# EDGAR Filing Document

**Accession Number:** 0001790169
**File Stem:** 0001062993-25-013438
**Filing Date:** 2025-8
**Character Count:** 194116
**Document Hash:** 721b096d97b7f2770a6b6c6da1beb78a
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001062993-25-013438.hdr.sgml**: 20250801

**ACCESSION NUMBER**: 0001062993-25-013438

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 102

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250801

**DATE AS OF CHANGE**: 20250801

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Flora Growth Corp.
- **CENTRAL INDEX KEY:** 0001790169
- **STANDARD INDUSTRIAL CLASSIFICATION:** PHARMACEUTICAL PREPARATIONS [2834]
- **ORGANIZATION NAME:** 03 Life Sciences
- **EIN:** 000000000
- **STATE OF INCORPORATION:** A6
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40397
- **FILM NUMBER:** 251176104

**BUSINESS ADDRESS:**
- **STREET 1:** 3230 W. COMMERCIAL BOULEVARD
- **STREET 2:** SUITE 180
- **CITY:** FORT LAUDERDALE
- **STATE:** FL
- **ZIP:** 33309
- **BUSINESS PHONE:** 416-861-2267

**MAIL ADDRESS:**
- **STREET 1:** 3230 W. COMMERCIAL BOULEVARD
- **STREET 2:** SUITE 180
- **CITY:** FORT LAUDERDALE
- **STATE:** FL
- **ZIP:** 33309

?xml version='1.0' encoding='ASCII'? Flora Growth Corp.: Form 10-Q - Filed by newsfilecorp.com

------

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

**FORM 10-Q**

**(Mark One)** 

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** 

For the quarterly period ended  **<u>June 30, 2025</u>**

**OR**

---

| | |
|:---|:---|
| ☐ | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|  | **For the transition period from _____________ to _____________** |

---

Commission file number <u>**001-40397**</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **<u>Flora Growth Corp.</u>**

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Province of Ontario** | **Not Applicable** |
| (State or other jurisdiction of<br>incorporation or organization) | (I.R.S. Employer Identification No.) |
|  **3230 W. Commercial Boulevard, Suite 180** |  |
|  **Fort Lauderdale, Florida** | **33309** |
| (Address of principal executive offices) | (Zip Code) |

---

**(954) 842-4989**

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Common Shares, no par value**  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **FLGC**  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Nasdaq Capital Market**  |

---

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

------

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No ☒

As of July 28, 2025, the registrant had 22,568,653 shares of its common shares, no par value ("common shares") outstanding.

------

**Table of Contents**

---

| | |
|:---|:---|
|  | **Page** |
| [Cautionary Statement Regarding Forward-Looking Statements](#page_4) | [2](#page_4) |
| [**PART I**](#page_6) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 1. Financial Statements](#page_6) | [4](#page_6) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](#page_28) | [26](#page_28) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 3. Quantitative and Qualitative Disclosures About Market Risk](#page_43) | [41](#page_43) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 4. Controls and Procedures](#page_43) | [41](#page_43) |
| [**PART II**](#page_44) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 1. Legal Proceedings](#page_44) | [42](#page_44) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 1A. Risk Factors](#page_44) | [42](#page_44) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](#page_44) | [42](#page_44) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 3. Defaults Upon Senior Securities](#page_45) | [43](#page_45) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 4. Mine Safety Disclosures](#page_45) | [43](#page_45) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 5. Other Information](#page_45) | [43](#page_45) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 6. Exhibits](#page_46) | [44](#page_46) |
| [Signatures](#page_48) | [46](#page_48) |

---

------

**Cautionary Statement Regarding Forward-Looking Statements**

This Quarterly Report on Form 10-Q (this "Quarterly Report") contains "forward-looking statements," as that term is defined under the Private Securities Litigation Reform Act of 1995 ("PSLRA"), Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements may include projections and estimates concerning our possible or assumed future results of operations, financial condition, business strategies and plans, market opportunity, competitive position, industry environment, and potential growth opportunities. In some cases, you can identify forward-looking statements by terms such as "may", "will", "should", "believe", "expect", "could", "intend", "plan", "anticipate", "estimate", "continue", "predict", "project", "potential", "target," "goal" or other words that convey the uncertainty of future events or outcomes. You can also identify forward-looking statements by discussions of strategy, plans or intentions. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, because forward-looking statements relate to matters that have not yet occurred, they are inherently subject to significant business, competitive, economic, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These and other important factors, including, among others, those discussed in this Quarterly Report, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements in this Quarterly Report. Risks and uncertainties, the occurrence of which could adversely affect our business, include, but are not limited to, the following:

* our limited operating history and net losses;

* 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;

* our ability to continue as a going concern absent access to sources of liquidity;

* damage to our reputation as a result of negative publicity;

* exposure to product liability claims, actions and litigation;

* risks associated with product recalls;

* product viability;

* continuing research and development efforts to respond to technological and regulatory changes;

* shelf life of inventory;

* our ability to successfully integrate businesses that we acquire;

* our ability to achieve economies of scale;

* our ability to fund overhead expenses, including costs associated with being a publicly-listed company

* maintenance of effective quality control systems;

* changes to energy prices and supply;

* risks associated with expansion into new jurisdictions;

* regulatory compliance risks;

* opposition to the cannabinoid industry;

* potential delisting resulting in reduced liquidity of our common shares; and

* the other risks described under Part I, Item 1A, "Risk Factors" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "2024 Annual Report") filed with the Securities and Exchange Commission (the "SEC") on March 24, 2025, as well as described from time to time in our other filings with the SEC.

Given the foregoing risks and uncertainties, you are cautioned not to place undue reliance on the forward-looking statements in this Quarterly Report. The forward-looking statements contained in this Quarterly Report are not guarantees of future performance and our actual results of operations and financial condition may differ materially from such forward-looking statements. In addition, even if our results of operations and financial condition are consistent with the forward-looking statements in this Quarterly Report, they may not be predictive of results or developments in future periods.

------

Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of this Quarterly Report. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements in this Quarterly Report, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report.

------

**PART I**

**Item 1. Financial Statements**

**Flora Growth Corp.** 

**Table of Contents**

---

| | |
|:---|:---|
| Unaudited Condensed Interim Consolidated Financial Statements: | Page |
| [Unaudited Condensed Interim Consolidated Statements of Financial Position as of June 30, 2025 and December 31, 2024](#page_7) | [5](#page_7) |
| [Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss for the Three and Six Months Ended June 30, 2025 and 2024](#page_8) | [6](#page_8) |
| [Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (Deficiency) for the Three and Six Months Ended June 30, 2025 and 2024](#page_9) | [7](#page_9) |
| [Unaudited Condensed Interim Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024](#page_10) | [8](#page_10) |
| [Notes to Unaudited Condensed Interim Consolidated Financial Statements](#page_11) | [9](#page_11) |

---

------

---

| |
|:---|
| **Flora Growth Corp.** |
| Unaudited Condensed Interim Consolidated Statements of Financial Position |
| (in thousands of United States dollars, except share amounts which are in thousands of shares) |

---

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;As at: | **June 30, 2025** | December 31, 2024 |
| &nbsp;&nbsp;ASSETS |  |  |
| &nbsp;&nbsp;Current |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash | $**1471** | $6017 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted cash | **35** | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade and amounts receivable, net of $938 allowance ($611 at December 31, 2024) | **5088** | 3061 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | **661** | 638 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indemnification receivables | **-** | 4241 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory | **4801** | 5771 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Digital assets | **1141** |  |
| &nbsp;&nbsp;Total current assets | **13197** | 19763 |
| &nbsp;&nbsp;Non-current |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment | **414** | 312 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease right of use assets | **1475** | 1297 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangible assets | **2718** | 2746 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill | **4698** | 2006 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | **165** | 103 |
| &nbsp;&nbsp;Total assets | $**22667** | $26227 |
| &nbsp;&nbsp;LIABILITIES |  |  |
| &nbsp;&nbsp;Current |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade payables | $**3807** | $5464 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contingencies | **3151** | 6936 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current portion of debt | **2755** | 2080 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current portion of debt - related parties | **226** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current portion of operating lease liability | **833** | 791 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contingent purchase considerations | **515** | 835 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other accrued liabilities | **2521** | 2726 |
| &nbsp;&nbsp;Total current liabilities | **13808** | 18832 |
| &nbsp;&nbsp;Non-current |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-current portion of debt | **326** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-current portion of debt - related parties | **1669** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-current operating lease liability | **1965** | 2029 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred tax | **876** | 856 |
| &nbsp;&nbsp;Total liabilities | **18644** | 21717 |
| &nbsp;&nbsp;SHAREHOLDERS' EQUITY |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share capital, no par value, unlimited authorized, 22,569 issued and outstanding (18,512 at<br> December 31, 2024) | **-** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | **165082** | 162871 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income (loss) | **251** | (221) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deficit | **(161310)** | (158140) |
| &nbsp;&nbsp;Total shareholders' equity | **4023** | 4510 |
| &nbsp;&nbsp;Total liabilities and shareholders' equity | $**22667** | $26227 |

---

*The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements. Commitments and contingencies - see Note 16. Going concern - see Note 2.*

------

**Flora Growth Corp.**<br>Unaudited Condensed Interim Consolidated Statements of Loss and<br>Comprehensive Loss<br>(in thousands of United States dollars, except per share amounts which<br>are in thousands of shares)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the three<br>months ended<br>June 30, 2025** | **For the three<br>months ended<br>June 30, 2024** | **For the six<br>months ended<br>June 30, 2025** | **For the six months<br>ended June 30,<br>2024** |
| &nbsp;&nbsp;**Revenue** | $14796 | $15683 | $26582 | $33714 |
| &nbsp;&nbsp;**Cost of sales** | 11966 | 12516 | 20864 | 26693 |
| &nbsp;&nbsp;**Gross profit** | 2830 | 3167 | 5718 | 7021 |
| &nbsp;&nbsp;**Operating expenses** |  |  |  |  |
| &nbsp;&nbsp;Consulting and management fees | 2202 | 2349 | 4103 | 4651 |
| &nbsp;&nbsp;Professional fees | 707 | 1146 | 1290 | 1599 |
| &nbsp;&nbsp;General and administrative | 760 | 587 | 1230 | 1029 |
| &nbsp;&nbsp;Promotion and communication | 945 | 1125 | 1850 | 2229 |
| &nbsp;&nbsp;Travel expenses | 106 | 123 | 204 | 192 |
| &nbsp;&nbsp;Share based compensation | 172 | 12 | 344 | 22 |
| &nbsp;&nbsp;Research and development | 73 | 62 | 186 | 109 |
| &nbsp;&nbsp;Operating lease expense | 162 | 199 | 329 | 364 |
| &nbsp;&nbsp;Depreciation and amortization | 195 | 257 | 377 | 331 |
| &nbsp;&nbsp;Bad debt expense | 259 | 172 | 330 | 219 |
| &nbsp;&nbsp;Asset impairment |  | 160 | 46 | 1058 |
| &nbsp;&nbsp;Gain on disposal of insolvent subsidiaries |  |  | (1162) |  |
| &nbsp;&nbsp;Other (income) expenses, net | (185) | 513 | 134 | 1241 |
| &nbsp;&nbsp;Total operating expenses | 5396 | 6705 | 9261 | 13044 |
| &nbsp;&nbsp;**Operating loss** | (2566) | (3538) | (3543) | (6023) |
| &nbsp;&nbsp;Interest expense (income) | 96 | (25) | 147 | (3) |
| &nbsp;&nbsp;Foreign exchange (gain) loss | (56) | 51 | (59) | 183 |
| &nbsp;&nbsp;Unrealized gain from changes in fair value | (146) | (872) | (451) | (265) |
| &nbsp;&nbsp;Net loss before income taxes | (2460) | (2692) | (3180) | (5938) |
| &nbsp;&nbsp;Income tax (benefit) expense | (48) | (35) | (10) | 93 |
| &nbsp;&nbsp;Net loss for the period | (2412) | (2657) | (3170) | (6031) |
| &nbsp;&nbsp;Net loss attributable to noncontrolling interest |  | (27) |  | (27) |
| &nbsp;&nbsp;**Net loss attributable to Flora Growth** | $(2412) | $(2630) | $(3170) | $(6004) |
| &nbsp;&nbsp;Basic loss per share attributable to Flora Growth Corp. | $(0.11) | $(0.21) | $(0.16) | $(0.57) |
| &nbsp;&nbsp;Diluted loss per share attributable to Flora Growth Corp. | $(0.11) | $(0.21) | $(0.16) | $(0.57) |
| &nbsp;&nbsp;Weighted average number of common shares outstanding - basic | 21454 | 12278 | 20265 | 10597 |
| &nbsp;&nbsp;Weighted average number of common shares outstanding - diluted | 21454 | 12278 | 20265 | 10597 |
| &nbsp;&nbsp;**Other comprehensive loss** |  |  |  |  |
| &nbsp;&nbsp;Net loss for the period | $(2412) | $(2657) | $(3170) | $(6031) |
| &nbsp;&nbsp;Derecognition of equity related to insolvent subsidiaries, net of income taxes of $nil ($nil in 2024) |  |  | (595) |  |
| &nbsp;&nbsp;Foreign currency translation, net of income taxes of $nil ($nil in 2024) | 447 | (19) | 1067 | 8 |
| &nbsp;&nbsp;Comprehensive loss for the period | (1965) | (2676) | (2698) | (6023) |
| &nbsp;&nbsp;Comprehensive loss attributable to noncontrolling interest |  | (27) |  | (27) |
| &nbsp;&nbsp;**Comprehensive loss** | $(1965) | $(2649) | $(2698) | $(5996) |

---

*The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.*

------

---

| |
|:---|
| **Flora Growth Corp.** |
| Unaudited Condensed Interim Consolidated Statement of Shareholders' Equity (Deficiency) |
| (in thousands of United States dollars, except for share amounts which are in thousands of shares) |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Common<br>Shares | Common<br>Shares | Additional paid-in<br>Capital | Accumulated<br>other<br>comprehensive<br>(loss) income | Accumulated<br>deficit | Non-<br>controlling<br>interests in<br>subsidiaries<br>(deficiency) | Shareholders'<br>equity<br>(deficiency) |
|  | # |  |  |  |  |  |  |
| &nbsp;&nbsp;**For the six months ended June 30, 2025** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Balance, December 31, 2024 | 18512 | $- | $162871 | $(221) | $(158140) | $- | $4510 |
| &nbsp;&nbsp;Equity offerings | 3133 |  | 1158 |  |  |  | 1158 |
| &nbsp;&nbsp;Equity offering issuance costs |  |  | (104) |  |  |  | (104) |
| &nbsp;&nbsp;Equity issued for business combinations | 924 |  | 813 |  |  |  | 813 |
| &nbsp;&nbsp;Restricted stock vested |  |  | 17 |  |  |  | 17 |
| &nbsp;&nbsp;SARs vested |  |  | 327 |  |  |  | 327 |
| &nbsp;&nbsp;Derecognition of equity related to insolvent subsidiaries |  |  |  | (595) |  |  | (595) |
| &nbsp;&nbsp;Other comprehensive loss - exchange differences (net of income taxes of $nil) |  |  |  | 1067 |  |  | 1067 |
| &nbsp;&nbsp;Net loss |  |  |  |  | (3170) |  | (3170) |
| &nbsp;&nbsp;Balance, June 30, 2025 | 22569 | $- | $165082 | $251 | $(161310) | $- | $4023 |
| &nbsp;&nbsp;**For the three months ended June 30, 2025** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Balance, March 31, 2025 | 19436 | $- | $163852 | $(196) | $(158898) | $- | $4758 |
| &nbsp;&nbsp;Equity offerings | 3133 |  | 1158 |  |  |  | 1158 |
| &nbsp;&nbsp;Equity offering issuance costs |  |  | (101) |  |  |  | (101) |
| &nbsp;&nbsp;Restricted stock vested |  |  | 9 |  |  |  | 9 |
| &nbsp;&nbsp;SARs vested |  |  | 164 |  |  |  | 164 |
| &nbsp;&nbsp;Other comprehensive loss - exchange differences (net of income taxes of $nil) |  |  |  | 447 |  |  | 447 |
| &nbsp;&nbsp;Net loss |  |  |  |  | (2412) |  | (2412) |
| &nbsp;&nbsp;Balance, June 30, 2025 | 22569 | $- | $165082 | $251 | $(161310) | $- | $4023 |
| &nbsp;&nbsp;**For the six months ended June 30, 2024** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Balance, December 31, 2023 | 8935 | $- | $149093 | $(140) | $(142549) | $- | $6404 |
| &nbsp;&nbsp;Common stock offerings | 1700 |  | 3230 |  |  |  | 3230 |
| &nbsp;&nbsp;Common stock offering issuance costs |  |  | (375) |  |  |  | (375) |
| &nbsp;&nbsp;Equity issued for business combinations | 2685 |  | 3969 |  |  | 991 | 4960 |
| &nbsp;&nbsp;Equity issued for other agreements | 50 |  | 55 |  |  |  | 55 |
| &nbsp;&nbsp;Options vested |  |  | 5 |  |  |  | 5 |
| &nbsp;&nbsp;Options forfeited |  |  | (316) |  | 316 |  |  |
| &nbsp;&nbsp;Restricted stock vested |  |  | 26 |  |  |  | 26 |
| &nbsp;&nbsp;Restricted stock cancelled | (3) |  | (9) |  |  |  | (9) |
| &nbsp;&nbsp;Other comprehensive loss - exchange differences (net of income taxes of $nil) |  |  |  | 8 |  |  | 8 |
| &nbsp;&nbsp;Net loss |  |  |  |  | (6004) | (27) | (6031) |
| &nbsp;&nbsp;Balance, June 30, 2024 | 13367 | $- | $155678 | $(132) | $(148237) | $964 | $8273 |
| &nbsp;&nbsp;**For the three months ended June 30, 2024** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Balance, March 31, 2024 | 8982 | $- | $148871 | $(113) | $(145620) | $- | $3138 |
| &nbsp;&nbsp;Common stock offering | 1700 |  | 3230 |  |  |  | 3230 |
| &nbsp;&nbsp;Common stock offering issuance costs |  |  | (391) |  |  |  | (391) |
| &nbsp;&nbsp;Equity issued for business combinations | 2685 |  | 3969 |  |  | 991 | 4960 |
| &nbsp;&nbsp;Options forfeited |  |  | (13) |  | 13 |  |  |
| &nbsp;&nbsp;Restricted stock vested |  |  | 12 |  |  |  | 12 |
| &nbsp;&nbsp;Other comprehensive loss - exchange differences (net of income taxes of $nil) |  |  |  | (19) |  |  | (19) |
| &nbsp;&nbsp;Net loss |  |  |  |  | (2630) | (27) | (2657) |
| &nbsp;&nbsp;Balance, June 30, 2024 | 13367 | $- | $155678 | $(132) | $(148237) | $964 | $8273 |

---

*The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.*

------

---

| |
|:---|
| **Flora Growth Corp.** |
| Unaudited Condensed Interim Consolidated Statement of Cash Flows |
| (in thousands of United States dollars) |

---

---

| | | |
|:---|:---|:---|
|  | **For the six months ended<br>June 30, 2025** | **For the six months ended<br>June 30, 2024** |
| &nbsp;&nbsp;**Cash flows from operating activities:** |  |  |
| &nbsp;&nbsp;Net loss | $(3170) | $(6031) |
| &nbsp;&nbsp;Adjustments to net loss: |  |  |
| &nbsp;&nbsp; Depreciation and amortization | 377 | 331 |
| &nbsp;&nbsp; Share based compensation | 344 | 22 |
| &nbsp;&nbsp; Inventory impairments through costs of sales | 291 | 1031 |
| &nbsp;&nbsp; Asset impairments | 46 | 1058 |
| &nbsp;&nbsp; Changes in financial instruments at fair value | (451) | (265) |
| &nbsp;&nbsp; Bad debt expense | 330 | 219 |
| &nbsp;&nbsp; Loss on asset disposals | 18 |  |
| &nbsp;&nbsp; Gain on disposal of insolvent subsidiaries | (1229) |  |
| &nbsp;&nbsp; Interest expense | 147 | (3) |
| &nbsp;&nbsp; Interest paid | (93) | 3 |
| &nbsp;&nbsp; Income tax | (10) | 93 |
|  | (3400) | (3542) |
| &nbsp;&nbsp;Net change in non-cash working capital: |  |  |
| &nbsp;&nbsp; Trade and other receivables | (2380) | (605) |
| &nbsp;&nbsp; Inventory | 846 | 1152 |
| &nbsp;&nbsp; Prepaid expenses and other assets | (120) | 328 |
| &nbsp;&nbsp; Trade payables and accrued liabilities | (562) | 1062 |
| &nbsp;&nbsp;**Net cash used in operating activities** | **(5616)** | (1605) |
| &nbsp;&nbsp;**Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;Equity instruments issued | 1158 | 3230 |
| &nbsp;&nbsp;Equity issue costs | (66) | (398) |
| &nbsp;&nbsp;Loan borrowings | 2766 | 4393 |
| &nbsp;&nbsp;Loan repayments | (2346) | (3857) |
| &nbsp;&nbsp;**Net cash provided by financing activities** | **1512** | 3368 |
| &nbsp;&nbsp;**Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;Purchase and sale of digital assets | (1010) |  |
| &nbsp;&nbsp;Purchases of property, plant and equipment and intangible assets | (89) | (114) |
| &nbsp;&nbsp;Net cash on asset disposals | 2 | 17 |
| &nbsp;&nbsp;Cash acquired in business combination | 461 | 64 |
| &nbsp;&nbsp;**Net cash used in investing activities** | **(636)** | (33) |
| &nbsp;&nbsp;Effect of exchange rate on changes on cash | 194 | 47 |
| &nbsp;&nbsp;**Change in cash during the period** | **(4546)** | 1777 |
| &nbsp;&nbsp;Cash and restricted cash at beginning of period | 6052 | 4385 |
| &nbsp;&nbsp;**Cash and restricted cash at end of period** | $1506 | $6162 |
| &nbsp;&nbsp;**Supplemental disclosure of non-cash investing and financing activities** |  |  |
| &nbsp;&nbsp;Common shares issued for business combinations | $813 | $3969 |
| &nbsp;&nbsp;Debt issued for business combinations | 2135 |  |
| &nbsp;&nbsp;Common shares issued for other agreements |  | 55 |
| &nbsp;&nbsp;Option cancellations reclassified to equity |  | 316 |
| &nbsp;&nbsp;Operating lease additions to right of use assets | 325 | 2143 |

---

*The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.*

------

---

| |
|:---|
| **Flora Growth Corp.** |
| **Notes to the unaudited condensed interim consolidated financial statements** |
| For the three and six months ended June 30, 2025 and 2024 |
| (In thousands of United States dollars, except shares and per share amounts) |

---

**1. NATURE OF OPERATIONS**

Flora Growth Corp. (the "Company" or "Flora") was incorporated under the laws of the Province of Ontario, Canada on March 13, 2019. The Company is a manufacturer and distributor of global cannabis and pharmaceutical products and brands, building a connected, design-led collective of plant-based wellness and lifestyle brands. The Company's registered office is located at 40 King Street, W Suite 2400, Toronto, Ontario, M5H 3S1, Canada and our principal place of business in the United States is located at 3230 W. Commercial Boulevard, Suite 180, Fort Lauderdale, Florida 33309.

**2. BASIS OF PRESENTATION**

These unaudited condensed interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP. The Company believes that the disclosures made are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2024. These unaudited condensed interim consolidated financial statements reflect all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.

These unaudited condensed interim consolidated financial statements apply the same accounting policies as those used in the financial statements included in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2024, except as noted below.

**Adoption of accounting standards and amendments**

In December 2023, the FASB issued ASU 2023-08, Crypto Assets (Subtopic 350-60), which addresses the accounting and disclosure requirements for certain crypto assets. The guidance required entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. For all entities, the ASU's amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those years. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. The Company has adopted ASU 2023-08 effective as of January 1, 2025 and the disclosures around the Company's digital assets are reflective of that adoption.

**Going concern**

The accompanying unaudited condensed interim consolidated financial statements have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that the Company will continue one year after the date these unaudited condensed interim consolidated financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

The Company had cash of $1.5 million at June 30, 2025, a net loss of $3.2 million for the six months ended June 30, 2025, and an accumulated deficit of $161.3 million at June 30, 2025. Current economic and market conditions have put pressure on the Company's growth plans. The Company's ability to continue as a going concern is dependent on its ability to obtain additional capital. The Company believes that its current level of cash is not sufficient to continue investing in growth, while at the same time meeting its obligations as they become due. These conditions raise substantial doubt regarding the Company's ability to continue as a going concern for a period of at least one year from the date of issuance of these unaudited condensed interim consolidated financial statements. To alleviate these conditions, management is currently evaluating various cost reductions and other alternatives and may seek to raise additional funds through the issuance of equity, debt securities, through arrangements with strategic partners, through obtaining credit from financial institutions or otherwise. The actual amount that the Company may be able to raise under these alternatives will depend on market conditions and other factors. As it seeks additional sources of financing, there can be no assurance that such financing would be available to the Company on favorable terms or at all. The Company's ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including but not limited to market and economic conditions, the Company's performance and investor sentiment with respect to it and its industry. The unaudited condensed interim consolidated financial statements do not include any adjustments for the recovery and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

**Basis of consolidation**

These unaudited condensed interim consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions were eliminated on consolidation. Subsidiaries are entities the Company controls when it is exposed, or has rights, to variable returns from its involvement in the entity and can affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are included in the consolidated financial results of the Company from the date of acquisition up to the date of disposition or loss of control. At June 30, 2025, the Company's subsidiaries and respective ownership percentages have not changed from the year ended December 31, 2024, except as noted below.

------

**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

On February 4, 2025, the Company completed the closing of the acquisition of 100% of the issued and outstanding shares of United Beverage Distribution Inc., a United States corporation with a functional currency of the United States dollar. See discussion of the acquisition in Note 8.

During the six months ended June 30, 2025, each of Franchise Global Health Inc. ("FGH"), Franchise Cannabis Corp., CBDMed Therapeutics Inc., Harmony Health One Inc., 1200325 B.C. Ltd., Fayber Technologies Inc., ACA Mueller ADAG Pharma Vertriebs GmbH, Sativa Verwaltungs GmbH, and Sativa Verwaltungs GmbH and Co. KG (together, the "Insolvent Subsidiaries") made insolvency filings in the appropriate jurisdictions. Each of the Insolvent Subsidiaries was a direct or indirect subsidiary of the Company and was part of the Company's acquisition of FGH in December 2022. See discussion in Note 3.

**Minimum bid price requirement**

On February 25, 2025, the Company was notified by the Nasdaq Stock Market, LLC ("Nasdaq") that it was not in compliance with the minimum bid price requirement of $1.00 per share for 30 consecutive business days as set forth in Rule 5550(a)(2) of the Nasdaq Listing Rules (the "Minimum Bid Price Requirement"). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has 180 calendar days, or until August 25, 2025, to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the Company will need to maintain a minimum closing bid price of $1.00 or more for at least 10 consecutive trading days before August 25, 2025, unless Nasdaq Listing Qualifications Department exercises its discretion to extend this ten-day period pursuant to Nasdaq Listing Rule 5810(c)(3)(H). If the common shares do not achieve compliance by August 25, 2025, the Company may be eligible for an additional 180-day period to regain compliance, provided that it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards of the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and provides written notice to Nasdaq of its intention to cure the deficiency during the second compliance period, for example, by effecting a reverse stock split, if necessary.

On July 31, 2025, the Company announced that it will effect a 1-for-39 share consolidation of the Company's issued and outstanding common shares, which is expected to be effective at the open of trading on August 4, 2025. See Note 20 for subsequent reverse stock split.

**3. INSOLVENCY AND DECONSOLIDATION OF CERTAIN SUBSIDIARIES**

On March 14, 2025, each of Franchise Global Health Inc., Franchise Cannabis Corp., CBDMed Therapeutics Inc., Harmony Health One Inc., 1200325 B.C. Ltd., and Fayber Technologies Inc. (collectively, the "Canadian insolvent entities") made a voluntary assignment in bankruptcy pursuant to section 49 Bankruptcy and Insolvency Act (Canada) in the Ontario Superior Court of Justice (the "Ontario Court"). On March 14, 2025, the Ontario Court appointed a trustee of the estate of each of the Canadian insolvent entities.

On March 18, 2025, ACA Mueller ADAG Pharma Vertriebs GmbH, Sativa Verwaltungs GmbH, and Sativa Verwaltungs GmbH and Co. KG (together "the German insolvent entities") each made filings for insolvency proceedings under German insolvency laws in the Constance Regional Court (the "German Court"). On March 18, 2025, the German Court appointed a trustee of the estate of each of the German insolvent entities.

The trustees have been appointed by the respective courts and the trustees have assumed and will continue to exercise control over all assets and liabilities of the Insolvent Subsidiaries. The assets of the Insolvent Subsidiaries will be liquidated for distribution in accordance with the priorities established by the courts. The Company expects that no distributions will be available in the Insolvent Subsidiaries' liquidation.

Each of the Canadian insolvent entities and the German insolvent entities was a direct or indirect subsidiary of the Company and was part of the Company's acquisition of FGH in December 2022. As a result of the insolvencies, the Company concluded that it no longer controls the Insolvent Subsidiaries for accounting purposes as of March 14, 2025, in accordance with ASC Topic 810, and, therefore, deconsolidated all assets and liabilities of the Insolvent Subsidiaries during the three months ended March 31, 2025 from the Company's financial statements. Subsequent to the deconsolidation, the Company accounted for its investment in the Insolvent Subsidiaries using the cost method of accounting, which was recorded at $nil in the Company's condensed interim consolidated statements of financial position as of June 30, 2025. The Insolvent Subsidiaries results of operations were removed from the Company's condensed interim consolidated statements of loss and comprehensive loss beginning March 14, 2025. The historical financial results for the Insolvent Subsidiaries have not been classified as a discontinued operation because it does not represent a strategic shift with a major effect on the Company's operations and financial results.

The following table provides the combined carrying value of assets and liabilities of Insolvent Subsidiaries that have been deconsolidated during the six months ended June 30, 2025:

------

**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

---

| | |
|:---|:---|
|  | **March 14, 2025** |
| &nbsp;&nbsp;Cash | $67 |
| &nbsp;&nbsp;Trade and amounts receivable | 40 |
| &nbsp;&nbsp;Indemnification receivables | 4329 |
| &nbsp;&nbsp;Total assets | $4436 |
| &nbsp;&nbsp;Trade and other payables | $1935 |
| &nbsp;&nbsp;Contingencies | 4329 |
| &nbsp;&nbsp;Current portion of long term debt | 4 |
| &nbsp;&nbsp;Current portion of operating lease liability | 6 |
| &nbsp;&nbsp;Total liabilities | $6274 |
| &nbsp;&nbsp;Net liabilities deconsolidated | 1838 |
| &nbsp;&nbsp;Impairment of receivables from Insolvent Subsidiaries | (676) |
| &nbsp;&nbsp;Gain on deconsolidation of Insolvent Subsidiaries | $1162 |

---

The gain on deconsolidation of Insolvent Subsidiaries is recorded in gain on disposal of insolvent subsidiaries in the unaudited condensed interim consolidated statements of loss and comprehensive loss. The Insolvent Subsidiaries reported a combined net loss and comprehensive loss of $nil and less than $0.1 million in the three and six months ended June 30, 2025, respectively (2024 - net loss and comprehensive loss of $0.1 million and 0.4 million, respectively).

As part of the deconsolidation of the Insolvent Subsidiaries, the Company reported a gain of $0.6 million related to currency translation adjustments, recorded in comprehensive loss in the six months ended June 30, 2025.

The contingencies and indemnification receivables relate to a legal claim filed against FGH, which was covered under an indemnification agreement between the Company and the former Chief Executive Officer and shareholder of FGH. The voluntary assignment in bankruptcy of FGH triggered an automatic stay on the related legal proceedings.

**4. TRADE AND AMOUNTS RECEIVABLE** 

The Company's trade and amounts receivable are recorded at amortized cost. The trade and other receivables balance as at June 30, 2025 and December 31, 2024 consists of trade accounts receivable, amounts recoverable from the Government of Canada for Harmonized Sales Taxes ("HST"), as well as Value Added Tax ("VAT") from various jurisdictions, and other receivables.

---

| | | |
|:---|:---|:---|
|  | **June 30, 2025** | **December 31, 2024** |
| &nbsp;&nbsp;Trade accounts receivable | $**4351** | $2334 |
| &nbsp;&nbsp;Allowance for expected credit losses | **(938)** | (611) |
| &nbsp;&nbsp;HST/VAT receivable | **1041** | 660 |
| &nbsp;&nbsp;Other receivables | **634** | 678 |
| &nbsp;&nbsp;Total | $**5088** | $3061 |

---

Changes in the trade accounts receivable allowance in the three and six months ended June 30, 2025 relate to establishing an allowance for expected credit losses. There were $0.2 million and $0.3 million in write-offs of trade receivables during the three and six months ended June 30, 2025, respectively (2024 - $0.1 million and $0.1 million, respectively). The Company has no amounts written-off that are still subject to collection enforcement activity as at June 30, 2025. The Company's aging of trade accounts receivable is as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2025** | **December 31, 2024** |
| &nbsp;&nbsp;Current | $2038 | $441 |
| &nbsp;&nbsp;1-30 Days | 469 | 710 |
| &nbsp;&nbsp;31-60 Days | 495 | 257 |
| &nbsp;&nbsp;61-90 Days | 63 | 440 |
| &nbsp;&nbsp;91-180 Days | 1286 | 486 |
| &nbsp;&nbsp;180+ Days |  |  |
| &nbsp;&nbsp;Total trade receivables | $4351 | $2334 |

---

------

**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

**5. INVENTORY** 

Inventory is comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2025** | **December 31, 2024** |
| &nbsp;&nbsp;Raw materials and supplies | $**348** | $508 |
| &nbsp;&nbsp;Finished goods | **4453** | 5263 |
| &nbsp;&nbsp;**Total** | $**4801** | $5771 |

---

During the three and six months ended June 30, 2025, the Company recorded inventory impairment as a write-down to cost of sales in the amount of $0.1 million and $0.3 million, respectively (2024 - $0.8 million and $1.0 million, respectively).

**6. DIGITAL ASSETS** 

The Company's digital assets consist of the following as of June 30, 2025:

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of Units** | **Cost Basis** | **Fair Value** |
| &nbsp;&nbsp;Ethereum (ETH) | 219.16143 | $410 | $542 |
| &nbsp;&nbsp;Solana (SOL) | 3274.36698 | 509 | 500 |
| &nbsp;&nbsp;Ripple (XRP) | 44653.30117 | 100 | 99 |
| &nbsp;&nbsp;Total digital assts |  | $1019 | $1141 |

---

In accordance with ASC Topic 820, Fair Value Measurement, the Company measures the fair value of its digital assets based on the quoted end-of-day price on the measurement date for a single digital asset on an active trading platform, Binance.com. Management has determined that Binance.com, an active exchange market, represents a principal market for the digital assets it holds and the end-of-day quoted price is both readily available and representative of fair value (Level 1 inputs). The Company recorded a gain of $0.1 million in the value of its digital assets for the three and six months ended June 30, 2025, which was reported in the unrealized gain from changes in fair value in the unaudited condensed interim consolidated statements of loss and comprehensive loss.

**7. PROPERTY, PLANT AND EQUIPMENT** 

Property, plant and equipment consist of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2025** | **December 31, 2024** |
| &nbsp;&nbsp;Buildings | $**-** | $31 |
| &nbsp;&nbsp;Machinery and office equipment | **715** | 655 |
| &nbsp;&nbsp;Vehicles | **48** | 22 |
| &nbsp;&nbsp;Total | **763** | 708 |
| &nbsp;&nbsp;Less: accumulated depreciation | **(349)** | (396) |
| &nbsp;&nbsp;Property, plant and equipment, net | $**414** | $312 |

---

Depreciation expense was less than $0.1 million for both the three and six months ended June 30, 2025, (2024 - less than $0.1 million and $0.1 million respectively) and was recorded in depreciation and amortization in the unaudited condensed interim consolidated statements of loss and comprehensive loss.

**8. BUSINESS COMBINATIONS**

*United Beverage Distribution Inc. business combination*

On January 30, 2025, the Company and United Beverage Distribution Inc. ("United"), a South Dakota corporation, entered into a Share Purchase Agreement (the "Purchase Agreement") pursuant to which the Company purchased 100% of the issued and outstanding common shares of United (the "United Common Shares"). Under the terms of the Purchase Agreement, Flora agreed to purchase the United Common Shares from the group of sellers listed in the Purchase Agreement (the "Sellers"), which included Clifford Starke and Sammy Dorf, each of whom are directors of Flora (the "Flora Directors"), and Flora's chief financial officer, Dany Vaiman (together with the Flora Directors, the "Related Parties") for (i) 923,744 shares of the Company, valued at $0.8 million utilizing the $0.88 share price on February 4, 2025, and representing 4.99% of the outstanding common shares of Flora as of January 30, 2025, issued to the Sellers who are not Related Parties and (ii) promissory notes with five year maturities that accrue interest at a rate of 6% per annum in an aggregate principal amount of $2.1 million issued to the Sellers. Total consideration for the United acquisition was $2.9 million.

------

**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

United was founded in 2024 and is a distributor of cannabis-infused drinks. The acquisition will allow the Company to drive synergies with its existing portfolio of brands.

The purchase is accounted for as a business combination with amounts recognized as at the February 4, 2025 acquisition date for each major class of assets acquired and liabilities assumed are as follows:

---

| | |
|:---|:---|
| &nbsp;&nbsp;(Thousands of Untied States dollars) |  |
| &nbsp;&nbsp;Current assets |  |
| &nbsp;&nbsp;Cash | $461 |
| &nbsp;&nbsp;Trade receivables | 68 |
| &nbsp;&nbsp;Inventory | 167 |
| &nbsp;&nbsp;Prepaid expenses and other current assets | 3 |
| &nbsp;&nbsp;Total current assets | 699 |
| &nbsp;&nbsp;Non-current assets |  |
| &nbsp;&nbsp;Property, plant and equipment, net | 30 |
| &nbsp;&nbsp;Goodwill | 2441 |
| &nbsp;&nbsp;Total assets | 3170 |
| &nbsp;&nbsp;Current liabilities |  |
| &nbsp;&nbsp;Trade and amounts payables | (180) |
| &nbsp;&nbsp;Loan payable | (27) |
| &nbsp;&nbsp;Other accrued liabilities | (15) |
| &nbsp;&nbsp;Total current liabilities | (222) |
| &nbsp;&nbsp;Total net assets acquired | $2948 |

---

Since the acquisition date through June 30, 2025, United reported revenue of $0.4 million and net loss and comprehensive loss of $0.4 million.

The goodwill is attributable to the significant synergies expected to arise after its acquisition. The Company does not expect the goodwill to be deductible for United States income tax purposes. The goodwill is assigned to the house of brands segment.

If United was acquired at January 1, 2024, the combined revenue of United and the Company would have increased approximately $0.1 million and $nil for the six months ended June 30, 2025 and 2024, respectively (unaudited). The combined net loss of United and the Company would have decreased by approximately $0.1 million and $nil for the six months ended June 30, 2025, and 2024, respectively (unaudited).

The Company incurred acquisition related costs of less than $0.1 million which were expensed as incurred in professional fees on the unaudited condensed interim consolidated statements of loss and comprehensive loss.

**9. INTANGIBLE ASSETS AND GOODWILL** 

A continuity of intangible assets for the six months ended June 30, 2025 is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Licenses** | **Trademarks**<br> **and Brands** | **Goodwill** | **Total** |
| &nbsp;&nbsp;**Cost** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December 31, 2024 | $3193 | $1351 | $2044 | $6588 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additions |  |  | 2441 | 2441 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At June 30, 2025 | $3193 | $1351 | $4485 | $9029 |
| &nbsp;&nbsp;**Accumulated Amortization** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December 31, 2024 | $487 | $1265 | $- | $1752 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additions | 327 | 9 |  | 336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At June 30, 2025 | $814 | $1274 | $- | $2088 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation | 257 | 5 | 213 | 475 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net book value at June 30, 2025** | $**2636** | $**82** | $**4698** | $**7416** |

---

------

**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

Amortization expense for the three and six months ended June 30, 2025 was $0.1 million and $0.3 million, respectively (2024 - $0.2 million and $0.2 million, respectively) and was recorded in depreciation and amortization in the unaudited condensed interim consolidated statements of loss and comprehensive loss.

At June 30, 2025, the weighted average amortization period remaining for intangible assets was 3.8 years.

At June 30, 2025, the estimated future amortization expense related to intangible assets is as follows:

---

| | |
|:---|:---|
| 2025 | $360 |
| 2026 | 721 |
| 2027 | 721 |
| 2028 | 721 |
| 2029 | 192 |
| Thereafter | 3 |
| Total | $2718 |

---

**10. ASSET IMPAIRMENT**

**Goodwill**

The Company tests its goodwill for impairment as part of its annual fourth quarter impairment test, and at interim periods when impairment indicators exist. The Company's goodwill is assigned to the reporting units associated with the original acquisition of those operations. At June 30, 2025, the Company determined that there were no indicators present for its TruHC and United reporting units.

**Long-lived assets**

As discussed in Note 12, the Company had been subleasing retail space in Miami, Florida to a third party since the third quarter of 2023. The Company is leasing this retail space pursuant to a lease agreement that expires in November 2026, which is the same term as the sublease agreement. In March 2025, the sublessor informed the Company that it planned to terminate the sublease agreement, effective in May 2025. The Company considers this to be an indicator of impairment, and, thus, performed a quantitative analysis as of March 31, 2025 to determine if impairment existed by comparing the carrying amount of the operating lease right of use asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. This analysis indicated the asset values may not be recoverable. The Company then calculated the fair value of this asset using an income approach. As a result, the Company recorded an impairment of operating lease right of use assets within its corporate asset group and segment totaling less than $0.1 million. These charges were recorded in the asset impairment caption on the unaudited condensed interim consolidated statements of loss and comprehensive loss. The Company has found a new sublessor for this space under an agreement with similar payment terms as the original sublease. Therefore, there were no further indicators of impairment as of June 30, 2025.

The Company determined that the reduced cash balances of JustCBD, as well as the declining share prices of comparable companies, were indicators of impairment as at June 30, 2025. The Company performed a quantitative analysis to determine if impairment existed by comparing the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over their remaining lives. This analysis indicated that the carrying amount of certain asset values may not be recoverable. The Company then calculated the fair value of these assets using an income approach, updating certain key variables, including estimated 2025 and 2026 sales, royalty savings rates and discount rates. The resulting calculation concluded that the carrying amount of the JustCBD assets were recoverable, and, thus, no impairment was recorded for the period ending June 30, 2025.

------

**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

**11. DEBT**

**Euro credit facility**

The Company, through Phatebo, has credit facilities totaling 2.4 million Euro ($2.8 million USD), at three different banks in Germany. These arrangements are open ended without predetermined maturity dates. Principal and interest payments are due at the end of each term. Interest rates can change with each new amount drawn. As of June 30, 2025, the total outstanding amount on these credit facilities was 2.3 million Euro ($2.7 million USD) with interest rates ranging from 4.76% to 5.19% and due within the next twelve months. These credit facilities were secured by various guarantees, including payment guarantees upon default.

**United promissory notes (Related Parties)**

As discussed in Note 8, the Company issued promissory notes with five-year maturities that accrue interest at a rate of 6% per annum in an aggregate principal amount of $2.1 million to the Sellers of United on January 30, 2025. The promissory notes require the first payments of principal and interest to be made in February 2026. At June 30, 2025, the total outstanding amount of these promissory notes was $2.2 million, $0.3 million of which was due within the next 12 months. Of the total amount outstanding at June 30, 2025, $1.9 million was owed to the Related Parties. These promissory notes were secured by payments guarantees and a default interest rate of 11% upon default.

**12. LEASES**

The Company's leases primarily consist of administrative real estate leases in Germany and the United States. Management has determined all the Company's leases are operating leases through June 30, 2025. Information regarding the Company's leases is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three months**<br> **ended June**<br> **30, 2025** | Three months<br> ended June 30,<br> 2024 | Six months<br> ended June 30,<br> 2025 | Six months<br> ended June 30,<br> 2024 |
| &nbsp;&nbsp;**Components of lease expense** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease expense | $**162** | $199 | $**329** | $364 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term lease expense | **23** | 38 | 9 | 180 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sublease income | **(92)** | (94) | **(184)** | (178) |
| &nbsp;&nbsp;**Total lease expense** | $**93** | $143 | $**154** | $366 |
| &nbsp;&nbsp;**Other Information** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating cash flows from operating leases | $**288** | $403 | $**561** | $748 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ROU assets obtained in exchange for new operating lease liabilities | **-** | 896 | **325** | 2143 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Weighted-average remaining lease term in years for operating leases |  |  | 3.4 | 4.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Weighted-average discount rate for operating leases |  |  | 10.8% | 10.7% |

---

------

**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

Maturities of operating lease liabilities as of June 30, 2025 are as follows:

---

| | |
|:---|:---|
| Thousands of United States dollars | **Operating Leases** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2025 | $544 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2026 | 1070 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2027 | 861 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2028 | 574 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2029 | 267 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Thereafter | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total future lease payments | 3344 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less: imputed interest | (546) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total lease liabilities | 2798 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: current lease liabilities | (833) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-current lease liabilities | $1965 |

---

Some of the Company's leases contain renewal options to continue the leases for another term equivalent to the original term, which are generally up to five years. The lease liabilities above include renewal terms that management has executed or is reasonably certain of renewing, which only included leases that would have expired in 2025.

In March 2025, the Company began leasing 10,400 sq. ft. of warehouse and office space in Hilzingen, Germany, for $1,000 a month, pursuant to a lease agreement that expires in February 2030.

The Company began subleasing warehousing and office space in Carlsbad, CA to a third party during the fourth quarter of 2023. The sublease is effective through August 31, 2027 and does not contain renewal options.

The Company began subleasing retail space in Miami, Florida to a third party during the third quarter of 2023. The sublease agreement was effective through November 30, 2026 and contains one option to renew for five more years. As discussed in Note 10, the Company received notification from the sublessor in March 2025 of its intention to exit the sublease. In July 2025, the Company began subleasing the retail space to a new third party with the new sublease agreement effective through November 30, 2026 and contains one option to renew for five more years.

**13. SHARE CAPITAL** 

The Company had the following significant common share transactions:

**Six months ended June 30, 2025**

**MAY PRIVATE PLACEMENT**

On May 2, 2025, the Company entered into a securities purchase agreement with certain investors (the "Investors") in connection with the issuance and sale by the Company to the Investors via a private placement (the "Private Placement") of an aggregate of 3,133,011 common shares of the Company, no par value per share at a purchase price of $0.30 per share (the "May Common Shares") and 726,992 pre-funded warrants of the Company at a purchase price of $0.2999 per warrant (the "Pre-funded Warrants") each to purchase one May Common Share which shall be immediately exercisable and expire when exercised in full, at an exercise price of $0.0001 per share. See Note 15. The Company filed a registration statement on Form S-3 on May 14, 2025.

**FEBRUARY PAYMENT TO UNITED OWNERS**

As discussed in Note 8, the Company issued 923,744 of its common shares valued at $0.8 million to certain prior owners of United, who were also Related Parties, as part of the Company's acquisition of 100% of the issued and outstanding common shares of United on February 4, 2025.

------

**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

See Note 20 for subsequent reverse stock split.

**Six months ended June 30, 2024**

**JUNE 2024 PAYMENT TO Australian Vaporizers ("AV") OWNERS**

The Company issued 550,000 of its common shares valued at $0.6 million to the prior owners of AV as part of the Company's acquisition of 100% of the issued and outstanding common shares of AV on June 4, 2024.

**APRIL 2024 PAYMENT TO TRUHC OWNERS**

The Company issued 2,135,199 of its common shares valued at $3.3 million to the prior owners of TruHC Pharma GmbH ("TruHC") as part of the first closing of the Company's acquisition of TruHC on April 22, 2024. The first closing made up 77% of the total agreed upon share price of 2,770,562 common shares of the Company. The remaining 635,363 common shares of the Company were issued to the prior owners of TruHC as part of the second closing on November 27, 2024, after receiving shareholder approval for such issuance in accordance with the rules of the Nasdaq Stock Capital Market at its annual general meeting of shareholders, held August 14, 2024.

**APRIL 2024 EQUITY OFFERING**

On April 8, 2024, the Company closed an offering of 1,700,000 of the Company's common shares at a public offering price of $1.90 per common share for gross proceeds of $3.2 million. The Company paid $0.4 million in issuance costs relating to the April 2024 equity offering.

The offering of the securities described above was made pursuant to the Company's effective shelf registration statement on Form S-3 (Registration No. 333-274204) (the "Registration Statement"), filed with the SEC on August 25, 2023 and amended on August 30, 2023, which was declared effective, on September 6, 2023, and the base prospectus included therein, as supplemented by the preliminary prospectus supplement filed with the SEC on April 4, 2024 and the final prospectus supplement filed with the SEC on April 5, 2024.

**AT THE MARKET ("ATM") OFFERING**

On April 26, 2024, the Company entered into an ATM Issuances Sales Agreement (the "Sales Agreement") with Aegis Capital Corp. (the "Agent") pursuant to which the Company may sell from time to time, at its option, common shares through the Agent in its capacity as sales agent. The sale of common shares, if any, will be made under the Company's Registration Statement, by any method that is deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act.

Subject to the terms and conditions of the Sales Agreement, the Agent will use its commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the Nasdaq Capital Market to sell on the Company's behalf all of the common shares requested to be sold by the Company. The Agent will offer the common shares, subject to the terms and conditions of the Sales Agreement, on a daily basis or as otherwise agreed upon by the Company and the Agent. The Company will designate the maximum amount of common shares to be sold through the Agent on a daily basis or otherwise determine such maximum amount, together with the Agent. The Company may instruct the Agent not to sell common shares if the sales cannot be effected at or above the price designated by the Company in any such instruction. The Company or the Agent may suspend the offering of common shares being made through the Agent under the Sales Agreement upon proper notice to the other parties.

The aggregate compensation payable to the Agent is 3.0% of the aggregate gross proceeds from each sale of the common shares sold through the Agent pursuant to the Sales Agreement. In addition, the Company has agreed in the Sales Agreement to provide indemnification and contribution to the Agent against certain liabilities, including liabilities under the Securities Act.

The Company is not obligated to make any sales of common shares under the Sales Agreement. The offering of common shares pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement by the Company or by the Agent, only with respect to itself, under the circumstances specified in the Sales Agreement. The Company has yet to sell any of its common shares under the Sales Agreement.

**OTHER ISSUANCES**

On March 8, 2024, the Company entered into a settlement agreement with a third party pursuant to which the Company issued 50,000 common shares of the Company, valued at $0.1 million, to a third party to settle outstanding amounts owed.

------

**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

**14. SHARE BASED COMPENSATION**

The Company's 2022 Incentive Compensation Plan (the "2022 Plan") and its previous "'rolling" stock option plan (the "Prior Plan") are described in the Company's 2024 Form 10-K. The 2022 Plan was amended to increase the number of shares issuable thereunder from 2,500,000 to 4,500,000 shares at the Company's annual and special shareholder meeting on June 30, 2025.

**OPTIONS**

Stock options granted under the Prior Plan are non-transferable and non-assignable and may be granted for a term not exceeding five years. Under the 2022 Plan, stock options may be granted with a term of up to ten years and in the case of all stock options, the exercise price may not be less than 100% of the fair market value of a common share on the date the award is granted. Stock option vesting terms are subject to the discretion of the Compensation Committee of the Company's Board of Directors (the "Committee"). Common shares are newly issued from available authorized shares upon exercise of awards. The Company no longer makes new grants of stock options under the Prior Plan.

Information relating to share options outstanding and exercisable as at June 30, 2025 and December 31, 2024 is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Options Outstanding** | **Options Outstanding** | | |
|  | **Number of**<br> **options (in**<br> **thousands)** | **Weighted**<br> **average**<br> **exercise**<br> **price** | **Weighted average** <br> **remaining life**<br> **(years)** | **Aggregate**<br> **i** **ntrinsic**<br> **value** |
| &nbsp;&nbsp;Outstanding balance, December 31, 2024 | 21 | $38.18 | 3.9 | $- |
| &nbsp;&nbsp;**Outstanding balance, June 30, 2025** | **21** | $**38.18** | **3.4** | $**-** |
| &nbsp;&nbsp;**Exercisable balance, June 30, 2025** | **21** | $**38.18** | **3.4** | $**-** |

---

The total expense related to the options granted in the three and six months ended June 30, 2025 was $nil (2024 - $nil and less than $0.1 million, respectively). This expense is included in the share-based compensation line on the unaudited condensed interim consolidated statements of loss and comprehensive loss. Generally, the options granted in 2023 vest one to two years following the date of grant provided that the recipient is still employed or engaged by the Company.

At June 30, 2025 the total remaining stock option cost for nonvested awards is $nil.

See Note 20 for subsequent forfeiture of options.

**RESTRICTED STOCK AWARDS**

Restricted stock is a grant of common shares which may not be sold or disposed of, and which is subject to such risks of forfeiture and other restrictions as the Committee, in its discretion, may impose. A participant granted restricted stock generally has all of the rights of a shareholder of the Company, unless otherwise determined by the Committee. Subject to certain exceptions, the vesting of restricted stock awards is subject to the holder's continued employment or engagement through the applicable vesting date. Unvested restricted stock awards will be forfeited if the holder's employment or engagement ceases during the vesting period and may, in certain circumstances, be accelerated. The Company values restricted stock awards based on the closing share price of the Company's common shares as of the date of grant. The fair value of the restricted stock award is recorded as expense over the vesting period.

Information relating to restricted stock awards outstanding as at June 30, 2025 and December 31, 2024:

---

| | | |
|:---|:---|:---|
|  | **Number of**<br> **restricted stock**<br> **awards** | **Weighted**<br> **average grant**<br> **date fair value** |
|  | **Thousands** |  |
| Balance, December 31, 2024 | 13 | $7.41 |
| **Balance, June 30, 2025** | **13** | $**7.41** |

---

The total expense related to the restricted stock awards in the three and six months ended June 30, 2025 was less than $0.1 million (2024 - less than $0.1 million). This expense is included in the share based compensation line on the unaudited condensed interim consolidated statements of loss and comprehensive loss.

------

**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

The outstanding restricted stock awards vest over the next year provided the award holder is still employed or engaged by the Company. As of June 30, 2025, the Company had less than $0.1 million of unrecognized compensation expense related to restricted stock awards which will be recognized over the next year.

**STOCK APPRECIATION RIGHTS ("SARs")**

SARs grant a right to receive, upon exercise thereof, the excess of the fair market value of one common share on the date of exercise over the grant price of the SAR. The grant price of a SAR shall not be less than 100% of the fair market value of a common share on the date of the grant. SARs generally vest over a period of zero to three years and have a term of ten or eleven years. The SARS granted by the Company to date are only payable in the Company's common shares and have no cash payments options.

On August 14, 2024, the Company granted 1,603,984 and 534,661 SARs to its Chief Executive Officer and Chief Financial Officer, respectively, which was approved by a majority of the Company's shareholders at the Company's annual meeting held on August 14, 2024. The fair value of the SARs at August 14, 2024 was determined using a Monte Carlo simulation incorporating Brownian motion with 100,000 trials through a binomial model. The significant inputs to the valuation include an 11-year term to maturity, the Company's closing share price at August 14, 2024 ($0.91), estimated volatility (110%) based on the Company's common share and comparable companies' historical volatilities, and risk-free rate of 3.8% to discount the ending result to present value. The valuation also includes a derived service period, which is the median time to vest, as calculated by the model. This derived service period inherently contains some degree of estimation uncertainty.

On December 15, 2024, the Company granted 440,000 SARS to officers, directors, employees and consultants of the Company pursuant to the 2022 Plan. The fair value of the SARS at December 15, 2024 was determined using a Black Scholes pricing model with the following assumptions: the $1.30 price of the Company's common shares; expected dividend yield of 0%; expected volatility of 110% based on the Company's common share and comparable companies' historical volatilities; risk-free interest rate of 4.35% and an expected life of 10.0 years.

On June 30, 2025, Flora's shareholders approved the repricing and amendment of vesting terms of certain outstanding SARS granted to certain employees and executive officers of the Company, including the SARs granted on August 14, 2024 and on December 15, 2024. The new base price of these SARs will be $0.58, the closing share price of the Company's stock as of June 30, 2025.

The vesting terms of the SARs granted on August 14, 2024 to the Company's Chief Executive Officer were amended such that the first of nine tranches will vest upon the Company's share price increasing by 25% from $0.58, with each tranche thereafter requiring an additional 25% increase in share price. The vesting terms of the SARs granted on August 14, 2024 to the Company's Chief Financial Officer were amended such that the first of eight tranches will vest upon the Company's share price increasing by 25% from $0.58, with each tranche thereafter requiring an additional 25% increase in share price. In accordance with ASC 718, the Company treated this modification of terms as an exchange of the original award for a new award. The fair value of the new SARs award was determined using a Monte Carlo simulation incorporating Brownian motion with 100,000 trials through a binomial model. The significant inputs to the valuation include an 10.1-year term to maturity, the Company's closing share price at June 30, 2025 ($0.58), estimated volatility (110%) based on the Company's common share and comparable companies' historical volatilities, and risk-free rate of 4.2% to discount the ending result to present value. The valuation also includes a new derived service period, which is the median time to vest, as calculated by the model. The new valuation resulted in an incremental value of less than $0.1 million, which, along with the unrecognized compensation cost, will be recognized as compensation cost over the new requisite service period. In the event of a reverse stock split, the Company may adjust proportionately the common shares subject to an award as well as any applicable exercise price and any other aspect of any award that the Company determines to be appropriate in order to prevent the reduction or enlargement of benefits under any award.

The SARS granted on December 15, 2024 were vested at the grant date and the expense was accelerated at that time. There is no incremental fair value for these awards.

Information relating to SARs outstanding at June 30, 2025 and December 31, 2024 is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **SARs Outstanding** | **SARs Outstanding** |  |  |
|  | **Number of**<br> **SARS (in**<br> **thousands)** | **Weighted**<br> **average**<br> **exercise price** | **Weighted average**<br> **remaining life**<br> **(years)** | **Aggregate**<br> **intrinsic value** |
| &nbsp;&nbsp;Outstanding balance, December 31, 2024 | 2579 |  |  |  |
| &nbsp;&nbsp;**Outstanding balance, June 30, 2025** | **2579** | $**0.58** | **9.7** | $**255** |
| &nbsp;&nbsp;**Exercisable balance, June 30, 2025** | **440** | $**0.58** | **9.5** | $**255** |

---

------

**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

The total expense related to SARs granted in the three and six months ended June 30, 2025 was $0.2 million and $0.3 million, respectively (2024 - $nil). This expense is included in the share based compensation line on the unaudited condensed interim consolidated statements of loss and comprehensive loss. The share based compensation expense of the SARs granted in 2024 will be recognized in tranches over the derived service period, ranging from zero to two years, provided that the recipient is still employed or engaged by the Company.

**15. WARRANTS**

As discussed in Note 13, the May 2, 2025 Private Placement included 726,992 Pre-funded Warrants at a purchase price of $0.2999 per warrant each to purchase one common share which shall be immediately exercisable and expire when exercised in full, at an exercise price of $0.0001 per share. The Pre-Funded Warrants are classified as equity because they are freestanding financial instruments, are immediately exercisable, permit the holder to receive a fixed number of the Company's common shares and do not provide any guarantee of value or return. Due to the nominal exercise price and no expiration date, the Pre-funded Warrants were allocated a value of $0.2 million at issuance based on the number issued multiplied by $0.2999 per unit cash immediately received. There were no Pre-funded Warrants exercised during the three and six months ending June 30, 2025, and the total number of Pre-funded Warrants outstanding was 726,992 as of June 30, 2025.

The following summarizes the number of warrants outstanding as of June 30, 2025, not including the Pre-funded Warrants:

---

| | | |
|:---|:---|:---|
|  | **Number of warrants** | **Weighted average**<br> **exercise price** |
|  | Thousands |  |
| Balance, December 31, 2024 | 2384 | $9.90 |
| **Balance, June 30, 2025** | **2384** | $**9.90** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Date of expiry** | **Warrants**<br> **outstanding** | **Exercise**<br> **price** | **Grant date fair**<br> **value** | **Remaining life**<br> **in years** |
|  | Thousands |  |  |  |
| November 18, 2026 | 221 | $75.00 | $6729 | 1.39 |
| November 18, 2027 | 23 | 66.00 | 1055 | 2.39 |
| December 8, 2027 | 25 | 8.80 | 149 | 2.44 |
| September 21, 2028 | 691 | 2.50 | 712 | 3.23 |
| September 21, 2028 | 55 | 2.39 | 81 | 3.23 |
| March 21, 2029 | 1369 | 2.50 | 1120 | 3.73 |
|  | 2384 | $9.90 | $9846 | 3.33 |

---

**16. COMMITMENTS AND CONTINGENCIES**

**Provisions**

The Company's current known provisions and contingent liabilities consist of the following as of June 30, 2025:

---

| | | | |
|:---|:---|:---|:---|
|  | Legal disputes | Sales tax | Total |
| &nbsp;&nbsp;Balance as at December 31, 2024 | $4241 | $2695 | $6936 |
| &nbsp;&nbsp;Payments/Settlements | (4329) | (241) | (4570) |
| &nbsp;&nbsp;Additional provisions | 548 | 227 | 775 |
| &nbsp;&nbsp;Foreign currency translation | 10 |  | 10 |
| &nbsp;&nbsp;**Balance as at June 30, 2025** | $**470** | $**2681** | $**3151** |

---

The legal disputes balance as of June 30, 2025 involves a legal proceeding that was brought against Vessel Brand Inc., a wholly owned subsidiary of the Company, by the lessor of the warehousing and office space in Carlsbad, CA on June 2, 2025, in the Superior Court of California, County of San Diego. The lessor is claiming breach of lease and written guaranty agreements by the Company and is seeking damages for $0.4 million in unpaid rent, 10% interest on its damages, and reasonable attorneys' fees of the lessor. The Company has assessed the claims and concluded that it is probable that a liability has been incurred and the Company is able to reasonably estimate the loss of $0.5 million. As a result, without acknowledgement (explicitly or implicitly) of any amount of liability arising from this claim, the Company recognized a provision of $0.5 million to reflect the value of the claim. At June 30, 2025, this balance was reclassified from trade payables to contingencies on the unaudited condensed interim consolidated statement of financial position.

------

**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

The Sales tax relates to estimated amounts owed to certain jurisdictions in the Unites States for sales from the Company's JustCBD operations. The ending balance is recorded within contingencies on the unaudited condensed interim consolidated statement of financial position, and additions to the provision as a reduction of revenue on the unaudited condensed interim consolidated statements of loss and comprehensive loss.

On April 30, 2024, a group representing the sellers of Just Brands LLC to Flora in February 2022 (the "Plaintiffs") brought an action against the Company in the United States District Court for the Southern District of New York (the "Court") claiming that the Company failed to promptly issue additional shares in accordance with a specific formula set forth in the securities purchase agreement after the two-year anniversary of the closing, which occurred on February 24, 2024. The plaintiffs claim that they are entitled to 182,889 common shares and $38.0 million to complete the acquisition of Just Brands LLC. On March 27, 2025, the Court dismissed both the claims brought under the securities laws without prejudice and the state law claims for lack of subject matter jurisdiction because the parties did not have diversity of citizenship in order to maintain those claims in the Court. The Plaintiffs did not amend their complaint against the Company within the thirty-day period allotted by the Court, and, thus, as of April 28, 2025, this litigation is no longer active. On May 9, 2025, the Plaintiffs filed a new action in New York State Supreme Court claiming that the Company failed to issue additional shares in accordance with a specific formula set forth in the securities purchase agreement after the two-year anniversary of the closing, which occurred on February 24, 2024. The Plaintiffs seek specific performance of the issuance of shares as well as monetary damages. The Company has assessed the claims and concluded that it is probable that a liability has been incurred and that the Company is able to reasonably estimate the loss based on the fair value of 632,484 common shares of the Company. As at June 30, 2025, this value is $0.4 million and has been recorded in the contingencies line on the unaudited condensed interim consolidated statement of financial position.

**Legal proceedings**

The Company records liabilities for legal proceedings in those instances where it can reasonably estimate the amount of the loss and where liability is probable. The Company is engaged from time to time in various legal proceedings and claims that have arisen in the ordinary course of business. The outcome of all the proceedings and claims against the Company is subject to future resolution, including the uncertainties of litigation. Based on information currently known to the Company and after consultation with outside legal counsel, management believes that the probable ultimate resolution of any such proceedings and claims, individually or in the aggregate, will not have a material adverse effect on the financial condition of the Company, taken as a whole as at June 30, 2025.

On May 31, 2023, Maria Beatriz Fernandez Otero and Sara Cristina Jacome De Torres brought an action against the Company in the Ontario Superior Court of Justice claiming that the Company is obligated to issue 500,000 common shares (pre-splits) each for a purchase price of $0.05 per share. The plaintiffs claim that they are entitled to such shares as compensation for alleged consulting services performed. The Company disputes their claim and intends to vigorously defend against this action. The Company believes that an unfavorable settlement in this matter is remote, and, as such, has not accrued a liability as of June 30, 2025.

On May 31, 2023, Ramon Ricardo Castellanos Saenz and Miriam Ortiz brought an action against the Company in the Ontario Superior Court of Justice claiming that the Company is obligated to issue 1,500,000 common shares (pre-splits) each for a purchase price of $0.05 per share. The plaintiffs claim that they are entitled to such shares as compensation for alleged consulting services performed. The Company disputes their claim and intends to vigorously defend against this action. The Company believes that an unfavorable settlement in this matter is remote, and, as such, has not accrued a liability as of June 30, 2025.

**17. LOSS PER SHARE**

The Company calculates basic earnings per share based upon the weighted average number of common shares outstanding during the period, while the calculation of diluted earnings per share includes the dilutive effect of potential common shares outstanding during the period. The calculation of diluted earnings per share excludes all potential common shares if their inclusion would have an anti-dilutive effect. Restricted stock award recipients under the 2022 Plan have a non-forfeitable right to receive dividends declared by the Company and are therefore included in computing earnings per share. Pre-funded Warrants are included in the computing earnings per share because the exercise price of the Pre-funded Warrants is nominal and there are no conditions that must be satisfied prior to their exercise.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three months**<br> **ended** | **Three months** <br> **ended** | **Six months**<br> **ended** | **Six months**<br> **ended** |
|  | **June 30, 2025** | **June 30, 2024** | **June 30, 2025** | **June 30, 2024** |
| &nbsp;&nbsp;Stock options | 21 | 21 | 21 | 21 |
| &nbsp;&nbsp;Warrants | 2384 | 2384 | 2384 | 2384 |
| &nbsp;&nbsp;Pre-funded warrants | 727 |  | 727 |  |
| &nbsp;&nbsp;Restricted stock awards | 13 | 24 | 13 | 24 |
| &nbsp;&nbsp;Stock appreciation rights | 440 |  | 440 |  |
| &nbsp;&nbsp;JustCBD potential additional shares to settle contingent consideration | 632 | 632 | 632 | 632 |
| &nbsp;&nbsp;Total anti-dilutive | 4217 | 3061 | 4217 | 3061 |

---

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**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

**18. FINANCIAL INSTRUMENTS**

**Fair value**

The Company's financial instruments measured at amortized cost as at June 30, 2025 and December 31, 2024 consist of cash, trade and amounts receivable, trade payables, contingencies, accrued liabilities, lease liabilities, and debt and loans payable. The amounts reflected in the unaudited condensed interim consolidated statements of financial position approximate fair value due to the short-term maturity of these instruments.

Financial instruments recorded at the reporting date at fair value are classified into one of three levels based upon the fair value hierarchy. Items are categorized based on inputs used to derive fair value based on:

Level 1 - quoted prices that are unadjusted in active markets for identical assets or liabilities

Level 2 - inputs other than quoted prices included in level 1 that are observable for the asset/liability either directly or indirectly; and

Level 3 - inputs for the instruments are not based on any observable market data.

The Company's contingent purchase considerations consist of the estimated fair value of contingent purchase consideration from the acquisitions of JustCBD in February 2022 and Original Hemp in March 2023. The amount for JustCBD is measured at FVPL as a Level 2 fair value financial instrument within the fair value hierarchy as at June 30, 2025. The fair value was determined using a simplified calculation which took the expected shares to be issued (632,484) multiplied by the Company's closing share price at June 30, 2025 ($0.58). The amount for Original Hemp is measured at FVPL as a Level 3 fair value financial instrument within the fair value hierarchy as at June 30, 2025. The fair value was determined using discounted cash flow models utilizing two different rates, high (26.0%) and low (18.5%), to estimate the present value of the future cash outflows. As valuations of investments for which market quotations are not readily available are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Such changes may have a significant impact on the Company's financial condition or operating results.

The following tables present information about the Company's financial instruments and their classifications as at June 30, 2025 and December 31, 2024 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value.

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;Fair value measurements at June 30, 2025 using: |  |  |  |  |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| &nbsp;&nbsp;Financial assets: |  |  |  |  |
| &nbsp;&nbsp;Digital assets | $**1141** | $**-** | $**-** | $**1141** |
| &nbsp;&nbsp;Financial liabilities: |  |  |  |  |
| &nbsp;&nbsp;Contingent purchase consideration from asset acquisitions and business combinations | $**-** | $**367** | $**148** | $**515** |
| &nbsp;&nbsp;Fair value measurements at December 31, 2024 using: |  |  |  |  |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| &nbsp;&nbsp;Financial liabilities: |  |  |  |  |
| &nbsp;&nbsp;Contingent purchase consideration from asset acquisitions and business combinations | $- | $651 | $184 | $835 |

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The less than $0.1 million change in the Level 3 contingent purchase consideration from the Original Hemp acquisition was recorded as a gain in the unrealized gain from changes in fair value on the unaudited condensed interim consolidated statements of loss and comprehensive loss.

**19. SEGMENTED INFORMATION**

The Company reports its financial results for the following two operating segments, which are also its reportable segments: commercial and wholesale (primarily the Phatebo and TruHC subsidiaries), which sell pharmaceutical products, and house of brands (primarily JustCBD and Vessel subsidiaries), which sells a mix of products across multiple categories including food and beverage, cannabis accessories and technology, personal care and wellness. TruHC, acquired in April 2024, is included in commercial and wholesale, while, AV, acquired in June 2024, and United, acquired in February 2025, are included in house of brands. These segments reflect how the Company's operations are managed, how the Company Chief Executive Officer, who is the chief operating decision maker, allocates resources and evaluates performance, and how the Company's internal management financial reporting is structured. The chief operating decision maker uses net income to evaluate income generated from segment assets in deciding whether to reinvest profits into the segment or into other parts of the Company, such as for acquisitions. Net income is used to monitor actual results versus budget and prior year, which is used to assess the performance of the segment.

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**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

The Company's operates its manufacturing and distribution business within its United States, Germany and Australia subsidiaries. Management has defined the reportable segments of the Company based on this internal business unit reporting, which is by major product line, and aggregates similar businesses into the house of brands segment below. The Corporate segment reflects balances and expenses that do not directly influence business unit operations and includes the Company's long-term investments. The eliminations represent sales within the house of brands segment.

The following table shows information regarding the Company's segments for the six months ended June 30, 2025.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Commercial &<br>Wholesale** | **House of<br>Brands** | **Corporate &<br>Eliminations** | **Total** |
| Revenue | $16748 | $12188 | $(2354) | $26582 |
| Cost of sales | 15723 | 7495 | (2354) | 20864 |
| Gross profit | 1025 | 4693 |  | 5718 |
| Consulting and management fees | 912 | 2394 | 797 | 4103 |
| Promotion and communication | 1 | 1726 | 123 | 1850 |
| Share based compensation |  |  | 344 | 344 |
| Depreciation and amortization | 347 | 30 |  | 377 |
| Impairment expense |  |  | 46 | 46 |
| Gain on disposal of insolvent subsidiaries | (11632) |  | 10470 | (1162) |
| Changes in financial instruments fair value |  | (36) | (415) | (451) |
| Interest expense, net | 97 | 25 | 25 | 147 |
| Other segment items (1) | 399 | 1571 | 1674 | 3644 |
| Net income (loss) before income taxes | 10901 | (1017) | (13064) | (3180) |
| Income taxes | (10) |  |  | (10) |
| Net income (loss) from continuing operations | $10911 | $(1017) | $(13064) | $(3170) |

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The following table shows information regarding the Company's segments for the three months ended June 30, 2025.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Commercial &<br>Wholesale** | **House of<br>Brands** | **Corporate &<br>Eliminations** | **Total** |
| Revenue | $9881 | $6223 | $(1308) | $14796 |
| Cost of sales | 9391 | 3883 | (1308) | 11966 |
| Gross profit | 490 | 2340 |  | 2830 |
| Consulting and management fees | 485 | 1268 | 449 | 2202 |
| Promotion and communication |  | 933 | 12 | 945 |
| Share based compensation |  |  | 172 | 172 |
| Depreciation and amortization | 180 | 15 |  | 195 |
| Changes in financial instruments fair value |  |  | (146) | (146) |
| Interest expense, net | 72 | 4 | 20 | 96 |
| Other segment items (1) | 18 | 928 | 880 | 1826 |
| Net loss before income taxes | (265) | (808) | (1387) | (2460) |
| Income taxes | (48) |  |  | (48) |
| Net loss from continuing operations | $(217) | $(808) | $(1387) | $(2412) |

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**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

The following table shows information regarding the Company's segments for the six months ended June 30, 2024.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Commercial &<br>Wholesale** | **House of<br>Brands** | **Corporate &<br>Eliminations** | **Total** |
| Revenue | $20981 | $15144 | $(2411) | $33714 |
| Cost of sales | 19566 | 9538 | (2411) | 26693 |
| Gross profit | 1415 | 5606 |  | 7021 |
| Consulting and management fees | 1214 | 2939 | 498 | 4651 |
| Promotion and communication |  | 2214 | 15 | 2229 |
| Share based compensation |  |  | 22 | 22 |
| Depreciation and amortization | 184 | 147 |  | 331 |
| Impairment expense | 31 | 1027 |  | 1058 |
| Interest expense, net | 28 | 1 | (32) | (3) |
| Changes in financial instruments fair value |  | (57) | (208) | (265) |
| Other segment items (1) | 200 | 1918 | 2818 | 4936 |
| Net loss before income taxes | (242) | (2583) | (3113) | (5938) |
| Income taxes | 93 |  |  | 93 |
| Net loss from continuing operations | $(335) | $(2583) | $(3113) | $(6031) |

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The following table shows information regarding the Company's segments for the three months ended June 30, 2024.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Commercial &<br>Wholesale** | **House of<br>Brands** | **Corporate &<br>Eliminations** | **Total** |
| Revenue | $9639 | $7124 | $(1080) | $15683 |
| Cost of sales | 8831 | 4765 | (1080) | 12516 |
| Gross profit | 808 | 2359 |  | 3167 |
| Consulting and management fees | 617 | 1457 | 275 | 2349 |
| Promotion and communication |  | 1119 | 6 | 1125 |
| Share based compensation |  |  | 12 | 12 |
| Depreciation and amortization | 175 | 82 |  | 257 |
| Impairment expense | (3) | 163 |  | 160 |
| Interest expense, net | (7) |  | (18) | (25) |
| Changes in financial instruments fair value |  | (57) | (815) | (872) |
| Other segment items (1) | 161 | 1212 | 1480 | 2853 |
| Net loss before income taxes | (135) | (1617) | (940) | (2692) |
| Income taxes | (35) |  |  | (35) |
| Net loss from continuing operations | $(100) | $(1617) | $(940) | $(2657) |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) Other segment items include professional fees, general and administrative, travel expenses, research and development, operating lease expense, bad debt expense, other expenses (net), and foreign exchange loss (income).

Other significant items and disaggregation by geographic area:

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;As at | **June 30, 2025** | **December 31, 2024** |
| &nbsp;&nbsp;**Assets** |  |  |
| &nbsp;&nbsp;Commercial & Wholesale | $**11560** | $14642 |
| &nbsp;&nbsp;House of Brands | **9015** | 7422 |
| &nbsp;&nbsp;Corp & Eliminations | **2092** | 4163 |
|  | $**22667** | $26227 |

---

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**Flora Growth Cor** **p.**<br>**Notes to the unaudited condensed interim consolidated financial statements** For the three and six months ended June 30, 2025 and 2024<br> (In thousands of United States dollars, except shares and per share amounts)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the three**<br> **months ended** | **For the three**<br> **months ended** | **For the six months**<br> **ended** | **For the six months**<br> **ended** |
|  | **June 30, 2025** | **June 30, 2024** | **June 30, 2025** | **June 30, 2024** |
| &nbsp;&nbsp;**Net Sales** |  |  |  |  |
| &nbsp;&nbsp;United States | $**4393** | $5605 | $9057 | $12123 |
| &nbsp;&nbsp;Germany | **9881** | 9638 | 16748 | 20981 |
| &nbsp;&nbsp;Australia | **489** | 241 | 643 | 241 |
| &nbsp;&nbsp;United Kingdom | **33** | 199 | 134 | 369 |
|  | $**14796** | $15683 | $26582 | $33714 |

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**20. SUBSEQUENT EVENTS** 

**REVERSE STOCK SPLIT**

On July 31, 2025, the Company announced that it will effect a 1-for-39 share consolidation of the Company's issued and outstanding common shares (the "Reverse Stock Split"). The Reverse Stock Split will be effective at 5:00 p.m. Eastern Time on August 3, 2025. The Company's common shares are expected to begin trading on The Nasdaq Capital Market on a post-Reverse Stock Split basis at the open of trading on August 4, 2025.

The Company's shareholders previously approved the Reverse Stock Split at the annual and special meeting of shareholders held on June 30, 2025 at a ratio ranging from 1-for-10 up to a ratio of 1-for-100, such ratio and the implementation and timing of such Reverse Stock Split to be determined by the Company's board of directors at its sole discretion, if at all, within one year of the date the proposal is approved by shareholders.

Upon the effectiveness of the Reverse Stock Split, every thirty-nine shares of the issued and outstanding common shares will be automatically combined and reclassified into one issued and outstanding common share. The Reverse Stock Split will not affect any shareholder's ownership percentage of the common shares, alter the par value of the common shares or modify any voting rights or other terms of the common shares. The number of authorized shares of common shares under the Company's Articles will remain unchanged. No fractional shares will be issued in connection with the Reverse Stock Split. Any fractional interest as a result of the Reverse Stock Split will be rounded up to the nearest whole common share.

**OTHER**

Subsequent to June 30, 2025, a total of 4,166 options were forfeited.

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**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations**

*The following discussion and analysis provides information we believe is relevant to an assessment and understanding of our results of operations, financial condition, liquidity and cash flows for the periods presented. This discussion should be read in conjunction with (a) our unaudited condensed consolidated financial statements and related notes contained elsewhere in Part I, Item 1, "Financial Statements" of this Quarterly Report, and (b) Part I, Item 1A "Risk Factors", Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited consolidated financial statements and related notes in our 2024 Annual Report. As discussed in the section above titled "Cautionary Statement Regarding Forward-Looking Statements," the following discussion contains forward-looking statements that are based upon our current expectations, including with respect to our future revenues and operating results. Our actual results may differ materially from those anticipated in such forward-looking statements as a result of various factors. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included under Part II, Item 1A below and included under Part I, Item 1A in our 2024 Annual Report.*

*Amounts are expressed in United States dollars ("$" or "USD") unless otherwise stated to be in Euro ("€"). Amounts stated in foreign currencies include approximate USD amounts based on exchange rates on June 30, 2025. Variance, ratio, and percentage changes in this section are based on unrounded numbers. This section reports the Company's activities through June 30, 2025, unless otherwise indicated.*

**Overview of our Business** 

We are a multi-national cannabis company that manufactures and distributes consumer packaged goods and distributes medicinal cannabis and pharmaceutical products. Flora exists to create a world where the benefits of cannabis are accessible to everyone. Our business strategy is built on two core pillars: House of Brands and Commercial & Wholesale. This strategy allows us to access to markets around the globe based on the legal standing of cannabis in the geographical locations in which we operate. Our approach to executing our strategy enables us to develop distribution networks, build customer bases, establish operations as regulatory frameworks evolve and allow for expanded access to cannabis and its derivatives.

Our brand portfolio consists of a mix of products across multiple categories, including food and beverage, nutraceuticals, cannabis accessories and technology, personal care, and wellness. Flora's consumer packaged goods brands allow Flora to move assertively into nascent markets, develop customer bases and distribution channels, and gather consumer insights that would not be possible with traditional cannabis sales alone. Through this channel we seek to build loyalty, credibility and enjoy healthy margins that help to support the rapid growth of our business.

*House of Brands*

JustCBD is Flora's leading consumer packaged goods brand. JustCBD was launched in 2017 with a mission to bring high-quality, trustworthy, and budget-friendly CBD products to market. JustCBD products are available for purchase in smoke and vape shops, clinics, spas and pet stores, as well as other independent non-traditional retail channels. JustCBD's products are both internally and third-party lab-tested to ensure quality.

Vessel is Flora's cannabis accessory and technology brand currently servicing the United States and Canada through direct-to-consumer and retail sales. Vessel's products include cannabis consumption accessories, personal storage, and travel accessories for the vape and dry herb categories, which are sold to consumers, dispensaries, smoke shops and cannabis brands. Vessel has been fully integrated into JustCBD and now benefits from operational, logistical and sales synergies with JustCBD.

Australian Vaporizers ("AV") was founded in 2010 and has become a prominent online retailer of vaporizers, hardware, and accessories in Australia. AV is one of the leading online authorities for aromatherapy products, specializing in dry herb vaporizers. It provides vapes, accessories and knowledge to enthusiasts and newcomers alike. Its website www.australianvaporizers.com.au is a popular destination in the country with a large database of satisfied customers.

During 2025, we acquired United Beverage Distribution Inc. ("United"). United was founded in 2024 and is a distributor of cannabis-infused drinks. It holds supply agreements with several large national and regional beverage retailers.

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*Commercial & Wholesale*

The Company's Commercial and Wholesale pillar encompasses the distribution of pharmaceutical products to international markets. This pillar is anchored by Flora's wholly owned subsidiary, Phatebo, a multi-national operator in pharmaceutical and medical cannabis distribution, with principal operations in Germany. Phatebo is a wholesale pharmaceutical distribution company with import and export capabilities of a wide range of pharmaceutical goods and medical cannabis products to treat a variety of health indications, including drugs related to cancer therapies, ADHD, multiple sclerosis and anti-depressants, among others. Phatebo holds a license for the Trade in Narcotic Drugs (including the cannabis sales license amendment) and a wholesale trading license, both of which are issued by BfArM (the largest drug approval authority in Europe). Phatebo is focused on distributing pharmaceutical products within 28 countries globally, primarily in Europe, but also with sales to Asia, Latin America, and North America. In November 2018, Phatebo also received a medical cannabis import and distribution license. We intend to leverage Phatebo's existing network of pharmacies as Flora begins to move medicinal cannabis from third parties into Germany. Additionally, the Phatebo warehouse provides a logistics outpost for Flora's growing product portfolio and distribution network within the European Union.

During 2024, we acquired TruHC, an early-stage cannabis company based in Hamburg, Germany. TruHC holds a GDP wholesale, and an EU-GMP processing and production license for medical cannabis. It also owns and operates an EU-GMP certified laboratory ready for instant cannabis analysis as required for the newly legalized cannabis social clubs. The facility of TruHC is a flexible production space with EU-GMP certified modules that can be extended and customized for any production process from processing to extraction. TruHC also holds a narcotic license with EU-GMP certified storage.

**Factors Impacting our Business** 

*Challenges in realization of overhead reductions.* Management has taken, and continues to implement, various cost-saving initiatives to lower overhead costs. However, the Company has not yet reached the critical balance in reducing overhead to meet both the existing and potential market demand in aggregate. The Company strives to attain sufficient growth to cover its overhead to reach profitability. If the Company fails to grow its business or reduce its operating expenses further in the long term, it will continue to face significant cash flow deficiencies in the future and continue to be reliant on debt and/or equity financing to fund operations.

*Consistent profitability and positive operating cash flows.* A key determinant of the Company's success is to deliver profitable results and positive cashflows from operating activities. The Company's results have not yet achieved the prerequisite consistency to achieve self-sufficiency. Since its inception, only the third quarter of 2023 yielded net income and positive cashflows from operating activities. There is no assurance that the Company will be able to produce adequate levels of sustained profitability and become cash flow positive. These factors, amongst others, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2 of the Company's unaudited condensed interim consolidated financial statements for the six months ended June 30, 2025. For more information, see Item 1A "Risk Factors" in the Company's 2024 Annual Report.

*Acquisition strategy disadvantages include significant transaction costs and liabilities of our acquirees.* The Company has historically been opportunistic and pursues acquisitions from time to time that management believes will be complementary to or synergistic to the Company's existing business. However, any such acquisitions require the Company to incur heightened upfront transaction costs and require the Company to assume certain liabilities from the acquired companies. In addition, while the Company believes such acquisitions will provide enhanced value in the long term, it is possible that the anticipated synergies from the acquisition may never be realized.

*Diversification of cashflows.* Our sources of cash are diversified across geographic and product lines. Revenues are concentrated primarily in Germany and the United States, spanning pharmaceuticals, hemp and non-hemp consumer products and medicinal cannabis.

*International cannabis developments.* Flora's growth is embedded in the expansion, regulation and legalization of medicinal and recreational cannabis and cannabis derivative products across the world. While medicinal cannabis has been regulated at the federal level in multiple countries, the Company is focused on the most robust markets in Germany and the European Union. We remain tuned to international developments as potentially lucrative medicinal cannabis markets open.

*Product evolution and brand acceptance.* As the cannabis industry continues to change, divergent regulations and the corresponding resources required to introduce high-quality products are expected to impact our market share. Gaining access to continuously evolving and superior products remains a critical success factor. Our ultimate ability to produce and acquire products meeting stringent quality control standards drives the extent of consumer acceptance. Furthermore, the intrinsic value within our brands, including JustCBD and Vessel, is subject to evolving consumer sentiment.

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*Regulatory proficiency and adoption.* The markets in which Flora operates are highly regulated and require extensive experience in navigating the associated complexities. We have assembled a team with deep knowledge of the regulatory and governance environments in which the Company operates. Fundamental expertise entails compliance with product approvals, import permits, export permits, distribution licenses and other pertinent licenses.

*Integration of acquired companies.* Our growth has been fueled substantially by the acquisitions of JustCBD, Vessel and Phatebo. Our continued ability to extract incremental synergies from a group of diversified entities is a key determinant of our ability to expand organically.

**Public Company Costs**

We are a public company which requires additional staff and the implementation of processes and procedures to address public company regulatory requirements and customary practices. We expect to continue to incur substantial additional annual expenses for, among other things, directors' and officers' liability insurance and additional internal and external costs for investor relations, accounting, audit, legal, and other functions.

**Minimum Bid Price Requirement**

On February 25, 2025, the Company was notified by the Nasdaq Stock Market, LLC ("Nasdaq") that it was not in compliance with the minimum bid price requirement of $1.00 per share for 30 consecutive business days as set forth in Rule 5550(a)(2) of the Nasdaq Listing Rules (the "Minimum Bid Price Requirement"). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has 180 calendar days, or until August 25, 2025, to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the Company will need to maintain a minimum closing bid price of $1.00 or more for at least 10 consecutive trading days before August 25, 2025, unless Nasdaq Listing Qualifications Department exercises its discretion to extend this ten-day period pursuant to Nasdaq Listing Rule 5810(c)(3)(H). If the common shares do not achieve compliance by August 25, 2025, the Company may be eligible for an additional 180-day period to regain compliance, provided that it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards of the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and provides written notice to Nasdaq of its intention to cure the deficiency during the second compliance period, for example, by effecting a reverse stock split, if necessary.

On July 31, 2025, the Company announced that it will effect a 1-for-39 share consolidation (the "Reverse Stock Split") of the Company's issued and outstanding common shares by the filing of Articles of Amendment to the Company's amended and restated Articles of Incorporation with the Ontario Ministry of Public and Business Service Delivery and Procurement. The Reverse Stock Split will become effective at 5:00 p.m. Eastern Time on August 3, 2025. The Company anticipates that the common shares will begin to trade on a post-Reverse Stock Split basis as of the opening of the Nasdaq Capital Market on August 4, 2025.

**Key Components of Results of Operations** 

*Revenue*

The Company primarily generates revenue as a distributor of pharmaceutical goods, and a manufacturer and reseller of a range of cannabis-based and complementary products. The Company has two major revenue groups, which are also its two reportable segments:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) House of Brands; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Commercial and Wholesale.

These segments reflect how the Company's operations are managed, how the Company's Chief Executive Officer, who is the chief operating decision maker, allocates resources and evaluates performance, and how the Company's internal management financial reporting is structured.

The Company operates its manufacturing and distribution business through its subsidiaries in the United States, Germany and Australia.

The Company uses the following five-step contract-based analysis of transactions to determine if, when and how much revenue can be recognized:

1. Identify the contract with a customer;

2. Identify the performance obligations in the contract;

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3. Determine the transaction price;

4. Allocate the transaction price to the performance obligations in the contract; and

5. Recognize revenue when or as the Company satisfies the performance obligations.

Revenue is recognized at the transaction price, which is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods to a customer. Gross revenue excludes duties and taxes collected on behalf of third parties. Revenue is presented net of expected price discounts, sales returns, customer rebates and other incentives. The Company's cannabis consumption accessory products include a six-month warranty, for which the Company accrues the estimated liability based on historical and expected claim costs.

The Company's contracts with customers for the sales of products consist of one performance obligation. Revenue from product sales is recognized at the point in time when control is transferred to the customer, which is on shipment or delivery, depending on the contract terms. The Company's payment terms generally range from 0 to 30 days from the transfer of control, and sometimes up to six months.

*Cost of sales*

The Company includes the cost of raw materials and supplies, purchased finished goods and changes in inventory reserves in cost of sales for each of its two reportable segments. Raw materials include the purchase cost of the materials, freight-in and duty. Finished goods include the cost of direct materials and labor and a proportion of manufacturing overhead allocated based on normal production capacity. Inventory reserves for excess and obsolete inventory are based upon quantities on hand, projected volumes from demand forecasts and net realizable value. The primary factors that can impact cost of goods sold on a period-to-period basis include the volume of products sold, the mix of products sold, third-party quality costs, transportation, overhead allocations and changes in inventory provisions.

*Operating Expenses*

The Company's operating expenses are apportioned based on the following categories:

* *Consulting and management fees* include salary and benefit expenses for employees, directors and consultants for the Company's corporate activities, other than those included in one of general and administrative, share-based compensation, and research and development.

* *Professional fees* include legal, audit and other expenses incurred by third-party service providers.

* *General and administrative* include certain public company costs, merchant fees and temporary labor and subcontractor costs for the Company's operating subsidiaries.

* *Promotion and communication expenses* consist primarily of services engaged in marketing and promotion of our products and costs associated with initiatives and development programs and salary and benefit expenses for certain employees.

* *Travel expenses* relate to flight, lodging and incidental expenses for attending conferences, events and key business meetings.

* *Share-based compensation* includes the cost of vesting of the Company's equity awards, including share options, restricted share awards, and stock appreciation rights ("SARs").

* *Research and development expenses* primarily consist of salary and benefit expenses for employees engaged in research and development activities, as well as other general costs associated with R&D activities.

* *Operating lease expense* represents the cost of the Company's operating leases, primarily consisting of real estate and equipment.

* *Depreciation and amortization expense* is provided on a straight-line basis over the corresponding assets' estimated useful lives. 

* *Bad debt expense* consists of changes in the provision for the Company's expected credit losses. The Company utilizes a provision matrix to estimate lifetime expected credit losses.

* *Asset impairment* includes the difference between the fair value and carrying amount of the asset group. An impairment loss is recognized when the sum of projected undiscounted cash flows is less than the carrying value of an asset group.

* *Gain on disposal of insolvent subsidiaries* includes the difference between the fair value of any consideration received and the carrying values of the net assets of subsidiaries that have been deconsolidated as a result of filing for bankruptcy.

* *Other expenses (income), net* include miscellaneous expenses that do not fit the criteria for recognition in another category.

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*Non-Operating (Income) Expenses*

Non-operating expenses include interest income and expenses, foreign exchange (gains) losses and unrealized losses and gains from changes in fair value. Interest is primarily related to the Company's lease liabilities and operating lines of credit. Foreign exchange is largely related to the revaluation of balances denominated in foreign currencies to U.S. dollars. Unrealized losses and gains from changes in fair value pertain to fluctuations in the fair values of the Company's digital assets, investments and liabilities.

*Income Tax*

Income tax consists primarily of income taxes related to U.S. federal and state income taxes and income taxes in foreign jurisdictions in which we conduct business.

**Results of Operations**

The following tables provide sets forth the Company's consolidated results of operations for the three and six months ended June 30, 2025 and 2024 (in thousands). The period-to-period comparisons of the Company's historical results are not necessarily indicative of the results that may be expected in the future. The results of operations data have been derived from our unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2025 and 2024 included elsewhere in this Quarterly Report.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the three<br>months ended<br>June 30, 2025** | **For the three<br>months ended<br>June 30, 2024** | **For the Six<br>months ended<br>June 30, 2025** | **For the Six<br>months ended<br>June 30, 2024** |
| &nbsp;&nbsp;Revenue | $14796 | $15683 | $26582 | $33714 |
| &nbsp;&nbsp;Cost of sales | 11966 | 12516 | 20864 | 26693 |
| &nbsp;&nbsp;Gross profit | 2830 | 3167 | 5718 | 7021 |
| &nbsp;&nbsp;Consulting and management fees | 2202 | 2349 | 4103 | 4651 |
| &nbsp;&nbsp;Professional fees | 707 | 1146 | 1290 | 1599 |
| &nbsp;&nbsp;General and administrative | 760 | 587 | 1230 | 1029 |
| &nbsp;&nbsp;Promotion and communication | 945 | 1125 | 1850 | 2229 |
| &nbsp;&nbsp;Travel expenses | 106 | 123 | 204 | 192 |
| &nbsp;&nbsp;Share based compensation | 172 | 12 | 344 | 22 |
| &nbsp;&nbsp;Research and development | 73 | 62 | 186 | 109 |
| &nbsp;&nbsp;Operating lease expense | 162 | 199 | 329 | 364 |
| &nbsp;&nbsp;Depreciation and amortization | 195 | 257 | 377 | 331 |
| &nbsp;&nbsp;Bad debt expense | 259 | 172 | 330 | 219 |
| &nbsp;&nbsp;Asset impairment |  | 160 | 46 | 1058 |
| &nbsp;&nbsp;Gain on disposal of insolvent subsidiaries |  |  | (1162) |  |
| &nbsp;&nbsp;Other (income) expenses, net | (185) | 513 | 134 | 1241 |
| &nbsp;&nbsp;Operating loss | (2566) | (3538) | (3543) | (6023) |
| &nbsp;&nbsp;Non-operating income | (106) | (846) | (363) | (85) |
| &nbsp;&nbsp;Net loss before taxes | (2460) | (2692) | (3180) | (5938) |
| &nbsp;&nbsp;Income tax | (48) | (35) | (10) | 93 |
| &nbsp;&nbsp;Net loss for the period | $(2412) | $(2657) | $(3170) | $(6031) |

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*Insolvency of Certain Canadian and German Subsidiaries*

On March 14, 2025, each of Franchise Global Health Inc., Franchise Cannabis Corp., CBDMed Therapeutics Inc., Harmony Health One Inc., 1200325 B.C. Ltd., and Fayber Technologies Inc. (collectively, the "Canadian insolvent subsidiaries") made a voluntary assignment in bankruptcy pursuant to section 49 Bankruptcy and Insolvency Act (Canada) in the appropriate Canadian jurisdictions. On March 18, 2025, ACA Mueller ADAG Pharma Vertriebs GmbH, Sativa Verwaltungs GmbH, and Sativa Verwaltungs GmbH and Co. KG (together "the German insolvent subsidiaries") each made filings for insolvency proceedings under German insolvency laws in Kontanz, Germany. Each of the Canadian insolvent subsidiaries and the German insolvent subsidiaries was a direct or indirect subsidiary of the Company and was part of the Company's acquisition of FGH in December 2022. The Company supported the insolvencies as part of ongoing strategic changes to cut costs and streamline operations. The combined net loss and comprehensive loss of the Canadian insolvent subsidiaries and the German insolvent subsidiaries was less than $0.1 million and $0.4 million in the six months ended June 30, 2025 and 2024, respectively.

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*Stop Sale Order by Florida Department of Agriculture and Consumer Services Division of Food Safety (the "Department")*

On October 31, 2023, the Department issued 340 stop sale orders on hemp extract products distributed by Just Brands primarily on the basis that such products were determined to be attractive to children with the product and/or labels in the shape of an animal, human, or cartoon; or bears any reasonable resemblance to an existing candy product, or branded food product. As a result, Just Brands has stopped distributing these products in the State of Florida. There is no assurance that these products can be sold in another jurisdiction, or at all.

On January 22, 2024, the Department issued a stop sale order on 231 hemp extract and other products distributed by Just Brands primarily on the basis that such products were determined to be attractive to children with the product and/or labels in the shape of an animal, human, or cartoon; or bears any reasonable resemblance to an existing candy product, or branded food product. As a result, Just Brands has stopped distributing these products in the State of Florida. There is no assurance that these products can be sold in another jurisdiction, or at all.

On April 2, 2024, the Department issued a stop sale order on 84 hemp extract and other products distributed by High Roller primarily on the basis that such products were determined to be attractive to children with the product and/or labels in the shape of an animal, human, or cartoon; or bears any reasonable resemblance to an existing candy product, or branded food product. As a result, Higher Roller has stopped distributing these products in the State of Florida. There is no assurance that these products can be sold in another jurisdiction, or at all.

On May 7, 2024, Just Brands and the Department agreed to a settlement and general release, whereby Just Brands will remove the products subject to the Stop Sales Orders from the state of Florida, pay the Department $60,500 to reimburse the Department's attorney's fees, and accept a five-year revocation of its food permit in the state of Florida. By signing the release, Just Brands waived, settled and released all claims it had or might have against the Department.

On June 27, 2024, Just Brands and the Department agreed to a settlement and general release, whereby High Roller will remove the products subject to the Stop Sales Orders from the state of Florida, destroy products containing controlled substances, pay the Department $5,000 to reimburse the Department's attorney's fees, and accept a two-year suspension of the manufacture, distribution and sale of gummy hemp extract products in the state of Florida. By signing the release, High Roller waived, settled and released all claims it had or might have against the Department.

The Company estimates that the disruption from these stop sale orders had an unfavorable impact of $0.7 million on revenue during the six months ended June 30, 2024.

For the Three Months Ended June 30, 2025 and 2024

*Revenue*

Revenue totaled $14.8 million and $15.7 million for the three months ended June 30, 2025 and 2024, respectively. The decrease was primarily driven by the following:

* Phatebo contributed $9.7 million in the three months ended June 30, 2025 compared to $9.7 million in the three months ended June 30, 2024.

* JustCBD contributed $3.2 million in the three months ended June 30, 2025 compared to $4.4 million in the three months ended June 30, 2024.

* Vessel contributed $1.0 million in the three months ended June 30, 2025, compared to $1.4 million in the three months ended June 30, 2024.

* AV contributed $0.5 million in the three months ended June 30, 2025, compared to $0.2 million in the three months ended June 30, 2024.

* These decreases were partially offset by the acquisitions of TruHC and United, which contributed $0.2 million and $0.2 million, respectively, in the three months ended June 30, 2025, compared to $nil and $nil, respectively, in the three months ended June 30, 2024.

*Gross Profit*

Gross profit totaled $2.8 million and $3.2 million for the three months ended June 30, 2025 and 2024, respectively. The decrease was primarily driven by the decreased margins in the Commercial and Wholesale segment, where Phatebo contributed $0.6 million in the three months ended June 30, 2025 compared to $0.8 million in the three months ended June 30, 2024. JustCBD contributed $1.6 million in the three months ended June 30, 2025, compared to $1.5 million for the three months ended June 30, 2024. Vessel contributed $0.6 million in the three months ended June 30, 2025, compared to $0.8 million in the three months ended June 30, 2024. As a percentage of net sales, or gross margin, the Company reported 19% and 20% for the three months ended June 30, 2025 and 2024, respectively. The decrease is primarily due to unfavorable mix, with a higher percentage of sales at Phatebo which distributes relatively lower margin pharmaceuticals.

------

*Operating Expenses*

Operating expenses totaled $5.4 million and $6.7 million for the three months ended June 30, 2025 and 2024, respectively. The decrease is driven by reduced professional fees and other expenses.

*Consulting and Management Fees*

Consulting and management fees were $2.2 million for the three months ended June 30, 2025 compared to $2.3 million for the three months ended June 30, 2024. These fees are related to employment and consulting contracts with most of the Company's management, as well as directors. The decrease is primarily due to a reduction in the Company's total headcount across all its business units.

*Professional Fees*

Professional fees totaled $0.7 million for the three months ended June 30, 2025 compared to $1.1 million for the three months ended June 30, 2024. These expenses are associated with legal, accounting and audit services. The decrease is primarily due to costs incurred in 2024 related to the acquisitions of TruHC and AV.

*General and Administrative Expenses*

General and administrative expenses totaled $0.8 million for the three months ended June 30, 2025 compared to $0.6 million for the three months ended June 30, 2024. The primary expenses included in both periods were filing services and shareholder communications, as well as professional dues and subscriptions.

*Promotion and Communication Expenses*

Promotion and communication expenses totaled $0.9 million for the three months ended June 30, 2025 compared to $1.1 million for the three months ended June 30, 2024. The decrease is due to reduced sales as well as cost-cutting initiatives by the Company aimed at the minimization of corporate overhead. Promotion expenses incurred in the period largely relate to the nature of JustCBD's business model, which is centered around promoting its products as a method for stimulating revenue growth.

*Travel Expenses*

Travel expenses totaled $0.1 million for both the three months ended June 30, 2025 and the three months ended June 30, 2024. These expenses were for various trips related to the subsidiaries and the Company's promotional activities.

*Share-based Compensation Expenses* 

Share based compensation expenses totaled $0.2 million for the three months ended June 30, 2025 compared to less than $0.1 million for the three months ended June 30, 2024. These expenses represent the amortization of the fair value of share-based payments. The increase is due to the grants of SARs to key employees during the year ended December 31, 2024.

*Research and Development Expenses*

Research and development expenses totaled $0.1 million for both the three months ended June 30, 2025 and the three months ended June 30, 2024. Research and development expenses consist primarily of contract research fees, manufacturing, consultant fees, and costs related to the launch of new brands for the Vessel business.

*Operating Lease Expenses*

Operating lease expenses totaled $0.2 million for both the three months ended June 30, 2025 and the three months ended June 30, 2024.

------

*Depreciation and Amortization Expense*

Depreciation and amortization expenses totaled $0.2 million for the three months ended June 30, 2025 compared to $0.3 million for the three months ended June 30, 2024. The increase is primarily due to the recent acquisitions of TruHC and United.

*Bad Debt Expense*

Bad debt expense totaled $0.3 million for the three months ended June 30, 2025 compared to $0.2 million for the three months ended June 30, 2024. The amounts reflect the Company's estimate of lifetime expected losses related to outstanding trade receivables.

*Asset Impairment*

Asset impairment totaled $nil for the three months ended June 30, 2025 compared to $0.2 million for the three months ended June 30, 2024. The amount in 2024 represents impairment of the property, plant and equipment at JustCBD as well as the patents at Vessel.

*Other (Income) Expenses*

Other income totaled $0.2 million for the three months ended June 30, 2025 compared to other expense of $0.5 million for the three months ended June 30, 2024. For both periods, this income and expense consists mainly of insurance, repairs and maintenance and royalties partially offset by miscellaneous incomes. The decrease in expense in the three months ended June 30, 2025 was driven by reduced royalty fees, as well as a gain recorded on a supplier agreement at TruHC.

*Non-operating (Income) Expenses*

We realized $0.1 million in non-operating income for the three months ended June 30, 2025 compared to non-operating income of $0.8 million for the three months ended June 30, 2024. This income and expense consist of unrealized (gains) losses from changes in fair value, interest (income) expense and foreign exchange loss (gain). The increase in income is primarily due to a less than $0.1 million gain on the value of the contingent consideration related to the JustCBD and Original Hemp acquisitions during the three months ended June 30, 2025 compared to a $0.8 million gain during the three months ended June 30, 2024.

*Income Tax*

We recognized less than $0.1 million in income tax benefit for both the three months ended June 30, 2025 and the three months ended June 30, 2024. Our effective tax rate during the periods ended June 30, 2025 and 2024 was 2.0% and 1.3%, respectively. We maintain valuation allowances when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in the tax provision in the period of change. In determining whether a valuation allowance is required, we consider such factors as prior earnings history, expected future earnings, carry-back and carry-forward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. We continue to believe our deferred tax assets are not more-likely-than-not to be realized and a full valuation allowance remains recorded against net deferred taxes as of June 30, 2025 and 2024.

*Net Loss* 

We recorded a net loss of $2.4 million for the three months ended June 30, 2025 compared to a net loss of $2.7 million for the three months ended June 30, 2024. This decrease in net loss is driven by lower operating expenses partially offset by lower gross profit and non-operating income.

For the Six Months Ended June 30, 2025 and 2024

*Revenue*

Revenue totaled $26.6 million and $33.7 million for the six months ended June 30, 2025 and 2024, respectively. The decrease was primarily driven by the following:

* Phatebo contributed $16.6 million in the six months ended June 30, 2025 compared to $21.0 million in the six months ended June 30, 2024.

* JustCBD contributed $6.7 million in the six months ended June 30, 2025 compared to $9.8 million in the six months ended June 30, 2024.

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* Vessel contributed $2.1 million in the six months ended June 30, 2025, compared to $2.7 million in the six months ended June 30, 2024.

* AV contributed $0.6 million in the six months ended June 30, 2025, compared to $0.2 million in the six months ended June 30, 2024.

* These decreases were partially offset by the acquisitions of TruHC and United, which contributed $0.2 million and $0.4 million, respectively, in the six months ended June 30, 2025, compared to $nil and $nil, respectively, in the six months ended June 30, 2024.

*Gross Profit*

Gross profit totaled $5.7 million and $7.0 million for the six months ended June 30, 2025 and 2024, respectively. The decrease was primarily driven by the decreased sales at JustCBD, which contributed $3.2 million in the six months ended June 30, 2025 compared to $4.2 million in the six months ended June 30, 2024. Phatebo contributed $1.2 million in the six months ended June 30, 2025, compared to $1.4 million in the six months ended June 30, 2024. Vessel contributed $1.2 million in the six months ended June 30, 2025, compared to $1.3 million in the six months ended June 30, 2024. As a percentage of net sales, or gross margin, the Company reported 22% and 21% for the six months ended June 30, 2025 and 2024, respectively. The increase is primarily due to slight increases in margins at both Phatebo and Just CBD.

*Operating Expenses*

Operating expenses totaled $9.3 million and $13.0 million for the six months ended June 30, 2025 and 2024, respectively. The decrease is driven by a $1.2 million gain on the disposal and deconsolidation of insolvent subsidiaries, as well as lower headcount-related costs and asset impairments.

*Consulting and Management Fees*

Consulting and management fees were $4.1 million for the six months ended June 30, 2025 compared to $4.7 million for the six months ended June 30, 2024. These fees are related to employment and consulting contracts with most of the Company's management, as well as directors. The decrease is primarily due to a reduction in the Company's total headcount across all its business units.

*Professional Fees*

Professional fees totaled $1.3 million for the six months ended June 30, 2025 compared to $1.6 million for the six months ended June 30, 2024. These expenses are associated with legal, accounting and audit services.

*General and Administrative Expenses*

General and administrative expenses totaled $1.2 million for the six months ended June 30, 2025 compared to $1.0 million for the six months ended June 30, 2024. The primary expenses included in both periods were filing services and shareholder communications, as well as professional dues and subscriptions.

*Promotion and Communication Expenses*

Promotion and communication expenses totaled $1.9 million for the six months ended June 30, 2025 compared to $2.2 million for the six months ended June 30, 2024. The decrease is due to reduced sales as well as cost-cutting initiatives by the Company aimed at the minimization of corporate overhead. Promotion expenses incurred in the period largely relate to the nature of JustCBD's business model, which is centered around promoting its products as a method for stimulating revenue growth.

*Travel Expenses*

Travel expenses totaled $0.2 million for both the six months ended June 30, 2025 and the six months ended June 30, 2024. These expenses were for various trips related to the subsidiaries and the Company's promotional activities.

*Share-based Compensation Expenses* 

Share based compensation expenses totaled $0.3 million for the six months ended June 30, 2025 compared to less than $0.1 million for the six months ended June 30, 2024. These expenses represent the amortization of the fair value of share-based payments. The increase is due to the grants of SARs to key employees during the year ended December 31, 2024.

------

*Research and Development Expenses*

Research and development expenses totaled $0.2 million for the six months ended June 30, 2025 compared to $0.1 million for the six months ended June 30, 2024. Research and development expenses consist primarily of contract research fees, manufacturing, consultant fees, and costs related to the launch of new brands for the Vessel business.

*Operating Lease Expenses*

Operating lease expenses totaled $0.3 million for the six months ended June 30, 2025 compared to $0.4 million for the six months ended June 30, 2024.

*Depreciation and Amortization Expense*

Depreciation and amortization expenses totaled $0.4 million for the six months ended June 30, 2025 compared to $0.3 million for the six months ended June 30, 2024. The increase is primarily due to the recent acquisitions of TruHC and United.

*Bad Debt Expense*

Bad debt expense totaled $0.3 million for the six months ended June 30, 2025 compared to $0.2 million for the six months ended June 30, 2024. The amounts reflect the Company's estimate of lifetime expected losses related to outstanding trade receivables.

*Asset Impairment*

Asset impairment totaled less than $0.1 million for the six months ended June 30, 2025 compared to $1.1 million for the six months ended June 30, 2024. The amount in 2025 represents impairment of an operating lease right of use asset in Florida. The amount in 2024 represents impairment of the long-lived assets at Vessel and JustCBD.

*Gain on Disposal of Insolvent Subsidiaries*

Gain on disposal of insolvent subsidiaries totaled $1.2 million for the six months ended June 30, 2025 compared to $nil for the six months ended June 30, 2024. The gain was the result of certain subsidiaries of the Company filing for bankruptcy during March 2025. The Company deconsolidated these subsidiaries when it lost control upon each subsidiaries' filing for bankruptcy.

*Other (Income) Expenses*

Other expense totaled $0.1 million for the six months ended June 30, 2025 compared to $1.2 million for the six months ended June 30, 2024. For both periods, this income and expense consists mainly of insurance, repairs and maintenance and royalties partially offset by miscellaneous incomes. The decrease in expense in the six months ended June 30, 2025 was driven by reduced royalty fees, as well as a gain recorded on a supplier agreement at TruHC.

*Non-operating (Income) Expenses*

We realized $0.4 million in non-operating income for the six months ended June 30, 2025 compared to non-operating income of $0.1 million for the six months ended June 30, 2024. This income and expense consist of unrealized (gains) losses from changes in fair value, interest (income) expense and foreign exchange loss (gain). The increase in income is primarily due to a $0.3 million gain on the value of the contingent consideration related to the JustCBD and Original Hemp acquisitions during the six months ended June 30, 2025 compared to a $0.2 million gain during the six months ended June 30, 2024. There was also a $0.1 million gain on the revaluation of the Company's digital assets recorded during the six months ended June 30, 2025.

*Income Tax*

We recognized less than $0.1 million in income tax benefit and $0.1 million in income tax expense for the six months ended June 30, 2025 and 2024, respectively. Our effective tax rate during the periods ended June 30, 2025 and 2024 was 0.3% and -1.6%, respectively. We maintain valuation allowances when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in the tax provision in the period of change. In determining whether a valuation allowance is required, we consider such factors as prior earnings history, expected future earnings, carry-back and carry-forward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. We continue to believe our deferred tax assets are not more-likely-than-not to be realized and a full valuation allowance remains recorded against net deferred taxes as of June 30, 2025 and 2024.

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*Net Loss* 

We recorded a net loss of $3.2 million for the six months ended June 30, 2025 compared to a net loss of $6.0 million for the six months ended June 30, 2024. This decrease in net loss is driven by a $1.2 million gain on the disposal and deconsolidation of insolvent subsidiaries as well as lower operating expenses of $2.6 million.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are non-U.S. GAAP financial measures that do not have any standardized meaning prescribed by U.S. GAAP and may not be comparable to similar measures presented by other companies. We calculate EBITDA as total net income (loss), plus (minus) income taxes (recovery), plus (minus) interest expense (income), plus depreciation and amortization. We calculate Adjusted EBITDA as EBITDA plus (minus) non-operating expense (income), plus share based compensation expense, plus asset impairment charges, plus (minus) unrealized loss (gain) from changes in fair value, plus charges related to the flow-through of inventory step-up on business combinations, plus other acquisition and transaction costs. Management believes that EBITDA and Adjusted EBITDA provide meaningful and useful financial information as these measures demonstrate the operating performance of the business.

The reconciliation of the Company's Adjusted EBITDA, a non-U.S. GAAP financial measure, to net income (loss), the most directly comparable U.S. GAAP financial measure, for the six months ended June 30, 2025 is presented in the table below:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;(In thousands of United States dollars) | **JustCBD** | **United** | **Vessel** | **Germany<br>(3)** | **AV** | **Corporate<br>& Other** | **Consolidated** |
| &nbsp;&nbsp;**Net income (loss)** | $**39** | $**(369)** | $**(636)** | $**(716)** | $**(50)** | $**(1438)** | $**(3170)** |
| &nbsp;&nbsp;Income tax benefit |  |  |  | (10) |  |  | (10) |
| &nbsp;&nbsp;Interest expense (income) | 25 | 2 | (3) | 97 | 1 | 25 | 147 |
| &nbsp;&nbsp;Depreciation and amortization | 19 | 3 | 2 | 347 | 6 |  | 377 |
| &nbsp;&nbsp;**EBITDA** | **83** | **(364)** | **(637)** | **(282)** | **(43)** | **(1413)** | **(2656)** |
| &nbsp;&nbsp;Non-operating income (1) | (1) |  |  |  | (9) | (49) | (59) |
| &nbsp;&nbsp;Share based compensation |  |  |  |  |  | 344 | 344 |
| &nbsp;&nbsp;Asset impairment |  |  |  |  |  | 46 | 46 |
| &nbsp;&nbsp;Unrealized gain from changes in fair value (2) | (36) |  |  |  |  | (415) | (451) |
| &nbsp;&nbsp;Charges related to the flow-through of inventory step-up on business combinations |  | 67 |  |  |  |  | 67 |
| &nbsp;&nbsp;Other acquisition and transaction costs |  |  |  |  |  | 164 | 164 |
| &nbsp;&nbsp;**Adjusted EBITDA** | $**46** | $**(297)** | $**(637)** | $**(282)** | $**(52)** | $**(1323)** | $**(2545)** |

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The reconciliation of the Company's Adjusted EBITDA, a non-U.S. GAAP financial measure, to net (loss) income, the most directly comparable U.S. GAAP financial measure, for the six months ended June 30, 2024 is presented in the table below:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;(In thousands of United States dollars) | **JustCBD** | **Vessel** | **Germany<br>(3)** | **AV** | **Corporate<br>& Other** | **Consolidated** |
| &nbsp;&nbsp;**Net (loss) income** | $**(1331)** | $**(1318)** | $**(51)** | $**66** | $**(3397)** | $**(6031)** |
| &nbsp;&nbsp;Income tax expense |  |  | 77 |  | 16 | 93 |
| &nbsp;&nbsp;Interest expense (income) | 1 |  | 65 |  | (69) | (3) |
| &nbsp;&nbsp;Depreciation and amortization | 110 | 34 | 178 | 3 | 6 | 331 |
| &nbsp;&nbsp;**EBITDA** | **(1220)** | **(1284)** | **269** | **69** | **(3444)** | **(5610)** |
| &nbsp;&nbsp;Non-operating loss (1) | 1 |  |  |  | 182 | 183 |
| &nbsp;&nbsp;Share based compensation |  |  |  |  | 22 | 22 |
| &nbsp;&nbsp;Asset impairment | 93 | 934 |  |  | 31 | 1058 |
| &nbsp;&nbsp;Unrealized gain from changes in fair value (2) | (57) |  |  |  | (208) | (265) |
| &nbsp;&nbsp;Charges related to the flow-through of inventory step-up on business combinations |  |  |  | 20 |  | 20 |
| &nbsp;&nbsp;Other acquisition and transaction costs |  |  | 216 | 33 | 20 | 269 |
| &nbsp;&nbsp;**Adjusted EBITDA** | $**(1183)** | $**(350)** | $**485** | $**122** | $**(3397)** | $**(4323)** |

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The reconciliation of the Company's Adjusted EBITDA, a non-U.S. GAAP financial measure, to net loss, the most directly comparable U.S. GAAP financial measure, for the three months ended June 30, 2025 is presented in the table below:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;(In thousands of United States dollars) | **JustCBD** | **United** | **Vessel** | **Germany<br>(3)** | **AV** | **Corporate<br>& Other** | **Consolidated** |
| &nbsp;&nbsp;**Net loss** | $**(78)** | $**(316)** | $**(383)** | $**(218)** | $**(30)** | $**(1387)** | $**(2412)** |
| &nbsp;&nbsp;Income tax benefit |  |  |  | (48) |  |  | (48) |
| &nbsp;&nbsp;Interest expense (income) | 3 | 1 | (1) | 72 |  | 21 | 96 |
| &nbsp;&nbsp;Depreciation and amortization | 9 | 2 | 1 | 180 | 3 |  | 195 |
| &nbsp;&nbsp;**EBITDA** | **(66)** | **(313)** | **(383)** | **(14)** | **(27)** | **(1366)** | **(2169)** |
| &nbsp;&nbsp;Non-operating income (1) |  |  |  |  | (8) | (48) | (56) |
| &nbsp;&nbsp;Share based compensation |  |  |  |  |  | 172 | 172 |
| &nbsp;&nbsp;Unrealized gain from changes in fair value (2) |  |  |  |  |  | (146) | (146) |
| &nbsp;&nbsp;Charges related to the flow-through of inventory step-up on business combinations |  | 40 |  |  |  |  | 40 |
| &nbsp;&nbsp;Other acquisition and transaction costs |  |  |  |  |  | 21 | 21 |
| &nbsp;&nbsp;**Adjusted EBITDA** | $**(66)** | $**(273)** | $**(383)** | $**(14)** | $**(35)** | $**(1367)** | $**(2138)** |

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The reconciliation of the Company's Adjusted EBITDA, a non-U.S. GAAP financial measure, to net (loss) income, the most directly comparable U.S. GAAP financial measure, for the three months ended June 30, 2024 is presented in the table below:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;(In thousands of United States dollars) | **JustCBD** | **Vessel** | **Germany<br>(3)** | **AV** | **Corporate<br>& Other** | **Consolidated** |
| &nbsp;&nbsp;**Net (loss) income** | $**(1442)** | $**(241)** | $**(45)** | $**66** | $**(995)** | $**(2657)** |
| &nbsp;&nbsp;Income tax expense (benefit) |  |  | 12 |  | (47) | (35) |
| &nbsp;&nbsp;Interest expense (income) |  |  | 29 |  | (54) | (25) |
| &nbsp;&nbsp;Depreciation and amortization | 62 | 16 | 172 | 3 | 4 | 257 |
| &nbsp;&nbsp;**EBITDA** | **(1380)** | **(225)** | **168** | **69** | **(1092)** | **(2460)** |
| &nbsp;&nbsp;Non-operating loss (1) |  |  |  |  | 51 | 51 |
| &nbsp;&nbsp;Share based compensation |  |  |  |  | 12 | 12 |
| &nbsp;&nbsp;Asset impairment | 93 | 70 |  |  | (3) | 160 |
| &nbsp;&nbsp;Unrealized gain from changes in fair value (2) | (57) |  |  |  | (815) | (872) |
| &nbsp;&nbsp;Charges related to the flow-through of inventory step-up on business combinations |  |  |  | 20 |  | 20 |
| &nbsp;&nbsp;Other acquisition and transaction costs |  |  | 216 | 33 | 20 | 269 |
| &nbsp;&nbsp;**Adjusted EBITDA** | $**(1344)** | $**(155)** | $**384** | $**122** | $**(1827)** | $**(2820)** |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) Non-operating loss (income) includes foreign exchange losses (gains).

&nbsp;&nbsp;&nbsp;&nbsp;(2) Unrealized gain from changes in fair value includes changes in the value of the Company's contingent consideration associated with its acquisition of JustCBD.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Germany includes the Company's main operating entities in Germany, Phatebo and TruHC

**Liquidity and Capital Resources**

Since the Company's inception, we have funded our operations and capital spending through cash flows from product sales and proceeds from the sale of our capital stock. The Company is generating cash from sales and is deploying its capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term to support our business growth and expansion. We have generated significant operating losses and negative cash flows from operations as reflected in our accumulated deficit and unaudited condensed interim consolidated statements of cash flows. We expect to continue to incur operating losses and negative cash flows in the foreseeable future. Our current principal sources of liquidity are cash and cash equivalents provided by our operations and prior equity offerings. Cash consists primarily of cash on deposit with banks. Cash was $1.5 million and $6.1 million as of June 30, 2025, and December 31, 2024, respectively. As of June 30, 2025, the Company's current working capital, anticipated operating expenses and net losses, and the uncertainties surrounding its ability to raise additional capital as needed, raise substantial doubt as to whether existing cash and cash equivalents will be sufficient to meet its obligations as they come due within twelve months from the date the unaudited condensed interim consolidated financial statements were issued. The unaudited condensed interim consolidated financial statements do not include any adjustments for the recovery and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

------

The Company's ability to execute its operating plans depends on its ability to obtain additional funding through equity offerings, debt financing, or other forms of financing to meet planned growth requirements and to fund future operations, which may not be available on acceptable terms, or at all. If we are unable to raise the requisite funds, we will need to curtail or cease operations. See Note 2 to the Company's unaudited condensed interim consolidated financial statements included elsewhere in this Quarterly Report and to the Company's audited consolidated financial statements for the years ended December 31, 2024, and 2023, included in the 2024 Annual Report, for more information, and "Part I., Item IA Risk Factors - Management has performed an analysis of our ability to continue as a going concern, and has determined that, based on our current financial position, there is a substantial doubt about our ability to continue as a going concern" in the Company's 2024 Annual Report. We have based our estimates as to how long we expect we will be able to fund our operations on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. In the long term, we will be required to obtain additional financing to fund our current planned operations, which may consist of incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds. There can be no assurance that the Company will be able to obtain additional funds on terms acceptable to it, on a timely basis or at all. The failure to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the results of operations, and financial condition. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing shareholders will be diluted. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

The Company's primary uses of cash are for working capital requirements and capital expenditures. Additionally, from time to time, it may use capital for acquisitions and other investing and financing activities. Working capital is used principally for the Company's personnel as well as costs related to the manufacture and production of its products. The Company's capital expenditures consist primarily of additional facilities, improvements in existing facilities and product development.

**Cash Flows**

The following table sets forth the major components of the Company's unaudited condensed interim consolidated statements of cash flows for the periods presented.

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;(In thousands of United States dollars) | **For the six<br>months ended<br>June 30, 2025** | **For the six<br>months ended<br>June 30, 2024** |
| &nbsp;&nbsp;Cash used in operating activities | $(5616) | $(1605) |
| &nbsp;&nbsp;Cash from financing activities | 1512 | 3368 |
| &nbsp;&nbsp;Cash used in investing activities | (636) | (33) |
| &nbsp;&nbsp;Effect of exchange rate change | 194 | 47 |
| &nbsp;&nbsp;Change in cash during the period | (4546) | 1777 |
| &nbsp;&nbsp;Cash, beginning of period | 6052 | 4385 |
| &nbsp;&nbsp;Cash, end of period | $1506 | $6162 |

---

*Cash used in Operating Activities*

Net cash used in operating activities in the six months ended June 30, 2025 was $5.6 million compared to net cash used in operating activities of $1.6 million for the six months ended June 30, 2024. Cash flows used in operating activities for the periods ended June 30, 2025 and 2024 were due primarily to operating expenses exceeding the gross profit for the periods.

*Cash provided by Financing Activities*

Net cash provided by financing activities for the six months ended June 30, 2025 totaled $1.5 million compared to $3.4 million for the six months ended June 30, 2024. Cash flows provided from financing activities for the period ending June 30, 2025 were due to the sale of common shares of the Company in May 2025 as well as net borrowings on the credit facilities in Germany through the Company's Phatebo subsidiary. Cash flows provided from financing activities for the period ending June 30, 2024 were due to the sale of common shares of the Company in April 2024 as well as net borrowings on the credit facilities in Germany through the Company's Phatebo subsidiary.

------

*Cash used in Investing Activities*

Net cash used in investing activities for the six months ended June 30, 2025 totaled $0.6 million compared to net cash used in investing activities during the six months ended June 30, 2024 of less than $0.1 million. Cash flows used in investing activities for the period ended June 30, 2025 were primarily related to the acquisition of digital assets. Cash flows used in investing activities for the period ended June 30, 2024 were primarily related to the purchases of property, plant and equipment.

*Working Capital*

As of June 30, 2025, we had working capital of ($0.6) million, including $1.5 million of cash. The Company's primary cash flow needs are for the development of its operating activities, administrative expenses and for general working capital to support growing sales with related receivables and payables.

**Funding Requirements**

Our continued existence is dependent on our ability to generate positive cash flows through synergies within our operations, expanding our production capacity and geographic footprint, exploring strategic partnerships, and pursuing accretive acquisitions to supplement our organic growth. We are committed to attaining a level of sustained growth that will effectively offset our overhead costs, thereby paving the path to achieving profitability. We will be required in the future to raise additional capital through either equity or debt financings. To date, we have raised capital through multiple equity offerings. On May 2, 2025, the Company closed a private placement offering of 3,133,011 common shares of the Company at a price of $0.30 per common share and 726,992 pre-funded warrants at a price of $0.2999 per warrant for gross proceeds of $1.2 million, of which the Company immediately invested $1.0 million in digital assets. On December 16, 2024, the Company closed a registered direct offering of 2,850,000 units of the Company at a price of $1.25 per unit for gross proceeds of $3.6 million. On December 10, 2024 and December 11, 2024, the Company sold an aggregate of 425,000 of the Company's common shares at a price of $1.67 per common share for gross proceeds of $0.7 million pursuant to separate subscription agreements entered into between the Company and certain institutional investors. On April 8, 2024, the Company closed a registered direct offering of 1,700,000 common shares of the Company at a price of $1.90 per common share for gross proceeds of $3.2 million. There were no other equity offerings in the periods ended June 30, 2025 and June 30, 2024.

***Debt***

In addition to the equity offerings described above, the Company also has access to credit facilities through its Phatebo subsidiary. The credit facilities total *€*2.4 million with three different German banks and are secured by default guarantees. On June 30, 2025, the outstanding amount was *€2.3* million ($2.7 million USD) and was due within the next twelve months. The credit facilities have interest rates ranging from 4.76% to 5.19% per year and does not have a set maturity date. The interest rate is reset every time a new amount is drawn.

As part of the acquisition of United on February 4, 2025, the Company issued promissory notes with five-year maturities that accrue interest at a rate of 6% per annum in an aggregate principal amount of $2.1 million issued to a group of shareholders of United on January 30, 2025. The promissory notes require the first payments of principal and interest to be made in February 2026. As of June 30, 2025, the total outstanding amount of these promissory notes was $2.2 million, $0.3 million of which is due within the next 12 months as of the date hereof. Of the total amount outstanding at June 30, 2025, $1.9 million was owed to related parties. These promissory notes were secured by payments guarantees and a default interest rate of 11% upon default.

------

**Off-Balance Sheet Arrangements**

As of June 30, 2025, the Company did not have any off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on its results of operations or financial condition, including, and without limitation, such considerations as liquidity and capital resources.

**Contractual Obligations**

At June 30, 2025, the Company had the following contractual obligations to make future payments, representing contracts and other commitments that are known and committed:

---

| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;(In thousands of United States dollars) | **Total** | **Less than 1<br>Year** | **1 - 3 Years** | **More than 3<br>Years** |
| &nbsp;&nbsp;Sales tax (1) | $2681 | $2681 | $- | $- |
| &nbsp;&nbsp;Legal disputes (1) | 470 | 470 |  |  |
| &nbsp;&nbsp;Contingent purchase consideration (2) | 515 | 515 |  |  |
| &nbsp;&nbsp;Operating lease obligations (3) | 3344 | 544 | 1931 | 869 |
| &nbsp;&nbsp;Debt (4) | 5349 | 2981 | 1309 | 1059 |
| &nbsp;&nbsp;Total | $12359 | $7191 | $3240 | $1928 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) See Note 16 of the Company's unaudited condensed interim consolidated financial statements, included elsewhere in this Quarterly Report.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Contingent purchase consideration related to the February 2022 acquisition of JustCBD and the March 2023 acquisition of Original Hemp.

&nbsp;&nbsp;&nbsp;&nbsp;(3) See Note 12 of the Company's unaudited condensed interim consolidated financial statements, included elsewhere in this Quarterly Report.

&nbsp;&nbsp;&nbsp;&nbsp;(4) See Note 11 of the Company's unaudited condensed interim consolidated financial statements, included elsewhere in this Quarterly Report.

**Critical Accounting Estimates**

For information regarding our critical accounting policies and estimates, see "Critical Accounting Estimates" included in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Annual Report.

**Recently Adopted Accounting Principles**

Except as discussed below, there were no new accounting standards issued during the six months ended June 30, 2025 that impacted the Company. See Note 3, Significant Accounting Policies, of the notes to the consolidated financial statements for the year ended December 31, 2024 for a discussion of recently issued accounting standards.

**Adoption of accounting standards and amendments**

In December 2023, the FASB issued ASU 2023-08, Crypto Assets (Subtopic 350-60), which addresses the accounting and disclosure requirements for certain crypto assets. The guidance required entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. For all entities, the ASU's amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those years. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period.. The Company has adopted ASU 2023-08 effective as of January 1, 2025 and the disclosures around the Company's digital assets are reflective of that adoption.

------

**Item 3. Quantitative and Qualitative Disclosures About Market Risk**

Not applicable.

**Item 4. Controls and Procedures**

**Evaluation of Disclosure Controls and Procedures**

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act and the regulations promulgated thereunder) as of June 30, 2025 (the "Evaluation Date"). Based on such evaluation, those officers have concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective.

**Changes in Internal Control over Financial Reporting**

There have been no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

------

**PART II**

**Item 1. Legal Proceedings**

There have been no material changes to the legal proceedings described in Item 3 of our 2024 Annual Report, other than as disclosed in Note 16 of the Company's unaudited condensed interim consolidated financial statements, included in Item 1 of Part I of this Quarterly Report.

**Item 1A. Risk Factors**

Except as discussed below, there have been no material changes to the risk factors described in the 2024 Annual Report.

***Our financial results and the market price of our common shares may be affected by the prices of digital assets.***

As part of our capital allocation strategy for assets that are not required to provide working capital for our ongoing operations, we have invested, and may invest more, in digital assets. The price of digital assets has historically been subject to price fluctuations and volatility. Moreover, digital assets are relatively novel and the application of securities laws and other regulations to such digital assets may be unclear in some respects. It is possible that regulators may interpret laws and/or regulations in a manner that adversely affects the liquidity or value of digital assets.

Any decrease in the fair value of our digital assets could require us to incur an unrealized loss on the digital asset investment, and such charge could be material to our financial results for the applicable reporting period, which may create significant volatility in our reported earnings. Any decrease in reported earnings or increased volatility of such earnings could have a material adverse effect on the market price of our common shares. In addition, the application of generally accepted accounting principles in the United States with respect to digital assets remains uncertain in some respects, and any future changes in the manner in which we account for our digital assets could have a material adverse effect on our financial results and the market price of our common shares.

In addition, if investors view the value of our common shares as dependent upon or linked to the value or change in the value of our digital asset holdings, the price of our digital assets may significantly influence the market price of our common shares.

**If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our digital assets, we may lose some or all of our digital assets and our financial condition and results of operations could be materially adversely affected.**

Security breaches and cyberattacks are of particular concern with respect to our investment in digital assets. While we use highly reviewed and audited custody solutions, a successful security breach or cyberattack could result in a partial or total loss of our digital assets in a manner that may not be covered by insurance or indemnity provisions of our custody agreements with those custodians. Such a loss could have a material adverse effect on our financial condition and results of operations.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds**

On May 2, 2025, the Company entered into a securities purchase agreement with certain investors (the "Investors") in connection with the issuance and sale by the Company to the Investors via a private placement pursuant to Rule506(b) of Regulation D under the Securities Act (the "Private Placement") of an aggregate of 3,133,011 common shares of the Company, no par value per share at a purchase price of $0.30 per share (the "May Common Shares") and 726,992 pre-funded warrants of the Company at a purchase price of $0.2999 per warrant (the "Pre-funded Warrants") each to purchase one common share which shall be immediately exercisable and expire when exercised in full, at an exercise price of $0.0001 per share. The Company filed a registration statement on Form S-3 on May 14, 2025 (File No. 333-287261), which was declared effective by the SEC on May 22, 2025, that registers the May Common Shares and common shares underlying Pre-Funded Warrants by the selling securityholders named therein. The net proceeds from the sale of the May Common Shares and Pre-funded Warrants were approximately $1.1 million after deducting estimated expenses relating to the Private Placement. The Company used $0.4 million of the net proceeds from the Private Placement to purchase Solana, $0.4 million to purchase Ethereum, $0.1 million to purchase Sui, $0.1 million to purchase Ripple, and the balance for general corporate and working capital purposes and to pay any fees and expenses in connection with the issuance of the May Common Shares and the Pre-funded Warrants.

------

**Item 3. Defaults Upon Senior Securities**

None.

**Item 4. Mine Safety Disclosures**

Not applicable.

**Item 5. Other Information**

(c) Trading Plans.

During the three months ended June 30, 2025, none of the directors or executive officers of the Company adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement," as that term is used in SEC regulations.

------

**Item 6. Exhibits**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| **Exhibit** <br>**Number** | **Description** | **Form** | **Exhibit** | **Filing Date** |
| [3.1](http://www.sec.gov/Archives/edgar/data/1790169/000159406219000087/ex21.htm) | [Articles of Incorporation of Flora Growth Corp.](http://www.sec.gov/Archives/edgar/data/1790169/000159406219000087/ex21.htm) | [1-A](http://www.sec.gov/Archives/edgar/data/1790169/000159406219000087/ex21.htm) | [2.1](http://www.sec.gov/Archives/edgar/data/1790169/000159406219000087/ex21.htm) | [10/10/2019](http://www.sec.gov/Archives/edgar/data/1790169/000159406219000087/ex21.htm) |
| [3.2](http://www.sec.gov/Archives/edgar/data/1790169/000159406221000068/ex33.htm) | [Articles of Amendment of Flora Growth Corp. effective April 30, 2021](http://www.sec.gov/Archives/edgar/data/1790169/000159406221000068/ex33.htm) | [F-1](http://www.sec.gov/Archives/edgar/data/1790169/000159406221000068/ex33.htm) | [3.3](http://www.sec.gov/Archives/edgar/data/1790169/000159406221000068/ex33.htm) | [11/16/2021](http://www.sec.gov/Archives/edgar/data/1790169/000159406221000068/ex33.htm) |
| [3.3](http://www.sec.gov/Archives/edgar/data/1790169/000147793223004313/flora_ex31.htm) | [Articles of Amendment of Flora Growth Corp. effective June 9, 2023](http://www.sec.gov/Archives/edgar/data/1790169/000147793223004313/flora_ex31.htm) | [8-K](http://www.sec.gov/Archives/edgar/data/1790169/000147793223004313/flora_ex31.htm) | [3.1](http://www.sec.gov/Archives/edgar/data/1790169/000147793223004313/flora_ex31.htm) | [07/07/2023](http://www.sec.gov/Archives/edgar/data/1790169/000147793223004313/flora_ex31.htm) |
| [3.4](http://www.sec.gov/Archives/edgar/data/1790169/000147793222004845/flora_ex993.htm) | [Bylaw No. 1-A of Flora Growth Corp.](http://www.sec.gov/Archives/edgar/data/1790169/000147793222004845/flora_ex993.htm) | [6-K](http://www.sec.gov/Archives/edgar/data/1790169/000147793222004845/flora_ex993.htm) | [99.3](http://www.sec.gov/Archives/edgar/data/1790169/000147793222004845/flora_ex993.htm) | [07/06/2022](http://www.sec.gov/Archives/edgar/data/1790169/000147793222004845/flora_ex993.htm) |
| [4.1](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-1.htm) | [Form of Unit Warrant](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-1.htm) | [F-1](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-1.htm) | [4.5](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-1.htm) | [11/16/2021](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-1.htm) |
| [4.2](http://www.sec.gov/Archives/edgar/data/1790169/000147793222009259/flora_ex41.htm) | [Form of Investor Warrant](http://www.sec.gov/Archives/edgar/data/1790169/000147793222009259/flora_ex41.htm) | [6-K](http://www.sec.gov/Archives/edgar/data/1790169/000147793222009259/flora_ex41.htm) | [4.1](http://www.sec.gov/Archives/edgar/data/1790169/000147793222009259/flora_ex41.htm) | [12/13/2022](http://www.sec.gov/Archives/edgar/data/1790169/000147793222009259/flora_ex41.htm) |
| [4.2](http://www.sec.gov/Archives/edgar/data/1790169/000147793222009259/flora_ex42.htm) | [Form of Placement Agent Warrant](http://www.sec.gov/Archives/edgar/data/1790169/000147793222009259/flora_ex42.htm) | [6-K](http://www.sec.gov/Archives/edgar/data/1790169/000147793222009259/flora_ex42.htm) | [4.2](http://www.sec.gov/Archives/edgar/data/1790169/000147793222009259/flora_ex42.htm) | [12/13/2022](http://www.sec.gov/Archives/edgar/data/1790169/000147793222009259/flora_ex42.htm) |
| [4.4](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-1.htm) | [Form of Investor Warrant](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-1.htm) | [8-K](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-1.htm) | [4.1](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-1.htm) | [09/21/2023](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-1.htm) |
| [4.5](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-2.htm) | [Form of Placement Agent Warrant](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-2.htm) | [8-K](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-2.htm) | [4.2](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-2.htm) | [09/21/2023](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit4-2.htm) |
| [4.6](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit10-3.htm) | [Form of Warrant Amendment](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit10-3.htm) | [8-K](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit10-3.htm) | [10.3](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit10-3.htm) | [09/21/2023](http://www.sec.gov/Archives/edgar/data/1790169/000106299323018364/exhibit10-3.htm) |
| [4.7](http://www.sec.gov/Archives/edgar/data/1790169/000106299325001745/exhibit10-2.htm) | [Form of Promissory Note of Flora Growth Corp., dated January 30, 2025](http://www.sec.gov/Archives/edgar/data/1790169/000106299325001745/exhibit10-2.htm) | [8-K](http://www.sec.gov/Archives/edgar/data/1790169/000106299325001745/exhibit10-2.htm) | [10.2](http://www.sec.gov/Archives/edgar/data/1790169/000106299325001745/exhibit10-2.htm) | [02/05/2025](http://www.sec.gov/Archives/edgar/data/1790169/000106299325001745/exhibit10-2.htm) |
| [4.8](http://www.sec.gov/ix?doc=/Archives/edgar/data/0001790169/000106299325008357/form8k.htm) | [Form of Pre-funded Warrant dated May 2, 2025](http://www.sec.gov/ix?doc=/Archives/edgar/data/0001790169/000106299325008357/form8k.htm) | [8-K](http://www.sec.gov/ix?doc=/Archives/edgar/data/0001790169/000106299325008357/form8k.htm) | [4.1](http://www.sec.gov/ix?doc=/Archives/edgar/data/0001790169/000106299325008357/form8k.htm) | [05/02/2025](http://www.sec.gov/ix?doc=/Archives/edgar/data/0001790169/000106299325008357/form8k.htm) |
| [4.9](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit4-1.htm) | [2022 Incentive Compensation Plan](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit4-1.htm) | [8-K](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit4-1.htm) | [4.1](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit4-1.htm) | [06/30/2025](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit4-1.htm) |
| [10.1](http://www.sec.gov/Archives/edgar/data/1790169/000106299325008357/exhibit10-1.htm) | [Form of Securities Purchase Agreement dated May 2, 2025](http://www.sec.gov/Archives/edgar/data/1790169/000106299325008357/exhibit10-1.htm) | [8-K](http://www.sec.gov/Archives/edgar/data/1790169/000106299325008357/exhibit10-1.htm) | [10.1](http://www.sec.gov/Archives/edgar/data/1790169/000106299325008357/exhibit10-1.htm) | [05/02/2025](http://www.sec.gov/Archives/edgar/data/1790169/000106299325008357/exhibit10-1.htm) |
| [10.2](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit10-1.htm) | [Form of Unvested Stock Appreciation Rights Agreement, dated June 30, 2025](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit10-1.htm) | [8-K](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit10-1.htm) | [10.1](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit10-1.htm) | [06/30/2025](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit10-1.htm) |
| [10.3](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit10-2.htm) | [Form of Vested Stock Appreciation Rights Agreement, dated June 30, 2025](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit10-2.htm) | [8-K](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit10-2.htm) | [10.2](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit10-2.htm) | [06/30/2025](https://www.sec.gov/Archives/edgar/data/1790169/000106299325012292/exhibit10-2.htm) |
| [31.1\*](exhibit31-1.htm) | [Certification of Principal Executive Officer of Flora Growth Corp. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](exhibit31-1.htm) |  |  |  |

---

------

---

| | |
|:---|:---|
| [31.2\*](exhibit31-2.htm) | [Certification of Principal Financial Officer of Flora Growth Corp. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](exhibit31-2.htm) |
| [32.1\*](exhibit32-1.htm) | [Certification of Principal Executive Officer of Flora Growth Corp. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](exhibit32-1.htm) |
| [32.2\*](exhibit32-2.htm) | [Certification of Principal Financial Officer of Flora Growth Corp. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](exhibit32-2.htm) |
| 101 | Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
| [101.SCH](flgc-20250630.xsd) | [Inline XBRL Taxonomy Extension Schema Document](flgc-20250630.xsd) |
| [101.CAL](flgc-20250630_cal.xml) | [Inline XBRL Taxonomy Extension Calculation Linkbase Document](flgc-20250630_cal.xml) |
| [101.DEF](flgc-20250630_def.xml) | [Inline XBRL Taxonomy Extension Definition Linkbase Document](flgc-20250630_def.xml) |
| [101.LAB](flgc-20250630_lab.xml) | [Inline XBRL Taxonomy Extension Label Linkbase Document](flgc-20250630_lab.xml) |
| [101.PRE](flgc-20250630_pre.xml) | [Inline XBRL Taxonomy Extension Presentation Linkbase Document](flgc-20250630_pre.xml) |
| 104 | Cover Page Interactive Data File |

---

# Indicates management contract or compensatory plan or arrangement.

\* Furnished herewith.

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**SIGNATURES**

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

---

| | | |
|:---|:---|:---|
| Dated: August 1, 2025 |  | Flora Growth Corp. |
|  | By: | */s/ Clifford Starke* |
|  |  | Clifford Starke |
|  |  | Chief Executive Officer (Principal Executive Officer) |
| Dated: August 1, 2025 |  |  |
|  | By: | */s/ Dany Vaiman* |
|  |  | *Dany Vaiman* |
|  |  | *Chief Financial Officer (Principal Financial and Accounting Officer)* |

---

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## Exhibit 31.1

------

**EXHIBIT 31.1**

**CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002**

I, Clifford Starke, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2025 of Flora Growth Corp.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: August 1, 2025 | */s/ Clifford Starke* |
|  | Clifford Starke |
|  | Chief Executive Officer |
|  | (Principal Executive Officer) |

---

------

## Exhibit 31.2

------

**EXHIBIT 31.2**

**CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002**

I, Dany Vaiman, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2025 of Flora Growth Corp.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: August 1, 2025 | */s/ Dany Vaiman* |
|  | Dany Vaiman |
|  | Chief Financial Officer |
|  | (Principal Financial and Accounting Officer) |

---

------

## Exhibit 32.1

------

**EXHIBIT 32.1**

**CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES OXLEY ACT OF 2002**

I, Clifford Starke, Chief Executive Officer of Flora Growth Corp. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 that, to the best of my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended June 30, 2025 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date: August 1, 2025 | */s/ Clifford Starke* |
|  | Clifford Starke |
|  | Chief Executive Officer |
|  | (Principal Executive Officer) |

---

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## Exhibit 32.2

------

**EXHIBIT 32.2**

**CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES OXLEY ACT OF 2002**

I, Dany Vaiman, Chief Financial Officer of Flora Growth Corp. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 that, to the best of my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended June 30, 2025 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date: August 1, 2025 | */s/ Dany Vaiman* |
|  | Dany Vaiman |
|  | Chief Financial Officer |
|  | (Principal Financial and Accounting Officer) |

---

------