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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Flora Growth Corporation | NASDAQ:FLGC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.04 | -2.44% | 1.60 | 1.45 | 1.73 | 1.74 | 1.54 | 1.69 | 323,621 | 05:00:01 |
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Filed pursuant to Rule 424(b)(4)
|
PROSPECTUS
$30,000,000
Flora Growth Corp.
10,000,000 Units (each consisting of one Common Share and one-half Unit Warrant)
5,000,000 Common Shares Underlying the Unit Warrants
This is a follow-on public offering (the “offering”) of our Units, with each Unit consisting of (i) one of our common shares, no par value per share (which we refer to as our “Common
Shares”) and (ii) one-half of one warrant to purchase a Common Share (which we refer to as the "Unit Warrants"). We are offering 10,000,000 Units, as well as up to an additional 1,500,000 Common Shares and/or up to an additional 750,000
Unit Warrants if the underwriters exercise in full their over-allotment option, in this offering. The Units will not be issued or certificated. The Common Shares and Unit Warrants part of a Unit are immediately separable and will be issued
separately, but will be purchased together in this offering. The Unit Warrants will have an exercise price of $3.75 per Common Share, will be exercisable at any time after the date of issuance and will expire five years from the date of
issuance. Each Unit will be sold at a negotiated price of $3.00 per Unit. The Common Shares issuable from time to time upon exercise of the Unit Warrants are also being offered by this prospectus.
Our Common Shares are listed on the NASDAQ Capital Market under the symbol “FLGC.” On November 18, 2021, the last reported per share sale price of our Common Shares on the NASDAQ Capital
Market was $3.69. We do not intend to apply for listing of the Unit Warrants on any securities exchange or other nationally recognized trading system. There is no established public trading market for the Unit Warrants, and we do not
expect a market to develop. Without an active trading market, the liquidity of the Unit Warrants will be limited.
We are organized under the laws of the Province of Ontario and are an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012, under applicable U.S. federal
securities laws, and are eligible for reduced public company reporting requirements. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Emerging
Growth Company Status.”
Investing in our securities is highly speculative and involves a high degree of risk. See “Risk Factors” for a discussion of
information that should be considered in connection with an investment in our securities.
Neither the U.S. Securities and Exchange Commission nor any state or provincial securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
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Per Unit
|
Total
|
|||||||
Public offering price
|
$
|
3.00 |
$
|
30,000,000 | ||||
Underwriting discounts and commissions(1)
|
$
|
0.21 |
$
|
2,100,000 | ||||
Proceeds to us (before expenses)(2)
|
$
|
2.79 |
$
|
27,900,000 |
(1)
|
We have agreed to reimburse the underwriters for certain expenses and the underwriters will receive compensation in addition to underwriting discounts and commissions. See “Underwriting” for additional disclosure regarding underwriters’ compensation and offering expenses.
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(2)
|
The total estimated expenses related to this offering are set forth in the section entitled "Expenses Related to The Offering".
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BMO Capital Markets
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Roth Capital Partners
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Page
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1
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10
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12
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33
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34
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35
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36
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37
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38
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40
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51
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55
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75
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80
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87
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91
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93
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95
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DESCRIPTION OF SECURITIES WE ARE OFFERING
|
98 |
100
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103
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114
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119
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119
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119
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119
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120
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121
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• |
Medicinal-Grade Cannabis. Material revenues are expected to begin in the fourth quarter of 2021, through our 90%-owned subsidiary, Cosechemos YA SAS;
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• |
Cannabis Oils and Extracts. Material revenues are expected to begin in the fourth quarter of 2021, through our 90%-owned subsidiary, Cosechemos YA SAS;
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• |
Skincare and Beauty Products. Our revenues commenced in August 2020, through our 87% owned subsidiary, Flora Beauty LLC;
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• |
Dermo-Cosmetic Products. Our revenues commenced in December 2020, following our acquisition of our 90%-owned subsidiary, Breeze Laboratory S.A.S. (now Flora Lab Laboratory S.A.S.) which entity has generated revenues since January
2013;
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|
• |
Pharmaceutical Products. Our revenues commenced in December 2020, following our acquisition of our 100%-owned subsidiary, Grupo Farmaceutico Cronomed SAS, which entity has generated revenues since March 2005;
|
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• |
Loungewear and Textiles. Our revenues commenced in October 2020 through our 100%-owned subsidiaries, Hemp Textiles & Co LLC and Hemp Textiles & Co SAS; and
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|
• |
Food and Beverage Products. Our revenues commenced in December 2020, following our acquisition of our 90%-owned subsidiary Kasa Wholefoods Company SAS Colombia which entity has generated revenues since July 2013.
|
• |
Experienced Management Team. Our management is experienced and has a fundamental understanding of Colombia’s regulatory framework, the global cannabis market and the
agricultural and scientific processes necessary to develop high quality and consistent medicinal cannabis products.
|
• |
Change in the Global Cannabis Industry. The global cannabis industry is experiencing significant change as governments embrace regulatory reform, liberalizing the
production and consumption of cannabis. It is possible that foreign corporations may enter the Colombian market as a result of Colombia’s regulatory regime, creating the prospect of Colombia becoming a hub for future industry
development.
|
• |
Colombian Cultivation Advantage. Flora only grows cannabis outdoors in Colombia with favorable environmental conditions. Further, the strength of the United States
dollar is projected to provide us with a cost advantage over our competitors, and Colombia has a workforce highly-skilled in agriculture at a lower cost compared to the United States.
|
• |
Healthy and Sustainable Products. We produce cannabis and derivative products across food and beverage, cosmetics, and medicinal markets, which markets are projected to
grow rapidly as consumers prioritize healthy and sustainable products that are good for themselves, their family, and their environment.
|
• |
Efficient Manufacturing Practices. We have adopted efficient manufacturing practices and logistics, synergizing our operations between our technical and commercial
teams.
|
• |
Expanding distribution capacity. In the near term, our primary strategy is to expand our distribution and channel access as quickly as possible to meet existing quotas
and production.
|
• |
Creating Sustainable and Natural Products. Flora sees sustainable innovation as key to achieving production objectives, and the main driver to our product development
approach.
|
|
• |
name Flora as its preferred supplier of genetic material and finished cannabis derivative products, provided all regulatory and quality standards are met and subject to entering into a definitive agreement by no later than
December 1, 2021;
|
|
• |
(a) grant Flora a right of first refusal to supply any cannabis oil or derivative products acquired by Hoshi or any of its affiliates at its Malta processing facility, provided regulatory and quality standards are met; and (b)
consult with Flora on equipment for processing and production to be installed in its Malta processing facility, including review of equipment, GMP design schematics, and proposed products to be manufactured in Malta, subject to
entering into a definitive agreement by no later than December 1, 2021;
|
|
• |
use commercially reasonable efforts to grant Flora access to its EU GMP auditors for the purposes of assisting Flora to obtain the EU-GMP certification at its Cosechemos Ya S.A.S. subsidiary in Colombia; and
|
|
• |
use commercially reasonable efforts to assist with the development of Flora’s operations in Malta and Portugal.
|
|
• |
Luis Merchan being named to the board of directors of Hoshi.
|
• |
Agricultural activity has been declared as an essential activity in Colombia. We are operating under a protocol authorized by the Colombian government.
|
• |
At our farm in Santander, all employees receive a new mask and a new set of surgical gloves daily. Hand sanitizer is provided and hand washing protocols are in place. The employees are also provided a transparent face
protection mask, which is replaced every 30 days. All employees have their temperature taken three times daily and must report to the Health and Safety office if they are experiencing any symptoms, including diarrhea, cough,
runny nose, or headache. If an employee reports any of these symptoms, the employee is sent home to isolate for 14 days, if the symptoms persist for 72 hours, the employee is required to go to a hospital.
|
• |
Our farm is located in a rural area, and to date, there have been five positive cases of COVID-19 reported to date.
|
• limited operating history and net losses;
• unpredictable events, such as the COVID-19 outbreak, and associated business disruptions;
• changes in cannabis laws, regulations and guidelines;
• decrease in demand for cannabis and derivative products due to certain research findings, proceedings, or negative media attention;
• damage to reputation as a result of negative publicity;
• exposure to product liability claims, actions and litigation;
• risks associated with product recalls;
• product viability;
• continuing research and development efforts to respond to technological and regulatory changes;
• shelf life of inventory;
• maintenance of effective quality control systems;
• changes to energy prices and supply;
• risks associated with expansion into new jurisdictions;
• regulatory compliance risks;
• opposition to the cannabinoid industry;
• risks related to our operations in Colombia; and
• potential delisting resulting in reduced liquidity of our Common Shares.
|
•
|
present more than two years of audited financial statements and two years of related selected financial data and management’s discussion and analysis of financial condition and
results of operations disclosure in our registration statement of which this prospectus forms a part;
|
•
|
have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (which we refer to as the “Sarbanes-Oxley
Act”);
|
•
|
disclose certain executive compensation related items; and
|
•
|
seek shareholder non-binding advisory votes on certain executive compensation matters and golden parachute arrangements, to the extent applicable to us as a foreign private
issuer.
|
•
|
the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations with respect to a security registered under the Exchange
Act;
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•
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the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified
information, and current reports on Form 8-K upon the occurrence of specified significant events; and
|
•
|
Regulation Fair Disclosure (“Regulation FD”), which regulates selective disclosures of material information by issuers.
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(i)
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the majority of our executive officers or directors are U.S. citizens or residents;
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(ii)
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more than 50% of our assets are located in the United States; or
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(iii)
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our business is administered principally in the United States.
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Issuer
|
Flora Growth Corp.
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Units Offered
|
10,000,000 Units, each consisting of (i) one Common Share and (ii) one-half Unit Warrant. Each Unit Warrant entitles the holder to purchase one Common Share. We may
also offer up to an additional 1,500,000 Common Shares and/or up to an additional 750,000 Unit Warrants if the full over-allotment option is exercised by the underwriters.
The Units will not be certificated, and the Common Share and one-half Unit Warrant comprising each Unit are immediately separable and will be issued
separately in this offering.
This prospectus also relates to the offering of Common Shares issuable upon the exercise of the Unit Warrants included in the Units.
|
Unit Warrants
|
Each whole Unit Warrant will have an exercise price of $3.75 per Common Share, will be exercisable at any time after the date of issuance and will
expire on the fifth anniversary of the date of issuance. To better understand the terms of the Unit Warrants, you should carefully read the “Description of Securities” section of this prospectus.
|
Common Shares Outstanding Before this Offering
|
52,817,904 Common Shares.
|
Common Shares to be Outstanding Immediately After this Offering
|
62,817,904 Common Shares (or 64,317,904 if the underwriters exercise the over-allotment option in full).
|
Underwriting; Over-Allotment Option
|
This offering is being conducted on a firm commitment basis. The underwriters are obligated to take and pay for all of the Units if any such Units are taken. We have granted the underwriters an
option for a period of 45 days from the date of this prospectus to purchase up to 1,500,000 additional Common Shares and/or up to 750,000 additional Unit Warrants, constituting 15% of the numbers of our Common Shares and Unit
Warrants, respectively, underlying the Units to be offered by us pursuant to this offering (excluding shares subject to this option), solely for the purpose of covering over-allotments, at the follow-on public offering price
less the underwriting discount.
|
Underwriters’ Warrants
|
We will issue to the underwriters, or their permitted designees warrants to purchase up to an aggregate amount of Common Shares representing four (4%) of the Units offered hereby. The underwriters’ warrants will have an
exercise price of 110% of the per Unit public offering price, will become exercisable on the first anniversary of the effective date of the registration statement of which this prospectus is a part, will have a cashless
exercise provision and will terminate on the sixth anniversary of the effective date of the registration statement of which this prospectus is a part.
|
Use of Proceeds
|
We estimate that the net proceeds to us from this offering will be approximately $27,400,000 ($31,585,000 if the full over-allotment option is exercised by the underwriters), after deducting the underwriting discounts and
commissions and estimated offering expenses payable by us. We will use these net proceeds for capital expenditures, operating capacity, working capital and general corporate purposes, and such other purposes described in “Use of Proceeds.”
|
Lock-ups
|
Our company, directors and certain executive officers have agreed with the underwriters not to, subject to certain exceptions, offer, issue, sell, contract to sell,
encumber, grant any option for the sale of, or otherwise dispose of, any of our securities for a ninety (90) day period from the date upon which this Registration Statement (of which this prospectus forms a part) is declared
effective without the consent of the underwriters. See “Underwriting—Lock-up Agreements” for more information.
|
Listing
|
Our Common Shares are listed on the NASDAQ Capital Market under the symbol “FLGC.” We do not plan to list the Unit Warrants on the NASDAQ Capital Market or any other securities exchange or trading
market.
|
Transfer Agent
|
The transfer agent and registrar for our Common Shares and Unit Warrants is Continental Stock Transfer & Trust Company.
|
Risk Factors
|
Investing in our securities is highly speculative and involves a high degree of risk. You should carefully read and consider the information set forth under
the heading “Risk Factors”, and all other information contained in this prospectus, before deciding to invest in our securities.
|
(a)
|
Up to 1,500,000 Common Shares issuable upon the exercise in full by the underwriters of their over-allotment option to purchase
additional Common Shares from us,
|
(b)
|
4,458,881 Common Shares issuable upon exercise of stock options outstanding which are exercisable at an average exercise price of $1.65
per share and 2,788,964 Common Shares issuable upon exercise of Common Share purchase warrants outstanding which are exercisable at an average exercise price of $2.57 per share.
|
(c)
|
491,501 Common Shares to be issued to Boustead Securities, LLC (“Boustead”) upon Boustead’s exercise of certain purchase warrants in August 2021;
|
(d)
|
5,000,000 Common Shares issuable upon the exercise of Unit Warrants to be issued to investors in this offering at an exercise price of $3.75 per share;
and
|
(e)
|
400,000 Common Shares issuable upon the exercise of the Underwriters’ Warrants with an exercise price of $3.30 per share.
|
•
|
a 1-for-3 reverse split and consolidation of our Common Shares that was prospectively approved by our board of directors and stockholders on March 8, 2021, which was effected April 30, 2021; and
|
•
|
no exercise by the underwriters of their over-allotment option to purchase additional Common Shares from us.
|
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in thousands of United States dollars, except per share amounts)
|
Six Months Period Ended June 30, 2021
|
Six Months Period Ended June 30, 2020
|
Year Ended December 31, 2020
|
March 13, 2019 (inception) through December 31, 2019
|
||||||||||||
(unaudited)
|
(unaudited)
|
(audited)
|
(audited)
|
|||||||||||||
Revenues
|
$
|
2,118
|
$
|
-
|
$
|
106
|
$
|
-
|
||||||||
Cost of sales
|
1,106
|
-
|
35
|
-
|
||||||||||||
Gross profit
|
1,012
|
-
|
71
|
-
|
||||||||||||
Expenses
|
||||||||||||||||
Consulting and management fees
|
$
|
2,262
|
$
|
819
|
$
|
4,752
|
2,001
|
|||||||||
Professional fees
|
766
|
218
|
794
|
183
|
||||||||||||
General office expenses
|
2,661
|
715
|
1,400
|
175
|
||||||||||||
Travel expenses
|
143
|
233
|
428
|
306
|
||||||||||||
Share based compensation
|
95
|
344
|
4,901
|
107
|
||||||||||||
Depreciation and amortization
|
119
|
57
|
113
|
26
|
||||||||||||
Research and development
|
85
|
53
|
78
|
21
|
||||||||||||
Foreign exchange (gain)
|
(78
|
)
|
171
|
20
|
6
|
|||||||||||
Total Expenses
|
6,053
|
2,610
|
12,486
|
2,825
|
||||||||||||
Loss before the undernoted items
|
(5,041
|
)
|
(2,610
|
)
|
(12,415
|
)
|
(2,825
|
)
|
||||||||
Goodwill Impairment
|
-
|
-
|
1,816
|
-
|
||||||||||||
Interest expense
|
64
|
72
|
30
|
19
|
||||||||||||
Transaction costs
|
-
|
-
|
132
|
-
|
||||||||||||
Other income
|
(67
|
)
|
(81
|
)
|
(59
|
)
|
-
|
|||||||||
Bad Debt Expense
|
100
|
-
|
||||||||||||||
Net loss for the period
|
$
|
(5,138
|
)
|
$
|
(2,601
|
)
|
$
|
(14,334
|
)
|
$
|
(2,844
|
)
|
||||
Other comprehensive loss
|
||||||||||||||||
Exchange differences on foreign operations
|
200
|
(19
|
)
|
(16
|
)
|
(23
|
)
|
|||||||||
Total comprehensive loss for the period
|
$
|
(5,338
|
)
|
$
|
(2,582
|
)
|
$
|
(14,350
|
)
|
$
|
(2,821
|
)
|
||||
Net loss attributable to:
|
||||||||||||||||
Flora Growth Corp.
|
$
|
(5,097
|
)
|
$
|
(2,555
|
)
|
$
|
(14,170
|
)
|
$
|
(2,824
|
)
|
||||
Non-controlling interests
|
$
|
(41
|
)
|
$
|
(46
|
)
|
$
|
(164
|
)
|
$
|
(20
|
)
|
||||
Comprehensive loss attributable to:
|
||||||||||||||||
Flora Growth Corp.
|
$
|
(5,297
|
)
|
$
|
(2,536
|
)
|
$
|
(14,186
|
)
|
$
|
(2,801
|
)
|
||||
Non-controlling interests
|
$
|
(41
|
)
|
$
|
(46
|
)
|
$
|
(164
|
)
|
$
|
(20
|
)
|
||||
Basic and diluted loss per share attributable to Flora Growth Corp.
|
$
|
(0.13
|
)
|
$
|
(0.09
|
)
|
$
|
(0.16
|
)
|
$
|
(0.06
|
)
|
||||
Weighted average number of Common Shares outstanding – basic and diluted
|
39,604
|
29,257
|
89,704
|
44,676
|
||||||||||||
• |
successfully implement or execute our business plan, or that our business plan is sound;
|
• |
adjust to changing conditions or keep pace with increased demand;
|
• |
attract and retain an experienced management team; or
|
• |
raise sufficient funds in the capital markets to effectuate our business plan, including product development, licensing and approvals.
|
•
|
require extensive changes to our operations;
|
•
|
result in regulatory or agency proceedings or investigations;
|
•
|
result in the revocation of our licenses and permits, increased compliance costs;
|
•
|
result in damage awards, civil or criminal fines or penalties;
|
•
|
result in restrictions on our operations;
|
•
|
harm our reputation; or
|
•
|
give rise to material liabilities.
|
•
|
the revocation or imposition of additional conditions on licenses to operate our business;
|
•
|
the suspension or expulsion from a particular market or jurisdiction or of our key personnel;
|
•
|
the imposition of additional or more stringent inspection, testing and reporting requirements;
|
•
|
product recalls or seizures; and
|
•
|
the imposition of fines and censures.
|
•
|
a limited availability of market quotations for our Common Shares;
|
•
|
reduced liquidity for our Common Shares;
|
•
|
a determination that our Common Shares are “penny stock”, which would require brokers trading in our Common Shares to adhere to more stringent rules and possibly result in a reduced level of trading
activity in the secondary trading market for our Common Shares;
|
•
|
a limited amount of news about us and analysist coverage of us; and
|
•
|
a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.
|
• delaying, deferring or preventing a change of control of the Company;
|
• impeding a merger, consolidation, takeover or other business combination involving the Company; or
|
• discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company.
|
• Our limited operating history and net losses;
• unpredictable events, such as the COVID-19 outbreak, and associated business disruptions;
• changes in cannabis laws, regulations and guidelines;
• decrease in demand for cannabis and derivative products due to certain research findings,
proceedings, or negative media attention;
• damage to our reputation as a result of negative publicity;
• exposure to product liability claims, actions and litigation;
• risks associated with product recalls;
• product viability;
• continuing research and development efforts to respond to technological and regulatory changes;
• shelf life of inventory;
• maintenance of effective quality control systems;
• changes to energy prices and supply;
• risks associated with expansion into new jurisdictions;
• regulatory compliance risks;
• opposition to the cannabinoid industry;
• risks related to our operations in Colombia; and
• potential delisting resulting in reduced liquidity of our Common Shares.
|
•
|
on an actual basis, except to the extent it has been adjusted to give effect to a 1-for-3 reverse split and consolidation of our Common Shares that was prospectively approved by our board of directors and
stockholders on March 8, 2021 and effected on April 30, 2021.
|
•
|
on a pro forma basis to give effect to proforma adjustments and the issuances of Common Shares after June 30, 2021 and
|
•
|
on a pro forma as adjusted basis, to give effect to the sale by us of 10,000,000 Units in this offering at the public offering price of $3.00 per Unit, after deducting underwriting discounts and commissions and estimated offering
expenses payable by us.
|
Public offering price per Unit
|
|
$
|
3.00
|
|
Net tangible book value per Common Share before this offering (as of June 30, 2021)
|
|
$
|
0.55
|
|
Increase in net tangible book value per Common Share attributable to purchasers in this offering
|
|
$
|
27,400
|
|
Pro forma, as adjusted net tangible book value per Common Share immediately after this offering
|
|
$
|
0.42
|
|
Dilution in pro forma, as adjusted net tangible book value per Common Share to purchasers in this offering
|
|
$
|
2.03
|
|
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in thousands of United States dollars, except per share amounts)
|
Six Month Period Ended June 30, 2021
|
Six Month Period Ended June 30, 2020
|
Year Ended December 31, 2020
|
March 13, 2019 (inception) through December 31, 2019
|
||||||||||||
(unaudited)
|
(unaudited)
|
(audited)
|
(audited)
|
|||||||||||||
Revenues
|
$
|
2,118
|
$
|
-
|
$
|
106
|
$
|
-
|
||||||||
Cost of sales
|
1,106
|
-
|
35
|
-
|
||||||||||||
Gross profit
|
1,012
|
-
|
71
|
-
|
||||||||||||
Expenses
|
||||||||||||||||
Consulting and management fees
|
$
|
2,262
|
$
|
819
|
$
|
4,752
|
2,001
|
|||||||||
Professional fees
|
766
|
218
|
794
|
183
|
||||||||||||
General office expenses
|
2,661
|
715
|
1,400
|
175
|
||||||||||||
Travel expenses
|
143
|
233
|
428
|
306
|
||||||||||||
Share based compensation
|
95
|
344
|
4,901
|
107
|
||||||||||||
Depreciation and amortization
|
119
|
57
|
113
|
26
|
||||||||||||
Research and development
|
85
|
53
|
78
|
21
|
||||||||||||
Foreign exchange (gain)
|
(78
|
)
|
171
|
20
|
6
|
|||||||||||
Total Expenses
|
6,053
|
2,610
|
12,486
|
2,825
|
||||||||||||
Loss before the undernoted items
|
(5,041
|
)
|
(2,610
|
)
|
(12,415
|
)
|
(2,825
|
)
|
||||||||
Goodwill Impairment
|
-
|
-
|
1,816
|
-
|
||||||||||||
Interest expense
|
64
|
72
|
30
|
19
|
||||||||||||
Transaction costs
|
-
|
-
|
132
|
-
|
||||||||||||
Other income
|
(67
|
)
|
(81
|
)
|
(59
|
)
|
-
|
|||||||||
Bad Debt Expense
|
100
|
-
|
||||||||||||||
Net loss for the period
|
$
|
(5,138
|
)
|
$
|
(2,601
|
)
|
$
|
(14,334
|
)
|
$
|
(2,844
|
)
|
||||
Other comprehensive loss
|
||||||||||||||||
Exchange differences on foreign operations
|
200
|
(19
|
)
|
(16
|
)
|
(23
|
)
|
|||||||||
Total comprehensive loss for the period
|
$
|
(5,338
|
)
|
$
|
(2,582
|
)
|
$
|
(14,350
|
)
|
$
|
(2,821
|
)
|
||||
Net loss attributable to:
|
||||||||||||||||
Flora Growth Corp.
|
$
|
(5,097
|
)
|
$
|
(2,555
|
)
|
$
|
(14,170
|
)
|
$
|
(2,824
|
)
|
||||
Non-controlling interests
|
$
|
(41
|
)
|
$
|
(46
|
)
|
$
|
(164
|
)
|
$
|
(20
|
)
|
||||
Comprehensive loss attributable to:
|
||||||||||||||||
Flora Growth Corp.
|
$
|
(5,297
|
)
|
$
|
(2,536
|
)
|
$
|
(14,186
|
)
|
$
|
(2,801
|
)
|
||||
Non-controlling interests
|
$
|
(41
|
)
|
$
|
(46
|
)
|
$
|
(164
|
)
|
$
|
(20
|
)
|
||||
Basic and diluted loss per share attributable to Flora Growth Corp.
|
$
|
(0.13
|
)
|
$
|
(0.09
|
)
|
$
|
(0.16
|
)
|
$
|
(0.06
|
)
|
||||
Weighted average number of Common Shares outstanding – basic and diluted
|
39,604
|
29,257
|
89,704
|
44,676
|
||||||||||||
•
|
name Flora as its preferred supplier of genetic material and finished cannabis derivative products, provided all regulatory and quality standards are met and subject to entering into a definitive
agreement by no later than December 1, 2021;
|
•
|
(a) grant Flora a right of first refusal to supply any cannabis oil or derivative products acquired by Hoshi or any of its affiliates at its Malta processing facility, provided regulatory and quality
standards are met; and (b) consult with Flora on equipment for processing and production to be installed in its Malta processing facility, including review of equipment, GMP design schematics, and proposed products to be manufactured
in Malta, subject to entering into a definitive agreement by no later than December 1, 2021;
|
•
|
use commercially reasonable efforts to grant Flora access to its European Union Good Manufacturing Practices (“EU-GMP”) auditors for the purposes of assisting Flora to obtain the EU-GMP certification at
its Cosechemos Ya S.A.S. subsidiary in Colombia;
|
•
|
use commercially reasonable efforts to assist with the development of Flora’s operations in Malta and Portugal; and
|
•
|
Luis Merchan being named to the board of directors of Hoshi
|
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in thousands of United States dollars, except per share amounts)
|
Six Months Period Ended June 30, 2021
|
Six Months Period Ended June 30, 2020
|
||||||
(unaudited)
|
(unaudited)
|
|||||||
Revenues
|
$
|
2,118
|
$
|
-
|
||||
Cost of sales
|
1,106
|
-
|
||||||
Gross profit
|
1,012
|
-
|
||||||
Expenses
|
||||||||
Consulting and management fees
|
$
|
2,262
|
$
|
819
|
||||
Professional fees
|
766
|
218
|
||||||
General office expenses
|
2,661
|
715
|
||||||
Travel expenses
|
143
|
233
|
||||||
Share based compensation
|
95
|
344
|
||||||
Depreciation and amortization
|
119
|
57
|
||||||
Research and development
|
85
|
53
|
||||||
Foreign exchange (gain)
|
(78
|
)
|
171
|
|||||
Total Expenses
|
6,053
|
2,610
|
||||||
Loss before the undernoted items
|
(5,041
|
)
|
(2,610
|
)
|
||||
Goodwill Impairment
|
-
|
-
|
||||||
Interest expense
|
64
|
72
|
||||||
Transaction costs
|
-
|
-
|
||||||
Other income
|
(67
|
)
|
(81
|
)
|
||||
Bad Debt Expense
|
100
|
-
|
||||||
Net loss for the period
|
$
|
(5,138
|
)
|
$
|
(2,601
|
)
|
||
Other comprehensive loss
|
||||||||
Exchange differences on foreign operations
|
200
|
(19
|
)
|
|||||
Total comprehensive loss for the period
|
$
|
(5,338
|
)
|
$
|
(2,582
|
)
|
||
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in thousands of United States dollars, except per share amounts)
|
Year Ended December 31, 2020
|
March 13, 2019 (inception) through December 31, 2019
|
||||||
(audited)
|
(audited)
|
|||||||
Revenues
|
$
|
106
|
$
|
-
|
||||
Cost of sales
|
35
|
-
|
||||||
Gross profit
|
71
|
-
|
||||||
Expenses
|
||||||||
Consulting and management fees
|
$
|
4,752
|
2,001
|
|||||
Professional fees
|
794
|
183
|
||||||
General office expenses
|
1,400
|
175
|
||||||
Travel expenses
|
428
|
306
|
||||||
Share based compensation
|
4,901
|
107
|
||||||
Depreciation and amortization
|
113
|
26
|
||||||
Research and development
|
78
|
21
|
||||||
Foreign exchange (gain)
|
20
|
6
|
||||||
Total Expenses
|
12,486
|
2,825
|
||||||
Loss before the undernoted items
|
(12,415
|
)
|
(2,825
|
)
|
||||
Goodwill Impairment
|
1,816
|
-
|
||||||
Interest expense
|
30
|
19
|
||||||
Transaction costs
|
132
|
-
|
||||||
Other income
|
(59
|
)
|
-
|
|||||
Net loss for the period
|
$
|
(14,334
|
)
|
$
|
(2,844
|
)
|
||
Other comprehensive loss
|
||||||||
Exchange differences on foreign operations
|
(16
|
)
|
(23
|
)
|
||||
Total comprehensive loss for the period
|
$
|
(14,350
|
)
|
$
|
(2,821
|
)
|
(in thousands of United States dollars)
|
Six Months ended June 30, 2021
|
Six Months ended June 30, 2020
|
Year ended December 31, 2020
|
For the period from March 13, 2019 (inception) to December 31, 2019
|
||||||||||||
Cash from operating activities
|
$
|
(5,770
|
)
|
$
|
(2,137
|
)
|
$
|
(8,421
|
)
|
$
|
(454
|
)
|
||||
Cash from financing activities
|
$
|
14,419
|
$
|
10,236
|
$
|
25,816
|
$
|
1,005
|
||||||||
Cash from investing activities
|
$
|
(5,171
|
)
|
$
|
(1,624
|
)
|
$
|
(2,164
|
)
|
$
|
(431
|
)
|
||||
Effect of exchange rate change
|
$
|
(195
|
)
|
$
|
76
|
$
|
152
|
$
|
20
|
|||||||
Change in cash during the period
|
$
|
3,283
|
$
|
6,551
|
$
|
15,383
|
$
|
140
|
||||||||
Cash, beginning of period
|
$
|
15,523
|
$
|
140
|
$
|
140
|
$
|
-
|
||||||||
Cash, end of period
|
$
|
18,806
|
$
|
6,691
|
$
|
15,523
|
$
|
140
|
• |
IFRS 3 – Business Combinations (“IFRS 3”) was amended in October 2018 to clarify the definition of a business. This amended definition states that a business must include inputs and a process and clarified that the process must be
substantive and the inputs and process must together significantly contribute to operating outputs. In addition it narrows the definitions of a business by focusing the definition of outputs on goods and services provided to customers
and other income from ordinary activities, rather than on providing dividends or other economic benefits directly to investors or lowering costs and added a test that makes it easier to conclude that a company has acquired a group of
assets, rather than a business, if the value of the assets acquired is substantially all concentrated in a single asset or group of similar assets. The amendments are effective for annual reporting periods beginning on or after January
1, 2020. Earlier adoption is permitted.
|
• |
IAS 1 – Presentation of Financial Statements (“IAS 1”) and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”) were amended in October 2018 to refine the definition of materiality and clarify its
characteristics. The revised definition focuses on the idea that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial
statements make on the basis of those financial statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2020. Earlier adoption is permitted.
|
In thousands of US dollars
|
Payments due by period:
|
|||||||||||||||
Total
|
Less than 1 year
|
1 – 3 years
|
More than 3 years
|
|||||||||||||
Long-term debt obligations
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Capital (finance) lease obligations
|
395
|
107
|
288
|
-
|
||||||||||||
Operating lease obligations
|
-
|
-
|
-
|
-
|
||||||||||||
Purchase obligations
|
-
|
-
|
-
|
-
|
||||||||||||
Other long-term liabilities reflected on our balance sheet
|
-
|
-
|
-
|
-
|
||||||||||||
Total
|
$
|
395
|
$
|
107
|
$
|
288
|
$
|
-
|
•
|
present more than two years of audited financial statements and two years of related selected financial data and management’s discussion and analysis of financial condition and results of operations
disclosure in our registration statement of which this prospectus forms a part;
|
•
|
have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; and
|
•
|
disclose certain executive compensation related items.
|
|
• |
The cultivation, processing and supplying of natural, medicinal-grade cannabis oil and high-quality cannabis derived medical and wellbeing products to large channel distributors, including pharmacies, medical clinics, and cosmetic
companies in Colombia and internationally;
|
|
• |
Over-the-counter medical products and medical cannabis products, in which we produce and sell branded products to consumers as well as use our production facility to create white-label products for consumers;
|
|
• |
Wellbeing products, focused on delivering the benefits of CBD and hemp across an array of various branded consumer packaged goods, such as its Mind Naturals and Ô cosmetics lines and Stardog loungewear line. We leverage our branded product market experience, scientific expertise, agricultural advantages and educational platforms to
introduce our products and services across markets in Latin America and the United States; and
|
|
• |
Food and beverage products, focused on delivering the benefits of exotic fruits from the Colombian amazon to consumers.
|
• |
Help People Restore and Thrive. We develop products to positively affect the health and wellness of people. From medicines to consumer products, we strive to help our
customers restore and thrive.
|
• |
Prioritize Value-chain Sustainability. We care about our broader global impact, from production to consumption. We make conscious decisions to prioritize sustainability
across our value-chain.
|
•
|
Medicinal-Grade Cannabis. Material revenues are expected to begin in the fourth quarter of 2021, through our 90%-owned subsidiary, Cosechemos YA SAS;
|
•
|
Cannabis Oils and Extracts. Material revenues are expected to begin in the fourth quarter of 2021, through our 90%-owned subsidiary, Cosechemos YA SAS;
|
•
|
Skincare and Beauty Products. Our revenues commenced in August 2020, through our 87% owned subsidiary, Flora Beauty LLC;
|
•
|
Dermo-Cosmetic Products. Our revenues commenced in December 2020, following our acquisition of our 90%-owned subsidiary, Breeze Laboratory S.A.S. (now Flora Lab Laboratory S.A.S.) which entity has
generated revenues since January 2013;
|
•
|
Pharmaceutical Products. Our revenues commenced in December 2020, following our acquisition of our 100%-owned subsidiary, Grupo Farmaceutico Cronomed SAS, which entity has generated revenues since March
2005;
|
•
|
Loungewear and Textiles. Our revenues commenced in October 2020 through our 100%-owned subsidiaries, Hemp Textiles & Co LLC and Hemp Textiles & Co SAS; and
|
•
|
Food and Beverage Products. Our revenues commenced in December 2020, following our acquisition of our 90%-owned subsidiary Kasa Wholefoods Company SAS Colombia which entity has generated revenues since
July 2013.
|
(1) |
Cleanser: The product is designed to be a gentle gel cleanser is used to remove makeup. The cleanser is creamy and smooth in texture, designed to dig deep and cleanse the skin without peeling it.
|
(2) |
Eye Cream: The eye cream is designed to decompress and recharges the skin with hyaluronic acid-based, aimed to generate smoother skin and diminish expression lines.
|
(3) |
Moisturizer: The moisturizer is designed to feed the skin with antioxidants and is formulated with hyaluronic acid, vitamin E from cacay oil, and CBD. The moisturizer is designed to nourish and replenish, leaving a smooth and
dewy complexion.
|
(4) |
Hydrating mask: The relaxing hydrating mask treatment can be used twice a week to enhance the effects of the other three products.
|
(5) |
Refreshing Mist: The refreshing mists is designed to hydrate and brighten complexion. Made from chamomile extract, calendula extract, rose water, coffee extract and camellia, the mist is intended for everyday use.
|
(6) |
Hand Cleanser: Effective cleaning and hydration for everyday use, the Mind Naturals cleanser is made from Aloe Vera and Tea-tree extract.
|
(1) |
pH Balanced Cleanser: The cleanser is designed to remove impurities and prepare the skin for its daily routine. Its special ingredients include CBD, cold-pressed coconut oil, and cacay oil.
|
(2) |
Anti-aging Repair Eye Cream: The eye cream is designed to provide a smooth finish and eliminate fine lines and under-eye bags. Its special ingredients include CBD and sacha inchi oil.
|
(3) |
Anti-Aging Moisturizer: The moisturizer is designed to replenish your skin and deliver a healthy complexion. Its special ingredients include CBD, calendula extract, aloe vera, and cacay oil.
|
(4) |
Exfoliating Nourishing mask: The nourishing mask is designed to rejuvenate your skin and deliver an alluring glow. Special ingredients include CBD and sacha inchi oil.
|
(1)
|
Anti-Friction Protector: Provides a protective layer to prevent friction caused during intense sport. This long-lasting CBD formulation does not stain and is water and sweat resistant.
|
(2)
|
Pre-Heating Emulsion: Made with CBD and natural extracts this emulsion generates a soothing heat sensation to activate microcirculation and is ideal for athletes during warm-up.
|
(3)
|
Calming Emulsion: Produced from CBD, natural extracts, glutamine and other amino acids this hydrating skin cream provides lasting relief and recovery to muscles post workout.
|
(1)
|
Wellness Roll On: Combination of natural ingredients with CBD to help soothe, calm and restore the body.
|
(2)
|
Natural Harmony Cream: This CBD-infused cream helps restore homeostasis by soothing muscles and supporting relaxation.
|
(3)
|
Night Relaxation and Massage Oil: Lavender, lemongrass, and CBD allow the body to unwind and rest more deeply.
|
(4)
|
Perfect Balance Roll On: This CBD roll on helps to stabilize energy levels to improve feelings of calm and wellbeing.
|
(5)
|
Pureness Moisturizing and Mattifying Gel: Moisturizes, tones, and mattifies skin daily with the benefits of green tea and CBD.
|
(6)
|
Pureness Facial Serum: Formulated with CBD and other natural hydrators to keep skin smooth and glowing.
|
(7)
|
Soft Spring Shower Gel: Gently cleanses skin and leaves it hydrated with CBD, aloe vera, and camu-camu.
|
(8)
|
Natural Growth Hair Lotion: Prevents hair loss and hydrates from the scalp all the way down to the ends of your hair, thanks to CBD and other natural ingredients known to
stimulate hair strength and growth.
|
(9)
|
CBD Shampoo and Conditioner: Infused with CBD, coconut oil, and rosemary, these products help to nourish scalp, protect from damage, and add deep moisture and shine.
|
(10)
|
Soft Cloud Body Ointment: CBD and natural ingredients complement your wellness routine by smoothing, calming, and relaxing your body.
|
(11)
|
Soft Breeze Moisturizing Body Lotion: Calm, soften, and refresh your skin with this rapidly absorbing, hydrating CBD-infused formula.
|
• |
Acquisitions in Colombia of Kasa, Cronomed and Flora Lab which businesses have some years of operating history, sales and brand recognition;
|
• |
Partnerships with Laura Londono and Paulina Vega, well known celebrities in Colombia and Latin America;
|
• |
Integration of vertically owned inputs and using CBD in Flora products as opposed to purchasing which gives access to high quality lower-priced CBD;
|
• |
Synergies associated with producing integrated products out of our recently acquired Quipropharma laboratory; and
|
• |
Strong distribution relationships in Colombia for the product categories Flora offers.
|
• |
Emerging business producing products in Colombia at a low cost and exporting to US;
|
• |
Strength of the dollar compared to Colombian peso;
|
• |
Expanding product portfolio that allows for revenue diversification;
|
• |
Paulina Vega, former Ms. Universe, has a strong profile with US Hispanic consumers;
|
• |
Vertical integration that ensures quality of raw materials and cost efficiencies;
|
• |
Sustainability focus that includes natural ingredients, ecological packaging and organic practices;
|
• |
Our ability to utilize skilled labor in Colombia for efficient costs and production; and
|
• |
Positive regulatory environment that supports exports into the United States.
|
•
|
In July 2020, the Colombian legislative update now allows for the sale and export of raw cannabis materials, namely dried flower, to international markets including THC.
|
Brand
|
Approved By
|
Certificate Number
|
Country
|
Validity Period (with an Option to Renew)
|
140 MILES
|
Superintendency of Industry and Commerce
|
687034 of 2021 on Nice Class 25 (clothing)
|
Colombia
|
July 27,2031
|
STARDOG LOUNGEWEAR and Design
|
Superintendency of Industry and Commerce
|
671504 of 2020 on Nice Class 3 (CBD goods)
|
Colombia
|
December 16, 2030
|
FLORA GROWTH and Design
|
Superintendency of Industry and Commerce
|
672089 of 2020 on Nice Classes 31, 32, 44 (agricultural goods light beverages medical services)
|
Colombia
|
November 27, 2030
|
COSECHEMOS and Design
|
Superintendency of Industry and Commerce
|
670673 of 2020 on Nice Classes (pharmaceutical products, medical services)
|
Colombia
|
December 7, 2030
|
BRAND
|
Approved By
|
Certificate Number
|
Country
|
Validity Period (with an Option to Renew)
|
|
MIND NATURALS
|
Superintendency of Industry and Commerce
|
Certificate 57796 of 2020 on Nice Class 11 (Cosmetic Products)
|
Colombia
|
Valid until September 18, 2030, with an option to renew for an addition 10-year period.
|
|
MIND NATURALS and Design
|
EUTM
|
Reg. No. 18225777 on Nice Class 3 (cosmetics)
|
EU
|
April 14, 2030,
|
|
MIND NATURALS and Design
|
UKIPO
|
Reg. No. UK00918225777 on Nice Class 3
(cosmetics)
|
UK
|
April 14, 2030
|
|
MIND NATURALS and Design
|
Superintendency of Industry and Commerce
|
667681 of 2020 on Nice Class 3 (bleaching and cleaning preparations, cosmetics)
|
Colombia
|
November 6, 2030
|
|
Ô
|
Superintendency of Industry and Commerce
|
674791 of 2021 on Nice Class 3 (bleacning and cleaning preparations, cosmetics)
|
Colombia
|
February 8, 2031
|
|
Anti-Aging Moisturizing Cream
|
INVIMA
|
NSOC04666-21CO
|
Colombia
|
March 2, 2028
|
|
Anti-Aging Repair Eye Cream
|
INVIMA
|
NSOC04292-21CO
|
Colombia
|
February 19, 2028
|
|
Control Moisturizer With CBD
|
INVIMA
|
NSOC07077-21CO
|
Colombia
|
July 7, 2028
|
|
Eye Cream
|
INVIMA
|
NSOC00666-20CO
|
Colombia
|
July 31, 2027
|
|
Facial Cleanser Gel With CBD
|
INVIMA
|
NSOC01574-20CO
|
Colombia
|
July 31, 2027
|
|
Facial Cleanser
|
INVIMA
|
NSOC05114-21CO
|
Colombia
|
March 25, 2028
|
|
Facial Toner With CBD
|
INVIMA
|
NSOC07014-21CO
|
Colombia
|
June 29, 2028
|
|
Hydrating Mask
|
INVIMA
|
NSOC00613-20CO
|
Colombia
|
July 28, 2027
|
|
Lip Balm With CBD
|
INVIMA
|
NSOC06144-21CO
|
Colombia
|
May 13, 2028
|
|
Moisturizing Body Cleanser With CBD
|
INVIMA
|
NSOC07343-21CO
|
Colombia
|
July 15, 2028
|
|
Oil Control Facial Cleanser With CBD
|
INVIMA
|
NSOC07125-21CO
|
Colombia
|
July 7, 2028
|
|
Purfying Mist With CBD
|
INVIMA
|
NSOC05083-21CO
|
Colombia
|
March 24, 2028
|
|
Refreshing Mist With CBD
|
INVIMA
|
NSOC04206-21CO
|
Colombia
|
February 15, 2028
|
|
Relaxing Mist With CBD
|
INVIMA
|
NSOC05715-21CO
|
Colombia
|
April 23, 2028
|
|
Rich Moisturizer With CBD
|
INVIMA
|
NSOC00648-20CO
|
Colombia
|
October 13, 2027
|
Approved By
|
Certificate Number
|
Country
|
Validity Period (with an Option to Renew)
|
|||
BREEZE
LABORATORY and Design
|
Superintendency of Industry and Commerce
|
541494 of 2016 on Nice Classes 3, 5 y 42
|
Colombia
|
October 24, 2026
|
||
Oil Massage
|
INVIMA
|
NSOC52156-13CO
|
Colombia
|
February 4, 2023
|
||
Agua Limpiadora Micelar
|
INVIMA
|
NSOC03754-21CO
|
Colombia
|
December 1, 2028
|
||
Anti-Age
|
INVIMA
|
NSOC87929-18CO
|
Colombia
|
September 14, 2025
|
||
Bio tonic
|
INVIMA
|
NSOC79856-17CO
|
Colombia
|
July 11, 2024
|
||
Bioexfoliating
|
INVIMA
|
NSOC67513-15CO
|
Colombia
|
September 3, 2022
|
||
Soothing and Refreshing tonic
|
INVIMA
|
NSOC38169-10CO
|
Colombia
|
August 28, 2028
|
||
Liposome Lightening and Antioxidant Cream
|
INVIMA
|
NSOC47521-12CO
|
Colombia
|
April 12, 2022
|
||
Protective And Regenerating Cream
|
INVIMA
|
NSOC71701-16CO
|
Colombia
|
April 22, 2023
|
||
Liposome Lightening Cream
|
INVIMA
|
NSOC06456-21CO
|
Colombia
|
June 1, 2028
|
||
Rehydrating And Nutritive Emulsion
|
INVIMA
|
NSOC52972-13CO
|
Colombia
|
April 5, 2023
|
||
Gel
|
INVIMA
|
NSOC86232-18-CO
|
Colombia
|
June 22, 2025
|
||
Serum
|
INVIMA
|
NSOC02984-20CO
|
Colombia
|
November 20, 2027
|
||
Antibacterial Gel
|
INVIMA
|
NSOC99512-20CO
|
Colombia
|
March 25, 2027
|
||
Hypothermal Gel For Firming And Toning Massage
|
INVIMA
|
NSOC52157-13CO
|
Colombia
|
February 7, 2023
|
||
Thermal Gel For Anti-Cellulite And Reducing Massage
|
INVIMA
|
NSOC52154-13CO
|
Colombia
|
February 7, 2023
|
||
Face Cleaner
|
INVIMA
|
NSOC73720-16CO
|
Colombia
|
August 19, 2023
|
||
Foam Cleaner
|
INVIMA
|
NSOC88500-18CO
|
Colombia
|
October 10, 2025
|
||
Mask
|
INVIMA
|
NSOC71907-16CO
|
Colombia
|
May 4, 2023
|
||
Sun Protector With Screen And Solar Filters Spf 60+
|
INVIMA
|
NSOC47416-12CO
|
Colombia
|
April 9, 2022
|
||
Silicone Dermal Recovery
|
INVIMA
|
NSOC79752-17CO
|
Colombia
|
July 7, 2024
|
||
Shampoo
|
INVIMA
|
NSOC86762-18CO
|
Colombia
|
July 25, 2025
|
||
Wet Towel
|
INVIMA
|
NSOC99378-20CO
|
Colombia
|
March 18, 2027
|
Approved By
|
Certificate Number
|
Country
|
Validity Period (with an Option to Renew)
|
||
AINEFLAM
|
Superintendency of Industsry and Commerce
|
505957 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
June 27, 2024
|
|
ALGICRON
|
Superintendency of Industry and Commerce
|
493971 of 2014 on Nice Class 5 (Pharmaceutical products)
|
Colombia
|
May 29, 2014
|
|
BIOCURE
|
Superintendency of Industry and Commerce
|
631482 of 2019 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
October 26, 2029
|
|
CAPSIFLAM
|
Superintendency of Industry and Commerce
|
479172 of 2013 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
September 12, 2023
|
|
CERIZ T
|
Superintendency of Industry and Commerce
|
501830 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
September 19, 2014
|
|
CRONOCICAR
|
Superintendency of Industry and Commerce
|
405176 of 2010 on Nice Class 3 (Cosmetics Products)
|
Colombia
|
April 12, 2030
|
CRONODOL MAX
|
Superintendency of Industry and Commerce
|
398866 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
March 07, 2024
|
|
CRONODOL MAX
|
Superintendency of Industry and Commerce
|
681038 of 2021 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
May 10,2031
|
|
CRONODOL FORTE
|
Superintendency of Industry and Commerce
|
488961 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
March 24, 2030
|
|
CRONOGRYP ULTRA
|
Superintendency of Industry and Commerce
|
681037 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
March 19, 2030
|
|
CRONOSURE
|
Superintendency of Industry and Commerce
|
402780 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
May 25, 2030
|
|
CRONOTREX
|
Superintendency of Industry and Commerce
|
411173 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
September 28, 2030
|
|
CRONOZIT
|
Superintendency of Industry and Commerce
|
411174 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
September 28, 2030
|
|
CROSIMPAR
|
Superintendency of Industry and Commerce
|
411175 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
September 28, 2030
|
|
DEXIFEM
|
Superintendency of Industry and Commerce
|
599383 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
July 31, 2028
|
|
DUOMELOC
|
Superintendency of Industry and Commerce
|
592108 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
April 23, 2028
|
|
DUOPLUS
|
Superintendency of Industry and Commerce
|
592107 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
April 23, 2028
|
|
ENDOVIT
|
Superintendency of Industry and Commerce
|
595743 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
March 31, 2024
|
|
ENERBIOVIT
|
Superintendency of Industry and Commerce
|
490055 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
June 22, 2027
|
|
FERROMINERAL
|
Superintendency of Industry and Commerce
|
589837 of 2018 on Nice Class 5 (dietary supplements)
|
Colombia
|
April 3, 2028
|
|
FILOX36
|
Superintendency of Industry and Commerce
|
594262 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
June 22, 2027
|
|
FLAXERD
|
Superintendency of Industry and Commerce
|
594262 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
July 31, 2023
|
Application Date
|
Approved By
|
Certificate Number
|
Country
|
Validity Period (with an Option to Renew)
|
|
FLUMIEL
|
Superintendency of Industry and Commerce
|
411562 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
September 29,
|
|
FYBERCRON
|
Superintendency of Industry and Commerce
|
648911 of 2020 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
May 22, 2030
|
|
GYNECOMB
|
Superintendency of Industry and Commerce
|
592105 of 2018 on Nice Class 5 (antifungal cream)
|
Colombia
|
April 23, 2028
|
|
GASTROBUTINO
|
Superintendency of Industry and Commerce
|
569608 of 2017 on Nice Class 5 (digestives for pharmaceutical use)
|
Colombia
|
June 8, 2027
|
|
HYPERXET
|
Superintendency of Industry and Commerce
|
463683 of 2012 on Nice Class 5 (Pharmaceutical products)
|
Colombia
|
November 29, 2022
|
|
HYDRACRON
|
Superintendency of Industry and Commerce
|
494089 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
May 28, 2024
|
|
IMPROTOP
|
Superintendency of Industry and Commerce
|
477148 of 2013 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
August 14, 2023
|
|
INFEMOX
|
Superintendency of Industry and Commerce
|
477148 of 2013 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
August 14, 2023
|
|
INFLAGEL
|
Superintendency of Industry and Commerce
|
486607 of 2012 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
November 28, 2022
|
|
INFLEDOL
|
Superintendency of Industry and Commerce
|
498918 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
August 11, 2024
|
|
LESFLIS
|
Superintendency of Industry and Commerce
|
546101 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
December 14, 2026
|
|
MAXERIL
|
Superintendency of Industry and Commerce
|
494916 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
June 10, 2024
|
|
METROFUROX
|
Superintendency of Industry and Commerce
|
598965 of 2018 on Nice Class 5 (medicine)
|
Colombia
|
July 25, 2028
|
|
MUCOCISTEIN
|
Superintendency of Industry and Commerce
|
54921 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
August 01, 2028
|
|
MUCOTAPP
|
Superintendency of Industry and Commerce
|
59595 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
August 17, 2028
|
|
NASORYL
|
Superintendency of Industry and Commerce
|
494091 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
May 28, 2024
|
|
NATURE’S FOOD
|
Superintendency of Industry and Commerce
|
467870 of 2013 on Nice Class 35 (business services)
|
|||
OTOMYC
|
Superintendency of Industry and Commerce
|
492450 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
April 30, 2014
|
|
SILDECRON
|
Superintendency of Industry and Commerce
|
598583 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
June 27, 2024
|
|
SOLKREM ULTRA
|
Superintendency of Industry and Commerce
|
464794 of 2012 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
November 21, 2022
|
|
URIFLOX
|
Superintendency of Industry and Commerce
|
631481 of 2019 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
October 26, 2029
|
|
TRICASP CHAMPU
|
Superintendency of Industry and Commerce
|
592105 of 2018 on Nice Class 5 (medical shampoos)
|
Colombia
|
April 23, 2028
|
|
TOXEDRA
|
Superintendency of Industry and Commerce
|
407903 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
August 11, 2030
|
|
Approved By
|
Certificate Number
|
Country
|
Validity Period (with an Option to Renew)
|
||
STARDOG LOUNGEWEAR
|
Superintendency of Industry and Commerce
|
69482 of 2020 on Nice Class 25 (clothing)
|
Colombia
|
October 29, 2030,
|
|
STARDOG
LOUNGEWEAR
and Design
|
EUTM
|
18285147
|
EU
|
August 5, 2030
|
•
|
The federal physician self-referral law, commonly known as the Stark Law, that generally prohibits physicians from referring Medicare or Medicaid patients to an entity for the provision of certain
“designated health services” if the physician or a member of such physician’s immediate family has a direct or indirect financial relationship (including an ownership interest or a compensation arrangement) with the entity, and prohibit
the entity from billing Medicare or Medicaid for such designated health services.
|
•
|
The federal Anti-Kickback Statute that prohibits the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback, rebate or other remuneration for referring an individual, in return
for ordering, leasing, purchasing or recommending or arranging for, or to induce the referral of an individual or the ordering, purchasing or leasing of items or services covered, in whole or in part, by any federal healthcare program,
such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation. In addition, the government may assert that a claim including items
or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.
|
•
|
The criminal healthcare fraud provisions of the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act
(“HITECH”), and their implementing regulations (collectively, “HIPAA”), and related rules which prohibit knowingly and willfully executing a scheme or artifice to defraud any healthcare benefit program or falsifying, concealing or
covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the federal Anti-Kickback Statute, a
person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation.
|
•
|
The federal False Claims Act, which imposes civil and criminal liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the government or knowingly make, or
cause to be made, a false statement in order to have a false claim paid, including qui tam or whistleblower suits.
|
•
|
Reassignment of payment rules which prohibit certain types of billing and collection practices in connection with claims payable by the Medicare or Medicaid programs.
|
•
|
Similar state law provisions pertaining to anti-kickback, self-referral and false claims issues.
|
•
|
State laws that prohibit general business corporations, such as us, from practicing medicine, controlling physicians’ medical decisions, or engaging in certain practices such as splitting fees with
physicians.
|
•
|
Laws that regulate debt collection practices as applied to our debt collection practices.
|
•
|
Certain provisions of the Social Security Act that impose criminal penalties on healthcare providers who fail to disclose, or refund known overpayments.
|
•
|
Federal and state laws that prohibit providers from billing and receiving payment from Medicare and Medicaid for services unless the services are medically necessary, adequately and accurately documented,
and billed using codes that accurately reflect the type and level of services rendered.
|
•
|
Federal and state laws and policies that require healthcare providers to maintain licensure, certification or accreditation to enroll and participate in the Medicare and Medicaid programs, and to report
certain changes in their operations to the agencies that administer these programs.
|
Regulation:
|
Regulates:
|
|
Law 1787 of 2016
|
Legalizes the use of Cannabis for medical and scientific purposes
|
|
Decree 613 of 2017 modifies Decree 780 of 2016
|
Regulates law 1787 establishing a licensing system and process, defines psychoactive and non-psychoactive cannabis and the quota system for psychoactive cannabis in accordance with Single Convention of
Narcotics of 1961 and amendments
|
|
Decree 811 of 2021
|
Regulates law 1787 and replaces Decree 613 of 2017, modifying the licensing process, adding additional requirements to license applications for psychoactive, non-psychoactive cannabis and use of seeds for
sowing.
|
|
Resolution 577 of 2017 from the Ministry of Justice
|
Regulates the evaluation and control of the following licenses:
a. Seed Use
b. Cultivation of psychoactive plants (High-THC cultivation licence)
c. Cultivation of non-psychoactive plants (Low-THC cultivation licence)
Creates requirement for security protocol
|
|
Resolution 578 of 2017 from the Ministry of Justice
|
Regulates the cost of the following licences:
a. Seed Use
b. Cultivation of psychoactive plants (High-THC cultivation licence)
c. Cultivation of non-psychoactive plants (Low-THC cultivation licence)
|
|
Resolution 579 of 2017 from the Ministry of Justice
|
Establishes that growers that cultivate on a half a hectare area (5,000 square meters) or less are considered small and medium growers and, therefore, may access technical advice, priority allocation of
quotas and purchase of their production by the processor and requires that 10 percent of the total production of the processor must come from a small and medium producers.
|
|
Resolution 2892 of 2017 from the Ministry of Health
|
Regulates the evaluation and control of the Fabrication of Cannabis derivatives (High-THC Production Licence) Provides guidelines for appropriate security protocols for manufacturing cannabis derivatives
including physical security, monitoring, detection, and incident reporting to authorities.
|
|
Resolution 2891 of 2017 from the Ministry of Health
|
Regulates the cost of the High-THC production Licence
|
|
Resolution 1478 of 2006 from the Ministry of Health modified by Resolution 315 of 2020.
|
Regulation of the control, monitoring and surveillance of the import, export, processing, synthesis, manufacture, distribution, dispensing, purchase, sale, destruction and use of controlled substances,
medicines or products containing them and on those which are State Monopoly
|
|
Decree 2200 of 2005 from the Ministry of Health
|
Regulates pharmaceutical services including the Magistral Preparations
|
|
Guidelines for the GEP certification for Magistral Preparations with Cannabis issued the 25 of October 2019 by INVIMA
|
Establishes the requirements for labs to obtain the GEP certification for the fabrication of Magistral Preparations with Cannabis derivatives
|
•
|
Decision 516 of 2002 of the Andean Community of Nations establishes a sanitary regulation for the manufacture and commercialization of Cosmetic Products in the countries of the Andean Community (Bolivia,
Colombia, Ecuador and Peru).
|
•
|
Decree 219 of 1998, which regulates the quality and control of Cosmetic Products.
|
•
|
Law 9 of 1979, which establishes the general framework for health surveillance and control
|
•
|
The lists and provisions issued by the Food & Drug Administration of the United States of America (FDA);
|
•
|
The Personal Care Products Council's cosmetic ingredient listings;
|
•
|
European Union Directives or Regulations governing cosmetic ingredients; and
|
•
|
Cosmetic Ingredient Listings Europe – The Personal Care Association. As long as the governmental entities that are in charge of the regulation, surveillance and sanitary control of cosmetic products,
according to the national legislation of each member country of the Andean Subregion, namely Bolivia, Colombia, Ecuador and Peru do not take a decision under Article 5 of Andean Decision 833 of 2018, member countries shall use the least
restrictive list and the ingredients contained in the European cosmetic (cosing) are permitted in cosmetic products, including the following cannabis ingredients: Cannabis sativa flower extract, Cannabis sativa flower/leaf/stem extract,
Sativa cannabis seed extract, Cannabis Sativa glycer glycertic seed oil-8, Sativa-8 cannabis seed esters, Cannabis Sativa Seedcake, Cannabis Sativa seed powder, Cannabis Sativa stem powder, Hydrolyzed Sativa cannabis seed extract,
Hydrolyzed hemp seed, Cannabidiol extract.
|
Name
|
Position
|
Age
|
||||||
Executive Officers:
|
||||||||
Luis Merchan
|
President and Chief Executive Officer
|
39
|
||||||
Lee Leiderman
|
Chief Financial Officer
|
63
|
||||||
Jason Warnock
|
Chief Revenue Officer
|
49
|
||||||
James Williams
|
VP Corporate Development
|
32
|
||||||
Javier Franco
|
VP Agriculture
|
53
|
||||||
Damian Lopez
|
VP Strategy and Legal
|
38
|
||||||
Matthew Cohen
|
VP U.S. Legal and Business Affairs
|
55
|
||||||
Directors:
|
||||||||
Dr. Bernard Wilson
|
Chairman
|
77
|
||||||
Luis Merchan
|
Director
|
39
|
||||||
Dr. Beverley Richardson
|
Director
|
60
|
||||||
Juan Carlos Gomez Roa
|
Director
|
58
|
||||||
Dr. Annabelle Manalo-Morgan
|
Director
|
37
|
||||||
Marc Mastronardi
|
Director
|
44
|
• |
Been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
|
• |
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he or she was a general partner or executive officer, either at the time of the
bankruptcy filing or within two years prior to that time;
|
• |
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or
otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
|
• |
been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed,
suspended, or vacated;
|
• |
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private
litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in
connection with any business entity; or
|
• |
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934, as amended (the
Exchange Act)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated
with a member.
|
•
|
NASDAQ Listing Rule 5605(b)(1) requires that at least a majority of the Company’s Board of Directors shall be independent directors, and NASDAQ Listing Rule 5605(b)(2) requires that independent directors
regularly meet in executive session, where only independent directors are present. We currently have five (5) indepedent directors, constituting a majority of the Company’s Board of Directors as of the date hereof. Our independent
directors meet regularly with other members of the Board and meet in executive session at least two (2) times per year.
|
•
|
NASDAQ Listing Rule 5620(c) sets out a quorum requirement of at least 33-1/3% of the outstanding shares with respect to meetings of shareholders. In accordance with Canadian law and generally accepted
business practices, our bylaws (the “Bylaws”) provide that, subject to the Business Corporations Act (Ontario) and any minimum quorum requirement for a shareholder meeting of any securities
exchange upon which the Company’s shares are listed, a quorum is met when holders of not less than 10% of the shares entitled to vote at the meeting of shareholders are present in person or represented by proxy. The quorum requirement
provided in our Bylaws is consistent with applicable Canadian laws and corporate practices.
|
•
|
NASDAQ Listing Rule 5605(c)(2)(A) requires that the Company shall have an audit committee composed entirely of not less than three directors, each of whom must be independent. We have an audit committee
comprised of three (3) directors, and each member of the audit committee meets the independence requirements of NASDAQ Listing Rule 5605(a)(2) and Rule 10A-3(b)(1) under the Exchange Act. See “—Audit Committee” below for further detail.
|
•
|
NASDAQ Listing Rule 5605(d)(2)(A) requires, among other things, that the Company’s compensation committee include at least two members, each of whom is an independent director as defined under NASDAQ
Listing Rule 5605(a)(2). The Company established a compensation committee of the Board effective December 16, 2020. Our compensation committee is comprised of two (2) directors, each of whom meet the independence requirements of NASDAQ
Listing Rule 5605(a)(2).
|
•
|
NASDAQ Listing Rule 5605(e) requires that the nomination and corporate governance committee include solely independent directors. The Company established a nomination and corporate governance committee of
the Board effective December 16, 2020. Our nomination and corporate governance committee is comprised of three (3) directors, each of whom meet the independence requirements of NASDAQ Listing Rule 5605(a)(2). The Company will utilize
the phase-in provisions of NASDAQ Listing Rule 5615(b) for the nominations committee composition requirement.
|
• |
appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm;
|
• |
discussing with our independent registered public accounting firm their independence from management;
|
• |
reviewing, with our independent registered public accounting firm, the scope and results of their audit;
|
• |
approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;
|
• |
overseeing the financial reporting process and discussing with management and our independent registered public accounting firm any financial statements that we file with the SEC;
|
• |
overseeing our financial and accounting controls and compliance with legal and regulatory requirements;
|
• |
reviewing our policies on risk assessment and risk management;
|
• |
reviewing related person transactions; and
|
• |
establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters.
|
• |
identifying individuals qualified to become members of our Board of Directors, consistent with criteria approved by our Board of Directors;
|
• |
overseeing succession planning for our executive officers;
|
• |
periodically reviewing our Board of Directors’ leadership structure and recommending any proposed changes to our Board of Directors;
|
• |
overseeing an annual evaluation of the effectiveness of our Board of Directors and its committees; and
|
• |
developing and recommending to our Board of Directors a set of corporate governance guidelines.
|
• |
reviewing and approving the corporate goals and objectives, evaluating the performance and reviewing and approving the compensation of our executive officers;
|
• |
reviewing and approving or making recommendations to our Board of Directors regarding our incentive compensation and equity-based plans, policies and programs;
|
• |
reviewing and approving all employment agreement and severance arrangements for our executive officers;
|
• |
making recommendations to our Board of Directors regarding the compensation of our directors; and
|
• |
retaining and overseeing any compensation consultants.
|
Name
|
Fees earned or paid in cash
($) |
Stock awards
($) |
Option awards(1)
($) |
Non-equity incentive plan compensation
($) |
Change in pension value and nonqualified deferred compensation earnings
|
All other compensation
($) |
Total
($) |
|||||||||||||||||||||
Executive Officers:
|
||||||||||||||||||||||||||||
Damian Lopez
|
435,745
|
-
|
-
|
-
|
-
|
-
|
435,745
|
|||||||||||||||||||||
Deborah Battiston
|
137,149
|
-
|
-
|
-
|
-
|
-
|
137,149
|
|||||||||||||||||||||
Orlando Bustos(2)
|
|
52,305
|
-
|
-
|
-
|
-
|
-
|
52,305
|
||||||||||||||||||||
Javier Franco
|
|
59,432
|
-
|
-
|
-
|
-
|
-
|
59,432
|
||||||||||||||||||||
Luis Merchan
|
|
200,500
|
$
|
2,560,000
|
917,805
|
-
|
-
|
-
|
3,678,305
|
|||||||||||||||||||
Evan Veryard
|
|
24,799
|
-
|
45,921
|
-
|
-
|
-
|
70,720
|
||||||||||||||||||||
Directors:
|
||||||||||||||||||||||||||||
Stan Bharti(3)
|
1,111,915
|
-
|
-
|
-
|
-
|
-
|
1,111,915
|
|||||||||||||||||||||
Damian Lopez(4)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Fred Leigh
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
William Steers(5)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Dr. Beverly Richardson
|
-
|
-
|
229,604
|
-
|
-
|
-
|
229,604
|
|||||||||||||||||||||
Dr. Bernard Wilson
|
-
|
-
|
229,604
|
-
|
-
|
-
|
229,604
|
|||||||||||||||||||||
Juan Carlos Gomez
|
-
|
229,604
|
-
|
-
|
229,604
|
Name of Issuance
|
Issuance Date
|
Expiration Date
|
Exercise Price
(per share)
($)
|
Number of Common Shares
Granted(1)
|
David Miller
|
April 23, 2020
|
April 23, 2025
|
$2.25
|
83,333
|
Evan Veryard
|
April 23, 2020
|
April 23, 2025
|
$2.25
|
33,333
|
Santiago Mora
|
July 6, 2020
|
July 6, 2025
|
$2.25
|
66,667
|
Rafael Molano
|
July 6, 2020
|
July 6, 2025
|
$2.25
|
33,333
|
Andres Restrepo
|
July 6, 2020
|
July 6, 2025
|
$2.25
|
33,333
|
Carolina Mejia
|
July 6, 2020
|
July 6, 2025
|
$2.25
|
33,333
|
Ricardo Castellanos
|
July 6, 2020
|
July 6, 2025
|
$2.25
|
33,333
|
Jina Forero
|
July 6, 2020
|
July 6, 2025
|
$2.25
|
33,333
|
Sandra Barreto
|
July 6, 2020
|
July 6, 2025
|
$2.25
|
33,333
|
Nicolas Vasquez
|
July 6, 2020
|
July 6, 2025
|
$2.25
|
16,667
|
Andrea Velasco
|
July 6, 2020
|
July 6, 2025
|
$2.25
|
16,667
|
Miguel Ramirez
|
July 6, 2020
|
July 6, 2025
|
$2.25
|
16,667
|
Jair Osuna
|
July 6, 2020
|
July 6, 2025
|
$2.25
|
16,667
|
Veronica Welch
|
July 31, 2020
|
July 31, 2025
|
$2.25
|
16,667
|
Catalina Navas
|
September 8, 2020
|
September 8, 2025
|
$2.25
|
8,333
|
Maria Juliana Morales
|
September 8, 2020
|
September 8, 2025
|
$2.25
|
8,333
|
Paulina Vega
|
September 8, 2020
|
September 8, 2025
|
$2.25
|
50,000
|
Luis Merchan
|
November 4, 2020
|
November 4, 2025
|
$2.25
|
666,667
|
Bernie Wilson
|
December 16, 2020
|
December 16, 2025
|
$2.25
|
166,667
|
Juan Carlos Gomez
|
December 16, 2020
|
December 16, 2025
|
$2.25
|
166,667
|
Beverley Richardson
|
December 16, 2020
|
December 16, 2025
|
$2.25
|
166,667
|
Name
|
Grant Date and Beginning of Exercise Period
|
End of Exercise Period
|
Exercise Price
|
Total Number of Stock Options Granted
|
Total Number of Common Shares Underlying Stock Options
|
|||
(per share)
|
||||||||
Evan Veryard
|
April 23, 2020
|
April 23, 2025
|
$
|
2.25
|
33,333
|
33,333
|
||
Luis Merchan
|
November 4, 2020
|
November 4, 2025
|
$
|
2.25
|
666,667
|
666,667
|
||
Bernie Wilson
|
December 16, 2020
|
December 16, 2025
|
$
|
2.25
|
166,667
|
166,667
|
||
Juan Carlos Gomez
|
December 16, 2020
|
December 16, 2025
|
$
|
2.25
|
166,667
|
166,667
|
||
Beverley Richardson
|
December 16, 2020
|
December 16, 2025
|
$
|
2.25
|
166,667
|
166,667
|
|
• |
of each of our executive officers and directors;
|
|
• |
of all of our executive officers and directors as a group; and
|
|
• |
of each person or entity (or group of affiliated persons or entities) known by us to be the beneficial owner of 5% or more of our Common Shares.
|
•
|
to vote at meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote;
|
•
|
subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of our Company, to share equally in the remaining property of our Company on liquidation, dissolution
or winding-up of our Company; and
|
•
|
the Common Shares are entitled to receive dividends if, as, and when declared by the Board of Directors.
|
• |
Acted honestly and in good faith with a view to our best interests;
|
• |
In the case of a criminal or administration action or proceeding enforced by a monetary penalty, had reasonable grounds to believe the conduct was lawful; and
|
• |
Was not judged by a court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done.
|
|
|
|
• |
beginning on the date of this prospectus, all of the shares sold in this offering will be immediately available for sale in the public market (except as described above); and
|
• |
beginning 90 days following the date of this prospectus, at the expiration of the lock-up period for our officers, and directors, 7,809,530 Common Shares will become eligible for sale in the public market, all of which shares will
be held by affiliates and subject to the volume and other restrictions of Rule 144 and Rule 701 as described below.
|
•
|
1% of the number of shares of our Common Shares then outstanding, which will equal approximately shares immediately after this offering; or
|
|
•
|
the average weekly trading volume of our Common Shares during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.
|
|
(a) |
that is for U.S. federal income tax purposes one of the following:
|
|
(i) |
an individual citizen or resident of the United States, including individuals treated as residents of the United States solely for tax purposes,
|
|
(ii) |
a corporation created or organized in or under the laws of the United States or any political subdivision thereof,
|
|
(iii) |
an estate the income of which is subject to U.S. federal income taxation regardless of its source, or
|
|
(iv) |
a trust if (1) a court within the United States can exercise primary supervision over it, and one or more United States persons have the authority to control all substantial decisions of the trust, or (2) the trust has a valid
election in effect under applicable U.S. Treasury regulations to be treated as a United States person;
|
•
|
are tax exempt organizations, qualified retirement plans, individual retirement accounts, or other tax deferred accounts;
|
•
|
are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies;
|
•
|
are brokers or dealers in securities or currencies or holders that are traders in securities that elect to apply a mark-to-market accounting method;
|
•
|
have a “functional currency” for U.S. federal income tax purposes that is not the U.S. dollar;
|
•
|
own Common Shares or Unit Warrants as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position;
|
•
|
acquire Common Shares or Unit Warrants in connection with the exercise of employee stock options or otherwise as compensation for services;
|
•
|
are partnerships or other pass-through entities for U.S. federal income tax purposes (or investors in such partnerships and entities);
|
•
|
are required to accelerate the recognition of any item of gross income with respect to the Common Shares or Unit Warrants as a result of such income being recognized on an applicable financial statement;
|
•
|
own or will own (directly, indirectly, or constructively) 10% or more of our total combined voting power or value;
|
•
|
are controlled foreign corporations;
|
•
|
are passive foreign investment companies;
|
•
|
hold the Common Shares or Unit Warrants in connection with trade or business conducted outside of the United States or in connection with a permanent establishment or other fixed place of business outside
of the United States; or
|
•
|
are former U.S. citizens or former long-term residents of the United States.
|
• |
the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the Common Shares;
|
• |
the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s holding period before the first day of our first taxable
year in which we are a PFIC, will be taxed as ordinary income;
|
• |
the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder without regard to
the U.S. Holder’s other items of income and loss for such year; and
|
• |
an additional amount equal to the interest charge generally applicable to underpayments of tax will be imposed on the U.S. Holder with respect to the tax attributable to each such other taxable year of the U.S. Holder.
|
Underwriters
|
|
Number of
Common Shares
|
|
Number of Unit
Warrants
|
|
A.G.P./Alliance Global Partners
|
|
6,000,000
|
|
3,000,000
|
|
BMO Nesbitt Burns Inc.
|
|
2,000,000
|
|
1,000,000
|
|
Roth Capital Partners, LLC
|
|
2,000,000
|
|
1,000,000
|
|
Total
|
|
10,000,000
|
|
5,000,000
|
|
|
|
Total(1)
|
|
|||||
|
|
Per Unit (1)
|
|
Without Option to Purchase Additional Common Shares and/or Unit Warrants
|
|
|
With Option to Purchase Additional Common Shares and/or Unit Warrants
|
|
Public offering price
|
|
$3.00
|
|
$30,000,000
|
|
|
$34,500,000
|
|
Underwriting discounts and commissions (7%)
|
|
$0.21
|
|
$2,100,000
|
|
|
$2,415,000
|
|
Proceeds, before expenses, to us
|
|
$2.79
|
|
$27,900,000
|
|
|
$32,085,000
|
|
●
|
offer, pledge, sell, contract to sell, grant, lend, or otherwise transfer or dispose of, directly or indirectly, any Common Shares or any securities convertible into or
exercisable or exchangeable for Common Shares, whether now owned or hereafter acquired by such individuals or with respect to which such individuals have or hereafter acquire the power of disposition (collectively, the “Lock-Up
Securities”);
|
|
●
|
enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities, whether any such
transaction described in the clause above is to be settled by delivery of Lock-Up Securities, in cash or otherwise;
|
|
●
|
make any demand for or exercise any right with respect to the registration of any Lock-Up Securities;
|
|
●
|
publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement relating to any Lock-Up Securities.
|
●
|
Stabilizing transactions permit bids to purchase shares, so long as the stabilizing bids do not exceed a specified maximum and are engaged in for the purpose of preventing or retarding a decline in the
market price of the shares while the offering is in progress.
|
|
●
|
Over-allotment transactions involve sales by the underwriters of Common Shares in excess of the number of shares the underwriters are obligated to purchase. This creates a syndicate short position, which
may be either a covered short position or a naked short position. In a covered short position, the number of Common Shares over-allotted by the underwriters is not greater than the number of Common Shares that they may purchase in the
over-allotment option. In a naked short position, the number of securities involved is greater than the number of shares in the over-allotment option. The underwriters may close out any short position by exercising their over-allotment
option and/or purchasing common shares in the open market.
|
|
●
|
Syndicate covering transactions involve purchases of Common Shares in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of
Common Shares to close out the short position, the underwriters will consider, among other things, the price of Common Shares available for purchase in the open market as compared to the price at which they may purchase Common Shares
through exercise of the over-allotment option. If the underwriters sell more Common Shares than could be covered by exercise of the over-allotment option, and, therefore, have a naked short position, the position can be closed out only
by buying Common Shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that after pricing there could be downward pressure on the price of the shares in the open market that
could adversely affect investors who purchase in the offering.
|
|
●
|
Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the Common Shares originally sold by that syndicate member are purchased in stabilizing or syndicate
covering transactions to cover syndicate short positions.
|
Description
|
Amount
|
|||
U.S. Securities and Exchange Commission registration fee
|
$
|
4,925.51
|
||
Financial Industry Regulatory Authority filing fee
|
6,500
|
|||
Accounting and Audit fees and expenses
|
35,000
|
|||
Reimbursement of Underwriters’ expenses
|
250,000
|
|||
Legal fees and expenses
|
160,000
|
|||
Printing expenses
|
15,000
|
|||
Miscellaneous
|
28,574.49
|
|||
Total
|
$
|
500,000
|
Page
|
|
Unaudited Consolidated Financial Statements of Flora Growth Corp. for Six Month Period Ended June 30, 2021 (expressed in thousands united states dollars)
|
|
F-3 | |
F-4 | |
F-5 | |
F-6 | |
F-7 | |
Audited Consolidated Financial Statements of Flora Growth Corp. for the Year Ended December 31, 2020 and for the Period from Incorporation on March 13, 2019 to December 31, 2019 (expressed in thousands
united states dollars)
|
|
F-22 | |
F-23 | |
F-24 | |
F-25 | |
F-26 | |
F-27 | |
Page | |
Financial Statements of Breeze Laboratory S.A.S. for the Year Ended December 31, 2019 (Audited) Compared to the Year Ended December 31, 2018 (Unaudited) (Expressed in United States
Dollars)
|
|
F-56 | |
F-57 | |
F-58 | |
F-59 | |
F-60 |
Page
|
|
Audited Financial Statements of Grupo Farmacéutico Cronomed S.A.S. for the Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018 (Expressed in United States
Dollars)
|
|
F-76 | |
F-77 | |
F-78 | |
F-79 | |
F-80 |
Page
|
|
Financial Statements of Kasa Wholefoods Company S.A.S. for the Year Ended December 31, 2019 (Audited) Compared to the Year Ended December 31, 2018 (Unaudited) (Expressed in United
States Dollars)
|
|
F-97 | |
F-98 | |
F-99 | |
F-100 | |
F-101 | |
Flora Growth Corp., Unaudited Pro Forma Condensed Consolidated Financial Statements as at December 31, 2020 (expressed in thousands of United States dollars)
|
|
F-120 | |
F-121 | |
F-122 |
Flora Growth Corp.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
(Unaudited - Prepared by Management)
(in thousands of United States dollars, except per share amounts which are in thousands of shares)
|
||||||||||||||||
For the three months ended
|
For the three months ended
|
For the six months ended
|
For the six months ended
|
|||||||||||||
June 30, 2021
|
June 30, 2020
|
June 30, 2020
|
||||||||||||||
Revenue (Note 18)
|
$
|
1,159
|
$
|
-
|
$
|
2,118
|
$
|
-
|
||||||||
Cost of sales
|
714
|
-
|
1,106
|
-
|
||||||||||||
Gross Profit
|
$
|
445
|
$
|
-
|
$
|
1,012
|
$
|
-
|
||||||||
Expenses
|
||||||||||||||||
Consulting and management fees (Note 13)
|
$
|
1,033
|
$
|
585
|
$
|
2,262
|
$
|
819
|
||||||||
Professional fees
|
414
|
89
|
766
|
218
|
||||||||||||
General and administrative
|
1,628
|
529
|
2,661 |
715
|
||||||||||||
Travel expenses
|
106
|
206
|
143
|
233
|
||||||||||||
Share based compensation (Note 11)
|
95
|
344
|
95
|
344
|
||||||||||||
Depreciation and amortization (Notes 6 and 8)
|
44
|
27
|
119
|
57
|
||||||||||||
Research and development
|
61
|
25
|
85
|
53
|
||||||||||||
Foreign exchange loss
|
(73
|
)
|
(75
|
)
|
(78
|
)
|
171
|
|||||||||
Total expenses
|
3,308
|
1,730
|
6,053
|
2,610
|
||||||||||||
Loss before the undernoted items
|
(2,863
|
)
|
(1,730
|
)
|
(5,041
|
)
|
(2,610
|
)
|
||||||||
Interest expense
|
21
|
39
|
64
|
72
|
||||||||||||
Bad Debt expense (Note 4)
|
100
|
-
|
100
|
-
|
||||||||||||
Other income
|
(23
|
)
|
(52
|
)
|
(67
|
)
|
(81
|
)
|
||||||||
Net loss for the period
|
$
|
(2,961
|
)
|
$
|
(1,717
|
)
|
$
|
(5,138
|
)
|
$
|
(2,601
|
)
|
||||
Other comprehensive loss
|
||||||||||||||||
Exchange differences on foreign operations
|
434
|
(68
|
)
|
200
|
(19
|
)
|
||||||||||
Total comprehensive loss for the period
|
$
|
(3,395
|
)
|
$
|
(1,649
|
)
|
$
|
(5,338
|
)
|
$
|
(2,582
|
)
|
||||
Net loss attributable to:
|
||||||||||||||||
Flora Growth Corp.
|
$
|
(2,958
|
)
|
$
|
(1,701
|
)
|
$
|
(5,097
|
)
|
$
|
(2,555
|
)
|
||||
Non-controlling interests
|
$
|
(3
|
)
|
$
|
(16
|
)
|
$
|
(41
|
)
|
$
|
(46
|
)
|
||||
Comprehensive loss attributable to:
|
||||||||||||||||
Flora Growth Corp.
|
$
|
(3,392
|
)
|
$
|
(1,633
|
)
|
$
|
(5,297
|
)
|
$
|
(2,536
|
)
|
||||
Non-controlling interests
|
$
|
(3
|
)
|
$
|
(16
|
)
|
$
|
(41
|
)
|
$
|
(46
|
)
|
||||
Basic and diluted loss per share attributable to Flora Growth Corp.
|
$
|
(0.07
|
)
|
$
|
(0.06
|
)
|
$
|
(0.13
|
)
|
$
|
(0.09
|
)
|
||||
Weighted average number of common shares outstanding (thousands)- basic and diluted (Note 15)
|
40,561
|
29,257
|
39,604
|
29,257
|
Flora Growth Corp.
(Unaudited - Prepared by Management)
(in thousands of United States dollars, except per share amounts which are in thousands of shares)
|
||||||||
Common Shares (thousands)
|
Options
|
Warrants
|
Accumulated other comprehensive loss
|
Accumulated Deficit
|
Non-Controlling interest (Deficiency)
|
Shareholders' Equity (Deficiency)
|
||
#
|
$
|
$
|
$
|
$
|
$
|
$
|
||
Balance, December 31, 2019
|
23,333
|
1,400
|
86
|
21
|
23
|
(2,824)
|
(11)
|
(1,305)
|
Regulation A Offering
|
5,723
|
10,984
|
-
|
1,893
|
-
|
-
|
-
|
12,877
|
Share issuance costs
|
-
|
(1,365)
|
-
|
(236)
|
-
|
-
|
-
|
(1,601)
|
Options exercised
|
200
|
37
|
(7)
|
-
|
-
|
-
|
-
|
30
|
Options issued (Note 11)
|
-
|
-
|
344
|
-
|
-
|
-
|
-
|
344
|
Other comprehensive loss - exchange differences on foreign operations
|
-
|
-
|
-
|
-
|
19
|
-
|
-
|
19
|
Loss for the period
|
-
|
-
|
-
|
-
|
-
|
(2,555)
|
(46)
|
(2,601)
|
Balance, June 30, 2020
|
29,256
|
11,056
|
423
|
1,678
|
42
|
(5,379)
|
(57)
|
7,763
|
Balance, December 31, 2020
|
38,355
|
27,254
|
2,396
|
3,961
|
39
|
(17,287)
|
(113)
|
16,250
|
Regulation A Offering and Initial Public Offering
(Note 10)
|
3,332
|
16,664
|
-
|
-
|
-
|
-
|
-
|
16,664
|
Options issued (Note 11)
|
-
|
-
|
95
|
-
|
-
|
-
|
-
|
95
|
Warrants exercised (Note 12)
|
337
|
65
|
-
|
(5)
|
-
|
-
|
-
|
60
|
Warrants issued (Note 12)
|
-
|
-
|
-
|
1,349
|
-
|
-
|
-
|
1,349
|
Share issuance costs - cash (Note 10)
|
-
|
(2,024)
|
-
|
-
|
-
|
-
|
-
|
(2,024)
|
Share issuance costs - share based (Note 10)
|
-
|
(3,016)
|
-
|
-
|
-
|
-
|
-
|
(3,016)
|
Other comprehensive loss - exchange differences on foreign operations
|
-
|
-
|
-
|
-
|
(201)
|
-
|
-
|
(201)
|
Loss for the period
|
-
|
-
|
-
|
-
|
(5,097)
|
(41)
|
(5,138)
|
|
Balance, June 30, 2021
|
42,024
|
38,943
|
2,491
|
5,305
|
(162)
|
(22,384)
|
(154)
|
24,039
|
Flora Growth Corp.
Interim Condensed Consolidated Statement of Cash Flows
(Unaudited - Prepared by Management)
(in thousands of United States dollars, except per share amounts which are in thousands of shares)
|
||||||||
For the six months ended
|
For the six months ended
|
|||||||
June 30, 2020
|
||||||||
CASH FROM OPERATING ACTIVITIES:
|
||||||||
Net loss for the period
|
$
|
(5,138
|
)
|
$
|
(2,601
|
)
|
||
Items not involving cash:
|
||||||||
Depreciation and amortization
|
119
|
57
|
||||||
Stock-based compensation
|
95
|
344
|
||||||
Bad debt expense
|
100
|
-
|
||||||
Accrued interest on loans receivable
|
-
|
(25
|
)
|
|||||
Accrued interest on loans payable and lease liability
|
15
|
13
|
||||||
(4,809
|
)
|
(2,212
|
)
|
|||||
Net change in non‑cash working capital
|
||||||||
Trade and other receivables
|
(772
|
)
|
(220
|
)
|
||||
Inventory
|
(421
|
)
|
-
|
|||||
Prepaid expenses
|
(1,415
|
)
|
153
|
|||||
Trade payables and accrued liabilities
|
1,647
|
142
|
||||||
(961
|
)
|
75
|
||||||
Net cash flows from operating activities
|
(5,770
|
)
|
(2,137
|
)
|
||||
CASH FROM FINANCING ACTIVITIES:
|
||||||||
Initial Public Offering and Regulation A Offering (Note 10)
|
16,664
|
12,878
|
||||||
Share issuance costs (Note 10)
|
(2,024
|
)
|
(1,601
|
)
|
||||
Exercise of options
|
-
|
30
|
||||||
Exercise of warrants
|
60
|
-
|
||||||
Repayments of lease liaility (Note 9)
|
(61
|
)
|
(27
|
)
|
||||
Loans received
|
-
|
6
|
||||||
Interest paid
|
-
|
(34
|
)
|
|||||
Long term debt repayments
|
(220
|
)
|
-
|
|||||
Loan repayments
|
-
|
(1,016
|
)
|
|||||
Net cash flows from financing activities
|
14,419
|
10,236
|
||||||
CASH FROM INVESTING ACTIVITIES:
|
||||||||
Loans provided (Note 4)
|
(275
|
)
|
(1,196
|
)
|
||||
Repayment of loan
|
224
|
|||||||
Advances
|
-
|
(345
|
)
|
|||||
Purchase of investment
|
(2,430
|
)
|
-
|
|||||
Acquisition of property, plant and equipment
|
(1,384
|
)
|
(83
|
)
|
||||
Asset Acquisitions (Note 7)
|
(1,306
|
)
|
-
|
|||||
Net cash flow from investing activities
|
(5,171
|
)
|
(1,624
|
)
|
||||
Effect of exchange rate change
|
(195
|
)
|
76
|
|||||
CHANGE IN CASH DURING THE PERIOD
|
3,283
|
6,551
|
||||||
CASH, beginning of the period
|
15,523
|
140
|
||||||
CASH, end of the period
|
$
|
18,806
|
$
|
6,691
|
||||
Supplementary information
|
||||||||
Interest paid
|
$
|
-
|
$
|
33
|
||||
Income taxes paid
|
$
|
-
|
$
|
-
|
Subsidiaries
|
Country of incorporation
|
Ownership
|
Functional currency
|
Cosechemos YA S.A.S.
|
Colombia
|
90%
|
Colombian Peso (COP)
|
Flora Growth Corp. Sucursal Colombia
|
Colombia
|
100%
|
Colombian Peso (COP)
|
Hemp Textiles & Co. LLC
|
United States
|
100%
|
United States Dollar (USD)
|
Hemp Textiles & Co. S.A.S.
|
Colombia
|
100%
|
Colombian Peso (COP)
|
Flora Beauty LLC
|
United States
|
87%
|
United States Dollar (USD)
|
Flora Beauty LLC Sucursal Colombia
|
Colombia
|
100%
|
Colombian Peso (COP)
|
Kasa Wholefoods Company S.A.S.
|
Colombia
|
90%
|
Colombian Peso (COP)
|
Kasa Wholefoods Company LLC
|
United States
|
90%
|
United States Dollar (USD)
|
Flora Lab S.A.S. (formerly Grupo Farmaceutico Cronomed S.A.S.)
|
Colombia
|
100%
|
Colombian Peso (COP)
|
Labcofarm Laboratorios S.A.S.
|
Colombia
|
100%
|
Colombian Peso (COP)
|
Breeze Laboratory S.A.S.
|
Colombia
|
90%
|
Colombian Peso (COP)
|
June 30, 2021
|
December 31, 2020
|
|||||||
Trade accounts receivable
|
$
|
773
|
$
|
254
|
||||
HST receivable
|
570
|
459
|
||||||
Other amounts receivable
|
252
|
209
|
||||||
Total
|
$
|
1,594
|
$
|
922
|
June 30,
|
December 31,
|
|
2021
|
2020
|
|
$
|
$
|
|
Raw materials and supplies - Pharmaceuticals and nutraceuticals
|
481
|
174
|
Raw materials and supplies - Agricultural
|
15
|
-
|
Raw materials and supplies - Foods and Beverages
|
5
|
-
|
Raw materials and supplies - Textile produts
|
80
|
8
|
Total raw materials and supplies
|
581
|
182
|
Work in progress - Pharmaceuticals and nutraceuticals
|
57
|
174
|
Work in progress - Textile produts
|
7
|
8
|
Total work in progress
|
64
|
182
|
Finished goods - Beauty products
|
54
|
18
|
Finished goods - Textiles products
|
42
|
37
|
Finished goods - Pharmaceuticals and nutraceuticals
|
149
|
274
|
Finished goods - Beverages and food products
|
149
|
29
|
Total finished goods
|
394
|
358
|
Reserves
|
(78)
|
-
|
Total
|
961
|
540
|
Construction in progress
$
|
Machinery and Office equipment
$
|
Vehicle
$
|
Land
$
|
Subtotal
$
|
Right of use assets
$
|
Total
$
|
||||||||||||||||||||||
Cost as at December 31, 2020
|
136
|
130
|
39
|
131
|
436
|
379
|
815
|
|||||||||||||||||||||
Additions
|
19
|
1,113
|
-
|
1,064
|
2,196
|
-
|
2,196
|
|||||||||||||||||||||
Foreign exchange translation
|
(10
|
)
|
(19
|
)
|
(3
|
)
|
(10
|
)
|
(41
|
)
|
(31
|
)
|
(72
|
)
|
||||||||||||||
Cost as at June 30, 2021
|
145
|
1,112
|
36
|
1,185
|
2,478
|
348
|
2,827
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Accumulated depreciation
|
||||||||||||||||||||||||||||
Accumulated depreciation as at December 31, 2020
|
-
|
(21
|
)
|
(4
|
)
|
-
|
(25
|
)
|
(61
|
)
|
(86
|
)
|
||||||||||||||||
Depreciation
|
-
|
(40
|
)
|
(4
|
)
|
-
|
(44
|
)
|
(45
|
)
|
(89
|
)
|
||||||||||||||||
Foreign exchange translation
|
-
|
3
|
-
|
(3
|
)
|
-
|
5
|
4
|
||||||||||||||||||||
Accumulated depreciation as at June 30, 2021
|
-
|
(58
|
)
|
(8
|
)
|
(3
|
)
|
(69
|
)
|
(101
|
)
|
(171
|
)
|
|||||||||||||||
Net book value
|
||||||||||||||||||||||||||||
As at June 30, 2021
|
145
|
1,054
|
28
|
1,182
|
2,409
|
247
|
2,656
|
|||||||||||||||||||||
As at December 31, 2020
|
136
|
109
|
35
|
131
|
411
|
318
|
729
|
|||||||||||||||||||||
Property and equipment
|
$ 1,493
|
Total consideration paid
|
$ 1,493
|
Licenses
|
Customer relationships
|
Trademarks and brands
|
Goodwill
|
Total
|
||||||||||||||||
Cost
|
||||||||||||||||||||
At January 1, 2021 and June 30, 2021
|
$
|
410
|
$
|
189
|
$
|
121
|
$
|
431
|
$
|
1,151
|
||||||||||
Accumulated Amortization
|
||||||||||||||||||||
At January 1, 2021
|
$
|
64
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
64
|
||||||||||
Additions
|
26
|
-
|
-
|
-
|
$
|
26
|
||||||||||||||
At June 30, 2021
|
$
|
90
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
90
|
||||||||||
Foreign Currency translation
|
1
|
-
|
-
|
-
|
1
|
|||||||||||||||
Net book value at June 30, 2021
|
$
|
321
|
$
|
189
|
$
|
121
|
$
|
431
|
$
|
1,062
|
As at December 31, 2020
|
$
|
329
|
||
Lease payments
|
(61
|
)
|
||
Interest expense on lease liability
|
14
|
|||
Foreign currency translation
|
(25
|
)
|
||
Cancellation of lease
|
(83
|
)
|
||
Acquisition of lease
|
72
|
|||
As of June 30, 2021
|
$
|
246
|
||
Current portion
|
80
|
|||
Long term portion
|
$
|
166
|
Less than one year
|
$
|
99
|
||
One to five years
|
217
|
|||
316
|
||||
Effect of discounting
|
(70
|
)
|
||
246
|
||||
Potential exposure on extension option (over 5 years) (i)
|
$
|
325
|
a. |
Authorized
|
b. |
Common shares issued
|
|
Number of shares
(thousands)
|
Stated value $
|
||||||
Balance, December 31, 2020
|
38,355
|
$
|
27,254
|
|||||
Initial Public Offering and Regulation A Offering
|
3,332
|
16,664
|
||||||
Share issuance costs – cash
|
-
|
(2,024
|
)
|
|||||
Share issuance costs – share based
|
-
|
(3,016
|
)
|
|||||
Stock warrant exercises
|
337
|
65
|
||||||
Balance, June 30, 2021
|
42,024
|
$
|
38,943
|
|
||||||||
Balance, December 31, 2020
|
3,794
|
$
|
1.08
|
|||||
Granted
|
408
|
3.79
|
||||||
Balance, June 30, 2021
|
4,202
|
$
|
1.34
|
Date
|
Options
|
Options
|
Exercise
|
Grant date
|
Remaining life
|
|||||||||||||||
of expiry
|
outstanding
|
exercisable
|
price
|
fair value
|
in years
|
|||||||||||||||
June 28, 2024
|
2,111
|
2,111
|
$
|
0.15
|
$
|
78
|
2.99
|
|||||||||||||
April 23,2025
|
250
|
250
|
$
|
2.25
|
344
|
3.81
|
||||||||||||||
July 6, 2025
|
183
|
183
|
$
|
2.25
|
252
|
4.02
|
||||||||||||||
July 31, 2025
|
17
|
17
|
$
|
2.25
|
23
|
4.08
|
||||||||||||||
September 8, 2025
|
67
|
67
|
$
|
2.25
|
92
|
4.19
|
||||||||||||||
November 4, 2025
|
667
|
667
|
$
|
2.25
|
918
|
4.35
|
||||||||||||||
December 16, 2025
|
500
|
500
|
$
|
2.25
|
689
|
4.46
|
||||||||||||||
June 3, 2023
|
8
|
-
|
$
|
3.87
|
1
|
4.93
|
||||||||||||||
June 3, 2026
|
233
|
-
|
$
|
3.87
|
56
|
4.93
|
||||||||||||||
June 10, 2026
|
167
|
-
|
$
|
3.68
|
38
|
4.95
|
||||||||||||||
4,202
|
3,794
|
$
|
1.34
|
$
|
2,491
|
3.69
|
Risk-free annual interest rate
|
0.92%
|
|
Current stock price
|
$ 3.77
|
|
Expected annualized volatility
|
100%
|
|
Expected life (years)
|
4.91
|
|
Expected annual dividend yield
|
0%
|
|
Exercise price
|
|
$ 3.77
|
|
Number of warrants
(thousands)
|
Weighted average
exercise price
|
Balance, January 1, 2021
|
9,000
|
$ 2.26
|
Granted
|
632
|
4.20
|
Exercised
|
(337)
|
0.18
|
Balance, June 30, 2021
|
9,295
|
$ 2.47
|
|
|
|
|
|
Date of expiry
|
Warrants
outstanding |
Exercise price | Grant date fair value |
Remaining life
in years
|
March 15, 2022
|
2,000
|
$ 0.15
|
$ 18
|
0.71
|
July 23, 2021- July 20, 2022
|
6,663
|
$ 3.00
|
$ 4,392
|
0.49
|
May 10, 2026
|
233
|
$ 6.25
|
$ 831
|
4.86
|
May 10, 2026
|
399
|
$ 3.00
|
$ 518
|
4.86
|
9,295
|
$ 2.47
|
$ 5,760
|
0.86
|
Three months ended June 30, 2021
|
Three months ended June 30, 2020
|
Six months ended June 30, 2021
|
Six months ended June 30, 2020
|
|||||||||||||
Directors & officers compensation
|
$
|
563,062
|
$
|
81,347
|
$
|
736,033
|
$
|
157,638
|
||||||||
Share-based payments
|
1,748,347
|
-
|
1,748,347
|
-
|
||||||||||||
$
|
2,311,409
|
$
|
81,347
|
$
|
2,484,380
|
$
|
157,638
|
June 30, 2021
|
|
Stock options (Note 11)
|
4,202
|
Warrants (Note 12)
|
9,295
|
13,497
|
June 30, 2021
|
CAD
|
COP
|
EUR
|
CHF
|
||||||||||||
Cash
|
$
|
1,206
|
3,061,465
|
$
|
114
|
$
|
-
|
|||||||||
Restricted cash
|
-
|
2,627,146
|
-
|
-
|
||||||||||||
Trade and other amounts receivable
|
570
|
3,164,525
|
-
|
-
|
||||||||||||
Loans receivable
|
-
|
-
|
-
|
250
|
||||||||||||
Prepaid expenses
|
-
|
2,818,958
|
-
|
-
|
||||||||||||
Inventory
|
-
|
3,558,624
|
-
|
-
|
||||||||||||
Trade payables and accrued liabilities
|
(201
|
)
|
(9,213,840
|
)
|
-
|
-
|
||||||||||
Lease liability
|
-
|
(909,638
|
)
|
-
|
-
|
|||||||||||
Long term debt
|
-
|
(369,888
|
)
|
-
|
-
|
|||||||||||
$
|
1,575
|
4,737,351
|
114
|
250
|
December 31, 2020
|
CAD
|
COP
|
EUR
|
|||||||||
Cash
|
$
|
1,839
|
889,204
|
$
|
118
|
|||||||
Amounts receivable
|
594
|
1,478,432
|
-
|
|||||||||
Prepaid expenses
|
-
|
1,171,419
|
-
|
|||||||||
Trade payables
|
(581
|
)
|
(4,032,077
|
)
|
-
|
|||||||
Accrued liabilities
|
(120
|
)
|
-
|
-
|
||||||||
Lease liability
|
-
|
(1,126,542
|
)
|
-
|
||||||||
Long term debt
|
-
|
(1,098,081
|
)
|
-
|
||||||||
$
|
1,732
|
(2,717,645
|
)
|
118
|
For the six months ended June 30, 2021
|
Cannabis growth and derivative production
|
Beauty products
|
Hemp industries
|
Beverage and food
|
Pharmaceuticals and nutraceuticals
|
Corporate
|
Total
|
|||||||||||||||||||||
$
|
$
|
$
|
$
|
$
|
$
|
$
|
||||||||||||||||||||||
Revenue
|
-
|
213
|
73
|
310
|
1,522
|
-
|
2,118
|
|||||||||||||||||||||
Cost of Sales
|
-
|
97
|
16
|
223
|
770
|
-
|
1,106
|
|||||||||||||||||||||
Gross profit
|
-
|
116
|
57
|
87
|
752
|
-
|
1,012
|
|||||||||||||||||||||
Expenses
|
||||||||||||||||||||||||||||
Consulting and management fees (Note 13)
|
129
|
467
|
41
|
57
|
248
|
980
|
1,922
|
|||||||||||||||||||||
Professional fees
|
54
|
20
|
1
|
1
|
99
|
590
|
765
|
|||||||||||||||||||||
General and administrative
|
88
|
317
|
139
|
92
|
267
|
1,430
|
2,333
|
|||||||||||||||||||||
Travel expenses
|
6
|
18
|
-
|
1
|
-
|
119
|
144
|
|||||||||||||||||||||
Share based compensation (Note 11)
|
-
|
-
|
-
|
-
|
-
|
95
|
95
|
|||||||||||||||||||||
Depreciation and amortization (Notes 6 and 8)
|
66
|
19
|
-
|
-
|
34
|
-
|
119
|
|||||||||||||||||||||
Research and development
|
85
|
-
|
-
|
-
|
-
|
-
|
85
|
|||||||||||||||||||||
Foreign exchange loss
|
-
|
-
|
-
|
-
|
(38
|
)
|
(40
|
)
|
(78
|
)
|
||||||||||||||||||
Total expenses
|
428
|
841
|
181
|
151
|
610
|
3,174
|
5,385
|
|||||||||||||||||||||
Loss before the undernoted items
|
(428
|
)
|
(725
|
)
|
(124
|
)
|
(64
|
)
|
142
|
(3,174
|
)
|
(4,373
|
)
|
|||||||||||||||
Interest expense
|
-
|
6
|
2
|
-
|
56
|
-
|
64
|
|||||||||||||||||||||
Bad debt expense
|
-
|
-
|
-
|
100
|
-
|
100
|
||||||||||||||||||||||
Other income
|
-
|
-
|
-
|
-
|
(64
|
)
|
(3
|
)
|
(67
|
)
|
||||||||||||||||||
Net loss for the period
|
$
|
(428
|
)
|
$
|
(731
|
)
|
$
|
(126
|
)
|
$
|
(64
|
)
|
$
|
50
|
$
|
(3,171
|
)
|
$
|
(4,470
|
)
|
Geographical Segments
|
||||||||||||||||
Colombia
|
United States
|
Canada
|
Total
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Non-current assets at June 30, 2021
|
3,718
|
-
|
2,430
|
6,148
|
||||||||||||
Liabilities at June 30, 2021
|
3,135
|
-
|
3,078
|
6,213
|
||||||||||||
Non-current assets at December 31, 2020
|
1,818
|
-
|
-
|
1,818
|
||||||||||||
Liabilities at December 31, 2020
|
1,922
|
12
|
1,268
|
3,202
|
||||||||||||
Period ended June 30, 2021
|
||||||||||||||||
Net revenue
|
2,069
|
49
|
-
|
2,118
|
||||||||||||
Gross profit
|
1,009
|
3
|
-
|
1,012
|
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 year ended
December 31, 2020
|
For the period from incorporation (March 13, 2019)
to December 31, 2019
|
|||||||
Revenue (Note 23)
|
$
|
106
|
$
|
-
|
||||
Cost of sales
|
35
|
-
|
||||||
Gross Profit
|
$
|
71
|
$
|
-
|
||||
Expenses
|
||||||||
Consulting and management fees (Note 14(b) and 17)
|
$
|
4,752
|
$
|
2,001
|
||||
Professional fees
|
794
|
183
|
||||||
General and administrative
|
1,400
|
175
|
||||||
Travel expenses
|
428
|
306
|
||||||
Share based compensation (Note 15)
|
4,901
|
107
|
||||||
Depreciation and amortization (Notes 8 and 10)
|
113
|
26
|
||||||
Research and development
|
78
|
21
|
||||||
Foreign exchange loss
|
20
|
6
|
||||||
Total expenses
|
12,486
|
2,825
|
||||||
Loss before the undernoted items
|
(12,415
|
)
|
(2,825
|
)
|
||||
Goodwill impairment (Note 10)
|
1,816
|
-
|
||||||
Interest expense
|
30
|
19
|
||||||
Transaction costs (Note 9)
|
132
|
-
|
||||||
Other income
|
(59
|
)
|
-
|
|||||
Net loss for the period
|
$
|
(14,334
|
)
|
$
|
(2,844
|
)
|
||
Other comprehensive loss
|
||||||||
Exchange differences on foreign operations
|
(16
|
)
|
(23
|
)
|
||||
Total comprehensive loss for the period
|
$
|
(14,350
|
)
|
$
|
(2,821
|
)
|
||
Net loss attributable to:
|
||||||||
Flora Growth Corp.
|
$
|
(14,170
|
)
|
$
|
(2,824
|
)
|
||
Non-controlling interests
|
$
|
(164
|
)
|
$
|
(20
|
)
|
||
Comprehensive loss attributable to:
|
||||||||
Flora Growth Corp.
|
$
|
(14,186
|
)
|
$
|
(2,801
|
)
|
||
Non-controlling interests
|
$
|
(164
|
)
|
$
|
(20
|
)
|
||
Basic and diluted loss per share attributable to Flora Growth Corp.
|
$
|
(0.16
|
)
|
$
|
(0.06
|
)
|
||
Weighted average number of common shares
outstanding (thousands)- basic and diluted (Note 19)
|
89,704
|
44,676
|
Consolidated Statements of Shareholders' Equity (Deficiency)
|
||||||||
(in thousands of United States dollars, except per share amounts which are in thousands of shares)
|
||||||||
Common Shares
(thousands)
|
Options
|
Warrants
|
Accumulated other comprehensive loss
|
Accumulated Deficit
|
Non-Controlling interest (Deficiency)
|
Shareholders' Equity (Deficiency)
|
||
#
|
$
|
$
|
$
|
$
|
$
|
$
|
||
Balance, March 13, 2019
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Incorporation share
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Common shares issued (Note 14(b))
|
70,000
|
1,400
|
-
|
-
|
-
|
-
|
-
|
1,400
|
Options issued (Note 15)
|
-
|
-
|
86
|
-
|
-
|
-
|
-
|
86
|
Warrants issued (Note 16)
|
-
|
-
|
-
|
21
|
-
|
-
|
21
|
|
Acquisition of Cosechemos (Note 9)
|
-
|
-
|
-
|
-
|
-
|
-
|
9
|
9
|
Other comprehensive loss - exchange differences on foreign operations
|
-
|
-
|
-
|
-
|
23
|
-
|
-
|
23
|
Loss for the period
|
-
|
-
|
-
|
-
|
-
|
(2,824)
|
(20)
|
(2,844)
|
Balance, December 31, 2019
|
70,000
|
1,400
|
86
|
21
|
23
|
(2,824)
|
(11)
|
(1,305)
|
Balance, December 31, 2019
|
70,000
|
1,400
|
86
|
21
|
23
|
(2,824)
|
(11)
|
(1,305)
|
Regulation A Offering (Note 14(b))
|
40,000
|
25,605
|
-
|
4,395
|
-
|
-
|
-
|
30,000
|
Share issuance costs (Note 14(b))
|
-
|
(2,652)
|
-
|
(455)
|
-
|
-
|
-
|
(3,107)
|
Common shares issued for services (Note 14(b))
|
4,000
|
2,560
|
-
|
-
|
-
|
-
|
-
|
2,560
|
Common shares issued for acquisitions (Note 14(b))
|
475
|
304
|
-
|
-
|
-
|
(317)
|
62
|
49
|
Options exercised
|
600
|
37
|
(7)
|
-
|
-
|
-
|
-
|
30
|
Options issued (Note 15)
|
-
|
-
|
2,341
|
-
|
-
|
-
|
-
|
2,341
|
Options expired
|
-
|
-
|
(24)
|
-
|
-
|
24
|
-
|
-
|
Other comprehensive loss - exchange differences on foreign operations
|
-
|
-
|
-
|
-
|
16
|
-
|
-
|
16
|
Loss for the year
|
-
|
-
|
-
|
-
|
(14,170)
|
(164)
|
(14,334)
|
|
Balance, December 31, 2020
|
115,075
|
27,254
|
2,396
|
3,961
|
39
|
(17,287)
|
(113)
|
16,250
|
Consolidated Statements of Cash Flows
|
||||||||
(in thousands of United States dollars, except per share amounts which are in thousands of shares)
|
||||||||
Year ended Decemer 31, 2020
|
For the period from incorportion (March 13, 2019) to December 31, 2019
|
|||||||
CASH FROM OPERATING ACTIVITIES:
|
||||||||
Net loss for the period
|
$
|
(14,334
|
)
|
$
|
(2,844
|
)
|
||
Items not involving cash:
|
||||||||
Share-based compensation (Notes 14(b) & 15)
|
4,901
|
107
|
||||||
Goodwill impairment (Note 10)
|
1,816
|
-
|
||||||
Bonus paid in shares (Note 14(b))
|
-
|
1,400
|
||||||
Loans settled with services (Note 6)
|
71
|
|||||||
Depreciation and amortization (Notes 8 and 10)
|
113
|
26
|
||||||
Accrued interest on loans receivable (Note 6)
|
(54
|
)
|
-
|
|||||
Accrued interest on loans payable (Note 11)
|
13
|
20
|
||||||
(7,474
|
)
|
(1,291
|
)
|
|||||
Net change in non‑cash working capital
|
||||||||
Trade and other receivables
|
(543
|
)
|
(19
|
)
|
||||
Inventory
|
(55
|
)
|
-
|
|||||
Prepaid expenses
|
(26
|
)
|
(170
|
)
|
||||
Trade payables and accrued liabilities
|
(323
|
)
|
1,026
|
|||||
(947
|
)
|
837
|
||||||
Net cash flows from operating activities
|
(8,421
|
)
|
(454
|
)
|
||||
CASH FROM FINANCING ACTIVITIES:
|
||||||||
Regulation A Offering (Note 14(b))
|
30,000
|
-
|
||||||
Unit issue costs (Note 14(b))
|
(3,107
|
)
|
-
|
|||||
Exercise of options (Note 14(b))
|
30
|
-
|
||||||
Repayments of lease liaility (Note 12)
|
(64
|
)
|
(5
|
)
|
||||
Loans received (Note 11)
|
6
|
1,010
|
||||||
Interest paid (Note 11)
|
(33
|
)
|
-
|
|||||
Loan repayments (Note 11)
|
(1,016
|
)
|
-
|
|||||
Net cash flows from financing activities
|
25,816
|
1,005
|
||||||
CASH FROM INVESTING ACTIVITIES:
|
||||||||
Loans provided (Notes 6 and 9)
|
(2,200
|
)
|
(390
|
)
|
||||
Repayment of loans provided (Note 6)
|
1,000
|
-
|
||||||
Acquisition of equipment (Note 8)
|
(234
|
)
|
(140
|
)
|
||||
Business and asset Acquisitions (Note 9)
|
(730
|
)
|
99
|
|||||
Net cash flow from investing activities
|
(2,164
|
)
|
(431
|
)
|
||||
Effect of exchange rate change
|
152
|
20
|
||||||
CHANGE IN CASH DURING THE PERIOD
|
15,383
|
140
|
||||||
CASH, beginning of the period
|
140
|
-
|
||||||
CASH, end of the period
|
$
|
15,523
|
$
|
140
|
||||
Supplementary information
|
||||||||
Interest paid
|
$
|
33
|
$
|
-
|
||||
Income taxes paid
|
$
|
-
|
$
|
-
|
||||
Non-cash consideration on acquisition of minority interests
|
$
|
304
|
$
|
-
|
Subsidiaries
|
Country of incorporation
|
Ownership
|
Functional currency
|
Cosechemos YA S.A.S.
|
Colombia
|
90%
|
Colombian Peso (COP)
|
Flora Growth Corp. Sucursal Colombia
|
Colombia
|
100%
|
Colombian Peso (COP)
|
Hemp Textiles & Co. LLC
|
United States
|
100%
|
United States Dollar (USD)
|
Hemp Textiles & Co. S.A.S.
|
Colombia
|
100%
|
Colombian Peso (COP)
|
Flora Beauty LLC
|
United States
|
87%
|
United States Dollar (USD)
|
Flora Beauty LLC Sucursal Colombia
|
Colombia
|
100%
|
Colombian Peso (COP)
|
Kasa Wholefoods Company S.A.S.
|
Colombia
|
90%
|
Colombian Peso (COP)
|
Kasa Wholefoods Company LLC
|
United States
|
90%
|
United States Dollar (USD)
|
Grupo Farmaceutico Cronomed S.A.S.
|
Colombia
|
100%
|
Colombian Peso (COP)
|
Labcofarm Laboratorios S.A.S.
|
Colombia
|
100%
|
Colombian Peso (COP)
|
Breeze Laboratory S.A.S.
|
Colombia
|
90%
|
Colombian Peso (COP)
|
December 31, 2020
|
December 31, 2019
|
|||||||
Trade accounts receivable
|
$
|
254
|
$
|
-
|
||||
HST receivable
|
459
|
19
|
||||||
Amounts receivables
|
209
|
1
|
||||||
Total
|
$
|
922
|
$
|
20
|
2020
|
2019
|
|||||||
|
$ |
|
$
|
|||||
Raw materials and supplies - Pharmaceuticals and nutraceuticals
|
174
|
|||||||
Raw materials and supplies - Textile produts
|
8
|
-
|
||||||
Total raw materials and supplies
|
182
|
-
|
||||||
Finished goods - Beauty products
|
18
|
|||||||
Finished goods - Textiles products
|
37
|
|||||||
Finished goods - Pharmaceuticals and nutraceuticals
|
274
|
|||||||
Finished goods - Beverages and food products
|
29
|
|||||||
Total finished goods
|
358
|
|||||||
Total
|
540
|
-
|
Cost
|
Construction in progress
$
|
Machinery and Office equipment
$
|
Vehicle
$
|
Land
$
|
Subtotal
$
|
Right of use assets
$
|
Total
$
|
|||||||||||||||||||||
As at March 13, 2019
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Additions
|
99
|
1
|
40
|
-
|
140
|
-
|
140
|
|||||||||||||||||||||
Asset acquisition (Note 9)
|
-
|
1
|
-
|
-
|
1
|
288
|
289
|
|||||||||||||||||||||
Foreign exchange translation
|
4
|
-
|
1
|
-
|
5
|
18
|
23
|
|||||||||||||||||||||
Cost as at December 31, 2019
|
103
|
2
|
41
|
-
|
146
|
306
|
452
|
|||||||||||||||||||||
Additions
|
35
|
77
|
-
|
122
|
234
|
-
|
234
|
|||||||||||||||||||||
Business combinations (Note 9)
|
-
|
41
|
-
|
-
|
41
|
85
|
126
|
|||||||||||||||||||||
Foreign exchange translation
|
(2
|
)
|
10
|
(2
|
)
|
9
|
15
|
(12
|
)
|
3
|
||||||||||||||||||
Cost as at December 31, 2020
|
136
|
130
|
39
|
131
|
436
|
379
|
815
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Accumulated depreciation
|
||||||||||||||||||||||||||||
As at March 13, 2019
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Depreciation
|
-
|
(2
|
)
|
-
|
-
|
(2
|
)
|
(13
|
)
|
(15
|
)
|
|||||||||||||||||
Foreign exchange translation
|
-
|
-
|
-
|
-
|
-
|
(2
|
)
|
(2
|
)
|
|||||||||||||||||||
Accumulated depreciation as at December 31, 2019
|
-
|
(2
|
)
|
-
|
-
|
(2
|
)
|
(15
|
)
|
(17
|
)
|
|||||||||||||||||
Depreciation
|
-
|
(14
|
)
|
(4
|
)
|
-
|
(18
|
)
|
(42
|
)
|
(60
|
)
|
||||||||||||||||
Foreign exchange translation
|
-
|
(5
|
)
|
-
|
-
|
(5
|
)
|
(4
|
)
|
(9
|
)
|
|||||||||||||||||
Accumulated depreciation as at December 31, 2020
|
-
|
(21
|
)
|
(4
|
)
|
-
|
(25
|
)
|
(61
|
)
|
(86
|
)
|
||||||||||||||||
Net book value
|
||||||||||||||||||||||||||||
As at December 31, 2019
|
103
|
-
|
41
|
-
|
144
|
291
|
435
|
|||||||||||||||||||||
As at December 31, 2020
|
136
|
109
|
35
|
131
|
411
|
318
|
729
|
|||||||||||||||||||||
|
$
|
|||
Current assets
|
221
|
|||
Property and equipment
|
1
|
|||
Right of use asset
|
288
|
|||
Intangible asset
|
272
|
|||
Trade and other payables
|
(104
|
)
|
||
Loans payable to Flora Growth Corp.
|
(299
|
)
|
||
Lease liability
|
(290
|
)
|
||
Non-controlling interest
|
(9
|
)
|
||
Total consideration paid
|
80
|
|
$
|
|||
Current assets
|
563
|
|||
Property and equipment
|
9
|
|||
Right of use asset
|
85
|
|||
Intangible asset
|
311
|
|||
Goodwill
|
728
|
|||
Trade and other payables
|
(300
|
)
|
||
Long term debt
|
(186
|
)
|
||
Amounts payable to Flora Growth Corp. consolidated group
|
(30
|
)
|
||
Lease liability
|
(92
|
)
|
||
Deferred income tax
|
(96
|
)
|
||
Total consideration paid
|
992
|
|
$
|
|||
Current assets
|
331
|
|||
Property and equipment
|
9
|
|||
Intangible asset
|
48
|
|||
Goodwill
|
834
|
|||
Trade and other payables
|
(246
|
)
|
||
Long term debt
|
(107
|
)
|
||
Amounts payable to Flora Growth Corp. consolidated group
|
(591
|
)
|
||
Deferred income tax
|
(15
|
)
|
||
Non-controlling interest
|
(27
|
)
|
||
Total consideration paid
|
236
|
|
$
|
|||
Current assets
|
214
|
|||
Property and equipment
|
23
|
|||
Intangible asset
|
89
|
|||
Goodwill
|
685
|
|||
Trade and other payables
|
(430
|
)
|
||
Long term debt
|
(27
|
)
|
||
Amounts payable to Flora Growth Corp. consolidated group
|
(297
|
)
|
||
Deferred income tax
|
(28
|
)
|
||
Non-controlling interest
|
(23
|
)
|
||
Total consideration paid
|
206
|
Licenses
|
Customer relationships
|
Trademarks and brands
|
Goodwill
|
Total
|
||||||||||||||||
Cost
|
||||||||||||||||||||
At March 13, 2019
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Acquired through asset acquistion (Note 9)
|
272
|
-
|
-
|
-
|
272
|
|||||||||||||||
At December 31, 2019
|
$
|
272
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
272
|
||||||||||
Accumulated Amortization
|
||||||||||||||||||||
At March 13, 2019
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Additions
|
11
|
-
|
-
|
-
|
11
|
|||||||||||||||
At December 31, 2019
|
$
|
11
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
11
|
||||||||||
Foreign Currency translation
|
16
|
-
|
-
|
-
|
16
|
|||||||||||||||
Net book value at December 31, 2019
|
$
|
277
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
277
|
||||||||||
Licenses
|
Customer relationships
|
Trademarks and brands
|
Goodwill
|
Total
|
||||||||||||||||
Cost
|
||||||||||||||||||||
At January 1, 2020
|
$
|
272
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
272
|
||||||||||
Acquired through business combinations (Note 9)
|
138
|
189
|
121
|
2,247
|
2,695
|
|||||||||||||||
Impairment
|
-
|
-
|
-
|
(1,816
|
)
|
(1,816
|
)
|
|||||||||||||
At December 31, 2020
|
$
|
410
|
$
|
189
|
$
|
121
|
$
|
431
|
$
|
1,151
|
||||||||||
Accumulated Amortization
|
||||||||||||||||||||
At January 1, 2020
|
$
|
11
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
11
|
||||||||||
Additions
|
53
|
-
|
-
|
-
|
53
|
|||||||||||||||
At December 31, 2020
|
$
|
64
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
64
|
||||||||||
Foreign Currency translation
|
2
|
-
|
-
|
-
|
2
|
|||||||||||||||
Net book value at December 31, 2020
|
$
|
348
|
$
|
189
|
$
|
121
|
$
|
431
|
$
|
1,089
|
As at March 13, 2019
|
$
|
-
|
||
Acquisition of lease
|
290
|
|||
Lease payments
|
(9
|
)
|
||
Interest expense on lease liability
|
4
|
|||
Foreign currency translation
|
14
|
|||
As at December 31, 2019
|
$
|
299
|
||
Lease payments
|
(64
|
)
|
||
Interest expense on lease liability
|
13
|
|||
Foreign currency translation
|
(13
|
)
|
||
Acquisition of lease
|
94
|
|||
As at December 31, 2020
|
$
|
329
|
||
Current portion
|
78
|
|||
Long term portion
|
$
|
251
|
Less than one year
|
$
|
107
|
||
One to five years
|
288
|
|||
395
|
||||
Effect of discounting
|
(66
|
)
|
||
329
|
||||
Potential exposure on extension option (over 5 years) (i)
|
$
|
350
|
The maturity analysis of the undiscounted contractual balances of the long term debt is as follows:
|
||||
Less than one year
|
269
|
|||
One to five years
|
51
|
|||
320
|
a.
|
Authorized
|
b.
|
Common shares issued
|
|
Number of shares (thousands)
|
Stated value
$
|
||||||
Balance, March 13, 2019
|
-
|
$
|
-
|
|||||
Incorporation share
|
-
|
-
|
||||||
Bonus shares
|
70,000
|
1,400
|
||||||
Balance, December 31, 2019
|
70,000
|
$
|
1,400
|
|||||
Regulation A Offering
|
40,000
|
25,605
|
||||||
Share issuance costs
|
-
|
(2,652
|
)
|
|||||
Stock options exercised
|
600
|
37
|
||||||
Shares issued services
|
4,000
|
2,560
|
||||||
Shares issued acquisitions (Note 9)
|
475
|
304
|
||||||
Balance, December 31, 2020
|
115,075
|
$
|
27,254
|
|
Number of
options
|
Weighted average
exercise price
|
Balance, March 13, 2019
|
-
|
$ -
|
Granted
|
7,000
|
0.05
|
|
|
|
Balance, December 31, 2019
|
7,000
|
$ 0.05
|
Granted
|
5,100
|
0.75
|
Exercised
|
(600)
|
0.05
|
Expired
|
(117)
|
0.35
|
Balance, December 31, 2020
|
11,383
|
$ 0.36
|
Date
|
Options
|
Options
|
Exercise
|
Grant date
|
Remaining life
|
|||||||||||||||
of expiry
|
outstanding
|
exercisable
|
price
|
fair value
|
in years
|
|||||||||||||||
June 28, 2024
|
6,333
|
6,333
|
$
|
0.05
|
$
|
78
|
3.49
|
|||||||||||||
April 23,2025
|
750
|
750
|
$
|
0.75
|
344
|
4.31
|
||||||||||||||
July 6, 2025
|
550
|
550
|
$
|
0.75
|
252
|
4.52
|
||||||||||||||
July 31, 2025
|
50
|
50
|
$
|
0.75
|
23
|
4.58
|
||||||||||||||
September 8, 2025
|
200
|
200
|
$
|
0.75
|
92
|
4.69
|
||||||||||||||
November 4, 2025
|
2,000
|
2,000
|
$
|
0.75
|
918
|
4.85
|
||||||||||||||
December 16, 2025
|
1,500
|
1,500
|
$
|
0.75
|
689
|
4.96
|
||||||||||||||
11,383
|
11,383
|
$
|
0.36
|
$
|
2,396
|
4.05
|
Risk-free annual interest rate
|
0.40%
|
|
|
Current stock price
|
$0.64
|
|
|
Expected annualized volatility
|
100%
|
|
|
Expected life (years)
|
5
|
|
|
Expected annual dividend yield
|
0%
|
|
|
Exercise price
|
$0.75
|
|
|||
Risk-free annual interest rate
|
1.39%
|
|
|
Current stock price
|
$0.02
|
|
|
Expected annualized volatility
|
100%
|
|
|
Expected life (years)
|
5
|
|
|
Expected annual dividend yield
|
0%
|
|
|
Exercise price
|
$0.05
|
|
Number of warrants
(thousands)
|
Weighted average exercise price
|
||||||
Balance, March 13, 2019
|
-
|
$
|
-
|
|||||
Granted
|
7,000
|
0.05
|
||||||
Balance, December 31, 2019
|
7,000
|
$
|
0.05
|
|||||
Granted (Note 15(b))
|
20,000
|
1.00
|
||||||
Balance, December 31, 2020
|
27,000
|
$
|
0.75
|
Date of expiry
|
Warrants
outstanding
|
Exercise
price
|
Grant date
fair value
|
Remaining life
in years
|
||||||||||||
March 15, 2022
|
7,000
|
$
|
0.05
|
$
|
21
|
1.20
|
||||||||||
July 23, 2021- June 29, 2022
|
20,000
|
$
|
1.00
|
$
|
4,395
|
0.98
|
||||||||||
27,000
|
$
|
0.75
|
$
|
4,416
|
1.07
|
|
Year ended December 31, 2020
|
Period from incorporation on March 13, 2019 to December 31, 2019
|
||||||
Directors & officers’ compensation
|
$
|
1,938
|
$
|
557
|
||||
Share-based payments
|
4,167
|
68
|
||||||
|
$
|
6,105
|
$
|
625
|
December 31, 2020
|
|
Stock options (Note 15)
|
11,383
|
Warrants (Note 16)
|
27,000
|
38,383
|
December 31, 2020
|
CAD
|
COP
|
EUR
|
|||||||||
Cash
|
$
|
1,839
|
889,204
|
$
|
118
|
|||||||
Amounts receivable
|
594
|
1,478,432
|
-
|
|||||||||
Prepaid expenses
|
-
|
1,171,419
|
-
|
|||||||||
Trade payables
|
(581
|
)
|
(4,032,077
|
)
|
-
|
|||||||
Accrued liabilities
|
(120
|
)
|
-
|
-
|
||||||||
Lease liability
|
-
|
(1,126,542
|
)
|
-
|
||||||||
Long term debt
|
-
|
(1,098,081
|
)
|
-
|
||||||||
$
|
1,732
|
(2,717,645
|
)
|
118
|
December 31, 2019
|
CAD
|
COP
|
||||||
Cash
|
$
|
-
|
523,677
|
|||||
Amounts receivable
|
19
|
5,115
|
||||||
Trade payables
|
(385
|
)
|
(247,758
|
)
|
||||
Accrued liabilities
|
(791
|
)
|
-
|
|||||
Lease liability
|
-
|
(978,465
|
)
|
|||||
$
|
(1,157
|
)
|
(697,431
|
)
|
For the year ended December 31, 2020
|
Cannabis growth and derivative production
$
|
Beauty product
$
|
Hemp industries
$
|
Corporate
$
|
Total
$
|
|||||||||||||||
Revenue
|
-
|
78
|
28
|
-
|
106
|
|||||||||||||||
Cost of Sales
|
-
|
31
|
4
|
-
|
35
|
|||||||||||||||
Gross profit
|
-
|
47
|
24
|
-
|
71
|
|||||||||||||||
Expenses
|
||||||||||||||||||||
Consulting and management fees (Note 14(b) and 17)
|
262
|
437
|
69
|
3,984
|
4,752
|
|||||||||||||||
Professional fees
|
77
|
3
|
2
|
712
|
794
|
|||||||||||||||
General and administrative
|
102
|
414
|
78
|
806
|
1,400
|
|||||||||||||||
Travel expenses
|
14
|
60
|
-
|
354
|
428
|
|||||||||||||||
Share based compensation (Note 15)
|
-
|
-
|
-
|
4,901
|
4,901
|
|||||||||||||||
Depreciation and amortization (Notes 8 and 10)
|
120
|
1
|
-
|
-
|
121
|
|||||||||||||||
Research and development
|
78
|
-
|
-
|
-
|
78
|
|||||||||||||||
Foreign exchange loss
|
(57
|
)
|
-
|
-
|
69
|
12
|
||||||||||||||
Total expenses
|
596
|
915
|
149
|
10,826
|
12,486
|
|||||||||||||||
Loss before the undernoted items
|
(596
|
)
|
(868
|
)
|
(125
|
)
|
(10,826
|
)
|
(12,415
|
)
|
||||||||||
Goodwill impairment (Note 10)
|
-
|
-
|
-
|
1,816
|
1,816
|
|||||||||||||||
Interest expense
|
16
|
4
|
10
|
30
|
||||||||||||||||
Transaction costs (Note 9)
|
-
|
-
|
-
|
132
|
132
|
|||||||||||||||
Other income
|
-
|
(3
|
)
|
-
|
(56
|
)
|
(59
|
)
|
||||||||||||
Net loss for the year
|
$
|
(612
|
)
|
$
|
(869
|
)
|
$
|
(125
|
)
|
$
|
(12,728
|
)
|
$
|
(14,334
|
)
|
Colombia
$
|
United States
$
|
Canada
$
|
Total
$
|
|||||||||||||
Non-current assets at December 31, 2020
|
1,818
|
-
|
-
|
1,818
|
||||||||||||
Liabilities at December 31, 2020
|
1,922
|
12
|
1,268
|
3,202
|
||||||||||||
Non-current assets at December 31, 2019
|
712
|
-
|
-
|
712
|
||||||||||||
Liabilities at December 31, 2019
|
418
|
-
|
2,060
|
2,478
|
||||||||||||
Year ended December 31, 2020
|
||||||||||||||||
Net revenue
|
75
|
31
|
-
|
106
|
||||||||||||
Gross profit
|
40
|
31
|
-
|
71
|
|
|
Calle 93 No. 15 – 40 Piso 4
Bogotá, Colombia
Tel: +57 (1) 256 30 04
www.mazars.com.co
|
|
|
|
Statements of Financial Position
As at December 31, 2019 and 2018
(Stated in Colombian Pesos)
|
|
Notes
|
December 31, 2019
|
December 31, 2018
|
||||||||||
Assets
|
||||||||||||
Current
|
||||||||||||
Cash
|
$
|
29,457,979
|
$
|
142,035,004
|
||||||||
Trade and other receivables
|
13
|
176,699,802
|
170,275,065
|
|||||||||
Inventories
|
3
|
210,135,959
|
30,157,357
|
|||||||||
Other assets
|
4,574,270
|
-
|
||||||||||
420,868,010
|
342,467,426
|
|||||||||||
Property, plant and equipment
|
4
|
1,182,301,677
|
617,109,648
|
|||||||||
Total Assets
|
$
|
1,603,169,687
|
$
|
959,577,074
|
||||||||
Liabilities
|
||||||||||||
Current
|
||||||||||||
Accounts payable and accrued liabilities
|
$
|
48,716,122
|
$
|
33,551,839
|
||||||||
Current portion of long-term debt
|
5
|
62,923,381
|
15,429,256
|
|||||||||
Deferred revenue
|
17,176,479
|
-
|
||||||||||
Income taxes payable
|
24,252,508
|
38,722,042
|
||||||||||
Due to related parties
|
11
|
827,770,119
|
477,707,381
|
|||||||||
980,838,609
|
565,410,518
|
|||||||||||
Long-term debt
|
5
|
249,076,601
|
194,987,411
|
|||||||||
Total Liabilities
|
1,229,915,210
|
760,397,929
|
||||||||||
Shareholders' Equity
|
||||||||||||
Share capital
|
6
|
52,000,000
|
52,000,000
|
|||||||||
Retained earnings
|
304,490,477
|
133,472,825
|
||||||||||
Restricted retained earnings
|
7
|
16,764,000
|
13,706,320
|
|||||||||
Total Equity
|
373,254,477
|
199,179,145
|
||||||||||
Total Liabilities and Equity
|
$
|
1,603,169,687
|
$
|
959,577,074
|
||||||||
Subsequent Events
|
15
|
|||||||||||
Statements of Operations and Comprehensive Income
|
Years Ended December 31, 2019 and 2018
|
(Stated in Colombian Pesos)
|
Years Ended December 31,
|
||||||||||||
Notes |
2019
|
2018
|
||||||||||
Revenue
|
8
|
$
|
1,325,631,530
|
$
|
1,057,618,584
|
|||||||
Cost of Sales
|
3
|
488,391,447
|
573,502,832
|
|||||||||
Gross Profit
|
837,240,083
|
484,115,752
|
||||||||||
General and Administrative Expenses
|
||||||||||||
Salaries, wages and benefits
|
11
|
238,544,466
|
174,684,353
|
|||||||||
Advertising and promotions
|
-
|
97,045,488
|
||||||||||
Professional fees
|
49,469,006
|
46,002,289
|
||||||||||
Occupancy, office expense and others
|
150,797,611
|
80,207,048
|
||||||||||
Amortization
|
71,703,000
|
69,214,460
|
||||||||||
510,514,083
|
467,153,638
|
|||||||||||
Other Income (Expense)
|
||||||||||||
Other income
|
9
|
35,576,976
|
65,123,795
|
|||||||||
Finance costs
|
10
|
(145,350,187
|
)
|
(30,454,414
|
)
|
|||||||
Other expenses
|
(2,966,949
|
)
|
(1,371,713
|
)
|
||||||||
(112,740,160
|
)
|
33,297,668
|
||||||||||
Income Before Taxes
|
213,985,840
|
50,259,782
|
||||||||||
Income tax expense
|
12
|
39,910,508
|
19,683,000
|
|||||||||
Net Income and Comprehensive Income
|
$
|
174,075,332
|
$
|
30,576,782
|
||||||||
Weighted average number of outstanding shares, basic and diluted
|
52,000
|
52,000
|
||||||||||
Basic and diluted earnings per share
|
$
|
3,347.60
|
$
|
588.02
|
Statements of Changes in Equity
|
Years Ended December 31, 2019 and 2018
|
(Stated in Colombian Pesos)
|
Notes
|
Number of Shares
|
Share Capital
|
Retained Earnings
|
Restricted Retained Earnings
|
Total
|
|
Balance at December 31, 2017
|
52,000
|
$ 52,000,000
|
$ 105,189,836
|
$ 11,412,527
|
$ 168,602,363
|
|
Transfer to reserve
|
7
|
-
|
-
|
(2,293,793)
|
2,293,793
|
-
|
Net income for the year
|
-
|
-
|
30,576,782
|
-
|
30,576,782
|
|
Balance at December 31, 2018
|
52,000
|
$ 52,000,000
|
$ 133,472,825
|
$ 13,706,320
|
$ 199,179,145
|
|
Balance at December 31, 2018
|
52,000
|
$ 52,000,000
|
$ 133,472,825
|
$ 13,706,320
|
$ 199,179,145
|
|
Transfer to reserve
|
7
|
-
|
-
|
(3,057,680)
|
3,057,680
|
-
|
Net income for the year
|
-
|
-
|
174,075,332
|
-
|
174,075,332
|
|
Balance at December 31, 2019
|
52,000
|
$ 52,000,000
|
$ 304,490,477
|
$ 16,764,000
|
$ 373,254,477
|
BREEZE LABORATORY S.A.S
|
Years Ended December 31, 2019 and 2018
|
(Stated in Colombian Pesos)
|
|
Years Ended December 31,
|
|||||||
2019
|
2018
|
|||||||
Operating Activities
|
||||||||
Net loss for the year
|
$
|
174,075,332
|
$
|
30,576,782
|
||||
Items not affecting cash:
|
||||||||
Amortization
|
71,409,000
|
76,000,000
|
||||||
245,484,332
|
106,576,782
|
|||||||
Net changes in non-cash working capital:
|
||||||||
Trade and other receivables
|
(6,424,737
|
)
|
149,364,249
|
|||||
Inventories
|
(179,978,602
|
)
|
41,193,068
|
|||||
Other assets
|
(4,574,270
|
)
|
13,463,206
|
|||||
Accounts payable and accrued liabilities
|
15,164,283
|
(1,125,283
|
)
|
|||||
Deferred revenue
|
17,176,479
|
-
|
||||||
Income taxes payable
|
(14,469,534
|
)
|
(6,808,958
|
)
|
||||
Due to related parties
|
350,062,738
|
(195,122,899
|
)
|
|||||
Cash Flows Provided By Operating Activities
|
422,440,689
|
107,540,165
|
||||||
Investing Activities
|
||||||||
Acquisition of property, plant and equipment
|
(636,601,029
|
)
|
(22,426,931
|
)
|
||||
Cash Flows Used In Investing Activities
|
(636,601,029
|
)
|
(22,426,931
|
)
|
||||
Financing Activities
|
||||||||
Proceeds from long-term debt
|
101,583,315
|
-
|
||||||
Repayment of long-term debt
|
-
|
(48,333,336
|
)
|
|||||
Cash Flows Provided By (Used In) Financing Activities
|
101,583,315
|
(48,333,336
|
)
|
|||||
Net Increase in Cash During the Year
|
(112,577,025
|
)
|
36,779,898
|
|||||
Cash, Beginning of Year
|
142,035,004
|
105,255,106
|
||||||
Cash, End of Year
|
$
|
29,457,979
|
$
|
142,035,004
|
Buildings
|
10 years
|
|
Leasehold improvements
|
Lesser of useful life and term of the lease
|
|
Computing and communications equipment
|
5 years
|
|
Machinery and equipment
|
10 years
|
|
Furniture and appliances
|
10 years
|
|
As at
December 31, 2019
|
As at
December 31, 2018
|
|||||||
Raw materials
|
$
|
206,545,995
|
$
|
30,157,357
|
||||
Finished goods
|
3,589,964
|
-
|
||||||
$
|
210,135,959
|
$
|
30,157,357
|
Buildings and leasehold improvements
|
Machinery and equipment
|
Furniture and appliances
|
Computing and communications equipment
|
Total
|
||||||||||||||||
Cost
|
||||||||||||||||||||
At January 1, 2018
|
$
|
-
|
$
|
13,231,933
|
$
|
15,956,684
|
$
|
8,127,482
|
$
|
48,395,099
|
||||||||||
Additions
|
650,000,000
|
21,815,727
|
611,204
|
-
|
672,426,931
|
|||||||||||||||
At December 31, 2018
|
$
|
650,000,000
|
$
|
35,047,660
|
$
|
16,567,888
|
$
|
8,127,482
|
$
|
720,822,030
|
||||||||||
Accumulated Amortization
|
||||||||||||||||||||
At January 1, 2018
|
$
|
-
|
$
|
2,992,439
|
$
|
9,467,504
|
$
|
4,173,439
|
$
|
27,712,382
|
||||||||||
Additions
|
65,000,000
|
6,359,528
|
3,014,964
|
1,625,508
|
76,000,000
|
|||||||||||||||
At December 31, 2018
|
$
|
65,000,000
|
$
|
9,351,967
|
$
|
12,482,468
|
$
|
5,798,947
|
$
|
103,712,382
|
||||||||||
Net book value at
|
||||||||||||||||||||
December 31, 2018
|
$
|
585,000,000
|
$
|
25,695,693
|
$
|
4,085,420
|
$
|
2,328,535
|
$
|
617,109,648
|
Buildings and leasehold improvements
|
Machinery and equipment
|
Furniture and appliances
|
Computing and communications equipment
|
Total
|
||||||||||||||||
Cost
|
||||||||||||||||||||
At January 1, 2019
|
$
|
650,000,000
|
$
|
35,047,660
|
$
|
16,567,888
|
$
|
8,127,482
|
$
|
720,822,030
|
||||||||||
Additions
|
628,928,259
|
7,558,370
|
114,400
|
-
|
636,601,029
|
|||||||||||||||
At December 31, 2019
|
$
|
1,278,928,259
|
$
|
42,606,030
|
$
|
16,682,288
|
$
|
8,127,482
|
$
|
1,357,423,059
|
||||||||||
Accumulated Amortization
|
||||||||||||||||||||
At January 1, 2019
|
$
|
65,000,000
|
$
|
9,351,967
|
$
|
12,482,468
|
$
|
5,798,947
|
$
|
103,712,382
|
||||||||||
Additions
|
65,000,000
|
4,155,000
|
629,000
|
1,625,000
|
71,409,000
|
|||||||||||||||
At December 31, 2019
|
$
|
130,000,000
|
$
|
13,506,967
|
$
|
13,111,468
|
$
|
7,423,947
|
$
|
175,121,382
|
||||||||||
Net book value at
|
||||||||||||||||||||
December 31, 2019
|
$
|
1,148,928,259
|
$
|
29,099,063
|
$
|
3,570,820
|
$
|
703,535
|
$
|
1,182,301,677
|
|
As at
December 31, 2019 |
As at
December 31, 2018 |
||||||
(a) Term loan - bearing interest at 10.91% per annum, monthly payments of $4,572,590, 120-month term, maturing in June of 2027
|
$
|
185,416,646
|
$
|
210,416,667
|
||||
(b) Term loan - bearing interest at 11.91% per annum, monthly payments of $5,101,214, 36-month term, maturing in June of 2022
|
126,583,336
|
-
|
||||||
311,999,982
|
210,416,667
|
|||||||
Less: current portion
|
(62,923,381
|
)
|
(15,429,256
|
)
|
||||
Long-term portion
|
$
|
249,076,601
|
$
|
194,987,411
|
|
(a) |
On June 12, 2017, the Company entered into a 120-month loan agreement with Banco Caja Social for an amount of $250,000,000. The loan has an effective interest rate of 10.91% and monthly payments of $4,572,590 is
required.
|
|
(b) |
On June 10, 2019, the Company entered into a 36-month loan agreement with Bancolombia for an amount of $151,900,000. The loan has an effective interest rate of 11.91% and monthly payments of $5,101,214 is required.
|
|
Number of common shares | Share capital | ||||||
Balance – December 31, 2018 and 2019
|
52,000
|
$
|
52,000,000
|
Year ended
December 31, 2019
|
Year ended December 31, 2018
|
|||||||
Revenue from sale of goods
|
$
|
1,262,446,466
|
$
|
1,055,876,182
|
||||
Revenue from provision of services
|
63,185,064
|
1,742,402
|
||||||
Total
|
$
|
1,325,631,530
|
$
|
1,057,618,584
|
Year ended
December 31, 2019
|
Year ended
December 31, 2018
|
|||||||
Rental income
|
$
|
34,664,443
|
$
|
54,599,582
|
||||
Miscellaneous
|
912,533
|
10,524,213
|
||||||
Total
|
$
|
35,576,976
|
$
|
65,123,795
|
Year ended
December 31, 2019 |
Year ended
December 31, 2018 |
|||||||
Bank fees
|
$
|
6,031,711
|
$
|
2,208,612
|
||||
Interest on loans
|
139,325,558
|
49,501,178
|
||||||
Other interest income
|
(7,082
|
)
|
(21,255,376
|
)
|
||||
Total
|
$
|
145,350,187
|
$
|
30,454,414
|
|
Year ended
December 31, 2019 |
Year ended
December 31, 2018 |
Occupancy
|
$ 37,682,917
|
$ 16,692,000
|
Interest expense
|
94,883,408
|
14,731,243
|
Total
|
$ 132,566,325
|
$ 31,423,243
|
|
Year ended
December 31, 2019 |
Year ended
December 31, 2018 |
Salary and short-term benefits
|
$ 40,617,000
|
$ 37,405,243
|
2019
|
2018
|
|
Net income before income taxes
|
$ 213,985,840
|
$ 50,259,782
|
Non-deductible expenses (income)
|
(93,044,907)
|
9,385,561
|
Income subjected to income taxes
|
120,940,933
|
59,645,343
|
Income tax expense
|
$ 39,910,508
|
$ 19,683,000
|
Weighted average loss rate
|
Gross carrying amount
|
Loss allowance
|
||||||||||
Current (30 days or less)
|
0
|
%
|
$
|
82,892,753
|
$
|
-
|
||||||
31-60 days
|
0
|
%
|
46,230,719
|
-
|
||||||||
61-90 days
|
0
|
%
|
14,394,470
|
-
|
||||||||
Greater than 90 days
|
0
|
%
|
29,481,860
|
-
|
||||||||
$
|
172,999,802
|
$
|
-
|
Weighted average loss rate
|
Gross carrying amount
|
Loss allowance
|
||||||||||
Current (30 days or less)
|
0
|
%
|
$
|
110,564,992
|
$
|
-
|
||||||
31-60 days
|
0
|
%
|
29,851,416
|
-
|
||||||||
61-90 days
|
0
|
%
|
9,790,649
|
-
|
||||||||
Greater than 90 days
|
0
|
%
|
-
|
-
|
||||||||
$
|
150,207,057
|
$
|
-
|
Payments due by period
|
||||||||||||||||
Total
|
<1 year
|
1-3 years
|
> 3 years
|
|||||||||||||
Accounts payable and accrued liabilities
|
$
|
48,716,122
|
$
|
48,716,122
|
$
|
-
|
$
|
-
|
||||||||
Due to related parties
|
827,770,119
|
827,770,119
|
-
|
-
|
||||||||||||
Long-term debt
|
311,999,982
|
62,923,381
|
249,076,601
|
-
|
||||||||||||
Total
|
$
|
1,188,486,223
|
$
|
939,409,622
|
$
|
249,076,601
|
$
|
-
|
||||||||
(Stated in Thousands of Colombian Pesos)
|
Notes
|
2019
|
2018
|
||||||||||
Assets
|
||||||||||||
Current
|
||||||||||||
Cash
|
4
|
$
|
143,081
|
$
|
54,459
|
|||||||
Trade and other accounts receivable
|
17
|
562,886
|
694,950
|
|||||||||
Inventories
|
5
|
1,189,748
|
1,293,710
|
|||||||||
Prepaids and other assets
|
30,969
|
80,529
|
||||||||||
Income taxes recoverable
|
9
|
14,805
|
39,397
|
|||||||||
1,941,489
|
2,163,045
|
|||||||||||
Property, plant and equipment
|
4,001
|
996
|
||||||||||
Right of use assets
|
6
|
13,679
|
-
|
|||||||||
Total Assets
|
$
|
1,959,169
|
$
|
2,164,041
|
||||||||
Liabilities
|
||||||||||||
Current
|
||||||||||||
Trade and other accounts payable
|
17
|
$
|
967,730
|
$
|
994,576
|
|||||||
Current portion of long-term debt
|
7
|
37,971
|
90,259
|
|||||||||
Current portion of lease liability
|
6
|
14,617
|
-
|
|||||||||
Current portion of due to related party
|
8
|
9,280
|
4,640
|
|||||||||
Sales taxes payable
|
34,225
|
20,359
|
||||||||||
1,063,823
|
1,109,834
|
|||||||||||
Long-term debt
|
7
|
27,445
|
-
|
|||||||||
Due to related party
|
8
|
500,000
|
500,000
|
|||||||||
Payments received in advance
|
9,510
|
25,379
|
||||||||||
Deferred income tax liabilities
|
9
|
3,184
|
2,609
|
|||||||||
Total Liabilities
|
$
|
1,603,962
|
$
|
1,637,822
|
||||||||
Shareholders' Equity
|
||||||||||||
Share capital
|
10
|
$
|
670,000
|
$
|
670,000
|
|||||||
Retained earnings
|
(333,312)
|
|
(162,300)
|
|
||||||||
Restricted retained earnings
|
11
|
18,519
|
18,519
|
|||||||||
Total Equity
|
355,207
|
526,219
|
||||||||||
Total Liabilities and Equity
|
$
|
1,959,169
|
$
|
2,164,041
|
||||||||
Subsequent Events
|
19
|
|||||||||||
|
Notes
|
2019
|
2018
|
||||||||||
Operating revenue
|
||||||||||||
Sale of pharmaceutical products
|
12
|
$
|
4,377,912
|
|
$
|
4,022,889
|
|
|||||
Conditional discounts
|
(352,237)
|
|
(607,033)
|
|
||||||||
Loyalty discounts
|
(15,019)
|
|
-
|
|
||||||||
Sales returns
|
(147,071)
|
|
(88,525)
|
|
||||||||
3,863,585
|
3,327,331
|
|||||||||||
Cost of sales
|
5
|
2,391,317
|
2,257,847
|
|||||||||
Gross profit
|
$
|
1,472,268
|
$
|
1,069,484
|
||||||||
Operating expenses
|
||||||||||||
Administrative expenses
|
13
|
$
|
472,063
|
$
|
456,993
|
|||||||
Sales expenses
|
14
|
884,244
|
919,825
|
|||||||||
1,356,307
|
1,376,818
|
|||||||||||
Operating profit (loss)
|
$
|
115,961
|
$
|
(307,334)
|
|
|||||||
Other income (expense)
|
||||||||||||
Other income
|
15
|
$
|
27,414
|
|
|
$
|
91,796
|
|
||||
Other expenses
|
16
|
(96,683)
|
|
|
(72,500)
|
|
||||||
Interest expenses
|
(98,305)
|
|
|
(91,503)
|
|
|||||||
(167,574)
|
|
|
(72,207)
|
|
||||||||
Income (loss) before taxes
|
$
|
(51,613)
|
|
|
$
|
(379,541)
|
|
|||||
|
||||||||||||
Current income tax
|
9
|
99,401
|
|
30,582
|
|
|||||||
Deferred income tax
|
9
|
(575)
|
|
(2,609)
|
|
|||||||
Local tax
|
20,573
|
|
16,926
|
|
||||||||
Net income (loss) and comprehensive income (loss)
|
$
|
(171,012)
|
|
$
|
(424,440)
|
|
||||||
|
|
|||||||||||
Weighted average number of outstanding shares, basic and diluted
|
134
|
|
134
|
|
||||||||
Basic and diluted earnings per share
|
$
|
(1,276.21)
|
|
$
|
(3,167.46)
|
|
||||||
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Number of Shares
|
|
|
Share Capital
|
|
|
Retained Earnings
|
|
|
Restricted Retained Earnings
|
|
|
Total
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance at December 31, 2017
|
|
|
134
|
|
|
$
|
670,000
|
|
|
$
|
242,341
|
|
$
|
38,318
|
|
|
$
|
950,659
|
|
||
Net loss and comprehensive loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
(424,440)
|
|
|
|
|
|
|
(424,440)
|
|
||
Transfer to restricted retained earnings
|
|
|
|
|
|
|
|
|
|
|
19,799
|
|
|
(19,799)
|
|
|
-
|
|
|||
Balance at December 31, 2018
|
|
|
134
|
|
|
$
|
670,000
|
|
|
$
|
(162,300)
|
|
$
|
18,519
|
|
|
$
|
526,219
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Balance at December 31, 2018
|
|
|
134
|
|
|
$
|
670,000
|
|
|
$
|
(162,300)
|
|
$
|
18,519
|
|
|
$
|
526,219
|
|
||
Net loss and comprehensive loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
(171,012)
|
|
|
-
|
|
|
|
(171,012)
|
|
||
Balance at December 31, 2019
|
|
|
134
|
|
|
$
|
670,000
|
|
|
$
|
(333,312)
|
|
$
|
18,519
|
|
|
$
|
355,207
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
2018
|
||||||
Operating Activities
|
|
|
||||||
Net loss for the period
|
$
|
(171,012)
|
|
$
|
(424,440)
|
|
||
Items not affecting cash:
|
|
|
||||||
Depreciation on property, plant and equipment
|
9,454
|
|
28,326
|
|
||||
Depreciation on right-of-use assets
|
86,431
|
|
-
|
|
||||
Lease interest expense differential
|
8,328
|
|
-
|
|
||||
(66,799)
|
|
(396,114)
|
|
|||||
Net changes in non-cash working capital
|
|
|
||||||
Trade and other accounts receivables
|
132,064
|
|
(71,432)
|
|
||||
Inventories
|
103,962
|
|
24,116
|
|
||||
Prepaids
|
49,560
|
|
60,036
|
|
||||
Income taxes recoverable
|
24,592
|
|
(64,844)
|
|
||||
Trade and other accounts payable
|
(26,846)
|
|
135,887
|
|
||||
Payments received in advance
|
(15,869)
|
|
25,379
|
|
||||
Sales taxes payable
|
13,866
|
|
24,601
|
|
||||
Deferred income tax liabilities
|
575
|
|
(100,695)
|
|
||||
Cash Flows Used in Operating Activities
|
$
|
215,105
|
|
$
|
(363,066
|
|
||
Investing Activities
|
|
|
||||||
Acquisition of property, plant and equipment
|
(12,459)
|
|
(12,385)
|
|
||||
Cash Flows Provided by (Used In) Investing Activities
|
$
|
(12,459)
|
|
$
|
(12,385)
|
|
||
Financing Activities
|
|
|
||||||
Proceeds from long-term debt
|
52,000
|
|
500,000
|
|
||||
Payment of long-term debt
|
(72,203)
|
|
(454,932)
|
|
||||
Principal paid on lease liabilities
|
(85,492)
|
|
-
|
|
||||
Interest paid on lease liabilities
|
(8,329)
|
|
-
|
|
||||
Cash Flows Provided By Financing Activities
|
$
|
(114,024)
|
|
$
|
45,068
|
|
||
|
|
|||||||
Net Increase in Cash During the Period
|
88,622
|
|
(330,383)
|
|
||||
Cash, Beginning of Period
|
54,459
|
|
384,842
|
|
||||
Cash, End of Period
|
$
|
143,081
|
|
$
|
54,459
|
|
||
|
|
|||||||
Supplementary information
|
|
|||||||
Interest paid
|
$
|
75,124
|
67,190
|
|
||||
1.
|
Basis of presentation
|
(a)
|
Statement of compliance
|
(b)
|
Basis of measurement
|
(c)
|
Functional and presentation currency
|
(d)
|
Basis of consolidation
|
1.
|
Basis of presentation (continued)
|
(e)
|
Going concern
|
(f)
|
Estimates and critical judgements made by management
|
(i)
|
Provisions
|
(ii)
|
Expected credit losses on financial assets
|
1.
|
Basis of presentation (continued)
|
(f)
|
Estimates and critical judgements made by management (continued)
|
(iii)
|
Inventory recoverability
|
(iv)
|
Income taxes
|
2.
|
Adoption of new accounting pronouncements
|
|
(a) |
IFRS 16 Leases
|
2.
|
Adoption of new accounting pronouncements (continued)
|
2.1
|
Recently Issued Accounting Pronouncement Not Yet Adopted
|
3.
|
Significant accounting policies
|
(a)
|
Financial instruments
|
(i)
|
Measurement basis
|
Item
|
Measurement Method
|
|
Financial instruments measured at fair value through profit or loss
|
||
None
|
None
|
|
Financial instruments measured at amortized cost
|
||
Cash; Trade and other accounts receivable; Trade and other accounts payable
|
Carrying amount (approximates fair value due to short-term nature)
|
|
Long-term debt; Due to related parties
|
Carrying value at the effective interest rate which approximates fair value
|
(ii)
|
Impairment of financial assets
|
(iii)
|
Fair value hierarchy
|
3.
|
Significant accounting policies (continued)
|
(b)
|
Income taxes
|
(c)
|
Share capital
|
(d)
|
Provisions
|
(e)
|
Basic and diluted earnings per share
|
(f)
|
Inventories
|
3.
|
Significant accounting policies (continued)
|
(g)
|
Revenue Recognition
|
4.
|
Cash
|
2019 | 2018 | ||||||||
Petty cash
|
$
|
14
|
$
|
800
|
|||||
Banco de Bogota
|
62,808
|
32,893
|
|||||||
Banco Davivienda
|
27,998
|
9,625
|
|||||||
Banco Bancolombia
|
52,261
|
11,141
|
|||||||
Total
|
$
|
143,081
|
$
|
54,459
|
5.
|
Inventories
|
2019 | 2018 | ||||||||
Raw materials
|
$
|
701,176
|
$
|
621,399
|
|||||
Finished goods - Food products
|
86,281
|
607,164
|
|||||||
Finished goods - Medications
|
321,362
|
65,147
|
|||||||
Finished goods - Cosmetics
|
80,929
|
-
|
|||||||
Total
|
$
|
1,189,748
|
$
|
1,293,710
|
6.
|
Leases
|
(a)
|
Right-of-Use Assets
|
Balance at January 1, 2019
|
$
|
85,583
|
|||
Additions
|
14,527
|
||||
Depreciation Expense
|
(86,431
|
)
|
|||
Balance at December 31, 2019
|
$
|
13,679
|
(b)
|
Lease Obligation
|
Balance at January 1, 2019
|
$
|
85,583
|
|||
Additions
|
14,527
|
||||
Interest expense
|
8,329
|
||||
Lease payments
|
(93,822
|
)
|
|||
Balance at December 31, 2019
|
$
|
14,617
|
7.
|
Long-term debt
|
2019
|
2018
|
||||||||
(a) Loan from Banco de Bogota - bearing interest at 1.14 % per month, 36-month term, maturing in August of 2020
|
$
|
20,638
|
$
|
90,259
|
|||||
(b) Loan from Bancolombia – bearing interest at 1.04% per month, 36-month term, maturing in July of 2022
|
44,778
|
-
|
|||||||
65,416
|
90,259
|
||||||||
Less: current portion
|
37,971
|
90,259
|
|||||||
Long-term potion
|
$
|
27,445
|
$
|
-
|
(a)
|
On August 28, 2017, the Company entered into a 36-month loan agreement with Banco de Bogota for an amount of $600,000 to finance payments to
suppliers.
|
(b)
|
On July 10, 2019, the Company entered into a 36-month loan agreement with Bancolombia for an amount of $52,000 to finance payments to suppliers.
|
8.
|
Related party transactions
|
(a)
|
Transactions with directors, officers and companies controlled by directors, officers and/or their families
|
2019
|
2018
|
||||||||
Loan from shareholder (i)
|
$
|
509,280
|
$
|
504,640
|
|||||
Interest expense on shareholder loan (i)
|
74,300
|
16,250
|
|||||||
Office equipment lease expense from shareholder (ii)
|
4,000
|
2,000
|
(i)
|
On November 8, 2018, the Company took out a loan from Inversiones Montearroyo Asociados SAS, a shareholder, for an amount of $500,000 to finance payments to suppliers and to pay down
loan with Banco de Bogota. The loan is 36-months with monthly interest rate of 1.16% and is interest-only payments with full principal due upon maturity.
|
(ii)
|
On October 31, 2018, the Company begin leasing office equipment from Inversiones Montearroyo Asociados SAS, a shareholder, for a monthly amount of $1,000. The lease is month-to-month
and ended during April 2020. This amount is included under Administrative expenses.
|
(b)
|
Key management compensation
|
2019
|
2018
|
||||||||
Salary and short-term benefits
|
$
|
84,386
|
$
|
100,827
|
9.
|
Income Taxes
|
(a)
|
Effective tax rate reconciliation
|
2019
|
2018
|
||||||||
Net loss before income taxes
|
$
|
(51,613
|
)
|
$
|
(379,541
|
)
|
|||
Local tax
|
20,573
|
16,926
|
|||||||
Non-deductible expenses
|
330,513
|
447,382
|
|||||||
Expenses subject to income taxes
|
299,473
|
84,767
|
|||||||
Income tax expense
|
$
|
98,826
|
$
|
27,973
|
(b)
|
Components of income tax expense
|
2019
|
2018
|
||||||||
Current tax expense
|
$
|
99,401
|
$
|
30,582
|
|||||
Deferred tax expense
|
|||||||||
Temporary differences
|
(575
|
)
|
(2,609
|
)
|
|||||
Income tax expense
|
$
|
98,826
|
$
|
27,973
|
(c)
|
Deferred income tax asset and liability
|
Balance at December 31, 2017
|
$ 103,304
|
|
Deferred income tax recovery
|
(100,695)
|
|
Balance at December 31, 2018
|
2,609
|
|
Deferred tax liabilities
|
575
|
|
Balance at December 31, 2019
|
$ 3,184
|
10.
|
Share Capital
|
(a)
|
Authorized share capital
|
(b)
|
Issued and outstanding
|
2019
|
2018
|
||
134 common shares
|
$ 670,000
|
$ 670,000
|
11.
|
Restricted retained earnings
|
2019
|
2018
|
||
Restricted retained earnings
|
$ 18,519
|
$ 18,519
|
12.
|
Revenues
|
December 31, 2019
|
Domestic (Colombia)
|
International
|
Total
|
||||||||||
Food products
|
$
|
924,270
|
$
|
-
|
$
|
924,270
|
|||||||
Medication
|
2,868,337
|
-
|
2,868,337
|
||||||||||
Cosmetics
|
585,305
|
-
|
585,305
|
||||||||||
Total
|
$
|
4,377,912
|
$
|
-
|
$
|
4,377,912
|
December 31, 2018
|
Domestic (Colombia)
|
International
|
Total
|
||||||||||
Food products
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
Medication
|
4,022,889
|
-
|
4,022,889
|
||||||||||
Cosmetics
|
-
|
-
|
-
|
||||||||||
Total
|
$
|
4,022,889
|
$
|
-
|
$
|
4,022,889
|
13.
|
Administrative expenses
|
2019
|
2018
|
||||||||
Personnel
|
$
|
267,325
|
$
|
113,561
|
|||||
Professional fees
|
65,940
|
110,903
|
|||||||
General office
|
106,884
|
189,626
|
|||||||
Travel, meals and entertainment
|
9,386
|
14,577
|
|||||||
Depreciation
|
22,528
|
28,326
|
|||||||
Total
|
$
|
472,063
|
$
|
456,993
|
14.
|
Sales expenses
|
2019
|
2018
|
||||||||
Personnel
|
$
|
522,645
|
$
|
287,773
|
|||||
Professional fees
|
24,001
|
438
|
|||||||
Advertising
|
38,033
|
34,938
|
|||||||
General office (a)
|
172,664
|
544,330
|
|||||||
Travel, meals and entertainment
|
53,544
|
52,346
|
|||||||
Depreciation
|
73,357
|
-
|
|||||||
Total
|
$
|
884,244
|
$
|
919,825
|
(a)
|
General office expense consists of building maintenance, utilities, communication, office supplies, equipment, bad debt, and other ad-hoc office expenses.
|
15.
|
Other income
|
2019
|
2018
|
||||||||
Reversal of provisions
|
$
|
-
|
$
|
40,000
|
|||||
Gain on sale of investments
|
-
|
8,000
|
|||||||
Recoveries from insurance
|
6,000
|
-
|
|||||||
Other
|
21,414
|
43,796
|
|||||||
Total
|
$
|
27,414
|
$
|
91,796
|
16.
|
Other expenses
|
2019
|
2018
|
||||||||
Bank charges
|
$
|
21,793
|
$
|
19,144
|
|||||
Donations
|
10,033
|
-
|
|||||||
Other (a)
|
64,857
|
53,356
|
|||||||
Total
|
$
|
96,683
|
$
|
72,500
|
(a)
|
Other expenses consists of tax on financial transactions, prior year costs and expenses, penalties, non-deductible expenses, and other extraordinary expenses.
|
17.
|
Financial Instruments
|
(a)
|
Credit risk
|
2019
|
2018
|
||
Trade accounts receivable from customers
|
$ 650,457
|
$ 747,802
|
|
Expected credit losses
|
(88,928)
|
(62,927)
|
|
Net trade receivables
|
561,529
|
684,875
|
|
Other accounts receivables
|
1,357
|
10,075
|
|
|
$ 562,886
|
$ 694,950
|
17.
|
Financial Instruments (continued)
|
(a)
|
Credit risk (continued)
|
December 31, 2019
|
Expected loss rate
|
Gross carrying amount
|
Loss provision
|
||
Current
|
1%
|
$ 389,633
|
$ 3,886
|
||
0-90 days past-due
|
5%
|
167,135
|
8,422
|
||
91-180 days past-due
|
50%
|
22,747
|
11,375
|
||
181-360 days past-due
|
80%
|
8,860
|
7,086
|
||
361-720 days past-due
|
90%
|
39,227
|
35,304
|
||
Greater than 720 days past-due
|
100%
|
22,855
|
22,855
|
||
$ 650,457
|
$ 88,928
|
December 31, 2018
|
Expected loss rate
|
Gross carrying amount
|
Loss provision
|
||
Current
|
1%
|
$ 533,571
|
$ 5,507
|
||
0-90 days past-due
|
5%
|
140,890
|
7,598
|
||
91-180 days past-due
|
27%
|
19,861
|
5,305
|
||
181-360 days past-due
|
78%
|
22,197
|
17,340
|
||
361-720 days past-due
|
87%
|
31,283
|
27,177
|
||
Greater than 720 days past-due
|
100%
|
-
|
-
|
||
$ 747,802
|
$ 62,927
|
Loss allowance
|
|||
Balance at January 1, 2018
|
$ 13,668
|
||
Change in loss allowance
|
53,148
|
||
Balance at December 31, 2018
|
62,927
|
||
Change in loss allowance
|
26,001
|
||
Balance at December 31, 2019
|
$ 88,928
|
17.
|
Financial Instruments (continued)
|
(b)
|
Liquidity risk
|
(c)
|
Market risk
|
(i)
|
Foreign currency risk
|
(ii)
|
Interest rate risk
|
18.
|
Capital Management
|
19.
|
Subsequent events
|
Kasa Wholefoods Company S.A.S.
|
||||||
Financial Statements
|
||||||
Years Ended December 31, 2019 and 2018
|
||||||
(Stated in Colombian Pesos)
|
||||||
Page
|
||||||
F-96
|
||||||
F-97
|
||||||
F-98
|
||||||
F-99
|
||||||
F-100
|
||||||
F-101
|
|
|
|
|
|
|
Notes
|
2019
|
2018
|
||||||||||
Assets
|
||||||||||||
Current
|
||||||||||||
Cash
|
12
|
$
|
274,674,966
|
$
|
20,107,005
|
|||||||
Trade and other receivables
|
12
|
128,906,808
|
114,513,881
|
|||||||||
Inventories
|
4
|
126,711,015
|
224,377,127
|
|||||||||
Prepaid expenses
|
12,333,307
|
102,869,654
|
||||||||||
$
|
542,626,096
|
$
|
461,867,667
|
|||||||||
Property plant and equipment
|
6
|
9,416,650
|
20,716,654
|
|||||||||
Intangible Assets
|
5
|
1,700,004
|
2,550,000
|
|||||||||
Total Assets
|
$
|
553,742,750
|
$
|
485,134,321
|
||||||||
Liabilities
|
||||||||||||
Current
|
||||||||||||
Current portion of long-term debt
|
7, 12
|
$
|
223,553,471
|
$
|
128,135,923
|
|||||||
Trade and other payables
|
8, 11, 12
|
520,574,492
|
211,820,202
|
|||||||||
Income tax payable
|
10
|
56,246,880
|
88,515,984
|
|||||||||
$
|
800,374,843
|
$
|
428,472,109
|
|||||||||
Long-term debt
|
7, 12
|
180,431,900
|
72,554,848
|
|||||||||
Due to partners and shareholders
|
11, 12
|
-
|
22,369,762
|
|||||||||
Other accounts payable
|
8, 12
|
353,434,938
|
13,167,262
|
|||||||||
Total Liabilities
|
$
|
1,334,241,681
|
$
|
536,563,981
|
||||||||
Shareholders' Deficiency
|
||||||||||||
Share capital
|
9
|
200,000,000
|
200,000,000
|
|||||||||
Deficit
|
(980,498,931
|
)
|
(251,429,660
|
)
|
||||||||
Total Shareholder's Deficiency
|
$
|
(780,498,931
|
)
|
$
|
(51,429,660
|
)
|
||||||
Total Liabilities and Shareholders' Deficiency
|
$
|
553,742,750
|
$
|
485,134,321
|
||||||||
Subsequent Events
|
17
|
|||||||||||
Notes
|
2019
|
2018
|
||||||||||
Operating revenue
|
||||||||||||
Income from ordinary activities
|
14
|
$
|
1,337,561,832
|
$
|
842,468,532
|
|||||||
Cost of sales
|
(847,520,243
|
)
|
(343,132,138
|
)
|
||||||||
Gross profit
|
490,041,589
|
499,336,394
|
||||||||||
Administrative expenses
|
15
|
(383,791,502
|
)
|
(110,236,575
|
)
|
|||||||
Sales operating expenses
|
15
|
(650,820,729
|
)
|
(213,333,038
|
)
|
|||||||
Total operating expenses
|
(1,034,612,231
|
)
|
(323,569,613
|
)
|
||||||||
Operating profit (loss)
|
(544,570,642
|
)
|
175,766,781
|
|||||||||
Other income
|
14
|
22,804,740
|
989,495
|
|||||||||
Other expenses
|
15
|
(56,386,032
|
)
|
(9,674,218
|
)
|
|||||||
Interest expense
|
(68,413,111
|
)
|
(40,771,695
|
)
|
||||||||
Provision for credit losses
|
12
|
(81,760,406
|
)
|
(2,428,863
|
)
|
|||||||
Total other income (expenses)
|
(183,754,809
|
)
|
(51,885,281
|
)
|
||||||||
Income (loss) before tax
|
(728,325,451
|
)
|
123,881,500
|
|||||||||
Income tax provision
|
10
|
743,820
|
48,731,218
|
|||||||||
Net income (loss) and comprehensive income (loss)
|
$
|
(729,069,271
|
)
|
$
|
75,150,282
|
|||||||
Weighted average number of outstanding shares, basic and diluted
|
9
|
20,000
|
8,887
|
|||||||||
Basic and diluted earnings (loss) per share
|
9
|
$
|
(36,453.46
|
)
|
$
|
8,456.20
|
||||||
|
Notes
|
Share capital
|
Retained earnings (deficit)
|
Total equity
|
|||||||||||||
Balance at December 31, 2018
|
$
|
200,000,000
|
$
|
(251,429,660
|
)
|
$
|
(51,429,660
|
)
|
||||||||
Net loss
|
-
|
(729,069,271
|
)
|
(729,069,271
|
)
|
|||||||||||
Shares issuances
|
9
|
-
|
-
|
-
|
||||||||||||
Balance at December 31, 2019
|
$
|
200,000,000
|
$
|
(980,498,931
|
)
|
$
|
(780,498,931
|
)
|
||||||||
Notes
|
Share capital
|
Retained earnings (deficit)
|
Total equity
|
|||||||||||||
Balance at December 31, 2017
|
$
|
85,090,000
|
$
|
(326,579,942
|
)
|
$
|
(241,489,942
|
)
|
||||||||
Net income
|
-
|
75,150,282
|
75,150,282
|
|||||||||||||
Shares issuances
|
9
|
114,910,000
|
-
|
114,910,000
|
||||||||||||
Balance at December 31, 2018
|
$
|
200,000,000
|
$
|
(251,429,660
|
)
|
$
|
(51,429,660
|
)
|
||||||||
2019
|
2018
|
|||||||
Operating Activities
|
||||||||
Net income (loss)
|
$
|
(729,069,271
|
)
|
$
|
75,150,282
|
|||
Items not affecting cash:
|
||||||||
Amortization
|
849,996
|
-
|
||||||
Depreciation
|
11,300,004
|
11,300,004
|
||||||
Net changes in non-cash working capital:
|
||||||||
Trade and other receivables (net)
|
(14,392,927
|
)
|
(45,291,881
|
)
|
||||
Inventories
|
97,666,112
|
(193,295,495
|
)
|
|||||
Prepaid Expenses
|
90,536,347
|
(102,869,654
|
)
|
|||||
Trade and other payables
|
295,587,028
|
13,494,184
|
||||||
Income tax payable
|
(32,269,104
|
)
|
42,233,340
|
|||||
Due to partner and shareholders
|
(22,369,762
|
)
|
22,369,762
|
|||||
Other accounts payable
|
353,434,938
|
13,167,262
|
||||||
Cash Flows Provided By (Used in) Operating Activities
|
$
|
51,273,361
|
$
|
(163,742,196
|
)
|
|||
Investing Activities
|
||||||||
Acquisition of intangible assets
|
-
|
(2,550,000
|
)
|
|||||
Cash Flows Used In Investing Activities
|
$
|
-
|
$
|
(2,550,000
|
)
|
|||
Financing Activities
|
||||||||
Proceeds from share issuances
|
114,910,000
|
|||||||
Repayment of long-term debt
|
(196,705,401
|
)
|
(145,520,444
|
)
|
||||
Proceeds from long-term debt
|
400,000,000
|
181,167,000
|
||||||
Cash Flows Provided By Financing Activities
|
$
|
203,294,599
|
$
|
150,556,556
|
||||
Net Increase in Cash During the Period
|
254,567,960
|
(15,735,640
|
)
|
|||||
Cash, Beginning of Period
|
20,107,005
|
35,842,644
|
||||||
Cash, End of Period
|
$
|
274,674,966
|
$
|
20,107,005
|
||||
Supplemental cash flow information
|
||||||||
Taxes paid
|
$
|
-
|
$
|
8,174,000
|
||||
Interest paid
|
$
|
-
|
$
|
325,000
|
||||
|
(a) |
IFRS 16 Leases
|
|
(i) |
The Company applied the modified retrospective approach and did not restate comparative information. As a result, any adjustment on initial application is recognized in accumulated deficit as at January 1, 2019.
|
|
(ii) |
On transition to IFRS 16, the Company elected to apply the practical expedient to grandfather the assessment of which transactions are leases. Contracts that were not identified as
leases under IAS 17, and IFRIC 4, Determining whether an arrangement contains a lease, were not reassessed for whether there is a lease. The Company applied the definition of a lease under IFRS 16 to contracts entered
into or changed on or after January 1, 2019.
|
As at
December 31, 2019
|
As at
December 31, 2018
|
|||||||
Raw materials
|
$
|
43,672,263
|
$
|
84,808,522
|
||||
Finished goods
|
83,038,752
|
139,568,605
|
||||||
$
|
126,711,015
|
$
|
224,377,127
|
Software license
|
||||
Cost
|
||||
At January 1, 2019
|
$
|
2,550,000
|
||
Additions
|
-
|
|||
Disposals
|
-
|
|||
At December 31, 2019
|
$
|
2,550,000
|
||
Accumulated Amortization
|
||||
At January 1, 2019
|
$
|
-
|
||
Amortization
|
850,000
|
|||
At December 31, 2019
|
||||
Net book value at
|
||||
December 31, 2018
|
$
|
2,550,000
|
||
Net book value at
|
||||
December 31, 2019
|
$
|
1,700,004
|
Vehicles
|
Computer Equipment
|
Total
|
||||||||||
Cost
|
||||||||||||
At January 1, 2019
|
$
|
56,500,000
|
$
|
1,400,000
|
$
|
57,900,000
|
||||||
Additions
|
-
|
-
|
-
|
|||||||||
Disposals
|
-
|
-
|
-
|
|||||||||
At December 31, 2019
|
$
|
56,500,000
|
$
|
1,400,000
|
$
|
57,900,000
|
||||||
Accumulated Depreciation
|
||||||||||||
At January 1, 2019
|
$
|
35,783,346
|
$
|
1,400,000
|
$
|
37,183,346
|
||||||
Depreciation
|
11,300,004
|
-
|
11,300,004
|
|||||||||
At December 31, 2019
|
$
|
47,083,350
|
$
|
1,400,000
|
$
|
48,483,350
|
||||||
Net book value at
|
||||||||||||
December 31, 2019
|
$
|
9,416,650
|
$
|
-
|
$
|
9,416,650
|
Vehicles
|
Computer Equipment
|
Total
|
||||||||||
Cost
|
||||||||||||
At January 1, 2018
|
$
|
56,500,000
|
$
|
1,400,000
|
$
|
57,900,000
|
||||||
Additions
|
-
|
-
|
-
|
|||||||||
Disposals
|
-
|
-
|
-
|
|||||||||
At December 31, 2018
|
$
|
56,500,000
|
$
|
1,400,000
|
$
|
57,900,000
|
||||||
Accumulated Depreciation
|
||||||||||||
At January 1, 2018
|
$
|
24,483,342
|
$
|
1,400,000
|
$
|
25,883,342
|
||||||
Depreciation
|
11,300,004
|
-
|
11,300,004
|
|||||||||
At December 31, 2018
|
$
|
35,783,346
|
$
|
1,400,000
|
$
|
37,183,346
|
||||||
Net book value at
|
||||||||||||
December 31, 2018
|
$
|
20,716,654
|
$
|
-
|
$
|
20,716,654
|
As at
|
As at
|
|||||||||||||||||||||
December 31, 2019
|
December 31, 2018
|
|||||||||||||||||||||
Credit cards
|
$
|
6,430,576
|
$
|
7,934,086
|
||||||||||||||||||
Financing Arrangement
|
10,817,724
|
18,874,171
|
||||||||||||||||||||
Bank loans
|
||||||||||||||||||||||
Principal
|
Interest rate
|
Issued
|
Maturity
|
|||||||||||||||||||
121,000,000
|
14.29
|
%
|
2017-06-07
|
2019-06-07
|
-
|
28,590,590
|
||||||||||||||||
20,000,000
|
27.33
|
%
|
2017-09-21
|
2019-09-21
|
-
|
3,393,203
|
||||||||||||||||
34,700,000
|
18.22
|
%
|
2018-02-19
|
2020-02-19
|
2,891,674
|
20,441,032
|
||||||||||||||||
26,467,000
|
23.48
|
%
|
2018-05-31
|
2020-05-31
|
5,016,744
|
20,313,235
|
||||||||||||||||
30,000,000
|
20.70
|
%
|
2019-08-30
|
2020-08-30
|
10,000,000
|
26,795,662
|
||||||||||||||||
20,000,000
|
22.38
|
%
|
2018-10-25
|
2020-10-25
|
8,333,338
|
18,488,877
|
||||||||||||||||
20,000,000
|
20.34
|
%
|
2018-12-14
|
2020-12-14
|
10,000,004
|
20,269,927
|
||||||||||||||||
50,000,000
|
18.16
|
%
|
2019-04-30
|
2021-04-30
|
33,333,336
|
-
|
||||||||||||||||
197,833,000
|
13.03
|
%
|
2019-05-30
|
2022-05-30
|
159,365,414
|
-
|
||||||||||||||||
102,167,000
|
13.03
|
%
|
2019-05-30
|
2022-05-30
|
82,301,196
|
-
|
||||||||||||||||
50,000,000
|
14.56
|
%
|
2019-12-04
|
2021-12-04
|
50,000,000
|
-
|
||||||||||||||||
50,000,000
|
22.80
|
%
|
2018-04-03
|
2021-04-03
|
25,495,365
|
35,589,988
|
||||||||||||||||
$
|
403,985,371
|
$
|
200,690,771
|
|||||||||||||||||||
Less: current portion
|
$
|
223,553,471
|
$
|
128,135,923
|
||||||||||||||||||
Long-term portion
|
$
|
180,431,900
|
$
|
72,554,848
|
|
At December 31, 2019
|
At December 31, 2018
|
||||||
Trade payables (1)
|
$
|
362,765,414
|
$
|
202,423,029
|
||||
Salaries & Bonus Payable (2)
|
129,529,089
|
1,624,923
|
||||||
Other Payables
|
28,279,989
|
7,772,250
|
||||||
|
$
|
520,574,492
|
$
|
211,820,202
|
As at
|
||||
Suppliers
|
December 31, 2019
|
|||
Union Commercial
|
$
|
77,823,189
|
||
Bon Vibrant
|
53,357,264
|
|||
Frutas Colombianas de Exportacion
|
36,923,787
|
|||
Hot Fill
|
31,394,781
|
|||
Distribuidora Cordoba
|
28,304,578
|
|||
Compañia Internacional Agrofrut
|
14,828,200
|
|||
Litografia Berna
|
8,141,851
|
|||
Central de Insumos
|
3,922,554
|
|||
Organic Evolution
|
1,444,047
|
|||
Estibas y Huacales de la Loma
|
624,750
|
|||
Cartonera Nacional
|
100,000
|
|||
Total suppliers payable
|
$
|
256,865,001
|
As at
|
As at
|
|||||||
Third Party
|
December 31, 2019
|
December 31, 2018
|
||||||
Mora Peñuela Jose Maria
|
$
|
6,918,476
|
$
|
13,167,262
|
||||
Sulliden Mining Capital Inc.
|
296,409,062
|
-
|
||||||
Vallita Petroleum
|
50,000,000
|
-
|
||||||
Viajes Zeppelin
|
107,400
|
-
|
||||||
Total other payables
|
$
|
353,434,938
|
$
|
13,167,262
|
|
Shares Outstanding (#)
|
Shares Outstanding ($)
|
At January 1, 2018
|
8,509
|
85,090,000
|
Shares issuances
|
11,491
|
114,910,000
|
At December 31, 2018
|
20,000
|
200,000,000
|
At December 31, 2019
|
20,000
|
200,000,000
|
2019
|
2018
|
|||||||
Net income before income taxes
|
$
|
-728,325,451
|
$
|
123,881,500
|
||||
Adjusting items
|
730,579,451
|
- 30,796,652
|
||||||
Taxable income
|
2,254,000
|
93,084,848
|
||||||
Income tax expense (33%)
|
$
|
743,820
|
$
|
30,718,000
|
|
2019
|
2018
|
||||||
Corporate tax
|
$
|
743,820
|
$
|
30,718,000
|
||||
Local tax
|
-
|
18,013,218
|
||||||
Total tax
|
$
|
743,820
|
$
|
48,731,218
|
As at
|
As at
|
|
December 31, 2019
|
December 31, 2018
|
|
Financial Assets
|
||
Cash
|
$ 274,674,966
|
$ 20,107,005
|
Trade and other receivables
|
128,906,808
|
114,513,881
|
|
$ 403,581,774
|
$ 134,620,886
|
Financial Liabilities
|
||
Trade and other payables
|
$ 520,574,492
|
$ 211,820,202
|
Current portion of long-term debt
|
223,553,471
|
128,135,923
|
Due to partners
|
-
|
22,369,762
|
Long-term debt
|
180,431,900
|
72,554,848
|
Other accounts payable
|
353,434,938
|
13,167,262
|
|
$ 1,277,994,801
|
$ 448,047,997
|
Trade receivables from customers
|
|
Opening balance
|
115,287,581
|
Origination
|
80,940,304
|
Derecognition
|
(29,420,913)
|
Write-offs
|
(82,295,854)
|
Ending balance
|
84,511,118
|
As at
December 31, 2019 |
As at
December 31, 2018 |
|
Trade receivables from customers
|
$ 84,511,118
|
$ 115,287,581
|
Expected credit loss
|
(1,893,415)
|
(2,428,863)
|
Net trade receivables
|
$ 82,617,703
|
$ 112,858,718
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
Opening balance
|
$ 697,756
|
$ 1,731,107
|
$ -
|
$ 2,428,863
|
Originations
|
164,927
|
1,747
|
64,979,887
|
65,146,561
|
Derecognitions
|
(16,758)
|
(897,146)
|
-
|
(913,904)
|
Remeasurement
|
(37,620)
|
1,124,449
|
16,440,920
|
17,527,750
|
Transfer to Stage 1
|
53,878
|
(53,878)
|
-
|
-
|
Transfer to Stage 2
|
(63,302)
|
63,302
|
-
|
-
|
Transfer to Stage 3
|
-
|
(1,697,575)
|
1,697,575
|
-
|
Provision
|
101,125
|
(1,459,101)
|
83,118,382
|
81,760,407
|
Write-offs
|
-
|
-
|
(82,295,854)
|
(82,295,854)
|
Recoveries
|
-
|
-
|
-
|
-
|
Closing balance
|
$ 798,881
|
$ 272,006
|
$ 822,528
|
$ 1,893,415
|
As at
December 31, 2019 |
As at
December 31, 2018 |
||
Current (30 days or less)
|
$ 81,205,888
|
$ 78,060,363
|
|
31-60 days
|
185,640
|
2,927,628
|
|
61-90 days
|
902,724
|
3,777,493
|
|
Greater than 90 days
|
|
2,216,866
|
30,522,097
|
|
|
$ 84,511,118
|
$ 115,287,581
|
|
<1 year
|
1-3 years
|
> 3 years
|
Total
|
Accounts payable and accrued liabilities
|
$ 520,574,492
|
$ -
|
$ -
|
$ 520,574,492
|
Long-term debt
|
223,553,471
|
180,431,900
|
-
|
403,985,371
|
Total
|
$ 744,127,963
|
$ 180,431,900
|
$ -
|
$ 924,559,863
|
Financial instruments measured at amortized cost
|
|
Cash; trade & other receivables; trade and other payables; other payables; due to partner and shareholders
|
Carrying amount (approximates fair value due to short-term nature)
|
Long-term debt
|
Carrying value at the effective interest rate which approximates fair value
|
2019
|
||
Customer
|
Revenue
|
Concentration of Revenue
|
Tostato
|
$ 1,154,425,480
|
86.31%
|
Colombian Mountain Coffee
|
33,938,457
|
2.54%
|
Sipote Burrito
|
30,603,150
|
2.29%
|
Cencosud
|
29,052,152
|
2.17%
|
Other
|
89,542,593
|
6.69%
|
Total
|
$ 1,337,561,832
|
100.00%
|
2018
|
||
Customer
|
Revenue
|
Concentration of Revenue
|
Tostato
|
$ 613,535,976
|
72.82%
|
Dyval
|
39,347,497
|
4.67%
|
Sipote Burrito
|
39,078,949
|
4.64%
|
Colombian Mountain Coffee
|
36,583,403
|
4.34%
|
Cencosud
|
13,840,262
|
1.64%
|
Other
|
100,082,445
|
11.89%
|
Total
|
$ 842,468,532
|
100.00%
|
|
As at
December 31, 2019 |
As at
December 31, 2018 |
Personnel expenses (1)
|
$ 243,982,673
|
$ 26,683,487
|
Professional fees
|
8,301,873
|
40,397,776
|
Legal expenses (2)
|
105,959,722
|
17,458,827
|
Services
|
7,679,369
|
823,372
|
Maintenance and repairs
|
652,113
|
2,866,871
|
Depreciation
|
11,300,004
|
11,300,004
|
Amortization
|
849,996
|
-
|
Other
|
5,065,752
|
10,706,238
|
Total administrative expenses
|
$ 383,791,502
|
$ 110,236,575
|
As at
|
|
|
December 31, 2019
|
Salaries
|
$ 208,040,831
|
Viaticos
|
323,961
|
Disabilities
|
195,557
|
Transportation
|
2,525,992
|
Layoffs
|
2,907,877
|
Interest on layoffs
|
280,596
|
Service bonus
|
2,758,415
|
Vacation
|
1,273,292
|
Training
|
240,000
|
Security
|
25,436,152
|
Total personnel expenses
|
$ 243,982,673
|
|
As at
December 31, 2019 |
As at
December 31, 2018 |
Personnel expenses
|
$ 48,822,011
|
$ 64,624,788
|
Professional fees
|
-
|
3,802,222
|
Marketing expense (1)
|
403,921,726
|
-
|
Insurance
|
3,115,560
|
4,323,946
|
Services
|
91,448,332
|
75,575,765
|
Maintenance and repairs
|
2,173,788
|
11,006,365
|
Other (2)
|
101,339,312
|
53,999,952
|
Total sales expenses
|
$ 650,820,729
|
$ 213,333,038
|
As at
|
|
|
December 31, 2019
|
Commissions
|
$ 36,918,319
|
Cleaning costs
|
1,772,152
|
Tools and stationery
|
1,324,240
|
Fuel
|
2,153,857
|
Transportation
|
1,080,400
|
Entertainment
|
66,732
|
Parking fees
|
125,904
|
Others (i)
|
57,897,708
|
Total other expenses
|
$ 101,339,312
|
As at
December 31, 2019 |
As at
December 31, 2018 |
|
Bank fees and expenses
|
$ 21,173,767
|
$ 8,859,763
|
Other
|
35,212,265
|
814,455
|
Total other expenses
|
$ 56,386,032
|
$ 9,674,218
|
Flora Growth Corp.
At December 31, 2020
|
Pro Forma Adjustments
(Note 4)
|
Pro Forma
Consolidation
|
|||||||||||
ASSETS
|
|||||||||||||
Current
|
|||||||||||||
Cash
|
$
|
15,523
|
$
|
16,667
|
(a)
|
$
|
29,758
|
||||||
(1,322
|
)
|
(b)
|
|||||||||||
(432
|
)
|
(d)
|
|||||||||||
50
|
(e)
|
||||||||||||
(728
|
)
|
(f)
|
|||||||||||
Trade and amounts receivable
|
922
|
922
|
|||||||||||
Loans receivable and advances
|
302
|
302
|
|||||||||||
Prepaid expenses
|
347
|
378
|
(f)
|
725
|
|||||||||
Inventory
|
540
|
540
|
|||||||||||
17,634
|
14,613
|
32,247
|
|||||||||||
Non-current
|
|||||||||||||
Property, plant and equipment
|
411
|
350
|
(f)
|
761
|
|||||||||
Right of use assets
|
318
|
318
|
|||||||||||
Intangible assets
|
658
|
658
|
|||||||||||
Goodwill
|
431
|
431
|
|||||||||||
Total assets
|
$
|
19,452
|
$
|
14,963
|
$
|
34,415
|
|||||||
LIABILITIES
|
|||||||||||||
Current
|
|||||||||||||
Trade payables and accrued liabilities
|
$
|
1,809
|
1,809
|
||||||||||
Amounts payable to vendors on business combinations
|
$
|
605
|
605
|
||||||||||
Current portion of long term debt
|
251
|
251
|
|||||||||||
Current portion of lease liability
|
78
|
78
|
|||||||||||
2,743
|
-
|
2,743
|
|||||||||||
Non-current
|
|||||||||||||
Non-current debt
|
69
|
69
|
|||||||||||
Non-current lease liability
|
251
|
251
|
|||||||||||
Deferred tax
|
139
|
139
|
|||||||||||
Total liabilities
|
$
|
3,202
|
$
|
-
|
$
|
3,202
|
|||||||
SHAREHOLDERS' EQUITY
|
|||||||||||||
Share capital
|
$
|
27,254
|
$
|
16,667
|
(a)
|
$
|
40,951
|
||||||
-
|
(2,148
|
)
|
(b)
|
||||||||||
-
|
(443
|
)
|
(c)
|
||||||||||
-
|
(432
|
)
|
(d)
|
||||||||||
-
|
53
|
(e)
|
|||||||||||
Options
|
2,396
|
2,396
|
|||||||||||
-
|
|||||||||||||
Warrants
|
3,961
|
826
|
(b)
|
5,227
|
|||||||||
-
|
(76
|
)
|
(c)
|
||||||||||
-
|
519
|
(c)
|
|||||||||||
-
|
(3
|
)
|
(e)
|
||||||||||
-
|
|||||||||||||
Accumulated other comprehensive loss
|
39
|
39
|
|||||||||||
Deficit
|
(17,287
|
)
|
(17,287
|
)
|
|||||||||
-
|
|||||||||||||
Non-controlling interest
|
(113
|
)
|
(113
|
)
|
|||||||||
16,250
|
14,963
|
31,213
|
|||||||||||
$
|
19,452
|
$
|
14,963
|
$
|
34,415
|
For the year ended
December 31, 2020
|
Proforma Adjustments
(Note 4)
|
Pro Forma
Consolidation
|
||||||||||
Revenue
|
$
|
106
|
|
$
|
106
|
|||||||
|
||||||||||||
Cost of sales
|
35
|
|
35
|
|||||||||
Gross Profit
|
$
|
71
|
|
|
$
|
71
|
||||||
|
|
|||||||||||
Expenses
|
|
|
||||||||||
Consulting and management fees
|
$
|
4,752
|
|
|
4,752
|
|||||||
Professional fees
|
794
|
|
|
794
|
||||||||
General and administrative
|
1,400
|
|
|
1,400
|
||||||||
Travel expenses
|
428
|
|
|
428
|
||||||||
Share based compensation
|
4,901
|
|
|
4,901
|
||||||||
Depreciation and amortization
|
113
|
|
|
113
|
||||||||
Research and development
|
78
|
|
|
78
|
||||||||
Foreign exchange loss
|
20
|
|
|
20
|
||||||||
Total expenses
|
12,486
|
|
|
12,486
|
||||||||
|
|
-
|
||||||||||
Loss before the undernoted items
|
(12,415
|
)
|
|
|
(12,415
|
)
|
||||||
Goodwill impairment
|
1,816
|
|
|
1,816
|
||||||||
Interest expense
|
30
|
|
|
30
|
||||||||
Transaction costs
|
132
|
|
|
132
|
||||||||
Other income
|
(59
|
)
|
|
|
(59
|
)
|
||||||
Net loss for the period
|
$
|
(14,334
|
)
|
|
|
$
|
(14,334
|
)
|
||||
|
|
|||||||||||
Other comprehensive loss
|
|
|
||||||||||
Exchange differences on foreign operations
|
(16
|
)
|
|
|
(16
|
)
|
||||||
Total comprehensive loss for the period
|
$
|
(14,350
|
)
|
|
|
$
|
(14,350
|
)
|
||||
|
|
|||||||||||
Net loss attributable to:
|
|
|
||||||||||
Flora Growth Corp.
|
$
|
(14,170
|
)
|
|
|
$
|
(14,170
|
)
|
||||
Non-controlling interests
|
$
|
(164
|
)
|
|
|
$ |
(164
|
)
|
||||
|
|
|||||||||||
Comprehensive loss attributable to:
|
|
|
||||||||||
Flora Growth Corp.
|
$
|
(14,186
|
)
|
|
|
$
|
(14,186
|
)
|
||||
Non-controlling interests
|
$
|
(164
|
)
|
|
|
$ |
(164
|
)
|
||||
Basic and diluted loss per share attributable to Flora Growth Corp.
|
$
|
(0.34
|
)
|
|||||||||
Number of common shares outstanding -
basic and diluted
|
42,024
|
(a)
|
To record 3,333 common shares to be issued pursuant to the IPO at a price of $5.00 per share.
|
(b)
|
To record broker share issuance costs on IPO, which are comprised of $1,322 in estimated cash costs, as well as broker warrants equal to 7% of the shares issued in the IPO. This is
estimated to include 233 broker warrants with an exercise price of $6.25 per share and an expiry of five years. The warrants have an estimated fair value of $826 and are valued using the Black-Scholes model,
applying the following assumptions:
|
(c)
|
To record broker fees related to the Regulation A Financing, which includes warrants equal to 7% of the units issued under the Regulation
A Financing subsequent to September 8, 2020. This is estimated to include 399 broker warrants with an exercise price of $3.00 per share and an expiry of five years. These issuance costs are allocated between share
capital and warrants, consistent with the allocation of the proceeds of the Regulation A Financing. The warrants with an estimated fair value of $519 are allocated $443 to share capital and $76 to warrants and are
valued using the Black-Scholes model, applying the following assumptions:
|
(d)
|
To record estimated professional fees pursuant to the intended IPO.
|
(e)
|
To record warrants exercised subsequent to December 31, 2020.
|
(f)
|
To record the acquisition of certain assets of Laboratorios Quipropharma SAS, including the acquisition of certain equipment as well as a
deposit on the purchase of real estate.
|
Share capital
|
Options
|
Warrants
|
Accumulated Other Comprehensive Income
|
Accumulated Deficit
|
Non-controlling interest
|
Total
|
||||||||||||||||||||||||||
In thousands
|
#
|
|
$
|
|
$
|
|
$
|
|
$ |
|
$
|
|
$
|
|
$
|
|||||||||||||||||
Flora at December 31, 2020
|
38,358
|
$
|
27,254
|
$
|
2,396
|
$
|
3,961
|
$
|
39
|
$
|
(17,287
|
)
|
$
|
(113
|
)
|
$
|
16,250
|
|||||||||||||||
.
|
-
|
|||||||||||||||||||||||||||||||
Pro forma adjustments
|
||||||||||||||||||||||||||||||||
Issuance of common shares pursuant to IPO
|
3,333
|
16,667
|
-
|
-
|
-
|
-
|
-
|
16,667
|
||||||||||||||||||||||||
Share issuance costs pursuant to IPO
|
-
|
(2,580
|
)
|
-
|
826
|
-
|
-
|
(1,754
|
)
|
|||||||||||||||||||||||
warrant issuance cost pursuant to Regulation A
|
-
|
(443
|
)
|
-
|
443
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Exercise of warrants
|
332
|
53
|
-
|
(3
|
)
|
-
|
-
|
-
|
50
|
|||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
42,024
|
$
|
40,951
|
$
|
2,396
|
$
|
5,227
|
$
|
39
|
$
|
(17,287
|
)
|
$
|
(113
|
)
|
$
|
31,213
|
Stock options:
|
|||
# of stock options outstanding in thousands
|
# of stock options exercisable in thousands
|
Exercise price
|
Expiry date
|
2,111
|
2,111
|
$0.15
|
28-Jun-24
|
250
|
250
|
$2.25
|
23-Apr-25
|
183
|
183
|
$2.25
|
6-Jul-25
|
17
|
17
|
$2.25
|
31-Jul-25
|
67
|
67
|
$2.25
|
8-Sep-25
|
667
|
667
|
$2.25
|
4-Nov-25
|
500
|
500
|
$2.25
|
16-Dec-25
|
Warrants:
|
|||
# of warrants outstanding in thousands
|
# of warrants exercisable in thousands
|
Exercise price
|
Expiry date
|
2,000
|
2,000
|
$ 0.15
|
15-Mar-22
|
6,667
|
6,667
|
$ 3.00
|
23-Jul-21 to 20-Jul 22
|
399
|
399
|
$ 3.00
|
31-Dec-25
|
233
|
233
|
$ 6.25
|
31-Dec-25
|
1 Year Flora Growth Chart |
1 Month Flora Growth Chart |
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