
Increased enforcement activity and changes in the regulatory environment, including evolving or changing interpretations and the implementation of new or varying regulatory requirements by the government or any new legislation affecting 0G, as well as enforcement actions involving or impacting our trading venues, counterparties and custodians, may impose significant costs or significantly limit our ability to hold and transact in 0G.
In addition, private actors that are wary of 0G or the regulatory concerns associated with 0G have in the past taken and may in the future take further actions that may have an adverse effect on our business or the market price of our listed securities. For example, it is possible that a financial institution could restrict customers from buying our securities if it were to determine that the value of our securities is closely tied to the performance of 0G, signaling a reluctance to facilitate exposure to virtual currencies.
Competition from the emergence or growth of other digital assets could have a negative impact on the price of 0G and adversely affect the value of our 0G holdings.
The digital asset market is highly competitive and rapidly evolving, with numerous alternative cryptocurrencies, blockchains, and decentralized finance (DeFi) platforms vying for market share in areas such as perpetual futures trading, staking, and on-chain liquidity provision, which are core to the Zero Gravity ecosystem and its 0G token. Existing or emerging competitors could attract users and developers away from the Zero Gravity ecosystem by providing superior technology, lower fees, faster transaction speeds or broader ecosystem integrations, potentially eroding Zero Gravity's market position and leading to reduced trading volumes, staking participation and overall demand. Many consortiums and financial institutions are also researching and investing resources into private or permissioned blockchain platforms rather than open platforms like the Zero Gravity network. 0G is newly minted and supported by fewer trading platforms than more established digital assets, such as Bitcoin and Ether, which could impact its liquidity. In addition, the Zero Gravity network is in direct competition with other smart contract platforms, such as the Ethereum, Solana, Polkadot, Avalanche and Cardano networks. Competition from the emergence or growth of alternative digital assets or other smart contract platforms could have a negative impact on the demand for, and price of, 0G, and thereby adversely affect the value of our 0G holdings.
Investors may also invest in 0G through means other than our securities, including through direct investments in 0G and other financial vehicles, including securities backed by or linked to 0G and digital asset treasury companies similar to us. Market and financial conditions, and other conditions beyond our control, may make it more attractive to gain exposure to 0G through other vehicles, rather than our securities.
Our 0G holdings will be less liquid than our cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.
Historically, the cryptocurrency market has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our 0G at favorable prices or at all. As a result, our 0G holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.
Further, the 0G we hold with our custodians and transact with our trade execution partners does not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation.
Additionally, we may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered 0G or otherwise generate funds using our 0G holdings, including in particular during times of market instability or when the price of 0G has declined significantly. If we are unable to sell our 0G, enter into additional capital raising transactions, including capital raising transactions using 0G as collateral, or otherwise generate funds using our 0G holdings, or if we are forced to sell our 0G at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.
47
Many countries and regulatory authorities are studying the impact of AI and may implement regulations on AI that may be difficult or impossible for the 0G Blockchain to implement and comply with.
The 0G Blockchain is designed to enable and support AI modules utilizing decentralized AI infrastructure. If there is regulation adopted in the U.S. or globally to regulate AI and machine learning modules, the 0G Blockchain, as a decentralized blockchain and protocol, may be unable to comply with such regulations which may adversely affect the 0G Blockchain and the 0G Token or could require the 0G Blockchain to terminate or suspect certain features, services and tools. Further, as a decentralized network, it is possible that the 0G Blockchain continues to operate without complying with applicable regulations, which could materially affect our business and our financial condition could be negatively impacted.
Other Risk Factors
There are risks relating to the sale of our legacy hemp and cannabis business.
On September 20, 2025, we entered into the Equity Transfer and Debt Repayment Agreement to sell certain subsidiaries comprising our legacy hemp and cannabis business to our Noteholders, in exchange for the repayment of the notes held by such Noteholders. This disposition closed on September 26, 2025. While we have agreed to only limited indemnification and other obligations in connection with the disposition, there can be no assurance that we will not be subjected to indemnification claims or other liabilities in connection with the disposition.
Further, achieving the anticipated benefits of the disposition is subject to a number of uncertainties. There can be no assurance that we will realize the full benefits of strategic focus, cost savings and operating efficiencies that we currently expect from the transaction or that such benefits will be achieved within the anticipated time frames. Failure to achieve these anticipated benefits could result in increased costs and diversion of management's time and energy and could materially adversely affect our business, financial position, results of operations and cash flows.
The disposition may be subject to regulatory actions or private litigation that could expose us to costly and time-consuming proceedings. Failure to prevail in any such regulatory actions or private litigation could result in significant fines or monetary damages, which may require us to raise additional capital.
We may experience difficulties due to changes in management.
In connection with the Cryptocurrency Offering, on October 1, 2025, Mr. Clifford Starke resigned as a director and the Chief Executive Officer of the Company and Mr. Sammy Dorf resigned as the Executive Chairman of the Company. Further, on October 1, 2025, the Board appointed Mr. Daniel Reis-Faria and Michael Heinrich as non-independent directors of the Board, and in connection with their appointments to the Board, Mr. Reis-Faria, was also appointed as the Chief Executive Officer of the Company and Mr. Heinrich was also appointed as Executive Chairman effective October 1, 2025. Neither new executive officer has previously served as an executive officer of a publicly-traded company. In addition to devoting substantial time becoming integrated into our business and increasing their familiarity with our operations, each new executive officer may be required to devote substantial time fulfilling their public company compliance obligations. Such changes in our management could impair relationships with key business contacts, make it more difficult to retain employees or result in the loss of confidence in our investor base, any of which events could harm our performance. There can be no assurance that our reconstituted management will function effectively.
The Company may be a "passive foreign investment company" for its current tax year, which may have adverse U.S. federal income tax consequences for U.S. investors.
The Company believes that it was not a "passive foreign investment company" ("PFIC") within the meaning of Section 1297(a) of the United States Internal Revenue Code of 1986, as amended (the "Code") for its most recently completed tax year. The Company's anticipated PFIC status for its current tax year and future tax years is uncertain and may depend on, among other things, how quickly the Company may raise cash pursuant to its recent PIPE Private Offering, the manner in which, and how quickly, the Company utilizes its cash on hand and the cash proceeds received from the offering, the business conducted by the Company going forward and the assets held by the Company in connection with such business, as well as on changes in the market value of common shares. If the Company is a PFIC for any year during a U.S. taxpayer's holding period of common shares, then such U.S. taxpayer generally will be required to treat any gain realized upon a disposition of the common shares or any so-called "excess distribution" received on its common shares as ordinary income, and to pay an interest charge on a portion of such gain or distribution. In certain circumstances, the sum of the tax and the interest charge may exceed the total amount of proceeds realized on the disposition, or the amount of excess distribution received, by the U.S. taxpayer. Subject to certain limitations, these tax consequences may be mitigated if a U.S. taxpayer makes a timely and effective "QEF election" under Section 1295 of the Code ("QEF Election") or a "mark-to-market" election under Section 1296 of the Code ("Mark-to-Market Election"). U.S. taxpayers should be aware that there can be no assurances that the Company will satisfy the record keeping requirements that apply to a qualified electing fund (a "QEF"), or that the Company will supply U.S. taxpayers with information that such U.S. taxpayers are required to report under the QEF rules, in the event the Company is a PFIC. Thus, U.S. Holders may not be able to make a QEF Election with respect to the Company. A U.S. taxpayer who makes a Mark-to-Market Election generally must include as ordinary income each year the excess of the fair market value of the common shares over the taxpayer's adjusted tax basis therein. Each potential investor who is a U.S. taxpayer should consult its own tax advisor regarding the PFIC rules and the tax consequences of the ownership and disposition of the common shares acquired pursuant to this prospectus supplement.
48
We may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition and results of operations.
As 0G Tokens and other digital assets are relatively novel and the application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of 0G Tokens. The U.S. federal government, states, regulatory agencies and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of 0G Tokens or the ability of individuals or institutions such as us to own or transfer 0G Tokens.
If 0G Tokens are determined to constitute a security for purposes of the federal securities laws, the additional regulatory restrictions imposed by such a determination could adversely affect the market price of 0G Tokens and in turn adversely affect the market price of our common share. Moreover, the risks of us engaging in a 0G Tokens treasury strategy have created, and could continue to create complications due to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future.
If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our digital assets, we may lose some or all of our digital assets and our financial condition and results of operations could be materially adversely affected.
Security breaches and cyberattacks are of particular concern with respect to our investment in digital assets. While we use highly reviewed and audited custody solutions, a successful security breach or cyberattack could result in a partial or total loss of our digital assets in a manner that may not be covered by insurance or indemnity provisions of our custody agreements with those custodians. Such a loss could have a material adverse effect on our financial condition and results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On May 2, 2025, the Company entered the May 2025 Securities Purchase Agreement with the May 2025 Investors in connection with the issuance and sale by the Company to the May 2025 Investors via the May 2025 Private Placement of an aggregate of 80,340 May 2025 Common Shares and 18,642 of the May 2025 Pre-Funded Warrants of the Company at a purchase price of $11.6961 per warrant each to purchase one common share, a May 2025 Pre-Funded Warrant Share, which were immediately exercisable and expire when exercised in full, at an exercise price of $0.0039 per share.
The net proceeds from the sale of the May 2025 Common Shares and the May 2025 Pre-funded Warrants were approximately $1.1 million after deducting estimated expenses relating to the May 2025 Private Placement. The Company used $0.4 million of the net proceeds from the May 2025 Private Placement to purchase the Owned Cryptocurrencies, including Solana, $0.4 million of the net proceeds from the May 2025 Private Placement to purchase Ethereum, $0.1 million of the net proceeds from the May 2025 Private Placement to purchase Sui, $0.1 million of the net proceeds from the May 2025 Private Placement to purchase Ripple, and the balance of the net proceeds from the May 2025 Private Placement for general corporate and working capital purposes and to pay any fees and expenses in connection with the issuance of the common shares and the May 2025 Pre-Funded Warrants.
49
On September 19, 2025, the Company entered into the PIPE Offering pursuant to which the Company agreed to sell and issue the following securities in private placement offerings: (i) 116,340 PIPE Common Share Units at a unit price of $25.19, payable in cash, for aggregate gross proceeds of $2.9 million, with each unit consisting of one PIPE Common Share and 0.2 PIPE Warrants to purchase one common share at an exercise price of $25.19; (ii) 412,037 PIPE Pre-Funded Warrant Units at a unit price of $25.1899, payable in cash, for aggregate gross proceeds of $10.4 million, with each unit consisting of one PIPE Pre-Funded Warrant to purchase one common share at an exercise price of $0.0001 and 0.2 of a PIPE Warrant; (iii) 8,546,955 PIPE Pre-Funded Warrants at a unit price of $25.1899, payable in 71,766,135 0G Tokens based on an agreed value of $3 per 0G Token; and (iv) the PIPE Note in an aggregate original principal amount of 95,333 Solana.
On September 26, 2025, in connection with the first closing of the PIPE Offering, the Company issued 116,340 PIPE Common Share Units and 412,037 PIPE Pre-Funded Warrant Units for aggregate gross cash proceeds of $13.3 million, and 2,592,212 PIPE Pre-Funded Warrants for 21,766,135 0G Tokens, valued at $54.7 million on the issuance date. The remaining 5,954,473 PIPE Pre-Funded Warrant Units were issued on October 9, 2025, for 50,000,000 0G Tokens. The PIPE Note was issued on October 24, 2025, at which date the original principal amount of 95,333 Solana was received.
On September 19, 2025, the Company entered into an arrangement with Zero Gravity pursuant to which the Company agreed to (i) borrow 50,000,000 0G Tokens from Zero Gravity under the Loan Agreement, and (ii) issue to Zero Gravity in a private placement offering 1,786,423 Loan Agreement Warrants. On September 22, 2025, the Company entered into an agreement with Zero Gravity for the issuance of the Zero Gravity Convertible Note in an aggregate original principal amount of 50,000,000 0G Tokens that will replace the Loan Agreement and Loan Agreement Warrants, subject to closing. The Zero Gravity Convertible Note was issued on October 23, 2025, at which date the 50,000,000 0G Tokens were received.
The Company intends to use the net proceeds from the Cryptocurrency Offering to further the Company's new digital asset treasury strategy linked to 0G Tokens, and to explore and expand the use of the native AI functionality of the 0G Tokens to enhance the business of the Company. The balance of the net proceeds will be used for general corporate and working capital purposes.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(c) Trading Plans.
During the three months ended September 30, 2025, none of the
50
Item 6. Exhibits
| Incorporated by Reference | ||||||||
| Exhibit Number |
Description | Form | Exhibit | Filing Date | ||||
| 3.1 | Articles of Incorporation of Flora Growth Corp. | 1-A | 2.1 | 10/10/2019 | ||||
| 3.2 | Articles of Amendment of Flora Growth Corp. effective April 30, 2021 | F-1 | 3.3 | 11/16/2021 | ||||
| 3.3 | Articles of Amendment of Flora Growth Corp. effective June 9, 2023 | 8-K | 3.1 | 07/07/2023 | ||||
| 3.5 | Articles of Amendment of Flora Growth Corp. effective August 3, 2025 | 8-K | 3.1 | 08/04/2025 | ||||
| 3.6 | Bylaw No. 1-A of Flora Growth Corp. | 6-K | 99.3 | 07/06/2022 | ||||
| 4.1 | Form of Unit Warrant | F-1 | 4.5 | 11/16/2021 | ||||
| 4.2 | Form of Investor Warrant | 6-K | 4.1 | 12/13/2022 | ||||
| 4.2 | Form of Placement Agent Warrant | 6-K | 4.2 | 12/13/2022 | ||||
| 4.4 | Form of Investor Warrant | 8-K | 4.1 | 09/21/2023 | ||||
| 4.5 | Form of Placement Agent Warrant | 8-K | 4.2 | 09/21/2023 | ||||
| 4.6 | Form of Warrant Amendment | 8-K | 10.3 | 09/21/2023 | ||||
| 4.7 | Form of Pre-funded Warrant dated as of September 19, 2025 | 8-K | 4.1 | 09/23/2025 | ||||
| 4.8 | Form of Common Warrant dated as of September 19, 2025 | 8-K | 4.2 | 09/23/2025 | ||||
| 4.9 | Form of Convertible Note dated as of September 19, 2025 | 8-K | 4.3 | 09/23/2025 | ||||
| 4.10 | Form of Convertible Note dated as of September 22, 2025 | 8-K | 4.4 | 09/23/2025 | ||||
51
| 10.1 | Form of Securities Purchase Agreement, dated as of September 19, 2025, by and between the Company and the Cash Investors identified therein | 8-K | 10.1 | 09/23/2025 | ||||
| 10.2 | Form of Securities Purchase Agreement, dated as of September 19, 2025, by and between the Company and the Token Investors identified therein | 8-K | 10.2 | 09/23/2025 | ||||
| 10.3 | Form of Securities Purchase Agreement, dated as of September 19, 2025, by and between the Company and the Note Investor identified therein | 8-K | 10.3 | 09/23/2025 | ||||
| 10.4 | Form of Securities Purchase Agreement, dated as of September 22, 2025, by and between the Company and Zero Gravity Labs Inc. | 8-K | 10.4 | 09/23/2025 | ||||
| 10.5 | Equity Transfer and Debt Repayment Agreement, dated as of September 20, 2025 | 8-K | 10.5 | 09/23/2025 | ||||
| 10.6# | Employment Agreement, dated September 20, 2025, by and between Flora Growth Corp. and Daniel Reis-Faria | 8-K | 10.6 | 09/23/2025 | ||||
| 10.7# | Employment Agreement, dated September 20, 2025, by and between Flora Growth Corp. and Dany Vaiman | 8-K | 10.7 | 09/23/2025 | ||||
| 10.8# | Employment Agreement, dated September 20, 2025, by and between Flora Growth Corp. and Michael Heinrich | 8-K | 10.8 | 09/23/2025 | ||||
| 10.9 | Sales Agreement by and among Flora Growth Corp. and Revere Securities LLC, dated September 23, 2025 |
8-K | 1.1 | 09/23/2025 | ||||
| 31.1* | Certification of Principal Executive Officer of Flora Growth Corp. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
| 31.2* | Certification of Principal Financial Officer of Flora Growth Corp. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
| 32.1* | Certification of Principal Executive Officer of Flora Growth Corp. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
| 32.2* | Certification of Principal Financial Officer of Flora Growth Corp. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
| 101 | Inline Interactive Data File | |||||||
| 101.INS | Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File |
# Indicates management contract or compensatory plan or arrangement.
* Furnished herewith.
52
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 hereunto duly authorized.
| Dated: November 5, 2025 | Flora Growth Corp. | |
| By: | /s/ Daniel Reis-Faria | |
| Daniel Reis-Faria | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Dated: November 5, 2025 | ||
| By: | /s/ Dany Vaiman | |
| Dany Vaiman | ||
| Chief Financial Officer (Principal Financial and Accounting Officer) |
53
