Issuer CIK | 0001790169 |
Issuer CCC | XXXXXXXX |
DOS File Number | |
Offering File Number | 024-11096 |
Is this a LIVE or TEST Filing? | ☒ LIVE ☐ TEST |
Would you like a Return Copy? | ☐ |
Notify via Filing Website only? | ☐ |
Since Last Filing? | ☐ |
Name | |
Phone | |
E-Mail Address |
Exact name of issuer as specified in the issuer's charter | Flora Growth Corp. |
Jurisdiction of Incorporation / Organization |
ONTARIO, CANADA
|
Year of Incorporation | 2019 |
CIK | 0001790169 |
Primary Standard Industrial Classification Code | MEDICINAL CHEMICALS & BOTANICAL PRODUCTS |
I.R.S. Employer Identification Number | 00-0000000 |
Total number of full-time employees | 5 |
Total number of part-time employees | 8 |
Address 1 | 65 QUEEN STREET WEST, SUITE 800 |
Address 2 | |
City | TORONTO |
State/Country |
ONTARIO, CANADA
|
Mailing Zip/ Postal Code | M5H2M5 |
Phone | 416-861-2267 |
Name | Damian Lopez |
Address 1 | |
Address 2 | |
City | |
State/Country | |
Mailing Zip/ Postal Code | |
Phone |
Industry Group (select one) | ☐ Banking ☐ Insurance ☒ Other |
Cash and Cash Equivalents |
$
0.00 |
Investment Securities |
$
0.00 |
Total Investments |
$
|
Accounts and Notes Receivable |
$
238.00 |
Loans |
$
|
Property, Plant and Equipment (PP&E): |
$
0.00 |
Property and Equipment |
$
|
Total Assets |
$
238.00 |
Accounts Payable and Accrued Liabilities |
$
414082.00 |
Policy Liabilities and Accruals |
$
|
Deposits |
$
|
Long Term Debt |
$
0.00 |
Total Liabilities |
$
414082.00 |
Total Stockholders' Equity |
$
-413844.00 |
Total Liabilities and Equity |
$
238.00 |
Total Revenues |
$
0.00 |
Total Interest Income |
$
|
Costs and Expenses Applicable to Revenues |
$
1899714.00 |
Total Interest Expenses |
$
|
Depreciation and Amortization |
$
0.00 |
Net Income |
$
-1899714.00 |
Earnings Per Share - Basic |
$
-0.99 |
Earnings Per Share - Diluted |
$
-0.99 |
Name of Auditor (if any) | McGovern Hurley LLP |
Name of Class (if any) Common Equity | Common Stock |
Common Equity Units Outstanding | 70000000 |
Common Equity CUSIP (if any): | n/a |
Common Equity Units Name of Trading Center or Quotation Medium (if any) | n/a |
Preferred Equity Name of Class (if any) | n/a |
Preferred Equity Units Outstanding | 0 |
Preferred Equity CUSIP (if any) | n/a |
Preferred Equity Name of Trading Center or Quotation Medium (if any) | n/a |
Debt Securities Name of Class (if any) | n/a |
Debt Securities Units Outstanding | 0 |
Debt Securities CUSIP (if any): | n/a |
Debt Securities Name of Trading Center or Quotation Medium (if any) | n/a |
Check this box to certify that all of the following statements are true for the issuer(s)
☒
Check this box to certify that, as of the time of this filing, each person described in Rule 262 of Regulation A is either not disqualified under that rule or is disqualified but has received a waiver of such disqualification.
☒
Check this box if "bad actor" disclosure under Rule 262(d) is provided in Part II of the offering statement.
☐
Check the appropriate box to indicate whether you are conducting a Tier 1 or Tier 2 offering | ☐ Tier1 ☒ Tier2 |
Check the appropriate box to indicate whether the financial statements have been audited | ☐ Unaudited ☒ Audited |
Types of Securities Offered in this Offering Statement (select all that apply) |
☒Equity (common or preferred stock) |
☒Option, warrant or other right to acquire another security |
☒Security to be acquired upon exercise of option, warrant or other right to acquire security |
Does the issuer intend to offer the securities on a delayed or continuous basis pursuant to Rule 251(d)(3)? | ☒ Yes ☐ No |
Does the issuer intend this offering to last more than one year? | ☒ Yes ☐ No |
Does the issuer intend to price this offering after qualification pursuant to Rule 253(b)? | ☐ Yes ☒ No |
Will the issuer be conducting a best efforts offering? | ☒ Yes ☐ No |
Has the issuer used solicitation of interest communications in connection with the proposed offering? | ☐ Yes ☒ No |
Does the proposed offering involve the resale of securities by affiliates of the issuer? | ☐ Yes ☒ No |
Number of securities offered | 60000000 |
Number of securities of that class outstanding | 70000000 |
Price per security |
$
0.7500 |
The portion of the aggregate offering price attributable to securities being offered on behalf of the issuer |
$
50000000.00 |
The portion of the aggregate offering price attributable to securities being offered on behalf of selling securityholders |
$
0.00 |
The portion of the aggregate offering price attributable to all the securities of the issuer sold pursuant to a qualified offering statement within the 12 months before the qualification of this offering statement |
$
0.00 |
The estimated portion of aggregate sales attributable to securities that may be sold pursuant to any other qualified offering statement concurrently with securities being sold under this offering statement |
$
0.00 |
Total (the sum of the aggregate offering price and aggregate sales in the four preceding paragraphs) |
$
50000000.00 |
Underwriters - Name of Service Provider | Underwriters - Fees |
$
0.00 | |
Sales Commissions - Name of Service Provider | Dalmore Partners LLC | Sales Commissions - Fee |
$
900000.00 |
Finders' Fees - Name of Service Provider | Finders' Fees - Fees |
$
0.00 | |
Audit - Name of Service Provider | McGovern Hurley LLP | Audit - Fees |
$
20000.00 |
Legal - Name of Service Provider | Greenberg Traurig LLP | Legal - Fees |
$
160000.00 |
Promoters - Name of Service Provider | Promoters - Fees |
$
0.00 | |
Blue Sky Compliance - Name of Service Provider | DALV Consulting LLC, Dalmore Partners LLC, FINRA fees | Blue Sky Compliance - Fees |
$
63000.00 |
CRD Number of any broker or dealer listed: | 136352 |
Estimated net proceeds to the issuer |
$
48857000.00 |
Clarification of responses (if necessary) | Offering consists of 40,000,000 Units at $0.75 per Unit, each unit comprised of one common share and one-half of one warrant for an additional 20,000,000 common shares. Blue Sky Compliance 30,000 to DALV, 25,000 to Dalmore & 8,000 FINRA |
Selected States and Jurisdictions |
ALABAMA
ALASKA
ARIZONA
ARKANSAS
CALIFORNIA
COLORADO
CONNECTICUT
DELAWARE
DISTRICT OF COLUMBIA
FLORIDA
GEORGIA
HAWAII
IDAHO
ILLINOIS
INDIANA
IOWA
KANSAS
KENTUCKY
LOUISIANA
MAINE
MARYLAND
MASSACHUSETTS
MICHIGAN
MINNESOTA
MISSISSIPPI
MISSOURI
MONTANA
NEBRASKA
NEVADA
NEW HAMPSHIRE
NEW JERSEY
NEW MEXICO
NEW YORK
NORTH CAROLINA
NORTH DAKOTA
OHIO
OKLAHOMA
OREGON
PENNSYLVANIA
PUERTO RICO
RHODE ISLAND
SOUTH CAROLINA
SOUTH DAKOTA
TENNESSEE
TEXAS
UTAH
VERMONT
VIRGINIA
WASHINGTON
WEST VIRGINIA
WISCONSIN
WYOMING
ALBERTA, CANADA
BRITISH COLUMBIA, CANADA
MANITOBA, CANADA
NEW BRUNSWICK, CANADA
NEWFOUNDLAND, CANADA
NOVA SCOTIA, CANADA
ONTARIO, CANADA
PRINCE EDWARD ISLAND, CANADA
QUEBEC, CANADA
SASKATCHEWAN, CANADA
YUKON, CANADA
CANADA (FEDERAL LEVEL)
|
None | ☐ |
Same as the jurisdictions in which the issuer intends to offer the securities | ☐ |
Selected States and Jurisdictions |
ALABAMA
ARIZONA
FLORIDA
NEW JERSEY
NORTH DAKOTA
TEXAS
WASHINGTON
|
None ☐
As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:
(a)Name of such issuer | Flora Growth Corp. |
(b)(1) Title of securities issued | Common stock |
(2) Total Amount of such securities issued | 70000000 |
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer. | 0 |
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof. | 1400000 |
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)). |
As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:
(a)Name of such issuer | Flora Growth Corp. |
(b)(1) Title of securities issued | Stock Option |
(2) Total Amount of such securities issued | 7000000 |
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer. | 0 |
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof. | Exercisable at $0.05 per share |
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)). |
As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:
(a)Name of such issuer | Flora Growth Corp. |
(b)(1) Title of securities issued | Share Purchase Warrant |
(2) Total Amount of such securities issued | 7000000 |
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer. | 0 |
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof. | Exercisable at $0.05 per share |
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)). |
(e) Indicate the section of the Securities Act or Commission rule or regulation relied upon for exemption from the registration requirements of such Act and state briefly the facts relied upon for such exemption | Not applicable as no securities were issued to US residents. The Company relied on Canadian securities laws exemptions. |
Title of Each Class of Securities to be Qualified
|
Amount to be Qualified
|
|
|
Price to Public
|
|
|
Underwriting Discount and Commissions
|
|
Proceeds to
the
Company (2)
|
|
||
Units, each consisting of:
|
40,000,000
|
|
|
$
|
0.75
|
|
|
(1)
|
|
$
|
29,075,000
|
|
One Common Share
|
40,000,000
|
|
|
|
-
|
|
|
|
|
|
|
|
One-half of one Warrant
|
40,000,000
|
|
|
|
-
|
|
|
|
|
|
|
|
Common Shares underlying Warrants
|
20,000,000
|
|
|
$
|
1.00
|
|
|
(1)
|
|
$
|
20,000,000
|
|
Total Maximum Offering (3)
|
|
|
|
$
|
50,000,000
|
|
|
(1)
|
|
$
|
49,075,000
|
|
The minimum investment amount for each subscription is 1,333 Units or $1,000. The Offering is being made directly to investors by the management of the Company on a “best efforts” basis. We reserve the right
to offer the Units through broker-dealers who are registered with the Financial Industry Regulatory Authority (“FINRA”). The Company has engaged Dalmore Group, LLC, a New York limited liability company and FINRA/SIPC registered broker-dealer
(“Dalmore”), to provide broker-dealer services in seven specified states, including Washington, Arizona, Texas, Alabama, North Dakota, Florida and New Jersey, in connection with this Offering. The Company has agreed to pay Dalmore a one-time
setup fee of $25,000, as described in the Broker-Dealer Agreement between the Company and Dalmore, as well as a 3% commission on the aggregate amount raised by the Company from investors in the specified states from the sale of Units.
Commissions are not payable upon exercise of the Warrants.
|
|
|
|
(2)
|
The amounts shown in the “Proceeds to the Company” column include a deduction of 3% for commissions payable to Dalmore on all the Units being offered. The 3% commission will only be paid on investments in the
seven states where Dalmore is engaged to provide broker-dealer services (Washington, Arizona, Texas, Alabama, North Dakota, Florida and New Jersey), although the Company intends to offer Units in all states within the United States and in
certain provinces of Canada (and other non-U.S. jurisdictions). The amount of total estimated proceeds to the Company in the table above also includes a deduction of $25,000 for the one-time setup fee payable to Dalmore. The amounts shown are
before deducting other organization and Offering costs to be borne by the Company, including legal, accounting, printing, due diligence, marketing, selling and other costs incurred in the Offering of the Units (See “Use of Proceeds to Issuer”
and “Plan of Distribution and Selling Securityholders”).
|
|
|
(3)
|
The Units, the Common Shares and Warrants of which the Units consist and the underlying Warrant Shares are being offered pursuant to Regulation A of Section 3(b) of the Securities Act for Tier 2 offerings. The
Units, the Common Shares and Warrants of which the Units consist and the underlying Warrant Shares are only issued to purchasers who satisfy the requirements set forth in Regulation A. We have the option in our sole discretion to accept less
than the minimum investment. The Total Maximum Offering amounts include the aggregate price and future aggregate potential proceeds of $20,000,000 with respect to the Warrant Shares if all 40,000,000 Units are sold and all 20,000,000 Warrant
Shares are sold upon exercise of the Warrants issued in the Offering.
|
|
|
Page
|
|
|
|
|
4
|
|
|
4
|
|
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6
|
|
|
10
|
|
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24
|
|
|
26
|
|
|
27
|
|
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28
|
|
|
39
|
|
|
40
|
|
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46
|
|
|
50
|
|
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52
|
|
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53
|
|
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53
|
|
|
56
|
|
Part F/S
|
|
|
|
F-1
|
|
Part III – Exhibits
|
|
|
|
57
|
|
59
|
•
|
limited operating history;
|
•
|
reliance on licenses and authorizations;
|
•
|
changes in cannabis laws, regulations and guidelines;
|
•
|
demand for cannabis and derivative products;
|
•
|
product recalls;
|
•
|
regulatory compliance risks;
|
•
|
retention and acquisition of skilled personnel;
|
•
|
risks inherent in an agricultural business;
|
•
|
supply of cannabis seeds;
|
•
|
competition;
|
•
|
legal and regulatory proceedings;
|
•
|
ability to establish and maintain bank accounts;
|
•
|
insurance coverage;
|
•
|
protected areas established by the National System of Protected Areas;
|
•
|
changes in corporate structure;
|
•
|
emerging market risks; and
|
•
|
global economy risks.
|
•
|
economic and political risks inherent with any investment in Colombia;
|
•
|
governmental influence on the Colombian economy;
|
•
|
internal security issues; and
|
•
|
political and economic instability in the region.
|
•
|
foreign sales;
|
•
|
estimates or judgments relating to critical accounting policies;
|
•
|
tax risks;
|
•
•
|
failure to develop our internal controls ; and
the going concern qualified opinion from our auditor.
|
•
|
reliance on licenses and authorizations and delays in receiving such licenses and authorizations;
|
•
|
changes in cannabis laws, regulations and guidelines;
|
•
|
demand for cannabis and derivative products;
|
•
|
product liability;
|
•
|
product recalls;
|
•
|
regulatory compliance risks;
|
•
|
retention and acquisition of skilled personnel;
|
•
|
risks inherent in an agricultural business;
|
•
|
supply of cannabis seeds;
|
•
|
limited operating history;
|
•
|
managing growth;
|
•
|
legal and regulatory proceedings;
|
•
|
ability to establish and maintain bank accounts;
|
•
|
insurance coverage;
|
•
|
protected areas established by the National System of Protected Areas;
|
•
|
changes in corporate structure;
|
•
|
emerging market risks; and
|
•
|
global economy risks.
|
•
|
economic and political risks inherent with any investment in Colombia;
|
•
|
guerrilla activity in Colombia;
|
•
|
operational risks;
|
•
|
inflation in Colombia;
|
•
•
|
operations in Spanish; and
enforements of judgements.
|
•
•
|
required access to capital;
the going concern qualified opinion from our auditor;
|
•
|
foreign sales and fluctuations in the exchange rate between the Colombian peso and the Canadian dollar, the Colombian peso and the U.S. dollar and the U.S. dollar and the Canadian dollar;
|
•
|
estimates or judgments relating to critical accounting policies; and
|
•
|
tax risks.
|
Issuer:
|
|
Flora Growth Corporation, a corporation incorporated in the Province of Ontario, Canada.
|
|
|
|
Units Offered:
|
|
A maximum of 40,000,000 units (the “Units”) at an offering price of $0.75 per Unit, each Unit being comprised of:
• one common share in the capital of the Company, with no par value per share (a “Common Share”);
and
• one-half of one Common Share purchase warrant (each whole warrant, a “Warrant”) to purchase one
additional Common Share (a “Warrant Share”) at an exercise price of $1.00 per share, subject to customary adjustments, over an 18-month exercise period following the date of issuance of the Warrant.
|
|
|
|
Warrant Shares Offered:
|
|
A maximum of 20,000,000 Warrant Shares at an exercise price of $1.00 per Warrant Share, subject to customary adjustments, over an 18-month exercise period following the date of issuance.
|
|
|
|
Common Shares Outstanding before the Offering (1):
|
|
70,000,000 Common Shares.
|
|
|
|
Common Shares to be Outstanding after the Offering (1):
|
|
110,000,000 Common Shares if the maximum Units are sold, or 130,000,000 Common Shares upon exercise of the Warrants if the maximum Units are sold and the maximum Warrant Shares are issued.
|
|
|
|
Price per Unit:
|
|
$0.75
|
|
|
|
Price per Warrant Share
|
|
$1.00, subject to customary adjustments as described in the form of Warrant included as Exhibit 4.2 hereto.
|
|
|
|
Maximum Offering:
|
|
40,000,000 Units, at an offering price of $0.75 per Unit, (including the exercise of the Warrants to purchase 20,000,000 Warrant Shares with an exercise price of $1.00 per Warrant Share, subject to customary
adjustments).
|
|
|
|
Use of Proceeds:
|
|
If we sell all of the 40,000,000 Units being offered, and all of the 20,000,000 Warrant Shares underlying the Units being offered, our net proceeds (after deducting fees and commissions and estimated offering
expenses) will be approximately $48,857,000. We will use these net proceeds for research and development expenses, working capital and general corporate purposes, and such other purposes described in the “Use of Proceeds to Issuer” section of this Offering Circular.
|
|
|
|
Resale Restrictions:
|
|
See “Securities Being Offered – Resale Restrictions” on page 55.
|
|
|
|
Risk Factors:
|
|
Investing in our Units, the Common Shares and Warrants of which the Units consist and the underlying Warrant Shares involve a high degree of risk. See “Risk Factors” starting on page 10.
|
(1)
|
Excludes 7,000,000 Common Shares issuable upon exercise of stock options outstanding which are exercisable at an exercise price of $0.05 per share and 7,000,000 Common Shares issuable upon exercise of common
share purchase warrants outstanding which are exercisable at an exercise price of $0.05 per share.
|
•
|
successfully implement or execute our business plan, or that our business plan is sound;
|
•
|
adjust to changing conditions or keep pace with increased demand;
|
•
|
attract and retain an experienced management team; or
|
•
|
raise sufficient funds in the capital markets to effectuate our business plan, including product development, licensing and approvals.
|
●
|
delaying, deferring or preventing a change of control of the Company;
|
|
|
●
|
impeding a merger, consolidation, takeover or other business combination involving the Company; or
|
|
●
|
discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company.
|
Funding Level
|
$
|
48,857,000
|
$
|
36,582,000
|
$
|
24,307,500
|
$
|
12,302,000
|
||||||||
Offering Price per Unit
|
$
|
0.75
|
$
|
0.75
|
$
|
0.75
|
$
|
0.75
|
||||||||
Offering Price per Warrant Share
|
$
|
1.00
|
$
|
1.00
|
$
|
1.00
|
$
|
1.00
|
||||||||
Weighted Average Price per Unit and Warrant Share
|
$
|
0.83
|
$
|
0.83
|
$
|
0.83
|
$
|
0.83
|
||||||||
Pro forma net tangible book value per Common Share before the Offering
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
||||
Increase per Common Share attributable to investors in this Offering
|
$
|
0.38
|
$
|
0.33
|
$
|
0.25
|
$
|
0.15
|
||||||||
Pro forma net tangible book value per Common Share after the Offering
|
$
|
0.37
|
$
|
0.31
|
$
|
0.24
|
$
|
0.14
|
||||||||
Dilution to investors after the Offering
|
$
|
0.46
|
$
|
0.52
|
$
|
0.59
|
$
|
0.69
|
|
Units Purchased
|
Total Consideration
|
||||||||||||||
|
Number
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
Assuming 100% of Units Sold:
|
||||||||||||||||
Existing Shareholders
|
70,000,000
|
54
|
%
|
$
|
1,400,000
|
3 | % | |||||||||
New Investors
|
60,000,000
|
46
|
%
|
$
|
50,000,000
|
97 |
%
|
|||||||||
Total
|
130,000,000
|
100
|
%
|
$
|
51,400,000
|
100
|
%
|
|
Units Purchased
|
Total Consideration
|
||||||||||||||
|
Number
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
Assuming 75% of Units Sold:
|
||||||||||||||||
Existing Shareholders
|
70,000,000
|
61
|
%
|
$
|
1,400,000
|
4
|
%
|
|||||||||
New Investors
|
45,000,000
|
39
|
%
|
$
|
37,500,000
|
96
|
%
|
|||||||||
Total
|
115,000,000
|
100
|
%
|
$
|
38,900,000
|
100
|
%
|
|
Units Purchased
|
Total Consideration
|
||||||||||||||
|
Number
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
Assuming 50% of Units Sold:
|
||||||||||||||||
Existing Shareholders
|
70,000,000
|
70
|
%
|
$
|
1,400,000
|
5
|
%
|
|||||||||
New Investors
|
30,000,000
|
30
|
%
|
$
|
25,000,000
|
95
|
%
|
|||||||||
Total
|
100,000,000
|
100
|
%
|
$
|
26,400,000
|
100
|
%
|
|
Units Purchased
|
Total Consideration
|
||||||||||||||
|
Number
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
Assuming 25% of Units Sold:
|
||||||||||||||||
Existing Shareholders
|
70,000,000
|
82
|
%
|
$
|
1,400,000
|
10 |
%
|
|||||||||
New Investors
|
15,000,000
|
18
|
%
|
$
|
12,500,000
|
90
|
%
|
|||||||||
Total
|
85,000,000
|
100
|
%
|
$
|
13,900,000
|
100
|
%
|
Percentage of Offering Sold
|
||||||||||||||||
100%
|
|
75%
|
|
50%
|
|
25%
|
|
|||||||||
Construction of facilities and equipment
|
$
|
10,000,000
|
$
|
8,000,000
|
$
|
8,000,000
|
$
|
4,000,000
|
||||||||
Complete licensing and permitting at new facilities
|
$
|
1,000,000
|
$
|
1,000,000
|
$
|
1,000,000
|
$
|
1,000,000
|
||||||||
Cosechemos operational expenditures
|
$
|
6,000,000
|
$
|
6,000,000
|
$
|
6,000,000
|
$
|
3,000,000
|
||||||||
Recruit and implement sales team
|
$
|
1,500,000
|
$
|
900,000
|
$
|
600,000
|
$
|
400,000
|
||||||||
Research and Development
|
$
|
5,800,000
|
$
|
4,800,000
|
$
|
1,900,000
|
$
|
1,328,500
|
||||||||
General and Administrative
|
$
|
6,100,000
|
$
|
6,100,000
|
$
|
6,007,000
|
$
|
2,003,500
|
||||||||
Execute marketing and branding campaigns
|
$
|
3,000,000
|
$
|
2,000,000
|
$
|
800,000
|
$
|
300,000
|
||||||||
Strategic acquisitions and related capital expenditures
|
$
|
15,457,000
|
$
|
7,782,000
|
$
|
-
|
$
|
-
|
||||||||
TOTAL
|
$
|
48,857,000
|
$
|
36,582,000
|
$
|
24,307,000
|
$
|
12,032,000
|
Flora Growth Corp.
(Ontario)
|
|||
|
|
||
90% | |||
Cosechemos Ya S.A.S.
(Colombia)
|
•
|
marketing, strategic planning and sales tactics (line leaders, visitors and promoters);
|
•
|
scientific contents;
|
•
|
institutional relations;
|
•
|
customer service, after sales; and
|
•
|
information systems and management platform.
|
•
|
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;
|
•
|
taking advantage of extensions of time to comply with certain new or revised financial accounting standards;
|
•
|
being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements; and
|
•
|
being exempt from the requirement to hold a non-binding advisory vote on executive compensation and shareholder approval of any
golden parachute payments not previously approved.
|
Name
|
|
Position
|
|
Age
|
|
|
Term of Office
|
|
|
Approximate hours per week
for part-time employees |
||
Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
||
Damian Lopez
|
|
President and Chief Executive Officer
|
|
|
36
|
|
|
|
March 2019 – Present
|
|
|
30
|
Deborah Battiston
|
|
Chief Financial Officer
|
|
|
61
|
|
|
|
March 2019 – Present
|
|
|
15
|
Orlando Bustos
|
|
VP Corporate Development
|
|
|
32
|
|
|
|
March 2019 – Present
|
|
|
30
|
Javier Franco
|
|
VP Agriculture
|
|
52
|
|
|
|
June 2019 – Present
|
|
|
N/A
|
|
Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stan Bharti
|
|
Executive Chairman
|
|
|
67
|
|
|
|
March 2019 – Present
|
|
|
N/A
|
Damian Lopez
|
|
Director
|
|
|
36
|
|
|
|
March 2019 – Present
|
|
|
N/A
|
Fred Leigh
|
|
Director
|
|
|
63
|
|
|
|
March 2019 – Present
|
|
|
N/A
|
William Steers
|
Director
|
66
|
July 2019 – Present
|
N/A
|
|
|
• Been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
|
|
|
|
|
|
• had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he or she was a general partner or executive
officer, either at the time of the bankruptcy filing or within two years prior to that time;
|
|
|
|
|
|
• been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining,
barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such
activity;
|
|
|
|
|
|
• been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended, or vacated;
|
|
|
|
|
|
• been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a
civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not
limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire
fraud or fraud in connection with any business entity; or
|
|
|
|
|
|
• been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act
of 1934, as amended (the Exchange Act)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or
persons associated with a member.
|
|
|
• the director is, or at any time during the past three years was, an employee of the company;
|
|
|
• the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of twelve consecutive months within the three years preceding the independence
determination (subject to certain exemptions, including, among other things, compensation for board or board committee service);
|
|
|
|
|
|
• the director or a family member of the director is a partner in, controlling shareholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the
current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exemptions);
|
|
|
|
|
|
• the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the
compensation committee of such other entity; or
|
|
|
|
|
|
• the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and
who worked on the company’s audit.
|
Name and Capacity
|
Cash Compensation and Value of Shares issued for Service
|
|
|
Other Compensation
|
|
|
Total Compensation
|
|
||||
|
|
|
|
(1)
|
|
|
|
|
||||
Damian Lopez (CEO//Director)
|
|
$
|
150,688
|
|
|
$
|
12,300
|
|
|
$
|
162,988
|
|
Deborah Battiston (CFO)
|
|
$
|
84,413
|
|
|
$
|
9,840
|
|
|
$
|
94,253
|
|
Orlando Bustos (VP Corp. Development)
|
|
$
|
38,138
|
|
|
$
|
12,300
|
|
|
$
|
50,438
|
|
Stan Bharti (Executive Chairman)
|
|
$
|
214,688
|
|
|
$
|
-
|
|
|
$
|
214,688
|
|
Fred Leigh (Director)
|
|
$
|
65,000
|
|
|
$
|
-
|
|
|
$
|
65,000
|
|
William Steers (Director)
|
|
$
|
-
|
|
|
$
|
12,300
|
|
|
$
|
12,300
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percent
of Class (1)
|
|
|
|
|
|
|
|
|
|
Directors and Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All executive officers and directors as a group
|
|
25,750,
|
000(2)
|
|
|
36.8%(2)
|
|
|
|
|
|
|
|
Greater than 10% Securityholders:
|
|
|
|
|
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This Offering Statement does not contemplate that any of our current listed shareholders will acquire any additional Common Shares as part of this Offering.
|
(2)
|
Includes 3,800,000 shares of common stock issuable upon exercise of stock options and 7,000,000 shares of common stock issuable upon exercise of founder warrants held by executive officers and directors.
|
•
|
to vote at meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote;
|
•
|
subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of our company, to share equally in the remaining property of our company on liquidation, dissolution
or winding-up of our company; and
|
•
|
the Common Shares are entitled to receive dividends if, as, and when declared by the Board of Directors.
|
INDEX TO FINANCIAL STATEMENTS
|
Page
|
|
Audited Financial Statements of Cosechemos Ya S.A.S. for the Years Ended December 31, 2018 and December 31, 2017 (Expressed in United States Dollars)
|
F-2
|
Independent Auditor’s Report
|
F-3
|
Statements of Financial Position as of December 31, 2018 and December 31, 2017
|
F-6
|
Statements of Loss and Comprehensive Loss (Income) for the years ended December 31, 2018 and December 31, 2017
|
F-7
|
Statements of Shareholders’ Equity for the years ended December 31, 2018 and December 31, 2017
|
F-8
|
Statements of Cash Flows for the years ended December 31, 2018 and December 31, 2017
|
F-9
|
Notes to the Financial Statements
|
F-10
|
Unaudited Condensed Interim Financial Statements of Cosechemos Ya S.A.S. for the three and six months ended June 30, 2019 and June 30, 2018 (Expressed in United States Dollars)
|
F-27 |
Unaudited Condensed Interim Statements of Financial Position as of June 30, 2019 and December 31, 2018
|
F-28
|
Condensed Interim Statements of Loss and Comprehensive Loss for the three and six months ended June 30, 2019 and June 30, 2018
|
F-29
|
Condensed Interim Statements of Shareholders’ Equity for the six months ended June 30, 2019 and June 30, 2018
|
F-30
|
Condensed Interim Statements of Cash Flows for the six months ended June 30, 2019 and June 30, 2018
|
F-31
|
Notes to the Condensed Interim Financial Statements
|
F-32
|
Audited Financial Statements of Flora Growth Corp. for the Period from Incorporation on March 13, 2019 to June 30, 2019 (Expressed in United States Dollars)
|
F-40
|
Independent Auditors’ Report
|
F-41
|
Interim Statement of Financial Position as of June 30, 2019
|
F-43
|
Interim Statement of Loss and Comprehensive Loss for the three months ended June 30, 2019 and for the period from incorporation on March 13, 2019 to June 30, 2019
|
F-44
|
Interim Statement of Changes in Shareholders’ Equity for the period from incorporation on March 13, 2019 to June 30, 2019
|
F-45
|
Interim Statement of Cash Flows for the period from incorporation on March 13, 2019 to June 30, 2019
|
F-46
|
Notes to the Unaudited Interim Financial Statements for the period from incorporation on March 13, 2019 to June 30, 2019
|
F-47
|
Pro Forma Consolidated Financial Statements of Flora Growth Corp. (unaudited) as of December 31, 2018 and June 30, 2019 (Expressed in United States Dollars)
|
F-61
|
Pro-Forma Condensed Consolidated Statement of Financial Position as of June 30, 2019
|
F-62
|
Pro-Forma Condensed Consolidated Statement of Loss and Comprehensive Loss as of June 30, 2019 and December 31, 2018
|
F-63 and F-64
|
Notes to Pro-Forma Condensed Consolidated Financial Statements as of December 31, 2018
|
F-65
|
1.
|
Compliance of transactions related with cannabis activities
|
2.
|
Lease agreement
|
COSECHEMOS YA S.A.S.
|
||||||||
Statements of Financial Position
|
||||||||
(Expressed in United States dollars)
|
||||||||
|
||||||||
As at:
|
December 31, 2018
|
December 31, 2017
|
||||||
|
||||||||
ASSETS
|
||||||||
Current
|
||||||||
Amounts receivable (Note 5)
|
$
|
1,539
|
1,676
|
|||||
Prepaid expenses (Note 6)
|
3
|
1
|
||||||
Total assets
|
$
|
1,542
|
1,677
|
|||||
|
||||||||
LIABILITIES
|
||||||||
Current
|
||||||||
Trade payables and accrued liabilities (Note 7)
|
$
|
14
|
8
|
|||||
Total liabilities
|
14
|
8
|
||||||
|
||||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Share capital (Note 8)
|
1,764
|
1,764
|
||||||
Accumulated deficit
|
(11
|
)
|
(7
|
)
|
||||
Accumulated other comprehensive income
|
(225
|
)
|
(88
|
)
|
||||
Total shareholders’ equity
|
1,528
|
1,669
|
||||||
Total liabilities and shareholders’ equity
|
$
|
1,542
|
1,677
|
|||||
|
COSECHEMOS YA S.A.S.
Statements of Loss and Comprehensive Loss (Income)
|
||||||||
(Expressed in United States dollars)
|
||||||||
|
||||||||
For the year ended
|
For the year ended
|
|||||||
|
December 31, 2018
|
December 31, 2017
|
||||||
|
||||||||
Expenses
|
||||||||
Income tax expenses (Note 9)
|
$
|
4
|
$
|
7
|
||||
Net loss for the year
|
$
|
4
|
$
|
7
|
||||
Other comprehensive income
|
||||||||
Foreign currency translation
|
137
|
88
|
||||||
Comprehensive loss for the year
|
$
|
141
|
$
|
95
|
||||
|
||||||||
Basic and diluted loss per share
|
$
|
0.03
|
$
|
0.02
|
||||
Weighted average number of common shares outstanding – basic and diluted
|
5,000
|
5,000
|
COSECHEMOS YA S.A.S.
|
||||||||||||||||||||
Statements of Shareholders’ Equity
|
||||||||||||||||||||
(Expressed in United States dollars)
|
||||||||||||||||||||
|
||||||||||||||||||||
|
Share Capital
|
Accumulated Deficit
|
Accumulated Other Comprehensive Income
|
Shareholders’ Equity
|
||||||||||||||||
#
|
|
$
|
|
$
|
|
$
|
|
$
|
||||||||||||
Balance, December 31, 2017
|
5,000
|
1,764
|
(7
|
)
|
(88
|
)
|
1,669
|
|||||||||||||
Loss for the year
|
-
|
-
|
(4
|
)
|
-
|
(4
|
)
|
|||||||||||||
Other comprehensive loss for the year
|
-
|
-
|
-
|
(137
|
)
|
(137
|
)
|
|||||||||||||
Balance, December 31, 2018
|
5,000
|
1,764
|
(11
|
)
|
(225
|
)
|
1,528
|
|||||||||||||
Balance, December 31, 2016
|
5,000
|
1,764
|
-
|
-
|
1,764
|
|||||||||||||||
Loss for the year
|
-
|
-
|
(7
|
)
|
-
|
(7
|
)
|
|||||||||||||
Other comprehensive loss for the year
|
-
|
-
|
-
|
(88
|
)
|
(88
|
)
|
|||||||||||||
Balance, December 31, 2017
|
5,000
|
1,764
|
(7
|
)
|
(88
|
)
|
1,669
|
COSECHEMOS YA S.A.S
|
||||||||
Statements of Cash Flows
(Expressed in United States dollars)
|
||||||||
December 31, 2018
|
December 31, 2017
|
|||||||
CASH FROM OPERATING ACTIVITIES:
|
||||||||
Net loss for the year
|
$
|
(4
|
)
|
$
|
(7
|
)
|
||
Net change in non-cash working capital
|
4
|
7
|
||||||
Net cash flows from operating activities
|
-
|
-
|
||||||
CHANGE IN CASH DURING THE PERIOD
|
-
|
-
|
||||||
CASH, beginning of the year
|
-
|
-
|
||||||
CASH, end of the year
|
$
|
-
|
$
|
-
|
||||
•
|
The contract involves the use of an identified asset. This may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically
distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;
|
•
|
The Company has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of use; and
|
•
|
The Company has the right to direct the use of the asset. The Company has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used.
In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:
|
o
|
The Company as the right to operate the asset; or
|
o
|
The Company designed the asset in a way that predetermines how and for what purpose it will be used.
|
December 31, 2018
|
December 31, 2017
|
|||||||
Amounts receivable
|
$
|
1,539
|
$
|
1,676
|
||||
Total
|
$
|
1,539
|
$
|
1,676
|
December 31, 2018
|
December 31, 2017
|
|||||||
Prepaid expenses
|
$
|
3
|
$
|
1
|
||||
Total
|
$
|
3
|
$
|
1
|
December 31, 2018
|
December 31, 2017
|
|||||||
Trade payables and accrued liabilities
|
$
|
14
|
$
|
8
|
||||
Total
|
$
|
14
|
$
|
8
|
a.
|
Authorized
|
b.
|
Common shares issued
|
December 31, 2018
|
December 31, 2017
|
|||||||
Share capital
|
$
|
1,764
|
$
|
1,764
|
||||
Total
|
$
|
1,764
|
$
|
1,764
|
December 31, 2018
|
December 31, 2017
|
|||||||
Income tax
|
4
|
7
|
||||||
Total
|
$
|
4
|
$
|
7
|
1.
|
The list of goods and services excluded from VAT established in articles 424, 426 and 476 of the Tax Code was modified.
|
2.
|
Article 437 of the Tax Code was added, regarding guidelines on the fulfillment of formal duties on VAT by service providers from abroad.
|
3.
|
The withholding of VAT may be up to 50% of the value of the tax, subject to regulation of the National Government. Withholding tax must be made at VAT when personal property or encumbered services are
acquired from persons registered as contributors to Simple regime.
|
4.
|
The VAT rate remains at 19%.
|
5.
|
The simplified VAT regime is eliminated, classifying taxpayers as not responsible as long as they meet the same criteria as they were for the simplified one (in addition to not belonging to the simple
regime).
|
6.
|
The tax discount on income is created in the sales tax on the acquisition or formation of real productive fixed assets (eliminating the special deduction of VAT on the acquisition of capital goods).
|
7.
|
For the years 2019, 2020, 2021, an extraordinary estate tax is created by: i) natural persons and illiquid successions contributing to income tax, ii) national or foreign natural persons who do not have
residence in the country , with respect to the assets directly owned in the country, ii) national or foreign natural persons who do not have residence in the country, with respect to their assets indirectly owned through permanent
establishments in the country (except for exceptions in international treaties and in domestic law ), iv) illiquid successions of causes without residence in the country at the time of their death with respect to their assets owned in
the country; and v) foreign companies or entities not declaring income tax, with respect to their property owned in Colombia, such properties, yachts, boats, boats, works of art, aircraft or mining or oil rights. This lien will not
apply to stocks or accounts receivable. The lien will apply to the possession as of January 1, 2019 of a net worth of more than 5,000 million pesos (1% rate each year).
|
8.
|
Creation of the tax normalization tax at a rate of 13% for taxpayers of income tax who have omitted assets or non-existent liabilities as of January 1, 2019.
|
9.
|
As of 2019, a withholding at the source of the income tax of 7.5% on the profits that would have been able to be distributed to national companies as non-constitutive income or occasional income is
added. The component taxed on profits distributed via dividends will be taxed at the rate indicated in article 240 of the Tax Statute, in which case the withholding at the source indicated above will be applied once this tax has been
reduced. This withholding does not apply to taxpayers who are part of a business group or who belong to the holding regime.
|
10.
|
The income tax rate on dividends received by companies or other foreign entities without domicile in the country, by natural persons without residence in Colombia and by illiquid successions of causes
that were not residents in Colombia was increased to 7.5% (profits) of 2017 and 2018 were taxed at 5%). The component taxed on profits distributed via dividends will be taxed at the rate indicated in article 240 of the Tax Statute, in
which case the tax indicated above will be applied once this tax has been reduced.
|
11.
|
A transition regime is created with regard to changes made to dividends.
|
12.
|
Increases the maximum marginal rate applicable to resident natural persons and modal assignments to 39%. Likewise, certain percentages applicable to withholding at source to natural persons are
modified.
|
13.
|
Life insurance indemnities will be taxed at the rate applicable to occasional earnings from the taxable year 2019 if they exceed 12,000 UVT.
|
14.
|
The income tax rate applicable to national (and similar) or foreign companies (with or without residence in Colombia required to file annual income tax returns) and permanent establishments of foreign
entities will be 33% for the taxable year 2019, 32% by 2020, 31% by 2021, and 30% from 2022. Special rules will apply to the hotel sector as of January 1, 2019
|
15.
|
Financial institutions must settle additional point to income tax and complementary when the taxable income is equal to or greater than 120,000 UVTs as follows: (i) 4% by 2019; and (ii) 3% by 2020 and
2021.
|
16.
|
In the income tax there are modifications around: i) income that is not considered to be of national source; ii) deduction of all taxes paid (exception to estate tax and standardization tax) and
inclusion of some taxes paid as a tax discount (50% - industry and commerce tax); iii) reduction of the presumptive income rate gradually up to 0% from the taxable year 2021 iv) discounts for taxes paid abroad, v) modification of the
exempt income contained in article 235-2 of the Tax Statute ; vi) elimination of tax discounts; and vii) the rules applicable to private equity funds, collective investment funds, among others.
|
17.
|
Modifies the provision contained in article 90 of the Tax Statute and the allocation of commercial margins will be extensible to the provision of services. It is understood that the value assigned by
the parties differs markedly from the average when it is separated by more than fifteen percent (15%) of the prices established in commerce for goods or services of the same species and quality. It is also provided that the sale value
of the shares cannot be less than 130% of the intrinsic value, leaving the possibility for the DIAN to use technical methods to determine the sale price.
|
18.
|
The sub-capitalization rule is modified by stating that it only applies when debts that generate interest are incurred, directly or indirectly, in favor of economic or domestic affiliates (before it did
not matter), only interest generated on occasion may be deducted of such debts as the average total amount thereof, does not exceed the result of multiplying by two (2) the taxpayer’s liquid assets determined as of December 31 of the
immediately preceding taxable year.
|
19.
|
The profits obtained in the transfer of assets or companies located in the national territory are taxed, through the transfer of shares, participations or rights of foreign entities, if the transfer was
made directly with the underlying asset (indirect disposals).
|
20.
|
Permanent establishments of foreign companies will be taxed with income tax with respect to their income from national and foreign sources that are attributable to them.
|
21.
|
Employee education contributions not considered as indirect payments to the worker are included as a deductible expense.
|
22.
|
It also indicates that interest and other financial costs attributed to a permanent establishment in Colombia may be deductible provided they have not been subject to withholding at source.
|
23.
|
Article 885 of the Tax Statute regarding the presumption of full right for foreign controlled entities is amended, indicating that if more than 80% of income is active there will be no passive income.
|
24.
|
Article 793 of the Tax Statute is added, including events under which there is joint and several liability with the principal taxpayer in paying the tax.
|
25.
|
A special regime called mega investments is created as of January 1, 2019 for 20 years, for income taxpayers who generate at least 250 direct jobs and make new investments within the national territory
with a value equal to or greater than 30,000. 000 UVT (COP $ 1,028,100,000,000 in the year 2019) in any commercial, industrial and / or service activity.
|
26.
|
Benefits are raised for the mega-investment regime in: i) the income tax rate (27%), ii) asset depreciation, iii) presumptive income exclusion, iv) non-application of dividend tax; and v) not subject to
the estate tax.
|
27.
|
The regime for Colombian holding companies is added to income and complementary taxes. It emphasizes in national societies that have as one of their main activities the holding of securities, investment
in shares or participations abroad. This regime allows an exemption on dividends received by foreign entities.
|
28.
|
Guidelines are generated around works for taxes clarifying validity, conditions for maintaining the means of payment, among others.
|
29.
|
Some retention rates at the source are modified for payments abroad: i) for administration services it will be 33% and in the case of technical assistance, exploitation of
industrial property, technical services, consulting, software licensing (among others) will be 20%.
|
30.
|
In the matter of procedure there are modifications: i) withholding statements at the source that despite being ineffective will be an executive title, ii) electronic notification of administrative acts;
and iii) payment of glosses in the statement of objections to avoid default interest and use the flows plus two points; iv) elimination of extension of firmness to three (3) additional years for compensation of tax losses; v)
inclusion of terminations by mutual agreement and conciliations, among others.
|
(ii)
|
Foreign exchange risk
|
COSECHEMOS YA S.A.S.
|
||||||
Condensed Interim Statements of Financial Position
|
||||||
(Expressed in United States dollars)
(Unaudited)
|
|
||||||||
As at:
|
June 30,
2019
|
December 31, 2018
|
||||||
|
||||||||
ASSETS
|
||||||||
Current
|
||||||||
Amounts receivable (Note 5)
|
$
|
1,575
|
$
|
1,539
|
||||
Prepaid expenses (Note 6)
|
3
|
3
|
||||||
Biological asset (Note 7)
|
11,096
|
-
|
||||||
Total current assets
|
12,674
|
1,542
|
||||||
Non-current
|
||||||||
Right-of-use asset (Note 8)
|
315,531
|
-
|
||||||
Intangible asset (Note 9)
|
1,048
|
-
|
||||||
Total assets
|
$
|
329,253
|
$
|
1,542
|
||||
|
||||||||
LIABILITIES
|
||||||||
Current
|
||||||||
Trade payables and accrued liabilities (Note 10)
|
$
|
15,027
|
$
|
14
|
||||
Current lease liability (Note 11)
|
5,374
|
-
|
||||||
Total current liabilities
|
20,401
|
14
|
||||||
Non-current lease liability (Note 11)
|
310,157
|
-
|
||||||
Total liabilities
|
330,558
|
14
|
||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Share capital (Note 12)
|
1,764
|
1,764
|
||||||
Accumulated deficit
|
(3,005
|
)
|
(11
|
)
|
||||
Accumulated other comprehensive income
|
(64
|
)
|
(225
|
)
|
||||
Total shareholders’ equity
|
(1,305
|
)
|
1,528
|
|||||
Total liabilities and shareholders’ equity
|
$
|
329,253
|
$
|
1,542
|
||||
|
COSECHEMOS YA S.A.S.
Condensed Interim Statements of Loss and Comprehensive Loss
|
||||||||||||||||
(Expressed in United States dollars)
(Unaudited)
|
||||||||||||||||
|
||||||||||||||||
For the three months ended
|
For the three months ended
|
For the six months ended
|
For the six months ended
|
|||||||||||||
|
June 30, 2019
|
June 30, 2018
|
June 30, 2019
|
June 30, 2018
|
||||||||||||
|
||||||||||||||||
Expenses
|
||||||||||||||||
General administration expenses
|
$
|
1,295
|
$
|
-
|
$
|
1,295
|
$
|
-
|
||||||||
Travel
|
779
|
-
|
779
|
-
|
||||||||||||
Amortization (Notes 9)
|
28
|
-
|
28
|
-
|
||||||||||||
Income tax expense
|
577
|
-
|
577
|
-
|
||||||||||||
Interest expense (Note 10)
|
315
|
-
|
315
|
-
|
||||||||||||
Net loss for the period
|
$
|
2,994
|
$
|
-
|
$
|
2,994
|
$
|
-
|
||||||||
Other comprehensive loss
|
||||||||||||||||
Foreign currency translation
|
(161
|
)
|
-
|
(161
|
)
|
-
|
||||||||||
Comprehensive loss for the period
|
$
|
2,833
|
$
|
-
|
$
|
2,833
|
$
|
-
|
||||||||
|
||||||||||||||||
Basic and diluted loss per share
|
$
|
0.57
|
$
|
0.00
|
$
|
0.57
|
$
|
0.00
|
||||||||
Weighted average number of common shares outstanding – basic and diluted
|
5,000
|
5,000
|
5,000
|
5,000
|
COSECHEMOS YA S.A.S.
|
||||||||||||||||||||
Condensed Interim Statements of Shareholders’ Equity
|
||||||||||||||||||||
(Expressed in United States dollars)
(Unaudited)
|
||||||||||||||||||||
|
||||||||||||||||||||
|
Share Capital
|
Accumulated Deficit
|
Accumulated Other Comprehensive Income
|
Shareholders’ Equity
|
||||||||||||||||
#
|
|
$
|
|
$
|
|
$
|
|
$
|
||||||||||||
Balance, December 31, 2018
|
5,000
|
1,764
|
(11
|
)
|
(225
|
)
|
1,528
|
|||||||||||||
Other comprehensive loss for the period
|
-
|
-
|
-
|
161
|
161
|
|||||||||||||||
Loss for the period
|
-
|
-
|
(2,994
|
)
|
-
|
(2,994
|
)
|
|||||||||||||
Balance, June 30, 2019
|
5,000
|
1,764
|
(3,005
|
)
|
(64
|
)
|
(1,305
|
)
|
||||||||||||
Balance, December 31, 2017
|
5,000
|
1,764
|
(7
|
)
|
(88
|
)
|
1,669
|
|||||||||||||
Loss for the period
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Balance, June 30, 2018
|
5,000
|
1,764
|
(7
|
)
|
(88
|
)
|
1,669
|
COSECHEMOS YA S.A.S
|
||||||||
Condensed Interim Statements of Cash Flows
(Expressed in United States dollars)
(Unaudited)
|
||||||||
June 30, 2019
|
June 30, 2018
|
|||||||
CASH FROM OPERATING ACTIVITIES:
|
||||||||
Net loss for the period
|
$
|
(2,833
|
)
|
$
|
-
|
|||
Accrued interest on amounts payables (Note 10)
|
315
|
-
|
||||||
Amortization (Notes 9)
|
28
|
-
|
||||||
(2,490
|
)
|
-
|
||||||
Net change in non-cash working capital
|
2,490
|
-
|
||||||
Net cash flows from operating activities
|
-
|
-
|
||||||
CHANGE IN CASH DURING THE PERIOD
|
-
|
-
|
||||||
CASH, beginning of the year
|
-
|
-
|
||||||
CASH, end of the period
|
$
|
-
|
$
|
-
|
||||
•
|
The contract involves the use of an identified asset. This may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically
distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;
|
•
|
The Company has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of use; and
|
•
|
The Company has the right to direct the use of the asset. The Company has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is
used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:
|
o
|
The Company as the right to operate the asset; or
|
o
|
The Company designed the asset in a way that predetermines how and for what purpose it will be used.
|
June 30, 2019
|
December 31, 2018
|
|||||||
Amounts receivable
|
$
|
1,575
|
$
|
1,539
|
||||
Total
|
$
|
1,575
|
$
|
1,539
|
June 30, 2019
|
December 31, 2018
|
|||||||
Prepaid expenses
|
$
|
3
|
$
|
3
|
||||
Total
|
$
|
3
|
$
|
3
|
June 30, 2019
|
December 31, 2018
|
|||||||
Biological asset
|
$
|
11,096
|
$
|
-
|
||||
Total
|
$
|
11,096
|
$
|
-
|
Cost
|
||||
Balance, December 31, 2018
|
$
|
-
|
||
Adoption of IFRS 16
|
315,531
|
|||
Balance, June 30, 2019
|
$
|
315,531
|
||
Amortization
|
||||
Balance, December 31, 2018
|
$
|
-
|
||
Amortization for the period
|
-
|
|||
Balance, June 30, 2019
|
$
|
-
|
||
Net book value:
|
||||
At December 31, 2018
|
$
|
-
|
||
At June 30, 2019
|
$
|
315,531
|
June 30, 2019
|
December 31, 2018
|
|||||||
License
|
$
|
1,048
|
$
|
-
|
||||
Total
|
$
|
1,048
|
$
|
-
|
June 30, 2019
|
December 31, 2018
|
|||||||
Trade payables and accrued liabilities
|
$
|
15,027
|
$
|
14
|
||||
Total
|
$
|
15,027
|
$
|
14
|
Lease liability, January 1, 2019
|
$
|
315,531
|
||
Interest expense
|
-
|
|||
Lease payments
|
-
|
|||
Lease liability as at June 30, 2019
|
$
|
315,531
|
|
June 30, 2019
|
|||
Current lease liability
|
$
|
5,374
|
||
Non-current lease liability
|
310,157
|
|||
|
$
|
315,531
|
a.
|
Authorized
|
b.
|
Common shares issued
|
June 30, 2019
|
December 31, 2018
|
|||||||
Share capital
|
$
|
1,764
|
$
|
1,764
|
||||
Total
|
$
|
1,764
|
$
|
1,764
|
Flora Growth Corp.
Interim Statements of Loss and Comprehensive Loss
|
||||||||
(Expressed in United States dollars)
|
||||||||
For the three months ended
|
From period from incorporation on March 13, 2019 to June 30,
|
|||||||
|
June 30, 2019
|
2019
|
||||||
|
||||||||
Expenses
|
||||||||
Consulting and management fees (Note 6(b) and 10)
|
$
|
1,550,610
|
$
|
1,550,610
|
||||
Professional fees
|
19,309
|
19,309
|
||||||
General office expenses
|
24,312
|
24,312
|
||||||
Travel expenses
|
219,613
|
219,613
|
||||||
Share based compensation (Note 7, 8, and 10)
|
85,870
|
85,870
|
||||||
Loss and comprehensive loss for the period
|
$
|
1,899,714
|
$
|
1,899,714
|
||||
|
||||||||
Basic and diluted loss per share
|
$
|
0.82
|
$
|
0.99
|
||||
Weighted average number of common shares outstanding – basic and diluted
|
2,307,692
|
1,926,606
|
||||||
Flora Growth Corp.
|
||||||||||||||||||||||||
Interim Statement of Shareholders’ Equity
|
||||||||||||||||||||||||
(Expressed in United States dollars)
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
|
Common Shares
|
Options
|
Warrants
|
Accumulated Deficit
|
Shareholders’
Equity (Deficiency)
|
|||||||||||||||||||
#
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
||||||||||||||
Balance, March 13, 2019
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Common shares issued (Note 6(b))
|
70,000,000
|
1,400,000
|
-
|
-
|
-
|
1,400,000
|
||||||||||||||||||
Options issued (Note 7)
|
-
|
-
|
85,870
|
-
|
-
|
85,870
|
||||||||||||||||||
Warrants issued (Note 8)
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Loss for the period
|
-
|
-
|
-
|
-
|
(1,899,714
|
)
|
(1,899,714
|
)
|
||||||||||||||||
Balance, June 30, 2019
|
70,000,000
|
1,400,000
|
85,870
|
-
|
(1,889,714
|
)
|
(413,844
|
)
|
||||||||||||||||
Flora Growth Corp.
|
||||
Interim Statement of Cash Flows
(Expressed in United States dollars)
|
||||
For the period from incorporation on March 13, 2019 to June 30, 2019
|
||||
CASH FROM OPERATING ACTIVITIES:
|
||||
Net loss for the period
|
$
|
(1,899,714
|
)
|
|
Share based compensation (Note 7 and 8)
|
85,870
|
|||
Bonus (Note 6(b))
|
1,400,000
|
|||
(413,844
|
)
|
|||
Net change in non-cash working capital
|
413,844
|
|||
Net cash flows from operating activities
|
-
|
|||
CHANGE IN CASH DURING THE PERIOD
|
-
|
|||
CASH, beginning of the period
|
-
|
|||
CASH, end of the period
|
$
|
-
|
||
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued)
|
June 30, 2019
|
||||
HST receivable
|
$
|
238
|
||
Total
|
$
|
238
|
a.
|
Authorized
|
b.
|
Common shares issued
|
|
|
Number of shares
|
|
Stated value $
|
|
Balance, March 13, 2019
|
-
|
$ -
|
|||
Bonus shares
|
70,000,000
|
1,400,000
|
|||
Balance, June 30, 2019
|
|
70,000,000
|
|
$ 1,400,000
|
|
Number of options
|
Weighted average exercise price
|
||||||
Balance, March 13, 2019
|
-
|
$
|
-
|
|||||
Granted
|
7,000,000
|
0.05
|
||||||
|
||||||||
Balance, June 30, 2019
|
7,000,000
|
$
|
0.05
|
Date
|
Options
|
Options
|
Exercise
|
Grant date
|
Remaining life
|
of expiry
|
outstanding
|
exercisable
|
price
|
fair value
|
in years
|
June 28, 2024
|
7,000,000
|
7,000,000
|
$0.05
|
$ 85,870
|
5.00
|
|
7,000,000
|
7,000,000
|
|
$ 85,870
|
5.00
|
|
Number of warrants
|
Weighted average exercise price
|
||||||
Balance, March 13, 2019
|
-
|
$
|
-
|
|||||
Granted
|
7,000,000
|
0.05
|
||||||
Balance, June 30, 2019
|
7,000,000
|
$
|
0.05
|
Date of expiry
|
Warrants outstanding
|
Exercise price
|
Grant date
fair value
|
Remaining life in years
|
March 15, 2022
|
7,000,000
|
$ 0.05
|
$ -
|
2.71
|
|
7,000,000
|
|
$ -
|
2.71
|
a)
|
Provision for income taxes
|
June 30, 2019
|
||||
|
|
$
|
||
(Loss) before income taxes
|
(1,899,714
|
)
|
||
Expected income tax recovery based on statutory rate
|
(503,000
|
)
|
||
Adjustment to expected income tax benefit:
|
||||
Stock based compensation
|
394,000
|
|||
Change in benefit not recognized
|
109,000
|
|||
Deferred income tax provision (recovery)
|
-
|
b)
|
Deferred income tax
|
June 30, 2019
|
||||
|
|
$
|
||
Non-capital loss carry-forwards
|
412,000
|
|||
Total
|
412,000
|
|||
Three months ended June 30, 2019
|
Period from incorporation from March 13, 2019 to June 30, 2019
|
|||||||
Directors & officers’ compensation
|
$
|
80,231
|
$
|
95,759
|
||||
Share based payments
|
345,615
|
345,615
|
||||||
|
$
|
425,846
|
$
|
441,374
|
(ii)
|
Foreign exchange risk
|
June 30, 2019
|
CAD
|
Trade payables
|
$ 2,703
|
Accrued liabilities
|
519,010
|
$ 521,713
|
Pro Forma Condensed Consolidated Statement of Financial Position
|
||||||||||||||||||||
As at June 30, 2019
|
||||||||||||||||||||
(Unaudited, Expressed in United States Dollars)
|
||||||||||||||||||||
|
Flora Growth Corp
|
Cosechemos Ya S.A.S
|
Note 5
|
Pro Forma Adjustments
|
Pro Forma Consolidated
|
|||||||||||||||
|
||||||||||||||||||||
|
June 30, 2019
|
June 30, 2019
|
||||||||||||||||||
ASSETS
|
||||||||||||||||||||
Current assets
|
||||||||||||||||||||
Cash
|
$
|
-
|
$
|
-
|
a
|
$
|
345,747
|
$
|
345,747
|
|||||||||||
(Note 3)
|
a
|
80,000
|
||||||||||||||||||
|
b
|
(80,000
|
)
|
|||||||||||||||||
Amounts receivable
|
238
|
1,575
|
1,813
|
|||||||||||||||||
Prepaid
|
-
|
3
|
3
|
|||||||||||||||||
Biological asset
|
-
|
11,096
|
11,096
|
|||||||||||||||||
Total current assets
|
238
|
12,674
|
345,747
|
358,659
|
||||||||||||||||
Right-of-use asset
|
315,531
|
315,531
|
||||||||||||||||||
Intangible asset
|
1,048
|
81,175
|
82,223
|
|||||||||||||||||
Total assets
|
$
|
238
|
$
|
329,253
|
$
|
426,922
|
$
|
756,413
|
||||||||||||
LIABILITIES
|
||||||||||||||||||||
Current liabilities
|
||||||||||||||||||||
Accounts payable and accrued liabilities
|
$
|
414,082
|
$
|
15,027
|
$
|
429,109
|
||||||||||||||
Loans payable
|
-
|
-
|
a
|
345,747
|
425,747
|
|||||||||||||||
|
a
|
80,000
|
||||||||||||||||||
Current lease liability
|
5,374
|
5,374
|
||||||||||||||||||
Total current liabilities
|
414,082
|
20,401
|
425,747
|
860,230
|
||||||||||||||||
Non-current lease liability
|
310,157
|
310,157
|
||||||||||||||||||
Total liabilities
|
414,082
|
330,558
|
-
|
425,747
|
1,170,387
|
|||||||||||||||
SHAREHOLDERS’ EQUITY
|
||||||||||||||||||||
Share capital (Note 3)
|
1,400,000
|
1,764
|
b
|
(1,764
|
)
|
1,400,000
|
||||||||||||||
Options
|
85,870
|
-
|
85,870
|
|||||||||||||||||
Deficit
|
(1,899,714
|
)
|
(3,005
|
)
|
b
|
3,005
|
(1,899,714
|
)
|
||||||||||||
Accumulated other comprehensive income
|
-
|
(64
|
)
|
b
|
64
|
-
|
||||||||||||||
Equity attributable to owners of the parent
|
(413,844
|
)
|
(1,305
|
)
|
1,305
|
(413,844
|
)
|
|||||||||||||
Non-controlling interest
|
-
|
-
|
b
|
(131
|
)
|
(131
|
)
|
|||||||||||||
Total shareholders’ equity
|
(413,844
|
)
|
(1,305
|
)
|
1,175
|
(413,975
|
)
|
|||||||||||||
Total liabilities and shareholders’ equity
|
$
|
238
|
$
|
329,253
|
$
|
426,922
|
$
|
756,413
|
||||||||||||
|
Pro Forma Condensed Consolidated Statement of Loss and Comprehensive Loss
|
||||||||||||||||||||
From January 1, 2019 to June 30, 2019
|
||||||||||||||||||||
(Unaudited, Expressed in United States Dollars)
|
||||||||||||||||||||
|
Flora Growth Corp
|
Cosechemos Ya S.A.S
|
Note 5
|
Pro Forma Adjustments
|
Pro Forma Consolidated
|
|||||||||||||||
|
||||||||||||||||||||
|
June 30, 2019
|
June 30, 2019
|
||||||||||||||||||
EXPENSES
|
||||||||||||||||||||
Consulting and management fees
|
$
|
1,550,610
|
$
|
-
|
$
|
-
|
$
|
1,550,610
|
||||||||||||
Professional fees
|
19,309
|
-
|
-
|
19,309
|
||||||||||||||||
General administration expense
|
24,312
|
1,295
|
b
|
(1,295
|
)
|
24,312
|
||||||||||||||
Travel expenses
|
219,613
|
779
|
b
|
(779
|
)
|
219,613
|
||||||||||||||
Shared based compensation
|
85,870
|
-
|
b
|
-
|
85,870
|
|||||||||||||||
Interest expense
|
-
|
315
|
b
|
(315
|
)
|
-
|
||||||||||||||
Amortization
|
-
|
28
|
b
|
(28
|
)
|
-
|
||||||||||||||
Income tax expense
|
-
|
577
|
b
|
(577
|
)
|
-
|
||||||||||||||
Loss for the period
|
1,899,714
|
2,994
|
(2,994
|
)
|
1,899,714
|
|||||||||||||||
Other comprehensive loss
|
||||||||||||||||||||
Foreign currency translation
|
-
|
(161
|
)
|
b
|
161
|
-
|
||||||||||||||
Comprehensive loss for the period
|
$
|
1,899,714
|
$
|
2,833
|
$
|
(2,833
|
)
|
$
|
1,899,714
|
|||||||||||
|
||||||||||||||||||||
Comprehensive loss for the period attributable to:
|
||||||||||||||||||||
Owners of the parent
|
1,899,714
|
2,833
|
(2,964
|
)
|
1,899,584
|
|||||||||||||||
Non-controlling interest
|
-
|
-
|
b
|
131
|
131
|
|||||||||||||||
Comprehensive loss for the period
|
$
|
1,899,714
|
$
|
2,833
|
$
|
(2,833
|
)
|
$
|
1,899,714
|
Flora Growth Corp.
|
||||||||||||||||
Pro Forma Condensed Consolidated Statement of Loss and Comprehensive Loss
|
||||||||||||||||
From January 1, 2018 to December 31, 2018
|
||||||||||||||||
(Unaudited, Expressed in United States Dollars)
|
||||||||||||||||
|
Cosechemos Ya S.A.S
|
Note 5
|
Pro Forma Adjustments
|
Pro Forma Consolidated
|
||||||||||||
|
||||||||||||||||
|
December 31, 2018
|
|||||||||||||||
|
||||||||||||||||
EXPENSES
|
||||||||||||||||
General administration expense
|
$
|
-
|
b
|
$
|
(1,295
|
)
|
$
|
(1,295
|
)
|
|||||||
Travel expenses
|
-
|
b
|
(779
|
)
|
(779
|
)
|
||||||||||
Interest expense
|
-
|
b
|
(315
|
)
|
(315
|
)
|
||||||||||
Amortization
|
-
|
b
|
(28
|
)
|
(28
|
)
|
||||||||||
Income tax expense
|
4
|
b
|
(577
|
)
|
(573
|
)
|
||||||||||
Loss for the period
|
4
|
(2,994
|
)
|
(2,990
|
)
|
|||||||||||
Other comprehensive loss
|
||||||||||||||||
Foreign currency translation
|
137
|
(137
|
)
|
-
|
||||||||||||
Comprehensive loss for the year
|
$
|
141
|
$
|
(3,131
|
)
|
$
|
(2,990
|
)
|
||||||||
|
||||||||||||||||
Comprehensive loss for the period attributable to:
|
||||||||||||||||
Owners of the parent
|
141
|
(3,262
|
)
|
(3,121
|
)
|
|||||||||||
Non-controlling interest
|
-
|
131
|
131
|
|||||||||||||
Comprehensive loss for the year
|
$
|
141
|
$
|
(3,131
|
)
|
$
|
(2,990
|
)
|
i.
|
The unaudited interim condensed consolidated statement of financial position of Flora as at June 30, 2019;
|
ii.
|
The unaudited interim condensed consolidated statement of financial position of Cosechemos as at June 30, 2019;
|
iii.
|
The unaudited interim condensed statement of loss and comprehensive loss of Flora for the period from incorporation on March 13, 2019 to June 30, 2019;
|
iv.
|
The unaudited interim condensed statement of loss and comprehensive loss of Cosechemos for the six months June 30, 2019; and
|
v.
|
The unaudited interim condensed statement of loss and comprehensive loss of Cosechemos for the year ended December 31, 2018.
|
Acquisition of Cosechemos Ya. S.A.S
|
||||
Preliminary purchase price allocation
|
Estimated fair value
|
|||
Consideration:
|
||||
Cash
|
$
|
80,000
|
||
|
$
|
80,000
|
||
Allocation of purchase price:
|
||||
Amounts receivable
|
$
|
1,575
|
||
Prepaid expenses
|
3
|
|||
Biological asset
|
11,096
|
|||
Right-of-use asset
|
315,531
|
|||
Trade payables and accrued liabilities
|
(15,027
|
)
|
||
Current lease liability
|
(5,374
|
)
|
||
Non-current lease liability
|
(310,157
|
)
|
||
Minority interest
|
131
|
|||
Intangible asset
|
82,223
|
|||
|
$
|
80,000
|
(a)
|
To record loans received from Copper One.
|
(b)
|
To record the acquisition of 90% of Cosechemos, Note 3.
|
|
Number of shares
|
$
|
Number of shares held by Flora shareholders
|
70,000,000
|
$ 1,400,000
|
Pro forma common shares at June 30, 2019
|
70,000,000
|
$ 1,400,000
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
|
|
|
|
EX1A-4.1†
|
|
Form of Subscription Agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FLORA GROWTH CORP. | |||
Date: November 21 , 2019
|
By:
|
/s/Damian Lopez | |
Name:Damian Lopez | |||
Title:Chief Executive Officer | |||
/s/Damian Lopez
Name: Damian Lopez
Title: Chief Executive Officer, President and Director
(Principal Executive Officer)
|
Date: November 21, 2019
|
/s/Deborah Battiston
Name: Deborah Battiston
Title: Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer) |
Date: November 21, 2019
|
/s/ Damian Lopez as Attorney-in-fact
Name: Orlando Bustos
Title: VP Corporate Development
|
Date: November 21, 2019
|
/s/ Damian Lopez as Attorney-in-fact
Name: Javier Franco
Title: VP Agriculture
|
Date: November 21, 2019
|
/s/ Damian Lopez as Attorney-in-fact
Name: Stan Bharti
Title: Executive Chairman
|
Date: November 21, 2019
|
/s/ Damian Lopez as Attorney-in-fact
Name: Frederic Leigh
Title: Director
|
Date: November 21, 2019
|
/s/ Damian Lopez as Attorney-in-fact
Name: William Steers
Title: Director
|
Date: November 21, 2019
|
|
☐ |
I represent and warrant that the Subscriber is a United States citizen or resident or a corporation, partnership, limited liability company, trust, or equivalent legal entity organized under the laws of any state of the United States.
|
|
[☐ |
I represent and warrant that the International Subscriber is not a United States citizen or resident, corporation, partnership, limited liability company, trust, or equivalent legal entity organized under the laws of any state of the
United States.]1
|
|
[☐ |
Accredited Investor Status. I represent and warrant that the Subscriber is an “accredited investor,” within the meaning of Rule 501(a) under the Securities Act, [and
the Subscriber has been authenticated and verified by the Company’s accreditation service as an accredited investor.]2
|
|
[☐ |
Qualified Purchaser Status. I represent and warrant that the Subscriber is a “qualified purchaser,” as defined in Regulation A of the Securities Act, based on the fact
that either:
|
a. |
I am the Subscriber and I am a natural person. I am not investing more than the greater of either 10% of my net worth3 or 10% of my annual income4; or
|
b. |
The Subscriber is not a natural person, and the Subscriber is not investing more than the greater of the following, as calculated for the most recently completed fiscal year end:
|
|
(a) |
10% of the Subscriber’s revenue; or
|
|
(b) |
10% of the Subscriber’s net assets.]5
|
|
a. |
The Offering Circular;
|
|
[b. |
The International Supplement which accompanies the US Offering Circular (the “International Supplement”)]6
|
|
c. |
The terms of use for the _______ website operated by the Company (“Terms of Use”);
|
|
d. |
The privacy notice for the Company and its affiliates (“Privacy Notice”); and
|
|
e. |
This Agreement, which sets forth the terms governing my subscription to the Securities, and sets forth certain representations I am making in connection with my subscription to the Securities.
|
Signatory name:
Signatory title (if applicable):
Entity address:
|
Entity Name:
|
E-Mail Address:
|
|
Aggregate Investment (USD value):
|
|
Price per Security in general sale:
|
$0.75
|
Payment Method (USD):
|
☐ |
I represent and warrant to the Company that the answers provided in this Subscriber Questionnaire are current, true, correct and complete and may be relied upon by the Company and its respective affiliates in evaluating my eligibility,
or the eligibility of the entity that I represent, as a Subscriber and determining whether to accept this Agreement. I will notify the Company of any change to the information provided in this Subscriber Questionnaire promptly, but in
any event within fifteen days of such change.
|
☐ |
I agree to be bound (or, if I am an authorized representative of the Subscriber, I agree that the Subscriber will be bound) by any affirmation, assent or agreement that I transmit to or through this website by computer or other
electronic device, including internet, telephonic and wireless devices, including, but not limited to, any consent I give to receive communications from the Company or any of its affiliates solely through electronic transmission. I agree
that when I click on an “I Agree,” “I Consent” or other similarly worded button or entry field with my mouse, keystroke or other device, my agreement or consent will be legally binding and enforceable against me (or, if I am an authorized
representative of the Subscriber, against the Subscriber) and will be the legal equivalent of my handwritten signature on an agreement that is printed on paper. I agree that the Company and any of their affiliates will send me electronic
copies of any and all communications associated with my subscription to the Securities, as provided in Section 6 of this Subscriber Questionnaire and Section 11 below of the Subscription Agreement.
|
☐ |
I represent and warrant to the Company that all questions and responses provided by the Subscriber in the course of completing the “purchase flow” process, including without limitation, the information reflected in this Subscriber
Questionnaire, as well as Subscriber’s contact information, address, and account information, Subscriber’s social security number if Subscriber is a natural person, and, if Subscriber is an entity, Subscriber’s tax identification number
and whether Subscriber is an S Corporation, C Corporation, Grantor Trust, Limited Partnership, General Partnership, Limited Liability Partnership, Limited Liability Company, Estate, or other type of entity, is current, true, correct and
complete and may be relied upon by the Company and its respective affiliates. I will notify the Company of any change to this information promptly, but in any event within fifteen days of such change.
|
Entity Name:
|
[ENTITY NAME]
|
By:
|
/s/ [SIGNATORY NAME]
|
Name:
|
[SIGNATORY NAME]
|
Title:
|
[SIGNATORY TITLE]
|
Submission Date:
|
[INVESTMENT SIGN DATE]
|
Total Purchase Amount:
|
$[PURCHASE AMOUNT]
|
Number of General Sale _______:
|
|
AGREED AND ACCEPTED BY
THE COMPANY:
_______
|
|
By:
|
|
Name:
|
|
Title:
|
|
Effective Date:
|
[EFFECTIVE DATE]
|
_______
_______
_______
_______
|
1.
|
That on the second of May of 2018, the Parties have celebrated a lease (the “Agreement”) on 361 hectares with 6,057 square meters (the “Area”) of the property located in the village of Motoso, rural area of the municipality of Girón, Santander, identified with the real estate registration No.
300-193758 of the County Recorder´s Office of Bucaramanga and the cadastral certificate No.000000110076000 the (“Property”). The current amendment aims to
clarify that any requirement or environmental regulation present on zones required by the environmental authority shall be respected and/or compensated, serving this as an explicit authorization utilizing this document, to the owner to
cede and deed these strips of land in favor of the environmental entity. This shall not deteriorate the value of the lease.
|
2.
|
That under the Agreement, the Tenant shall destine the Property to labors related to cannabis cultivation with medicinal and scientific purposes and other activities of production
and transformation associated to these and activities included within its business purpose.
|
3.
|
That the Parties have been engaged in negotiations and to reflect the agreements outlined in the Agreement, have decided to subscribe the present Amendment, which leads to the entire
replacement of the points contained in the Agreement, which shall remain as:
|
4.
|
The Tenant has full knowledge that as of October of 2018, the property subject of this contract has had a lien by an embargo process with Bancolombia.
|
5.
|
The Tenant has full knowledge of the condition of the property, and its access roads and its internal building roads.
|
6.
|
The Tenant has full knowledge of the condition of the property, and its access roads and its internal building roads.
|
7.
|
COSECHEMOS YA SAS, has full knowledge of the existence of a pineapple crop that occupies approximately 20 hectares of the farm Cantalavieja, it is estimated that the pineapple
harvest comes out once a year. CI GRAMALUZ SCA shall indemnify COSECHEMOS YA SAS, against any possible claim arising from this crop.
|
8.
|
COSECHEMOS YA SAS, has full knowledge that on the Cantalavieja farm, there are two (2) portions of land leased for the installation of two (2) antennas of the companies Sistelec, one
of them works for meteorological analysis and Genesis Data. For internet purposes, CI GRAMALUZ SCA shall hold Cosechemos Ya SAS compensated from any third party claims that may arise from the existence of the mentioned antennas.
|
(a)
|
Ten million Colombian pesos (COP $10.000.000) plus VAT, which shall be in force from September 19th,
2019 until February 29th, 2020.
|
(b)
|
Twenty million Colombian pesos (COP $20.000.000) plus VAT, which shall be in force from March 1st, 2020. Upon expiration of
the first year of the Agreement, the Fee shall be increased automatically without the need for any requirement between the Parties, in a proportion equal to the consumer Price index (CPI) increase, this being certified by the DANE for the
12 months immediately prior to the date in which readjustments are to be made.
|
|
(a)
|
To allow the peaceful use and enjoyment of the Area.
|
(b)
|
To release the Tenant from any disturbance in the normal and full enjoyment of the Area.
|
(c)
|
To receive the payment of the fee.
|
(d)
|
To file the corresponding invoice to the collection of the fees within the first 5 business days of each month.
|
(e)
|
To assume the payment of the Property´s tax obligations, specifically those that correspond to property taxes, valuation contributions, and overall, any tax or tribute levied on the
Property, for which the Tenant may demand verification of said payments under the applicable legislation.
|
(f)
|
To allow the Tenant, with prior express written authorization, to make improvements and adjustments in the Area for its adaptation and use, under the Agreement Provisions. To allow
the Tenant to make improvements and adaptations in the Area for its use under the provisions determined in the Agreement, said expenses should fall under the Tenant responsibility, and if the withdrawing of the improvements causes any
deterioration to the Property, these shall not be withdrawn. The tenant shall not intervene in any way among the areas currently purposed for pineapple, avocado, lemon, and tangerine harvests. The Tenant shall respect these areas with
their respective crops. Said areas may be intervened after previous stipulated agreements with the Landlord.
|
(g)
|
To carry out all the necessary acts for the Tenant to have a peaceful tenancy of the Property.
|
(h)
|
To receive the Area upon termination of the Agreement, as determined in the mentioned.
|
(i)
|
To notify the Tenant before entering into any legal business involving the Property.
|
(j)
|
All other law provisions as well as those stipulated on this Agreement.
|
(a)
|
To pay the Fee under the provisions of this Agreement.
|
(b)
|
To use and enjoy the Area under this Agreement, showing respect to the areas with current pineapple, lemon, tangerine and avocado harvests.
|
(c)
|
To restitute the property and/or Areas at the termination of the Agreement.
|
(d)
|
To maintain good relations, peaceful and respectful coexistence with the personnel and other people who are in the Cantalavieja estate.
|
(e)
|
To comply with the farm’s biosecurity standards.
|
(f)
|
To pay for the respective public services of the farm.
|
(g)
|
To provide the Landlord with copies of the licenses permits and other required authorizations by different entities regarding the development of the business purpose activity carried
out on the leased property.
|
(h)
|
To watch over and care for the conservation and security of the farm and of those who are on it.
|
(i)
|
The Tenant shall be liable for all provisions assumed on this Agreement, as well as those imposed by the applicable law, not being limited to the agreed initial term but also during
tacit carryovers and written renewals, until the date of restitution of the property to the Landlord. It shall not keep or allow the storage within the Property of explosive substances or those detrimental to safety, conservation, and
hygiene, as well as those that in any way may be qualified as illicit.
|
(j)
|
All other law provisions as well as those stipulated on this Agreement.
|
(a)
|
Termination by either Party
|
i.
|
Damage or destruction of the Area and/or Property, when said damage or destruction is of such magnitude as to prevent the normal use and
enjoyment of the Tenant.
|
ii.
|
By dissolution or declaration of compulsory liquidation of any of the Parties.
|
iii.
|
By judicial conviction or inclusion of the Parties and/or any of their administrators in the Specially Designated Nationals and Blocked Persons List, issued by the Office of Foreign
Assets Control of the United States Department of Treasury (“OFAC”) and/or in any similar list issued by the OFAC or any similar entity, in accordance with any authorization, executive order or regulation.
|
iv.
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The expiry of the term of the Agreement, its carryovers, or renewals.
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v.
|
The mutual agreement between the Parties, which must be in written form.
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vi.
|
The breach of any of the provisions set forth in the present Agreement.
|
(b)
|
Termination by the Tenant
|
i.
|
The impossibility of using the Area for the purposes agreed upon this Agreement, due to the urban planning and use regulations in force or that shall be governed in the future by
judicial rulings, administrative or policy decisions that so order.
|
ii.
|
By revocation, denial, or termination of the required licenses or permits for the operation of the activities to which the Area shall be
assigned.
|
iii.
|
If the Tenant fails to make the necessary repairs to the purpose of this Agreement, and this failure causes damage to the Landlord.
|
(c)
|
Termination by the Landlord
|
i.
|
By failure or delay greater than four (4) consecutive months in the payment of the established Fee.
|
ii.
|
If the Tenant destines the Area to a different purpose other than the one established in the present Agreement.
|
(a)
|
That he is a legal entity legally established under the laws of the Republic of Colombia.
|
(b)
|
That, for the celebration and the fulfillment of this Agreement, they have all the corporate and legal authorizations and faculties and have taken all the necessary corporate
actions, including the authorizations of the respective corporate bodies, to be able to celebrate and perform this Agreement.
|
(c)
|
That the effectiveness, enforceability, subscription, celebration, and/or performance of this Agreement does not require the granting of approval, consent, permission, order,
license, authorization, declaration, presentation, or report from any person.
|
(d)
|
That the information provided to the Tenant is truthful, complete, accurate, up to date, verifiable, and comprehensible. Likewise, the information to be provided to the Tenant in the
performance of the Contract shall be truthful, complete, accurate, up to date, verifiable and comprehensible.
|
(e)
|
That the Contract has been duly celebrated and subscribed and constitutes a source of legal, valid, binding and enforceable obligations under its regulations.
|
(f)
|
That, in addition to the executive attachment that falls on the Property, and which is recorded in notation 008 of the ninth (9) of October 2018 of the property registration number
folio, to date he/she is not aware of any situation that limits or threatens to limit or restrict the use, enjoyment and disposition of the Property or the Area, including threats of a civil nature to the ownership, possession or free
disposition, nor has he/she been notified of or identified any circumstance of a regulatory, urban, environmental or health nature that could affect the development of the object of this Agreement.
|
(g)
|
That the Property, at the date of subscription of this Agreement, is up to date in the payment of all taxes such as property tax, valuation charge, and in general, other concepts
related to the maintenance of the Property.
|
(h)
|
That he/she is solely and exclusively responsible for any possible complaint regarding the right to and/or ownership of the Property, in this sense, it releases in a long-term the
Tenant from all liability for judicial and / or extrajudicial complaints that may arise against the Tenant.
|
i.
|
The purchase and sale price shall be that agreed-upon corporate appraisal carried out by the Lonja de Propiedad Raíz of Bogotá, which shall be contracted by the
Tenant within six (6) months following the Starting Date, and shall be indexed to the date on which the notification of the intention to purchase the Property is made, increasing in a proportional
manner equal to that of the Consumer Price Index.
|
ii.
|
The Purchase Option may be exercised in whole by the Tenant, at any time during the Term of the Contract, contemplated in the Fourth Provision of this Agreement,
excluding its extensions (the "Term of the effectiveness of the Option ").
|
iii.
|
The Tenant, at any time during the Term of Effectiveness of the Option to Purchase, must communicate in writing to the Landlord, the will to exercise the Option
to Purchase, indicating in such communication the documents required for the performance of due diligence on the Leased Property (the "Due Diligence Documents"), which will be, but not limited to,
registered public deeds on the Property, proof of payment of trade taxes, building permits, information on disputes, precautionary measures, liens or encumbrances on the Leased Property, among other documents of a similar nature.
|
iv.
|
The Landlord shall, within thirty (30) business days of receiving the notice, forward the Due Diligence Documents to the Tenant. Once the Due Diligence Documents
have been received, the Tenant shall have a term of sixty (60) business days to carry out the due diligence process of the Property.
|
v.
|
Once the legal, due diligence process of the Properties has been satisfactorily completed, at the discretion of the Tenant, the Parties, within fifteen (15)
business days following the expiration of the period for carrying out the due diligence process, shall sign the promissory Sale and Purchase Agreement in which the method of payment of the Sale and Purchase Price, and other conditions
for executing the purchase and sale agreement on the Property shall be specified.
|
vi.
|
With a prior written agreement, the Parties may grant the public deed of sale and Purchase or the document through which the sale of the Properties is
understood to be executed, without the need to exhaust the subscription stage of the Promissory Sale and Purchase Agreement.
|
No.
|
Description
|
Exhibit 1
|
Landlord Legal Representation Instruments
|
Exhibit 2
|
Tenant Legal Representation Instruments
|
Exhibit 3
|
Area plan
|
Exhibit 4
|
Corporate appraisal carried out by the Lonja de Propiedad Raíz of Bogotá
|
Exhibit 5
|
Title research study
|
LANDLORD
|
TENANT
|
|
(signed) “Guillermo Ramirez Cabrales”
|
(signed) “Oscar Mauricio Franco”
|
|
CI GRAMALUZ SCA
|
COSECHEMOS YA
|
|
TIN 804.017.745-1
|
TIN 900.969.918-1,
|
|
GUILLERMO RAMIREZ CABRALES
|
OSCAR MAURICIO FRANCO
|
|
ID NO. 5.764.410
Legal Rep.
|
ID NO. 79.596.227
Legal Rep.
|
|
Julia Álvarez de Delgado
|
|
|
|
|
|
Pedro Benito Delgado Hernández
Award in judicial liquidation
(1992)
|
|
|
|
|
|
Tierracaoba S.C.A.
Sale and purchase (2008)
|
|
|
|
|
|
CI Gramaluz
Merger (2014)
|
|
|
|
|
(i)
|
VICALVARO C.V., represented in this act by Margarita María Méndez Caicedo, of legal age, identified with citizenship card No. 1,130,667,987, who acts in this act in her capacity as special proxy, as evidenced by the power of attorney registered with Notary 5 of Cali, Public deed No 405 of 17 February 2017 and whose power of
attorney is valid until 31 December 2019, ("Promising Landlord with Option to Sell"), and, on the other hand,
|
(ii)
|
COSECHEMOS YA S.A.S., identified with NIT 900.969.918-1, legally represented in this act by Oscar Mauricio Franco Ulloa, of
legal age, identified with citizenship card No. 79.596.227, who acts in this act in his capacity as legal representative, as stated in the Certificate of Legal Existence and Legal Representation
issued by the Chamber of Commerce of Bucaramanga, (the "Promoter Tenant with lease purchase agreement").
|
1.
|
The parties celebrate this supplementary agreement to the contract signed on December 27, 2018, on 1,432 hectares, of the property located in the village of Palagua, rural area of the municipality of Puerto
Boyacá, Department of Boyacá, identified with the real estate registration No. 088-6222 of the Office of Registration of Public Instruments of Puerto Boyacá and the cadastral identification 155720001000000040212000000000, property BOCAS DE
PALAGUA Y TIERRA PROMETIDA.
|
2.
|
The parties consider it necessary to modify and give detailed scope to clauses Four and Six of the original contract set forth above, which will remain as follows:
|
McGovern Hurley LLP
|
Chartered Professional Accountants
Licensed Public Accountants |
Toronto, Ontario
November 21, 2019
|
(a)
|
a certified copy dated October 10, 2019 of the constating documents and by-laws of the Corporation;
|
(b)
|
a certificate of status dated October 9, 2019 issued by the Ministry of Government and Consumer Services (Ontario) in respect of the Corporation (the “Certificate of Status”);
and
|
(c)
|
resolutions of the directors of the Corporation relating to the Offering and the transactions contemplated thereby, including resolutions of the directors approving, among other things, the Offering, the form
of subscription agreement to be entered into between the Corporation and purchasers of the Units and the form of the certificate representing the Warrants.
|
(a)
|
the legal capacity of all individuals;
|
(b)
|
the genuineness of all signatures on, and the authenticity and completeness of all documents submitted to us as originals and the conformity to authentic or original documents of all documents submitted to us
as certified, conformed, telecopied, photostatic, electronically transmitted copies (including commercial reproductions);
|
(c)
|
the identity and capacity of any person acting or purporting to act as a corporate or public official;
|
(d)
|
the accuracy and completeness of all information provided to us by public officials or offices of public record;
|
(e)
|
the accuracy and completeness of all representations and statements of fact contained in all documents, instruments and certificates (including the Officer’s Certificate);
|
(f)
|
the accuracy and completeness of the minute books and all other corporate records of the Corporation reviewed by us;
|
(g)
|
the facts stated in the Certificate of Status continue to be true as of the date hereof;
|
(h)
|
the Units will be offered, issued and sold in compliance with applicable United States federal and state securities laws, and in the manner stated in the Offering Statement; and
|
(i)
|
that the facts stated in the Certificate of Status and the Officer’s Certificate shall continue to be true and correct as at the date of completion of the Offering.
|
1.
|
The Corporation is a corporation existing under the Business Corporations Act (Ontario) and has not been dissolved.
|
2.
|
The Shares have been duly authorized by all necessary corporate action on the part of the Corporation and, when the Shares are issued and sold in the manner and under the terms described in the Offering
Statement, will be validly issued, fully paid and non-assessable.
|
3.
|
The Warrants have been duly authorized and, when issued and sold in accordance with and in the manner described in the Offering Statement, shall be authorized, created and validly issued by the Corporation.
|
4.
|
The Warrants constitute valid and binding obligations of the Corporation enforceable against the Corporation in accordance with their terms.
|
5.
|
The Units have been duly authorized by all necessary corporate action on the part of the Corporation.
|
6.
|
The Warrant Shares have been authorized and reserved for issuance and such Warrant Shares, when issued and delivered by the Corporation in accordance with the terms and conditions of the certificates
representing the Warrants against payment of the exercise price therefor, will be validly issued as fully paid and non-assessable common shares in the capital of the Corporation.
|