|
|
Ontario, Canada
|
2833
|
Not Applicable
|
(State or other jurisdiction of
incorporation or organization)
|
(Primary Standard Industrial
Classification Code Number)
|
(I.R.S. Employer
Identification No.)
|
Rebecca G. DiStefano
Greenberg Traurig, P.A.
401 East Las Olas Boulevard, Suite 2000 Fort Lauderdale, Florida 33301 Tel: +1 (954) 768-8221 Fax: +1 (561) 338-7099 |
Michael Rennie
Wildeboer Dellelce LLP
365 Bay Street, Suite 800
Toronto, Ontario M5H 2V1
Tel: +1 (416) 361-4781
Fax: +1 (416) 361-1790
|
Louis A. Bevilacqua
Bevilacqua PLLC
1050 Connecticut Ave., NW, Suite 500
Washington, DC 20036
Tel: +1 (202) 869-0888
Fax: +1 (202) 869-0889
|
† |
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification
after April 5, 2012.
|
Title of each class of
securities to be registered |
Amount to be registered
|
Proposed maximum
offering price per Common Share |
Proposed maximum
aggregate offering price |
Amount of
registration fee |
Common Shares(1)(2)
|
$
|
$
|
$
|
|
Underwriters’ Warrants(3)
|
$
|
$
|
$
|
|
Common Shares underlying Underwriters’ Warrants(4)
|
$
|
$
|
$
|
|
Total
|
$
|
$
|
$
|
(1)
|
Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(a) under the under the Securities Act of 1933, as amended (the “Securities
Act”). Includes the Common Shares that the underwriters have the option to purchase to cover any over-allotments. See “Underwriting.”
|
(2)
|
Pursuant to Rule 416 under the Securities Act, there is also being registered hereby such indeterminate number of additional Common Shares of the Registrant as may be issued or issuable
because of stock splits, stock dividends, stock distributions, and similar transactions.
|
(3)
|
No fee required pursuant to Rule 457(g) of the Securities Act.
|
(4)
|
Represents underwriters’ warrants to purchase up to an aggregate of seven percent (7%) of the Common Shares sold in the offering at an exercise price equal to one hundred ten percent (110%) of the public offering price. As estimated
solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act, the proposed maximum aggregate offering price of the underwriters’ warrants is $ . The underwriters’ warrants will be
exercisable upon issuance, will have a cashless exercise provision and will terminate on the fifth anniversary of the effective date of the registration statement of which this prospectus is a part. The underwriters’ warrants are not
exercisable or convertible for more than five years from the commencement of sales of the public offering.
|
The
information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is declared effective. This
preliminary prospectus is not an offer to sell these securities, nor a solicitation of an offer to buy these securities, in any jurisdiction where the offer, solicitation, or sale is not permitted.
|
|
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED FEBRUARY 11, 2021
Flora Growth Corp.
Common Shares
This is an initial public offering (the “offering”) of our common shares, no par value per share
(which we refer to as our “Common Shares”). We are offering of our Common Shares in this offering. The Common Shares are being offered at a purchase price of $ per share.
Prior to this offering, there has been no public market for our Common Shares. We are in the process
of applying to list our Common Shares and have reserved the symbol “FLGC” for purposes of listing our Common Shares on the NASDAQ Capital Market under the symbol “FLGC.” NASDAQ might not approve such application, and if our application is
not approved, this offering cannot be completed.
We are organized under the laws of the Province of Ontario and are an “emerging growth company”, as
defined in the Jumpstart Our Business Startups Act of 2012, under applicable U.S. federal securities laws, and are eligible for reduced public company reporting requirements. See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations —Emerging Growth Company Status.”
Investing in our securities is highly speculative and involves a high degree of
risk. See “Risk Factors” for a discussion of information that should be considered in connection with an investment in our securities.
Neither the U.S. Securities and Exchange Commission nor any state or provincial
securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
|
|
|
Per Common Share
|
Total
|
|||||||
Initial public offering price
|
$
|
$
|
||||||
Underwriting discounts and commissions(1)
|
$
|
$
|
||||||
Proceeds to us (before expenses)(2)
|
$
|
$
|
(1) |
|
We have agreed to reimburse the underwriters for certain expenses and the underwriters will receive compensation in addition to underwriting discounts and commissions. See “Underwriting” for additional disclosure regarding underwriters’ compensation and offering expenses.
|
(2) |
|
The total estimated expenses related to this offering are set forth in the section entitled "Expenses Related to This Offering".
|
|
Page
|
1
|
|
9
|
|
11
|
|
10
|
|
41
|
|
42
|
|
43
|
|
44
|
|
46
|
|
47
|
|
61
|
|
65
|
|
89
|
|
94
|
|
101
|
|
105
|
|
106
|
|
108
|
|
111
|
|
113
|
|
123
|
|
127
|
|
128
|
|
128
|
|
128
|
|
129
|
|
130
|
•
|
Experienced Management Team. Our
management is experienced and has a fundamental understanding of Colombia’s regulatory framework, the agricultural and scientific processes necessary to develop high quality and consistent medicinal cannabis products.
|
•
|
Change in the Global Cannabis Industry. The global cannabis industry is experiencing significant change as governments embrace regulatory reform, liberalizing the production and consumption of cannabis. It is possible that foreign corporations may enter the
Colombian market as a result of Colombia’s regulatory regime, creating the prospect of Colombia becoming a hub for future industry development.
|
•
|
Colombian Cultivation Advantage. We anticipate growing our cannabis outdoors in Colombia with favorable environmental conditions. Further, the strength of the United States dollar is projected to provide us with a cost advantage over our competitors, and
Colombia has a workforce highly-skilled in agriculture at a lower cost compared to the United States.
|
•
|
Healthy and Sustainable Products. We produce cannabis and derivative products across food and beverage, cosmetics, and medicinal markets,
which markets are projected to grow rapidly as consumers prioritize healthy and sustainable products that are good for themselves, their family, and their environment.
|
•
|
Efficient Manufacturing Practices. We have
adopted efficient manufacturing practices and logistics, synergizing our operations between our technical and commercial teams
|
•
|
Expanding our production capacity. In the near term, our primary strategy is to expand our production capacity as quickly as possible to meet existing demand in the United States and Colombia.
|
•
|
Creating Sustainable and Natural Products. We believe that sustainable innovation is key to achieving our production objectives, and the main driver to our product development approach.
|
•
|
Expanding our geographic footprint. Our current focus is on selling our products in the United States and Colombia in the short term, with expansion to other Latin American countries, Canada and Europe, subject
to regulatory conditions in such countries.
|
•
|
Exploring strategic partnerships. Because we offer a wide variety of cannabis related products, we believe that we can create a competitive advantage by partnering with
influencers, national and multinational companies to jointly develop and market branded cannabis offerings.
|
•
|
Pursuing accretive acquisitions. We believe that our deal-making capabilities and experience will allow us to successfully identify, consummate and integrate acquisitions.
|
•
|
Agricultural activity has been declared as an essential activity in Colombia. We are operating under a protocol authorized by the Colombian government.
|
•
|
At our farm in Santander, all employees receive a new mask and a new set of surgical gloves daily. Hand sanitizer is provided and hand washing protocols are
in place. The employees are also provided a transparent face protection mask, which is replaced every 30 days. All employees have their temperature taken three times daily and must report to the Health and Safety office if they are
experiencing any symptoms, including diarrhea, cough, runny nose, or headache. If an employee reports any of these symptoms, the employee is sent home to isolate for 14 days, if the symptoms persist for 72 hours, the employee is
required to go to a hospital.
|
•
|
Our farm is located in a rural area, and there have been no positive cases of COVID-19 reported to date. The province in which the farm is located has
reported 475 cases across a population of 2,340,765 to date.
|
•
|
Our staff from the Bogotá office have been working from home since March 25, 2020, and staff from the Toronto office have also been working from home since
March 17, 2020.
|
•
|
To date, there have been 5 reported cases of COVID-19 amongst our staff, with all 5 being completely recovered.
|
• limited operating history and net losses;
• unpredictable events, such as the COVID-19 outbreak, and associated business disruptions;
• changes in cannabis laws, regulations and guidelines;
• decrease in demand for cannabis and derivative products due to certain research findings,
proceedings, or negative media attention;
• damage to reputation as a result of negative publicity;
• exposure to product liability claims, actions and litigation;
• risks associated with product recalls;
• product viability;
• continuing research and development efforts to respond to technological and regulatory changes;
• shelf life of inventory;
• maintenance of effective quality control systems;
• changes to energy prices and supply;
• risks associated with expansion into new jurisdictions;
• regulatory compliance risks;
• opposition to the cannabinoid industry;
• risks related to our operations in Colombia; and
• potential delisting resulting in reduced liquidity of our Common Shares.
|
•
|
present more than two years of audited financial statements and two years of related selected financial data and management’s discussion and analysis of financial condition and results of operations
disclosure in our registration statement of which this prospectus forms a part;
|
•
|
have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (which we refer to as the “Sarbanes-Oxley Act”);
|
•
|
disclose certain executive compensation related items; and
|
•
|
seek shareholder non-binding advisory votes on certain executive compensation matters and golden parachute arrangements, to the extent applicable to us as a foreign private issuer.
|
•
|
the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations with respect to a security registered under the Exchange Act;
|
•
|
the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, and current reports on Form 8-K
upon the occurrence of specified significant events; and
|
•
|
Regulation Fair Disclosure (“Regulation FD”), which regulates selective disclosures of material information by issuers.
|
(i)
|
the majority of our executive officers or directors are U.S. citizens or residents;
|
(ii)
|
more than 50% of our assets are located in the United States; or
|
(iii)
|
our business is administered principally in the United States.
|
Issuer
|
Flora Growth Corp.
|
|
Common Shares Offered
|
● Common Shares at an offering price of $● per Common Share.
|
|
Public Offering Price
|
The assumed public offering price is $● per Common Share.
|
|
Common Shares Outstanding Before this Offering
|
● Common Shares.
|
|
Common Shares to be Outstanding Immediately After this Offering
|
● Common Shares (or ● if the underwriters exercise the over-allotment option in full).
|
|
Underwriting; Over-Allotment Option
|
This offering is being conducted on a firm commitment basis. The underwriters are obligated to take and pay for all of the Common Shares if any such shares
are taken. We have granted the underwriters an option for a period of 45 days from the date of this prospectus to purchase up to additional Common Shares constituting 15% of the total number of our Common Shares to be offered
by us pursuant to this offering (excluding shares subject to this option), solely for the purpose of covering over-allotments, at the initial public offering price less the underwriting discount.
|
|
Underwriters’ Warrants
|
We will issue to Boustead Securities, LLC (the “Representative”), the representative of the underwriters, or its permitted designees warrants to purchase up
to ● Common Shares (or ● Common Shares if the underwriters exercise their over-allotment option in full). The underwriters’
warrants will have an exercise price of 110% of the per Common Share public offering price, will be exercisable upon issuance, will have a cashless exercise provision and will terminate on the fifth anniversary of the effective date
of the registration statement of which this prospectus is a part.. The underwriters’ warrants are not exercisable or convertible for more than five years from the commencement of sales of the public offering.
|
|
Use of Proceeds
|
We estimate that the net proceeds to us from this offering will be approximately $●, assuming an initial public offering price of $● per Common Share, after deducting the underwriting discounts and commissions and estimated
offering expenses payable by us. We will use these net proceeds for capital expenditures (including without limitation the construction of our planned Research Technology and Processing Centre), operating capacity, working capital
and general corporate purposes, and such other purposes described in “Use of Proceeds.”
|
|
Lock-ups
|
Our company, our directors, executive officers and certain beneficial holders of 5% or more of our Common Shares have agreed with the underwriters not to
offer, issue, sell, contract to sell, encumber, grant any option for the sale of, or otherwise dispose of, any of our securities for (i) a one year period in the case of our officers and directors and (ii) a period of 180 days, in
the case of such beneficial holders of our Common Shares, following the closing of this offering, subject to certain exceptions. See “Underwriting—No Sales of Similar Securities”
for more information.
|
|
Listing
|
We are in the processing of filing a listing application with NASDAQ and intend to list our Common Shares on
the NASDAQ Capital Market under the symbol “FLGC.” Our application could be rejected by NASDAQ, and this offering may not close until we have received NASDAQ’s approval of our application.
|
|
Transfer Agent
|
The transfer agent and registrar for our Common Shares is TSX Trust Company.
|
|
Risk Factors
|
Investing in our securities is highly speculative and involves a high degree of risk. You should carefully read and consider the information set forth under the heading “Risk Factors”,
and all other information contained in this prospectus, before deciding to invest in our securities.
|
(a)
|
up to ● Common Shares issuable upon the exercise in full by the underwriters of their over-allotment option to purchase additional Common Shares
from us, and
|
(b)
|
● Common Shares issuable upon exercise of stock options outstanding which are exercisable
at an exercise price of $● per share and ● Common Shares issuable upon exercise of common share purchase warrants outstanding which are exercisable at an exercise price of $ per share.
|
Consolidated Statements of Loss and Comprehensive Loss (Income)
(Expressed in United States dollars)
|
March 13, 2019 (inception) through December 31, 2019
|
Six Months Ended
|
||||||||||
June 30, 2020
|
June 30, 2019
|
|||||||||||
(audited)
|
(unaudited)
|
|||||||||||
Expenses
|
|
|
||||||||||
Consulting and management fees
|
$
|
2,000,508
|
$
|
818,866 | $ | 1,550,610 | ||||||
Professional fees
|
182,900
|
217,960 | 19,309 | |||||||||
General office expenses
|
175,296
|
714,947 | 24,312 | |||||||||
Travel expenses
|
305,874
|
233,362 | 219,613 | |||||||||
Share based compensation
|
107,024
|
344,406 |
107,024
|
|||||||||
Depreciation and amortization
|
25,865 | 56,617 | - | |||||||||
Research and development
|
21,040
|
53,405
|
-
|
|||||||||
Foreign exchange (gain)
|
6,119
|
170,041
|
-
|
|||||||||
Loss before interest expense
|
2,824,626
|
2,609,604
|
1,920,868
|
|||||||||
Interest expense
|
19,485
|
72,087
|
-
|
|||||||||
Other income
|
-
|
(80,579
|
)
|
-
|
||||||||
Net loss for the period
|
$ |
2,844,111
|
$ |
2,601,112
|
$ |
1,920,868
|
||||||
Other comprehensive loss
|
||||||||||||
Exchange differences on foreign operations
|
(22,877
|
)
|
(19,046
|
)
|
-
|
|||||||
Total comprehensive loss for the period
|
$ |
2,821,234
|
$ |
2,582,066
|
$ |
1,920,868
|
||||||
Net loss attributable to:
|
||||||||||||
Flora Growth Corp.
|
$ |
2,824,326
|
$ |
2,555,413
|
$ |
1,920,868
|
||||||
Non-controlling interests
|
$ |
19,785
|
$ |
45,699
|
$ |
-
|
||||||
Comprehensive loss attributable to:
|
||||||||||||
Flora Growth Corp.
|
$ |
2,801,449
|
$ |
2,536,367
|
$ |
1,920,868
|
||||||
Non-controlling interests
|
$ |
19,785
|
$ |
45,699
|
$ |
-
|
||||||
|
||||||||||||
Basic and diluted loss per share attributable to Flora Growth Corp.
|
$ |
0.06
|
$ |
0.03
|
$
|
1.00
|
||||||
Weighted average number of Common Shares outstanding – basic and diluted
|
44,675,768
|
81,126,625
|
1,926,606
|
|||||||||
•
|
successfully implement or execute our business plan, or that our business plan is sound;
|
•
|
adjust to changing conditions or keep pace with increased demand;
|
•
|
attract and retain an experienced management team; or
|
•
|
raise sufficient funds in the capital markets to effectuate our business plan, including product development, licensing and approvals.
|
•
|
require extensive changes to our operations;
|
•
|
result in regulatory or agency proceedings or investigations;
|
•
|
result in the revocation of our licenses and permits, increased compliance costs;
|
•
|
result in damage awards, civil or criminal fines or penalties;
|
•
|
result in restrictions on our operations;
|
•
|
harm our reputation; or
|
•
|
give rise to material liabilities.
|
•
|
the revocation or imposition of additional conditions on licenses to operate our business;
|
•
|
the suspension or expulsion from a particular market or jurisdiction or of our key personnel;
|
•
|
the imposition of additional or more stringent inspection, testing and reporting requirements;
|
•
|
product recalls or seizures; and
|
•
|
the imposition of fines and censures.
|
•
|
a limited availability of market quotations for our Common Shares;
|
•
|
reduced liquidity for our Common Shares;
|
•
|
a determination that our Common Shares are “penny stock”, which would require brokers trading in our Common Shares to adhere to more stringent rules and possibly result in a reduced level of trading
activity in the secondary trading market for our Common Shares;
|
•
|
a limited amount of news about us and analysist coverage of us; and
|
•
|
a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.
|
• delaying,
deferring or preventing a change of control of the Company;
|
• impeding
a merger, consolidation, takeover or other business combination involving the Company; or
|
• discouraging
a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company.
|
• Our
limited operating history and net losses;
• unpredictable
events, such as the COVID-19 outbreak, and associated business disruptions;
• changes
in cannabis laws, regulations and guidelines;
• decrease
in demand for cannabis and derivative products due to certain research findings,
proceedings, or negative media attention;
• damage
to our reputation as a result of negative publicity;
• exposure
to product liability claims, actions and litigation;
• risks
associated with product recalls;
• product
viability;
• continuing
research and development efforts to respond to technological and regulatory changes;
• shelf
life of inventory;
• maintenance
of effective quality control systems;
• changes
to energy prices and supply;
• risks
associated with expansion into new jurisdictions;
• regulatory
compliance risks;
• opposition
to the cannabinoid industry;
• risks
related to our operations in Colombia; and
• potential
delisting resulting in reduced liquidity of our Common Shares.
|
•
|
on an actual basis;
|
•
|
on a pro forma basis to give effect to the issuances of an aggregate of Common Shares after June 30, 2020 in connection with the exercise of all outstanding warrants and the issuances of an
aggregate of Common Shares after June 30, 2020 in connection with the exercise of outstanding stock options; and
|
•
|
on a pro forma, as adjusted, basis to give effect to the above and the issuance of Common Shares in this offering at an assumed initial public offering price of $ per Common Share after
deducting underwriting discounts and commissions and estimated offering expenses payable by us, as set forth in this prospectus.
|
As of June 30, 2020
|
||||||||||||
(in [thousands/millions], except share amounts)
|
Actual(1)
|
Pro Forma(1)
|
Pro Forma,
as Adjusted(1)
|
|||||||||
Cash and cash equivalents
|
$
|
$
|
$
|
|||||||||
Shareholders’ equity:
|
||||||||||||
Common Shares, without par value; 87,770,100 shares issued and outstanding, actual; 117,679,502 shares issued and outstanding pro forma and pro forma as adjusted
|
||||||||||||
Stock Options; 7,150,000 issued and outstanding, actual; 9,950,000 issued and outstanding pro forma and pro forma as adjusted
|
||||||||||||
Warrants; 15,585,050 issued and outstanding, actual; 28,663,088 issued and outstanding pro forma and pro forma as adjusted
|
||||||||||||
Capital surplus
|
||||||||||||
Retained earnings (accumulated deficit)
|
||||||||||||
Accumulated other comprehensive loss, net of taxes
|
||||||||||||
Treasury stock, at cost
|
||||||||||||
Total shareholders’ equity (deficiency)
|
||||||||||||
Total capitalization
|
$
|
$
|
$
|
|||||||||
(1)
|
Based on the exchange rate of , which was the foreign exchange rate on June 30, 2020, as reported by the U.S. Federal Reserve,
and as used in our unaudited consolidated financial statements as of and for the six months ended June 30, 2020 and included elsewhere in this prospectus.
|
Assumed initial public offering price per Common Share
|
$
|
|||
Net tangible book value per Common Share before this offering (as of June 30, 2020)
|
$
|
|||
Increase in net tangible book value per Common Share attributable to existing shareholders due to the issuance of Common Shares after
June 30, 2020
|
$
|
|||
Pro forma net tangible book value per Common Share before this offering (as of June 30, 2020)
|
$
|
|||
Increase in net tangible book value per Common Share attributable to purchasers in this offering
|
$
|
|||
Pro forma, as adjusted net tangible book value per Common Share immediately after this offering
|
$
|
|||
Dilution in pro forma, as adjusted net tangible book value per Common Share to purchasers in this offering
|
$
|
Common Shares
|
Total Consideration
|
||||
Number
|
Percent
|
Amount
|
Percent
|
Weighted Average Price
Per Share |
|
Existing shareholders
|
|||||
Purchasers in this offering
|
|||||
|
|||||
Total
|
100%
|
100%
|
|||
Consolidated Statements of Loss and Comprehensive Loss (Income)
(Expressed in United States dollars)
|
March 13, 2019 (inception) through December 31, 2019
|
Six Months Ended
|
||||||||||
June 30, 2020
|
June 30, 2019
|
|||||||||||
(audited)
|
(unaudited)
|
|||||||||||
Expenses
|
|
|
||||||||||
Consulting and management fees
|
$
|
2,000,508
|
$
|
818,866 | $ | 1,550,610 | ||||||
Professional fees
|
182,900
|
217,960 | 19,309 | |||||||||
General office expenses
|
175,296
|
714,947 | 24,312 | |||||||||
Travel expenses
|
305,874
|
233,362 | 219,613 | |||||||||
Share based compensation
|
107,024
|
344,406 |
107,024
|
|||||||||
Depreciation and amortization
|
25,865 | 56,617 | - | |||||||||
Research and development
|
21,040
|
53,405
|
-
|
|||||||||
Foreign exchange (gain)
|
6,119
|
170,041
|
-
|
|||||||||
Loss before interest expense
|
2,824,626
|
2,609,604
|
1,920,868
|
|||||||||
Interest expense
|
19,485
|
72,087
|
-
|
|||||||||
Other income
|
-
|
(80,579
|
)
|
-
|
||||||||
Net loss for the period
|
$ |
2,844,111
|
$ |
2,601,112
|
$ |
1,920,868
|
||||||
Other comprehensive loss
|
||||||||||||
Exchange differences on foreign operations
|
(22,877
|
)
|
(19,046
|
)
|
-
|
|||||||
Total comprehensive loss for the period
|
$ |
2,821,234
|
$ |
2,582,066
|
$ |
1,920,868
|
||||||
Net loss attributable to:
|
||||||||||||
Flora Growth Corp.
|
$ |
2,824,326
|
$ |
2,555,413
|
$ |
1,920,868
|
||||||
Non-controlling interests
|
$ |
19,785
|
$ |
45,699
|
$ |
-
|
||||||
Comprehensive loss attributable to:
|
||||||||||||
Flora Growth Corp.
|
$ |
2,801,449
|
$ |
2,536,367
|
$ |
1,920,868
|
||||||
Non-controlling interests
|
$ |
19,785
|
$ |
45,699
|
$ |
-
|
||||||
|
||||||||||||
Basic and diluted loss per share attributable to Flora Growth Corp.
|
$ |
0.06
|
$ |
0.03
|
$
|
1.00
|
||||||
Weighted average number of Common Shares outstanding – basic and diluted
|
44,675,768
|
81,126,625
|
1,926,606
|
Period from March 13, 2019
(inception)
to December 31, 2019
|
||||
Revenues
|
-
|
|||
Cost of revenues
|
-
|
|||
Gross profit
|
-
|
|||
Expenses
|
||||
Consulting and management fees
|
$
|
2,000,508
|
||
Professional fees
|
182,900
|
|||
General office expenses
|
175,296
|
|||
Travel expenses
|
305,874
|
|||
Share based compensation
|
107,024
|
|||
Amortization
|
25,865
|
|||
Research and development
|
21,040
|
|||
Foreign exchange (gain)
|
6,119
|
|||
Loss before interest expense
|
2,824,626
|
|||
Interest expense
|
19,485
|
|||
Net Loss
|
$
|
2,844,111
|
||
Other comprehensive loss
|
||||
Exchange differences on foreign corporations
|
(22,877
|
)
|
||
Total comprehensive loss for the period from incorporation
|
$
|
2,821,234
|
Year Ended
December 31, 2018
|
Year Ended
December 31, 2017
|
|||||||
Revenues
|
$
|
-
|
$
|
-
|
||||
Cost of revenues
|
-
|
-
|
||||||
Gross profit
|
-
|
-
|
||||||
Expenses
|
||||||||
Consulting and management fees
|
$
|
-
|
$
|
-
|
||||
Professional fees
|
-
|
-
|
||||||
General office expenses
|
-
|
-
|
||||||
Travel expenses
|
-
|
-
|
||||||
Share based compensation
|
-
|
-
|
||||||
Amortization
|
-
|
-
|
||||||
Research and development
|
-
|
-
|
||||||
Foreign exchange (gain)
|
-
|
-
|
||||||
Loss before interest expense and other income
|
-
|
-
|
||||||
Interest expense
|
-
|
-
|
||||||
Other income
|
4
|
7
|
||||||
Net Loss for the period
|
4
|
7
|
||||||
Other comprehensive loss
|
141
|
95
|
||||||
Exchange differences on foreign corporations
|
-
|
-
|
||||||
Total comprehensive loss for the period
|
$
|
141
|
$
|
95
|
March 13, 2019 (inception) through June 30, 2019
|
||||
Revenues
|
$
|
-
|
||
Cost of revenues
|
-
|
|||
Gross profit
|
-
|
|||
Expenses
|
||||
Consulting and management fees
|
$
|
1,550,610
|
||
Professional fees
|
19,309
|
|||
General administration expense
|
24,312
|
|||
Travel expenses
|
219,613
|
|||
Share based compensation
|
107,024
|
|||
Interest expense
|
-
|
|||
Amortization
|
-
|
|||
Income tax expense
|
-
|
|||
Loss for the period
|
1,920,868
|
|||
Other comprehensive loss
|
||||
Foreign currency translation
|
-
|
|||
Comprehensive loss for the period
|
1,920,868
|
Six Months ended June 30, 2020
|
|
||||
Revenues
|
-
|
|
|||
Cost of revenues
|
-
|
|
|||
Gross profit
|
-
|
|
|||
Expenses
|
|
||||
Consulting and management fees
|
$
|
818,866
|
|
||
Professional fees
|
217,960
|
|
|||
General office expenses
|
714,947
|
|
|||
Travel expenses
|
233,362
|
|
|||
Share based compensation
|
344,406
|
|
|||
Amortization
|
56,617
|
|
|||
Research and development
|
53,405
|
|
|||
Foreign exchange (gain)
|
170,041
|
|
|||
Loss before interest expense and other income
|
2,609,604
|
|
|||
Interest expense
|
72,087
|
|
|||
Other income
|
(80,579
|
)
|
|
||
Net Loss
|
2,601,112
|
|
|||
|
|||||
Other comprehensive loss
|
|
||||
Exchange differences on foreign corporations
|
(19,046
|
)
|
|
||
Total comprehensive loss for the period from incorporation
|
$
|
2,582,066
|
For the period from March 13, 2019 (inception) to December 31, 2019
|
For the Fiscal years ended
|
For the period from March 13, 2019 (inception) through June 30, 2019 for the Company and Cosechemos
|
For the Six Months ended June 30, 2020
|
|||||||||||||||||
December 31, 2018
|
December 31, 2017
|
|||||||||||||||||||
Cash from operating activities
|
$
|
(2,771,926
|
)
|
$
|
(4
|
)
|
$
|
(4
|
)
|
$
|
(413,844
|
) $
|
(2,548,591
|
)
|
||||||
Cash from financing activities
|
$
|
710,772
|
$
|
-
|
$
|
-
|
$
|
- $
|
10,242,653
|
|||||||||||
Cash from investing activities
|
$
|
(91,000
|
)
|
$
|
-
|
$
|
-
|
$
|
- $
|
(1,680,464
|
)
|
|||||||||
Effect of exchange rate change
|
$
|
(186
|
)
|
$
|
-
|
$
|
-
|
$
|
- $
|
69,224
|
||||||||||
Change in cash during the period
|
$
|
159,797
|
$
|
-
|
$
|
-
|
$
|
- $
|
6,028,275
|
|||||||||||
Cash, beginning of the period
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
- $
|
159,797
|
|||||||||||
Cash, beginning of the period
|
$
|
159,797
|
$
|
-
|
$
|
-
|
$
|
- $
|
6,188,072
|
•
|
IFRS 3 – Business Combinations (“IFRS 3”) was amended in October 2018 to clarify the definition of a business. This amended definition states that a business
must include inputs and a process and clarified that the process must be substantive and the inputs and process must together significantly contribute to operating outputs. In addition it narrows the definitions of a business by
focusing the definition of outputs on goods and services provided to customers and other income from ordinary activities, rather than on providing dividends or other economic benefits directly to investors or lowering costs and added
a test that makes it easier to conclude that a company has acquired a group of assets, rather than a business, if the value of the assets acquired is substantially all concentrated in a single asset or group of similar assets. The
amendments are effective for annual reporting periods beginning on or after January 1, 2020. Earlier adoption is permitted.
|
•
|
IAS 1 – Presentation of Financial Statements (“IAS 1”) and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”) were amended in
October 2018 to refine the definition of materiality and clarify its characteristics. The revised definition focuses on the idea that information is material if omitting, misstating or obscuring it could reasonably be expected to
influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2020.
Earlier adoption is permitted.
|
Payments due by period:
|
||||||||||||||||
Total
|
Less than 1 year
|
1 – 3 years
|
More than 3 years
|
|||||||||||||
Long-term debt obligations
|
$
|
-
|
$ |
-
|
$ |
-
|
$ |
-
|
||||||||
Capital (finance) lease obligations
|
266,790
|
63,920
|
192,193
|
10,677
|
||||||||||||
Operating lease obligations
|
-
|
-
|
-
|
-
|
||||||||||||
Purchase obligations
|
-
|
-
|
-
|
-
|
||||||||||||
Other long-term liabilities reflected on our balance sheet
|
-
|
-
|
-
|
-
|
||||||||||||
Total
|
$ |
266,790
|
$ |
63,920
|
$ |
192,193
|
$ |
10,677
|
•
|
present more than two years of audited financial statements and two years of related selected financial data and management’s discussion and analysis of financial condition and results of operations
disclosure in our registration statement of which this prospectus forms a part;
|
•
|
have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; and
|
•
|
disclose certain executive compensation related items.
|
•
|
The cultivation, processing and supplying of natural, medicinal-grade cannabis oil and high quality cannabis derived medical and wellbeing products to large
channel distributors, including pharmacies, medical clinics, and cosmetic companies in Colombia and internationally;
|
•
|
Over-the-counter medical products and medical cannabis products, in which we produce and sell branded products to consumers as well as use our production
facility to create white-label products for consumers;
|
•
|
Wellbeing products, focused on delivering the benefits of CBD and hemp across an array of various branded consumer packaged goods, such as its Mind Naturals and Ô cosmetics lines and Stardog loungewear line. We leverage our branded product market
experience, scientific expertise, agricultural advantages and educational platforms to introduce our products and services across markets in Latin America and the United States; and
|
•
|
Food and beverage products, focused on delivering the benefits of exotic fruits from the Colombian amazon to consumers.
|
•
|
Help People Restore and Thrive. We
develop products to positively affect the health and wellness of people. From medicines to consumer products, we strive to help our customers restore and thrive.
|
•
|
Prioritize Value-chain Sustainability. We care about our broader global impact, from production to consumption. We make conscious decisions to prioritize sustainability across our value-chain.
|
(1)
|
Cleanser: The gentle gel cleanser is used to
remove makeup. The cleanser is creamy and smooth in texture, designed to dig deep and cleanse the skin without peeling it.
|
(2)
|
Eye Cream: The eye cream decompresses and
recharges the skin with hyaluronic acid-based, aimed to generate smoother skin and diminish expression lines.
|
(3)
|
Moisturizer: The moisturizer feeds the skin
with antioxidants and is formulated with hyaluronic acid, vitamin E from cacay oil, and CBD. The moisturizer is designed to nourish and replenish, leaving a smooth and dewy complexion.
|
(4)
|
Hydrating mask: The relaxing hydrating mask
treatment can be used twice a week to enhance the effects of the other three products.
|
(1)
|
Cleanser: The cleanser is designed to remove
impurities and prepare the skin for its daily routine. Its special ingredients include CBD, cold-pressed coconut oil, and cacay oil.
|
(2)
|
Eye Cream: The eye cream is designed to
provide a smooth finish and eliminate fine lines and under-eye bags. Its special ingredients include CBD and sacha inchi oil.
|
(3)
|
Moisturizer: The moisturizer is designed to
replenish your skin and deliver a healthy complexion. Its special ingredients include CBD, calendula extract, aloe vera, and cacay oil.
|
(4)
|
Nourishing mask: The nourishing mask is
designed to rejuvenate your skin and deliver an alluring glow. Special ingredients include CBD and sacha inchi oil.
|
•
|
White Label: development and production of brands for businesses.
|
•
|
Custom Formulas: specific customized needs for patients and consumers.
|
•
|
Dermo cosmetic products: intended for plastic surgeons, cosmetic surgeons, dermatologists and clinicians in other specialties.
|
•
|
Private Label: brands developed for our intra-company divisions and spa products intended for beauticians and beauty treatment professionals for beauty treatments such as weight reduction and skin
appearance improvement.
|
•
|
Bottling and Packaging Services: to maximize idle time and laboratory output.
|
(1)
|
https://bdsa.com/wp-content/uploads/2019/08/BDS-Analytics-The-Global-Cannabinoids-Market-Will-CBD- Overtake-THC.pdf
|
(2)
|
2019 Hemp and CBD Industry Factbook
|
•
|
Our acquisitions in Colombia of Kasa, Cronomed and Breeze which businesses have some years of operating history, sales and brand recognition;
|
•
|
Our Partnerships with Laura Londono and Paulina Vega, well known celebrities in Colombia and Latin America;
|
•
|
Following our planned commercial production CBD, we anticipate using CBD in our products as opposed to purchasing which gives us access to high quality lower-priced CBD;
|
•
|
Synergies associated with producing our products out of our recently acquired Quipropharma laboratory; and
|
•
|
Our strong distribution relationships in Colombia for the product categories Flora offers.
|
•
|
Our emerging business producing products in Colombia at a low cost and exporting to US;
|
•
|
Strength of the dollar compared to Colombian peso;
|
•
|
Our expanding product portfolio that allows for revenue diversification;
|
•
|
Paulina Vega, former Ms. Universe, has a strong profile with US Hispanic consumers;
|
•
|
Vertical integration that ensures quality of raw materials and cost efficiencies;
|
•
|
Sustainability focus that includes natural ingredients, ecological packaging and organic practices;
|
•
|
Our ability to utilize skilled labor in Colombia for efficient costs and production; and
|
•
|
Positive regulatory environment that supports exports into the United States.
|
Application Date
|
Date of Approval
|
Approved By
|
Certificate Number
|
Country
|
Validity Period (with an Option to Renew)
|
|
Brands
|
||||||
MIND NATURALS
|
March 25, 2020
|
September 18, 2020
|
Superintendency of Industry and Commerce
|
Certificate 57796 of 2020 on Nice Class 11 (Cosmetic Products)
|
Colombia
|
Valid until September 18, 2030, with an option to renew for an addition 10-year period.
|
Certificates
|
||||||
Cleanser
|
September 17, 2020
|
INVIMA
|
NSOC01574-20CO
|
Colombia
|
July 31, 2027
|
|
Eye Cream
|
July 31, 2020
|
INVIMA
|
NSOC00666-20CO
|
Colombia
|
July 31, 2027
|
|
Hydrating Mask
|
July 28, 2020
|
INVIMA
|
NSOC00613-20CO
|
Colombia
|
July 28, 2027
|
|
Moisturizer
|
October 13, 2020
|
INVIMA
|
NSOC00648-20CO
|
Colombia
|
October 13, 2027
|
Application Date
|
Date of Approval
|
Approved By
|
Certificate Number
|
Country
|
Validity Period (with an Option to Renew)
|
|
Brands
|
||||||
BREEZE
|
October 24, 2016
|
Superintendency of Industry and Commerce
|
541494 of 2016 on Nice Classes 3, 5 y 42
|
Colombia
|
October 24, 2026
|
|
Certificates
|
||||||
Oil Massage
|
February 4, 2016
|
INVIMA
|
NSOC52156-13CO
|
Colombia
|
February 4, 2023
|
|
Anti-Age
|
September 14, 2018
|
INVIMA
|
NSOC87929-18CO
|
Colombia
|
September 14, 2025
|
|
Bio tonic
|
July 11, 2017
|
INVIMA
|
NSOC79856-17CO
|
Colombia
|
July 11, 2024
|
|
Bio Tonic
|
September 3, 2015
|
INVIMA
|
NSOC67513-15CO
|
Colombia
|
September 3, 2022
|
|
Soothing and Refreshing tonic
|
January 1, 2014
|
INVIMA
|
NSOC38169-10CO
|
Colombia
|
January 1, 2021
|
|
Liposome Lightening and Antioxidant Cream
|
January 1, 2014
|
INVIMA
|
NSOC47521-12CO
|
Colombia
|
January 1, 2021
|
|
DERMOREPARING CREAM
|
April 2, 2014
|
INVIMA
|
NSOC58710-14CO
|
Colombia
|
April 2, 2021
|
|
DERMOREPARING CREAM
|
April 2, 2014
|
INVIMA
|
NSOC58710-14CO
|
Colombia
|
April 2, 2021
|
|
PROTECTIVE AND REGENERATING CREAM
|
April 22, 2014
|
INVIMA
|
NSOC71701-16CO
|
Colombia
|
April 22, 2023
|
|
EMULSION FOR REDUCING, MOLDING AND FIRMING MASSAGE
|
February 7, 2016
|
INVIMA
|
NSOC52155-13CO
|
Colombia
|
February 7, 2023
|
|
REHYDRATING AND NUTRITIVE EMULSION
|
April 5, 2016
|
INVIMA
|
NSOC52972-13CO
|
Colombia
|
April 5, 2023
|
|
GEL
|
June 22, 2018
|
INVIMA
|
NSOC86232-18-CO
|
Colombia
|
June 22, 2018
|
|
ANTIBACTERIAL GEL
|
March 25, 2020
|
INVIMA
|
NSOC99512-20CO
|
Colombia
|
March 25, 2027
|
|
HYPOTHERMAL GEL FOR FIRMING AND TONING MASSAGE
|
February 7, 2016
|
INVIMA
|
NSOC52157-13CO
|
Colombia
|
February 7, 2023
|
|
THERMAL GEL FOR ANTI-CELLULITE AND REDUCING MASSAGE
|
February 7, 2016
|
INVIMA
|
NSOC52154-13CO
|
Colombia
|
February 7, 2023
|
|
FACE CLEANER
|
August 19, 2016
|
INVIMA
|
NSOC73720-16CO
|
Colombia
|
August 19, 2023
|
|
FOAM CLEANER
|
October 10, 2018
|
INVIMA
|
NSOC88500-18CO
|
Colombia
|
October 10, 2025
|
|
ANTIBACTERIAL FOAM CLEANER
|
March 5, 2020
|
INVIMA
|
NSOC99498-20CO
|
Colombia
|
March 5, 2027
|
|
MASK
|
May 4, 2016
|
INVIMA
|
NSOC71907-16CO
|
Colombia
|
May 4, 2023
|
|
SUN PROTECTOR WITH SCREEN AND SOLAR FILTERS SPF 60+
|
April 9, 2015
|
INVIMA
|
NSOC47416-12CO
|
Colombia
|
April 9, 2022
|
|
SILICONE DERMAL RECOVERY
|
July 7, 2018
|
INVIMA
|
NSOC79752-17CO
|
Colombia
|
July 7, 2024
|
|
Shampoo
|
July 25, 2018
|
INVIMA
|
NSOC86762-18CO
|
Colombia
|
July 25, 2025
|
|
WET TOWEL
|
March 18, 2020
|
INVIMA
|
NSOC99378-20CO
|
Colombia
|
March 18, 2027
|
Application Date
|
Date of Approval
|
Approved By
|
Certificate Number
|
Country
|
Validity Period (with an Option to Renew)
|
|
Brands
|
||||||
COLNLAX
|
August 21, 2013
|
Superintendency of Industry and Commerce
|
477949 of 2013 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
August 21, 2023
|
|
CAPSIFLAM
|
September 12, 2013
|
Superintendency of Industry and Commerce
|
479171 of 2013 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
September 12, 2023
|
|
COLNLAX
|
August 21, 2013
|
Superintendency of Industry and Commerce
|
479171 of 2013 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
August 21, 2023
|
|
CRONOCICAR
|
April 12, 2010
|
Superintendency of Industry and Commerce
|
405176 of 2010 on Nice Class 3 (Cosmetics Products)
|
Colombia
|
April 12, 2020 with an option to renew for an additional 10-year period
|
|
CRONODOL MAX
|
March 10, 2010
|
Superintendency of Industry and Commerce
|
398866 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
March 07, 2024
|
|
CRONODOL FORTE
|
March 07, 2014
|
Superintendency of Industry and Commerce
|
488961 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
March 10, 2020 with an option to renew for an additional 10-year period
|
|
CRONOGRYP ULTRA
|
March 10, 2010
|
Superintendency of Industry and Commerce
|
398865 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
March 10, 2020 with an option to renew for an additional 10-year period
|
|
CRONOSURE
|
March 25, 2010
|
Superintendency of Industry and Commerce
|
402780 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
March 10, 2020 with an option to renew for an additional 10-year period
|
|
CRONOTEX
|
September 28, 2010
|
Superintendency of Industry and Commerce
|
411173 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
March 10, 2020 with an option to renew for an additional 10-year period
|
|
CRONOZIT
|
September 28, 2010
|
Superintendency of Industry and Commerce
|
411174 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
September 28, 2020 with an option to renew for an additional 10-year period
|
|
CROSIMPAR
|
September 28, 2010
|
Superintendency of Industry and Commerce
|
411175 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
September 28, 2020 with an option to renew for an additional 10-year period
|
|
DEXIFEM
|
July 27, 2018
|
Superintendency of Industry and Commerce
|
599383 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
July 31, 2020 with an option to renew for an additional 10-year period
|
|
DUOMELOC
|
April 18, 2018
|
Superintendency of Industry and Commerce
|
592108 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
April 23, 2028
|
|
DUOPLUS
|
April 18, 2018
|
Superintendency of Industry and Commerce
|
592107 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
April 23, 2028
|
|
ENDOVIT
|
March 31, 2014
|
Superintendency of Industry and Commerce
|
595743 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
March 31, 2024
|
|
ENERBIOVIT
|
March 31, 2014
|
Superintendency of Industry and Commerce
|
490055 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
June 22, 2027
|
|
FILOX36
|
May 24, 2018
|
Superintendency of Industry and Commerce
|
594262 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
June 22, 2027
|
|
FLAXERD
|
July 31, 2013
|
Superintendency of Industry and Commerce
|
594262 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
July 31, 2023
|
Application Date | Date of Approval | Approved By | Certificate Number | Country | Validity Period (with an Option to Renew) | |
FLUMIEL
|
September 29, 2010
|
Superintendency of Industry and Commerce
|
411562 of 2010 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
September 29, 2020 with an option to renew for an additional 10-year period
|
|
IMPROTOP
|
August 14, 2013
|
Superintendency of Industry and Commerce
|
477148 of 2013 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
August 14, 2023
|
|
INFEMOX
|
August 14, 2013
|
Superintendency of Industry and Commerce
|
477148 of 2013 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
August 14, 2023
|
|
INFLAGEL
|
November 28, 2012
|
Superintendency of Industry and Commerce
|
486607 of 2012 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
November 28, 2022
|
|
INFLEDOL
|
August 11, 2014
|
Superintendency of Industry and Commerce
|
498918 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
August 11, 2024
|
|
LESFLIS
|
April 27, 2018
|
Superintendency of Industry and Commerce
|
546101 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
December 14, 2026
|
|
MAXERIL
|
June 14, 2014
|
Superintendency of Industry and Commerce
|
494916 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
June 10, 2024
|
|
MUCOCISTEIN
|
August 01, 2018
|
Superintendency of Industry and Commerce
|
54921 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
August 01, 2028
|
|
MUCOTAPP
|
August 17, 2018
|
Superintendency of Industry and Commerce
|
59595 of 2018 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
August 17, 2028
|
|
NASORYL
|
May 28, 2014
|
Superintendency of Industry and Commerce
|
494091 of 2014 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
May 28, 2024
|
|
SOLKREM ULTRA
|
November 21, 2012
|
Superintendency of Industry and Commerce
|
464794 of 2012 on Nice Class 5 (Pharmaceutical Products)
|
Colombia
|
November 21, 2022
|
Application Date
|
Date of Approval
|
Approved By
|
Certificate Number
|
Country
|
Validity Period (with an Option to Renew)
|
|
Brands
|
||||||
STARDOG LOUNGEWEAR
|
June 9, 2020
|
October 29, 2020
|
Superintendency of Industry and Commerce
|
69482 of 2020 on Nice Class 25 (clothing)
|
Colombia
|
October 29, 2030, with an option to renew for an additional 10-year period
|
Application Date
|
Date of Approval
|
Approved By
|
Certificate Number
|
Country
|
Validity Period (with an Option to Renew)
|
|
Brands
|
||||||
MAMBE
|
March 28, 2016
|
Superintendency of Industry and Commerce
|
545034 of 2016 on Nice Class 32 (fruit-based drinks)
|
Colombia
|
March 28, 2026
|
|
ALMOST VIRGIN MAMBA WATER
|
December 23, 2015
|
Superintendency of Industry and Commerce
|
5321148 of 2015 on Nice Class 32 (fruit-based drinks)
|
Colombia
|
December 23, 2025
|
|
ALMOST VIRGIN
|
April 02, 2020
|
Superintendency of Industry and Commerce
|
Nice Class Nice Class 11 (Cosmetic Products)
|
Colombia
|
||
MAMBE SABIDURIA
|
July 17, 2020
|
Superintendency of Industry and Commerce
|
Nice Class Nice Class 30 (Chocolate bar)
|
Colombia
|
||
Certificates
|
||||||
ALMOST VIRGIN SX (CBD Oil)
|
August 18, 2020
|
INVIMA
|
NSOC00887-20CO
|
Colombia
|
August 18, 2027
|
|
ALMOST VIRGIN (Spray)
|
August 28, 2020
|
INVIMA
|
NSOC01116-20CO
|
Colombia
|
August 28, 2027
|
|
JUNGLE BOOST; COCONUT WATER; CUCUMBER SOUL; CAMU CAMU; PASSIFLORAS; MR. BERRY
|
July 04, 2017
|
INVIMA
|
RSA-003797-2017
|
Colombia
|
July 21, 2022
|
|
ALBA; FARO; SANTO; PURE DELIGHT; SUPER TONIC; JUST BLOSSUM; GUAPI DREAM; ORANGE BLISS; PASSIFLORA
|
July 04, 2017
|
INVIMA
|
RSA-003797-2017
|
Colombia
|
||
MAMBA, MAMBA RAW
|
July 4, 2017
|
February 20, 2018
|
INVIMA
|
Colombia
|
•
|
The federal physician self-referral law, commonly known as the Stark Law, that generally prohibits physicians from referring Medicare or
Medicaid patients to an entity for the provision of certain “designated health services” if the physician or a member of such physician’s immediate family has a direct or indirect financial relationship (including an ownership
interest or a compensation arrangement) with the entity, and prohibit the entity from billing Medicare or Medicaid for such designated health services.
|
•
|
The federal Anti-Kickback Statute that prohibits the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback, rebate or other remuneration for referring an individual, in
return for ordering, leasing, purchasing or recommending or arranging for, or to induce the referral of an individual or the ordering, purchasing or leasing of items or services covered, in whole or in part, by any federal healthcare
program, such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation. In addition, the government may assert that a claim
including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.
|
•
|
The criminal healthcare fraud provisions of the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act
(“HITECH”), and their implementing regulations (collectively, “HIPAA”), and related rules which prohibit knowingly and willfully executing a scheme or artifice to defraud any healthcare benefit program or falsifying, concealing or
covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the federal Anti-Kickback Statute, a
person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation.
|
•
|
The federal False Claims Act, which imposes civil and criminal liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the government or knowingly make, or
cause to be made, a false statement in order to have a false claim paid, including qui tam or whistleblower suits.
|
•
|
Reassignment of payment rules which prohibit certain types of billing and collection practices in connection with claims payable by the Medicare or Medicaid programs.
|
•
|
Similar state law provisions pertaining to anti-kickback, self-referral and false claims issues.
|
•
|
State laws that prohibit general business corporations, such as us, from practicing medicine, controlling physicians’ medical decisions, or engaging in certain practices such as splitting fees with
physicians.
|
•
|
Laws that regulate debt collection practices as applied to our debt collection practices.
|
•
|
Certain provisions of the Social Security Act that impose criminal penalties on healthcare providers who fail to disclose, or refund known overpayments.
|
•
|
Federal and state laws that prohibit providers from billing and receiving payment from Medicare and Medicaid for services unless the services are medically necessary, adequately and accurately
documented, and billed using codes that accurately reflect the type and level of services rendered.
|
•
|
Federal and state laws and policies that require healthcare providers to maintain licensure, certification or accreditation to enroll and participate in the Medicare and Medicaid programs, and to report
certain changes in their operations to the agencies that administer these programs.
|
Regulation:
|
Regulates:
|
|
Law 1787 of 2016
|
Legalizes the use of Cannabis for medical and scientific purposes
|
|
Decree 613 of 2017 modifies Decree 780 of 2016
|
Regulates law 1787 establishing a licensing system and process, defines psychoactive and non-psychoactive cannabis and the quota system for psychoactive
cannabis in accordance with Single Convention of Narcotics of 1961 and amendments
|
|
Resolution 577 of 2017 from the Ministry of Justice
|
Regulates the evaluation and control of the following licenses:
a. Seed Use
b. Cultivation of psychoactive plants (High-THC cultivation licence)
c. Cultivation of non-psychoactive plants (Low-THC cultivation licence)
Creates requirement for security protocol
|
|
Resolution 578 of 2017 from the Ministry of Justice
|
Regulates the cost of the following licences:
a. Seed Use
b. Cultivation of psychoactive plants (High-THC cultivation licence)
c. Cultivation of non-psychoactive plants (Low-THC cultivation licence)
|
|
Resolution 579 of 2017 from the Ministry of Justice
|
Establishes that growers that cultivate on a half a hectare area (5,000 square meters) or less are considered small and medium growers and, therefore, may
access technical advice, priority allocation of quotas and purchase of their production by the processor and requires that 10 percent of the total production of the processor must come from a small and medium producers.
|
|
Resolution 2892 of 2017 from the Ministry of Health
|
Regulates the evaluation and control of the Fabrication of Cannabis derivatives (High-THC Production Licence) Provides guidelines for appropriate security
protocols for manufacturing cannabis derivatives including physical security, monitoring, detection, and incident reporting to authorities.
|
|
Resolution 2891 of 2017 from the Ministry of Health
|
Regulates the cost of the High-THC production Licence
|
|
Resolution 1478 of 2006 from the Ministry of Health modified by Resolution 315 of 2020.
|
Regulation of the control, monitoring and surveillance of the import, export, processing, synthesis, manufacture, distribution, dispensing, purchase, sale,
destruction and use of controlled substances, medicines or products containing them and on those which are State Monopoly
|
|
Decree 2200 of 2005 from the Ministry of Health
|
Regulates pharmaceutical services including the Magistral Preparations
|
|
Guidelines for the GEP certification for Magistral Preparations with Cannabis issued the 25 of October 2019 by INVIMA
|
Establishes the requirements for labs to obtain the GEP certification for the fabrication of Magistral Preparations with Cannabis derivatives
|
Name
|
Position
|
Age
|
||||||
Executive Officers:
|
||||||||
Luis Merchan
|
President and Chief Executive Officer
|
39
|
||||||
Deborah Battiston
|
Chief Financial Officer
|
62
|
||||||
Orlando Bustos
|
VP Corporate Development
|
33
|
||||||
Javier Franco
|
VP Agriculture
|
53
|
||||||
Damian Lopez
|
VP Strategy and Legal
|
38
|
||||||
Evan Veryard
|
VP Investor Relations
|
26
|
||||||
Aaron Atin
|
Corporate Secretary
|
37 | ||||||
Directors:
|
||||||||
Dr. Bernard Wilson
|
Executive Chairman
|
77
|
||||||
Luis Merchan
|
Director
|
39
|
||||||
Dr. Beverley Richardson
|
Director
|
60
|
||||||
Juan Carlos Gomez Roa
|
Director
|
58
|
||||||
Stan Bharti
|
Director
|
68
|
•
|
Been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
|
•
|
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he
or she was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
|
•
|
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state
authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or
to be associated with persons engaged in any such activity;
|
•
|
been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or
state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
|
•
|
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended
or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial
institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or
prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
•
|
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in
Section 3(a)(26) of the Securities Exchange Act of 1934, as amended (the Exchange Act)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or persons associated with a member.
|
•
|
NASDAQ Rule 5605(b)(1) requires that at least a majority of the Company’s Board of Directors shall be independent directors, and NASDAQ Rule 5605(b)(2) requires
that independent directors regularly meet in executive session, where only independent directors are present. We will have independent directors at the time of listing, who will meet regularly with other members of the Board. We
intend to appoint more independent directors after the listing over time, and they may choose to meet in executive session at their discretion.
|
•
|
NASDAQ Rule 5620(c) sets out a quorum requirement of 33-1/3% applicable to meetings of shareholders. In accordance with Canadian law and generally accepted
business practices, our bylaws (the “Bylaws”) provide that a quorum is met when holders of not less than 10% of the shares entitled to vote at the meeting of shareholders are present in person or represented by proxy.
|
•
|
NASDAQ Rule 5605(c)(2)(A) requires that the Company shall have an audit committee composed entirely of not less than three directors, each of whom must be
independent. We expect to have a committee of three directors, and the directors will meet the requirements of Rule 10A-3 under the Exchange Act. See “—Audit Committee” below
for further detail.
|
•
|
NASDAQ Rule 5605(d) requires, among other things, that the Company’s compensation committee include at least two members, each of whom is an independent
director as defined under such rule. Our Board of Directors will together participate in the strategic discussions and determination of directors and executive compensation and other compensation-related matters. The Company established
a compensation committee of the Board effective December 16, 2020.
|
•
|
NASDAQ Rule 5605(e) requires that the nomination and corporate governance committee include solely of independent directors. Our Board of Directors will
together participate in the nomination process and oversee the corporate governance practices of the Company. The Company established a nomination and corporate governance committee of the Board effective December 16, 2020.
|
•
|
appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm;
|
•
|
discussing with our independent registered public accounting firm their independence from management;
|
•
|
reviewing, with our independent registered public accounting firm, the scope and results of their audit;
|
•
|
approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;
|
•
|
overseeing the financial reporting process and discussing with management and our independent registered public accounting firm any financial statements that
we file with the SEC;
|
•
|
overseeing our financial and accounting controls and compliance with legal and regulatory requirements;
|
•
|
reviewing our policies on risk assessment and risk management;
|
•
|
reviewing related person transactions; and
|
•
|
establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters.
|
•
|
identifying individuals qualified to become members of our Board of Directors, consistent with criteria approved by our Board of Directors;
|
•
|
overseeing succession planning for our executive officers;
|
•
|
periodically reviewing our Board of Directors’ leadership structure and recommending any proposed changes to our Board of Directors;
|
•
|
overseeing an annual evaluation of the effectiveness of our Board of Directors and its committees; and
|
•
|
developing and recommending to our Board of Directors a set of corporate governance guidelines.
|
•
|
reviewing and approving the corporate goals and objectives, evaluating the performance and reviewing and approving the compensation of our executive officers;
|
•
|
reviewing and approving or making recommendations to our Board of Directors regarding our incentive compensation and equity-based plans, policies and programs;
|
•
|
reviewing and approving all employment agreement and severance arrangements for our executive officers;
|
•
|
making recommendations to our Board of Directors regarding the compensation of our directors; and
|
•
|
retaining and overseeing any compensation consultants.
|
Fees earned or paid in cash
($) |
Stock awards
($) |
Option awards(1)
($) |
Non-equity incentive plan compensation
($) |
Change in pension value and nonqualified deferred compensation earnings
|
All other compensation
($) |
Total
($) |
||||||||||||||||||||||
Executive Officers:
|
||||||||||||||||||||||||||||
Damian Lopez
|
$
|
152,544
|
-
|
$
|
12,300
|
-
|
-
|
-
|
$
|
164,844
|
||||||||||||||||||
Deborah Battiston
|
$
|
85,526
|
-
|
$
|
9,840
|
-
|
-
|
-
|
$
|
95,366
|
||||||||||||||||||
Orlando Bustos
|
$
|
38,509
|
-
|
$
|
12,300
|
-
|
-
|
-
|
$
|
50,809
|
||||||||||||||||||
Javier Franco
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Luis Merchan
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Evan Veryard
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Directors:
|
||||||||||||||||||||||||||||
Stan Bharti
|
$
|
216,544
|
-
|
-
|
-
|
-
|
-
|
$
|
216,544
|
|||||||||||||||||||
Damian Lopez(2)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Fred Leigh
|
$
|
65,000
|
-
|
-
|
-
|
-
|
-
|
$
|
65,000
|
|||||||||||||||||||
William Steers(3)
|
-
|
-
|
$
|
12,300
|
-
|
-
|
-
|
$
|
12,300
|
|||||||||||||||||||
Dr. Bernard Wilson
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1)
|
Option awards are based on the Black-Scholes option valuation model.
|
(2)
|
Damian Lopez is a former director of the Company and resigned from the Board in December 2020. |
(3)
|
William Steers is a former director of the Company and resigned from the Board in December 2020.
|
Name of Issuance
|
Issuance Date
|
Expiration Date
|
Exercise Price
(per share)
($)
|
Number of Common Shares
Granted(1)
|
Damian Lopez
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
1,000,000
|
Orlando Bustos
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
1,000,000
|
Deborah Battiston
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
800,000
|
Marcelo Lopez
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
600,000
|
Daniyal Baizak
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
100,000
|
Miya Kobayashi
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
200,000
|
Wanda Roque
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
200,000
|
Kam Gill
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
450,000
|
Kenny Choi
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
225,000
|
Aaron Atin
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
225,000
|
Javier Franco
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
1,000,000
|
Helen Velandria
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
66,667
|
David Battiston
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
66,667
|
Xuan Do
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
66,666
|
William Steers
|
June 28, 2019
|
June 28, 2024
|
$0.05
|
1,000,000
|
Name
|
Grant Date and Beginning of Exercise Period
|
End of Exercise Period
|
Exercise Price
(per share)
|
Total Number of Stock Options Granted
|
Total Number of Common Shares Underlying Stock Options
|
|||||||||
William Steers
|
June 28, 2019
|
June 28, 2024
|
$
|
0.05
|
1,000,000
|
1,000,000
|
||||||||
Deborah Battiston
|
June 28, 2019
|
June 28, 2024
|
$
|
0.05
|
800,000
|
800,000
|
||||||||
Damian Lopez
|
June 28, 2019
|
June 28, 2024
|
$
|
0.05
|
1,000,000
|
1,000,000
|
||||||||
Javier Franco
|
June 28, 2019
|
June 28, 2024
|
$
|
0.05
|
1,000,000
|
1,000,000
|
||||||||
Orlando Bustos
|
June 28, 2019
|
June 28, 2024
|
$
|
0.05
|
1,000,000
|
1,000,000
|
(1) |
Each stock option is exercisable for one Common Share.
|
|
• |
each of our executive officers and directors;
|
|
• |
all of our executive officers and directors as a group; and
|
|
• |
each person or entity (or group of affiliated persons or entities) known by us to be the beneficial owner of 5% or more of our Common Shares.
|
Common Shares
Beneficially Owned Immediately Prior to this Offering(1) |
Common Shares
Beneficially Owned Immediately After this Offering(1) |
|||
Name of Beneficial Owner
|
Shares
|
Percentage
|
Shares
|
Percentage
|
Executive Officers and Directors:
|
|
|
|
|
Executive Officers:
|
||||
Luis Merchan, President and Chief Executive Officer
|
4,000,000
|
3.49%
|
||
Deborah Battiston, Chief Financial Officer
|
1,500,000
|
1.31%
|
||
Orlando Bustos, VP Corporate Development
|
1,000,000
|
0.87%
|
||
Javier Franco, VP Agriculture
|
0
|
0.00%
|
||
Damian Lopez, VP Strategy & Legal
|
3,000,000
|
2.62%
|
||
Evan Veryard, VP Investor Relations
|
0
|
0.00%
|
||
Directors:
|
||||
Dr. Bernard Wilson, Executive Chairman
|
0
|
0.00%
|
||
Luis Merchan, Director
|
0
|
0.00%
|
||
Dr. Beverley Richardson
|
0
|
0.00%
|
||
Juan Carlos Gomez Roa, Director
|
6,431,000
|
5.61%
|
||
Stan Bharti, Director
|
4,195,400
|
3.66%
|
||
All named executive officers and directors as a group
|
20,127,600
|
17.56%
|
||
5% or more Shareholders:
|
|
|
|
|
Juan Carlos Gomez Roa
|
6,431,600
|
5.61%
|
||
Hannele Bharti
|
6,000,000
|
5.24% | ||
(1) |
Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. A person is deemed to be the beneficial owner of any Common Shares if that person has or
shares voting power or investment power with respect to those shares or has the right to acquire beneficial ownership at any time within 60 days.
|
•
|
to vote at meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote;
|
•
|
subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of our Company, to share equally in the remaining property of our Company on liquidation, dissolution or winding-up of our
Company; and
|
•
|
the Common Shares are entitled to receive dividends if, as, and when declared by the Board of Directors.
|
•
|
Acted honestly and in good faith with a view to our best interests;
|
•
|
In the case of a criminal or administration action or proceeding enforced by a monetary penalty, had reasonable grounds to believe the conduct was lawful; and
|
•
|
Was not judged by a court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done.
|
|
•
|
beginning on the date of this prospectus, all of the shares sold in this offering will be immediately available for sale in the public market (except as
described above);
|
|
•
|
beginning ● days after the date of this prospectus, at the expiration of the lock-up period for our officers, directors and holders of at least ●% of our
outstanding securities, additional shares will become eligible for sale in the public market, all of which shares will be held by affiliates and subject to the volume and other restrictions of Rule 144 and Rule 701 as described
below.
|
|
•
|
1% of the number of shares of our Common Shares then outstanding, which will equal approximately shares immediately after this offering; or
|
|
|
|
|
•
|
the average weekly trading volume of our Common Shares during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.
|
|
(a) |
that is for U.S. federal income tax purposes one of the following:
|
|
(i) |
an individual citizen or resident of the United States, including individuals treated as residents of the United States solely for tax purposes,
|
|
(ii) |
a corporation created or organized in or under the laws of the United States or any political subdivision thereof,
|
|
(iii) |
an estate the income of which is subject to U.S. federal income taxation regardless of its source, or
|
|
(iv) |
a trust if (1) a court within the United States can exercise primary supervision over it, and one or more United States persons have the authority to control all substantial
decisions of the trust, or (2) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person;
|
• |
are tax exempt organizations, qualified retirement plans, individual retirement accounts, or other tax deferred accounts;
|
•
|
are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies;
|
•
|
are brokers or dealers in securities or currencies or holders that are traders in securities that elect to apply a mark-to-market accounting method;
|
•
|
have a “functional currency” for U.S. federal income tax purposes that is not the U.S. dollar;
|
•
|
own Common Shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position;
|
•
|
acquire Common Shares in connection with the exercise of employee stock options or otherwise as compensation for services;
|
•
|
are partnerships or other pass-through entities for U.S. federal income tax purposes (or investors in such partnerships and entities);
|
•
|
are required to accelerate the recognition of any item of gross income with respect to the Common Shares as a result of such income being recognized on an applicable financial statement;
|
•
|
own or will own (directly, indirectly, or constructively) 10% or more of our total combined voting power or value;
|
•
|
are controlled foreign corporations;
|
•
|
are passive foreign investment companies;
|
•
|
hold the Common Shares in connection with trade or business conducted outside of the United States or in connection with a permanent establishment or other fixed place of business outside of the
United States; or
|
•
|
are former U.S. citizens or former long-term residents of the United States.
|
•
|
the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the Common Shares;
|
•
|
the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in
the U.S. Holder’s holding period before the first day of our first taxable year in which we are a PFIC, will be taxed as ordinary income;
|
•
|
the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate
in effect for that year and applicable to the U.S. Holder without regard to the U.S. Holder’s other items of income and loss for such year; and
|
•
|
an additional amount equal to the interest charge generally applicable to underpayments of tax will be imposed on the U.S. Holder with respect to the tax
attributable to each such other taxable year of the U.S. Holder.
|
Underwriters
|
Number
of Shares |
Boustead Securities, LLC
|
|
|
|
|
|
Total
|
|
|
●
|
Short sales involve secondary market sales by an underwriter of a greater number of shares than they are required to purchase in the offering.
|
|
|
|
|
●
|
“Covered” short sales are sales of shares in an amount up to the number of shares represented by the over-allotment option.
|
|
|
|
|
●
|
“Naked” short sales are sales of shares in an amount in excess of the number of shares represented by the over-allotment option.
|
|
|
|
|
●
|
Covering transactions involve purchases of shares either pursuant to the over-allotment option or in the open market after the distribution has been completed
in order to cover short positions.
|
|
|
|
|
●
|
To close a naked short position, an underwriter must purchase shares in the open market after the distribution has been completed. A naked short position is
more likely to be created if an underwriter is concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.
|
|
|
|
|
●
|
To close a covered short position, an underwriter must purchase shares in the open market after the distribution has been completed or must exercise the
over-allotment option. In determining the source of shares to close the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price
at which they may purchase shares through the over-allotment option.
|
|
|
|
|
●
|
Stabilizing transactions involve bids to purchase shares so long as the stabilizing bids do not exceed a specified maximum.
|
|
|
Per Share
|
|
|
Total Without Exercise of Over-Allotment
Option |
|
|
Total With Exercise of Over-Allotment
Option |
|
|||
Public offering price
|
|
$
|
●
|
|
|
$
|
●
|
|
|
$
|
●
|
|
Underwriting discounts (1)
|
|
$
|
● |
|
|
$
|
● |
|
|
$
|
●
|
|
(1)
|
Does not include (i) the warrant to purchase Common Shares equal to 7% of the number of shares sold in the offering, (ii) a 1% non-accountable expense allowance
or (iii) amounts representing reimbursement of certain out-of-pocket expenses, each as described below.
|
●
|
the information set forth in this prospectus and otherwise available to the Representative;
|
●
|
our prospects and the history and prospects for the industry in which we compete;
|
●
|
an assessment of our management;
|
●
|
our prospects for future revenue and earnings;
|
●
|
the general condition of the securities markets at the time of this offering;
|
●
|
the recent market prices of, and demand for, publicly traded securities of generally comparable companies; and
|
●
|
other factors deemed relevant by the Representative and us.
|
Description
|
Amount
|
|||
U.S. Securities and Exchange Commission registration fee
|
$
|
|||
Financial Industry Regulatory Authority filing fee
|
||||
NASDAQ Capital Market entry and listing fee
|
||||
Accounting and Audit fees and expenses
|
||||
Legal fees and expenses
|
||||
Blue Sky fees and expenses
|
||||
Printing expenses
|
||||
Miscellaneous
|
||||
|
||||
Total
|
$
|
Page
|
|
Audited Consolidated Financial Statements of Flora Growth Corp. for the Period from Incorporation on March 13, 2019 to December 31, 2019 (Expressed in United
States Dollars)
|
F-1
|
Independent Auditors’ Report
|
F-2
|
Consolidated Statement of Financial Position as of December 31, 2019
|
F-4
|
Consolidated Statement of Loss and Comprehensive Loss for the period from incorporation on March 13, 2019 to December 31, 2019
|
F-5
|
Consolidated Statement of Changes in Shareholders’ Deficiency for the period from incorporation on March 13, 2019 to December 31, 2019
|
F-6
|
Consolidated Statement of Cash Flows for the period from incorporation on March 13, 2019 to December 31, 2019
|
F-7
|
Notes to the Audited Consolidated Financial Statements for the period from incorporation on March 13, 2019 to December 31, 2019
|
F-8
|
Audited Financial Statements of Cosechemos Ya S.A.S. for the Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017
(Expressed in United States Dollars)
|
|
Independent Auditor’s Report
|
F-27
|
Statements of Financial Position for the year ended December 31, 2018 compared to the year ended December 2017
|
F-29
|
Statements of Loss and Comprehensive Loss (Income) for the year ended December 31, 2018 compared to the year ended December 2017
|
F-30
|
Statements of Shareholders’ Equity for the year ended December 31, 2018 compared to the year ended December 2017
|
F-31
|
Statements of Cash Flows for the year ended December 31, 2018 compared to the year ended December 2017
|
F-32
|
Notes to the Audited Financial Statements for the year ended December 31, 2018 compared to the year ended December 2017
|
F-33
|
Financial Statements of Breeze Laboratory S.A.S. for the Year Ended December 31, 2019 (Audited) Compared to the Year Ended December 31, 2018 (Unaudited) (Expressed in United States
Dollars)
|
F-76
|
Statements of Financial Position for the year ended December 31, 2019 (Audited) compared to the year ended December 2018 (Unaudited)
|
F-78
|
Statements of Loss and Comprehensive Loss (Income) for the year ended December 31, 2019 (Audited) compared to the year ended December 2018 (Unaudited)
|
F-79
|
Statements of Shareholders’ Equity for the year ended December 31, 2019 (Audited) compared to the year ended December 2018 (Unaudited)
|
F-80
|
Statements of Cash Flows for the year ended December 31, 2019 (Audited) compared to the year ended December 2018 (Unaudited)
|
F-81
|
Notes to the Financial Statements for the year ended December 31, 2019 (Audited) compared to the year ended December 2018 (Unaudited)
|
F-82
|
Page
|
|
Audited Financial Statements of Grupo Farmacéutico Cronomed S.A.S. for the Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018 (Expressed in United States
Dollars)
|
F-111
|
Audited Statements of Financial Position for the year ended December 31, 2019 compared to the year ended December 2018
|
F-113
|
Audited Statements of Loss and Comprehensive Loss (Income) for the year ended December 31, 2019 compared to the year ended December 2018
|
F-114
|
Audited Statements of Shareholders’ Equity for the year ended December 31, 2019 compared to the year ended December 2018
|
F-115
|
Audited Statements of Cash Flows for the year ended December 31, 2019 compared to the year ended December 2018
|
F-116
|
Notes to the Audited Financial Statements for the year ended December 31, 2019 compared to the year ended December 2018
|
F-117
|
Unaudited Interim Condensed Consolidated Financial Statements of Grupo Farmaceutico Cronomed S.A.S. for the Three and Six Months Ended June 30, 2020 and June 30, 2019
|
F-132
|
Interim Condensed Consolidated Statements of Financial Position as at June 30, 2020 and December 31, 2019 (Unaudited)
|
F-135
|
Interim Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2020, and June 30, 2019 (Unaudited)
|
F-136
|
Interim Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2020 and June 30, 2019 (Unaudited)
|
F-137
|
Interim Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2020 and June 30, 2019 (Unaudited)
|
F-138
|
Notes to the Interim Condensed Consolidated Financial Statements for the Three and Six Months ended June 30, 2020 and June 30, 2019 (Unaudited)
|
F-139
|
Page | |
Financial Statements of Kasa Wholefoods Company S.A.S. for the Year Ended December 31, 2019 (Audited) Compared to the Year Ended December 31, 2018 (Unaudited) (Expressed in United
States Dollars)
|
F-148
|
Statements of Financial Position for the year ended December 31, 2019 (Audited) compared to the year ended December 2018 (Unaudited)
|
F-151
|
Statements of Loss and Comprehensive Loss (Income) for the year ended December 31, 2019 (Audited) compared to the year ended December 2018 (Unaudited)
|
F-152
|
Statements of Shareholders’ Equity for the year ended December 31, 2019 (Audited) compared to the year ended December 2018 (Unaudited)
|
F-153
|
Statements of Cash Flows for the year ended December 31, 2019 (Audited) compared to the year ended December 2018 (Unaudited)
|
F-154
|
Notes to the Financial Statements for the year ended December 31, 2019 (Audited) compared to the year ended December 2018 (Unaudited)
|
F-155
|
Unaudited Interim Condensed Financial Statements of Kasa Wholefoods Company S.A.S. for the Six Months Ended June 30, 2020
|
F-173
|
Interim Condensed Statements of Financial Position as at June 30, 2020 and December 31, 2019 (Unaudited)
|
F-176
|
Interim Condensed Statement of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2020, and June 30, 2019 (Unaudited)
|
F-177
|
Interim Condensed Statement of Changes in Equity for the Six Months Ended June 30, 2020 and June 30, 2019 (Unaudited)
|
F-178
|
Interim Condensed Statements of Cash Flows for the Six Months Ended June 30, 2020 and June 30, 2019 (Unaudited)
|
F-179
|
Notes to the Interim Condensed Financial Statements for the Six Months ended June 30, 2020 (Unaudited)
|
F-180
|
Unaudited Pro Forma Condensed Consolidated Financial Statements as at June 30, 2020 (Expressed in United States Dollars)
|
|
Pro Forma Condensed Consolidated Statement of Financial Position as at June 30, 2020
|
F-194
|
Pro Forma Condensed Consolidated Statement of Loss and Comprehensive Loss for the period ended June 30, 2020
|
F-195
|
Pro Forma Condensed Consolidated Statement of Loss and Comprehensive Loss for the year ended December 31, 2019
|
F-196
|
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements as at June 30, 2020
|
F-197
|
|
“DAVIDSON & COMPANY LLP”
|
|
|
|
|
|
Chartered Professional Accountants
|
|
Vancouver, Canada
|
||
December 9, 2020 |
Flora Growth Corp.
|
||||
Consolidated Statement of Financial Position
|
||||
(Expressed in US dollars)
|
||||
|
||||
As at:
|
December 31, 2019
|
|||
|
||||
ASSETS
|
||||
Current
|
||||
Cash
|
$
|
139,892
|
||
Amounts receivable (Note 5)
|
20,401
|
|||
Loan receivable (Note 6)
|
91,087
|
|||
Prepaid expenses (Note 7)
|
210,197
|
|||
Total current assets
|
461,577
|
|||
Non-current
|
||||
Property, plant and equipment (Note 8)
|
434,520
|
|||
Intangible asset (Note 10)
|
276,778
|
|||
Total assets
|
$
|
1,172,875
|
||
|
||||
LIABILITIES
|
||||
Current
|
||||
Trade payables and accrued liabilities (Note 16)
|
$
|
1,149,469
|
||
Loans payable (Note 11)
|
1,030,154
|
|||
Current lease liability (Note 12)
|
52,772
|
|||
Total current liabilities
|
2,232,395
|
|||
Non-current
|
||||
Non-current lease liability (Note 12)
|
245,801
|
|||
Total liabilities
|
2,478,196
|
|||
|
||||
SHAREHOLDERS' DEFICIENCY
|
||||
Share capital (Note 13(b))
|
1,400,000
|
|||
Options (Note 14)
|
85,870
|
|||
Warrants (Note 15)
|
21,154
|
|||
Accumulated other comprehensive income
|
22,877
|
|||
Deficit
|
(2,824,326
|
)
|
||
Non-controlling interest (deficiency) (Note 9)
|
(10,896
|
)
|
||
Total shareholders deficiency
|
(1,305,321
|
)
|
||
Total liabilities and shareholders' deficiency
|
$
|
1,172,875
|
Flora Growth Corp.
|
||||
Consolidated Statement of Loss and Comprehensive Loss
|
||||
(Expressed in U.S. Dollars)
|
||||
|
||||
For the period from incorporation (March 13, 2019)
|
||||
|
to December 31, 2019
|
|||
|
||||
Expenses
|
||||
Consulting and management fees (Note 13(b) and 16)
|
$
|
2,000,508
|
||
Professional fees
|
182,900
|
|||
General office expenses
|
175,296
|
|||
Travel expenses
|
305,874
|
|||
Share based compensation (Note 14, 15, and 16)
|
107,024
|
|||
Depreciation and amortization (Note 8 and 10)
|
25,865
|
|||
Research and development
|
21,040
|
|||
Foreign exchange loss
|
6,119
|
|||
Loss before interest expense
|
2,824,626
|
|||
Interest expense
|
19,485
|
|||
Net loss
|
$
|
2,844,111
|
||
|
||||
Other comprehensive income
|
||||
Exchange differences on foreign operations
|
(22,877
|
)
|
||
Total comprehensive loss for the period from incorporation
|
$
|
2,821,234
|
||
Net loss attributable to:
|
||||
Flora Growth Corp.
|
$
|
2,824,326
|
||
Non-controlling interests
|
$
|
19,785
|
||
Comprehensive loss attributable to:
|
||||
Flora Growth Corp.
|
$
|
2,801,449
|
||
Non-controlling interests
|
$
|
19,785
|
||
Basic and diluted loss per share attributable to Flora Growth Corp.
|
$
|
0.06
|
||
Weighted average number of common shares
outstanding - basic and diluted (Note 18) |
44,675,768
|
|||
|
Flora Growth Corp.
|
||||||||||||||||||||||||||||||||
Consolidated Statement of Shareholders' Deficiency
|
||||||||||||||||||||||||||||||||
(Expressed in United States dollars)
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
Common Shares
|
Options
|
Warrants
|
Accumulated other comprehensive income
|
Accumulated Deficit
|
Non-Controlling interest (Deficiency)
|
Shareholders' Equity (Deficiency)
|
|||||||||||||||||||||||||
#
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
||||
Balance, March 13, 2019
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Incorporation share
|
1
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Common shares issued (Note 13(b))
|
69,999,999
|
1,400,000
|
-
|
-
|
-
|
-
|
-
|
1,400,000
|
||||||||||||||||||||||||
Options issued (Note 14)
|
-
|
-
|
85,870
|
-
|
-
|
-
|
-
|
85,870
|
||||||||||||||||||||||||
Warrants issued (Note 15)
|
-
|
-
|
-
|
21,154
|
-
|
-
|
-
|
21,154
|
||||||||||||||||||||||||
Acquisition of Cosechemos (Note 9)
|
-
|
-
|
-
|
-
|
-
|
-
|
8,889
|
8,889
|
||||||||||||||||||||||||
Other comprehensive income - exchange differences on foreign operations
|
-
|
-
|
-
|
-
|
22,877
|
-
|
-
|
22,877
|
||||||||||||||||||||||||
Loss for the period
|
-
|
-
|
-
|
-
|
-
|
(2,824,326
|
)
|
(19,785
|
)
|
(2,844,111
|
)
|
|||||||||||||||||||||
Balance, December 31, 2019
|
70,000,000
|
1,400,000
|
85,870
|
21,154
|
22,877
|
(2,824,326
|
)
|
(10,896
|
)
|
(1,305,321
|
)
|
|||||||||||||||||||||
December 31, 2019
|
||
HST receivable
|
$ 18,840
|
|
Sundry receivables
|
1,561
|
|
Total
|
$ 20,401
|
Cost
|
Construction in progress
|
Office equipment
|
Vehicle
|
Right of use asset (land)
|
Total
|
|||||||||||||||
As at March 13, 2019
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Additions
|
99,556
|
715
|
39,903
|
-
|
140,174
|
|||||||||||||||
Asset acquisition (Note 9)
|
-
|
609
|
-
|
288,111
|
288,720
|
|||||||||||||||
Foreign exchange translation
|
3,602
|
249
|
1,444
|
17,537
|
22,832
|
|||||||||||||||
Cost as at December 31, 2019
|
$
|
103,158
|
$
|
1,573
|
$
|
41,347
|
$
|
305,648
|
$
|
451,726
|
||||||||||
|
||||||||||||||||||||
Accumulated depreciation
|
||||||||||||||||||||
As at March 13, 2019
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Depreciation
|
-
|
(1,370
|
)
|
(333
|
)
|
(13,133
|
)
|
(14,836
|
)
|
|||||||||||
Foreign exchange translation
|
-
|
(22
|
)
|
(12
|
)
|
(2,336
|
)
|
(2,370
|
)
|
|||||||||||
Accumulated depreciation as at December 31, 2019
|
$
|
-
|
$
|
(1,392
|
)
|
$
|
(345
|
)
|
$
|
(15,469
|
)
|
$
|
(17,206
|
)
|
||||||
Net book value
|
||||||||||||||||||||
As at December 31, 2019
|
$
|
103,158
|
$
|
181
|
$
|
41,002
|
$
|
290,179
|
$
|
434,520
|
$
|
|
Current assets
|
220,582
|
Property and equipment
|
609
|
Right of use asset
|
288,111
|
Intangible asset
|
271,725
|
Trade and other payables
|
(102,892)
|
Loans payable to Flora Growth Corp.
|
(299,022)
|
Lease liability
|
(290,224)
|
Non-controlling interest
|
(8,889)
|
Total consideration paid
|
80,000
|
Balance at March 13, 2019
|
Additions
|
Balance at December 31, 2019
|
||||||||||
Cost
|
$
|
$
|
$
|
|||||||||
Acquisition of license (Note 9)
|
-
|
271,725
|
271,725
|
|||||||||
Amortization
|
-
|
(11,029
|
)
|
(11,029
|
)
|
|||||||
Foreign currency translation
|
-
|
16,082
|
16,082
|
|||||||||
Total
|
-
|
276,778
|
276,778
|
December 31, 2019
|
||
Loans payable
|
$ 1,030,154
|
|
Total
|
$ 1,030,154
|
|
As at March 13, 2019
|
$ -
|
Acquisition of lease
|
290,224
|
Lease payments
|
(8,835)
|
Interest expense on lease liability
|
3,703
|
Foreign currency translation
|
13,481
|
As at December 31, 2019
|
$298,573
|
Current portion
|
52,772
|
Long term portion
|
$245,801
|
Less than one year
|
$ 67,132
|
One to five years
|
269,394
|
336,526
|
|
Effect of discounting
|
(37,953)
|
298,573
|
|
Potential exposure on extension option (over 5 years) (i)
|
366,412
|
a.
|
Authorized
|
b.
|
Common shares issued
|
|
|
Number of shares
|
|
Stated value $
|
|
Balance, March 13, 2019
|
-
|
$ -
|
|||
Incorporation share
|
1
|
-
|
|||
Bonus shares
|
69,999,999
|
1,400,000
|
|||
Balance, December 31, 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, December 31, 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
|
4.50
|
7,000,000
|
7,000,000
|
$ 85,870
|
4.50
|
|
Number of warrants
|
Weighted average exercise price
|
Balance, March 13, 2019
|
-
|
$ -
|
Granted
|
7,000,000
|
0.05
|
Balance, December 31, 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
|
$ 21,154
|
2.21
|
|
7,000,000
|
|
$ 21,154
|
2.21
|
|
Period from incorporation on
March 13, 2019 to December 31, 2019
|
||
Directors & officers’ compensation
|
$ 557,165
|
||
Directors & officers’ share based payments
|
67,769
|
||
|
|
$ 624,934
|
December 31, 2019
|
|
Stock options (Note 14)
|
7,000,000
|
Warrants (Note 15)
|
7,000,000
|
14,000,000
|
2019
|
|||||
|
|
|
|
|
$
|
Non-capital loss carry-forwards - Canada
|
2,476,000
|
||||
Non-capital loss carry-forwards - Colombia
|
187,000
|
||||
|
|
|
|
|
|
Total
|
|
|
|
|
2,663,000
|
|
|
|
|
|
|
|
|
|
Individual Statement of Financial Position
|
||||||||
|
||||||||
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
|
||||||
Loss of the period
|
(4
|
)
|
(7
|
)
|
||||
Loss Accumulated
|
(7
|
)
|
-
|
|||||
Adjustment for translation
|
(225
|
)
|
(88
|
)
|
||||
Total shareholders' equity
|
1,528
|
1,669
|
||||||
Total liabilities and shareholders’ equity
|
$
|
1,542
|
1,677
|
|||||
|
Jina Paola Forero Daza
Legal representative
|
|
Ernesto Erazo Cardona
Public accountant
T.P 108159–T
Representing Mazars Colombia SAS
|
|
|
|
|
|
|
Statements of Loss and Comprehensive Loss
|
||||||||
For the year ended
|
For the year ended
|
|||||||
|
December 31, 2018
|
December 31, 2017
|
||||||
|
||||||||
Expenses
|
||||||||
Income tax expenses (Note 9)
|
$
|
4
|
$
|
7
|
||||
Operating (loss)
|
$
|
(4
|
)
|
$
|
(7
|
)
|
||
Loss before income tax
|
$
|
(4
|
)
|
$
|
(7
|
)
|
||
|
||||||||
Provision for income tax
|
-
|
-
|
||||||
Loss of the period
|
$
|
(4
|
)
|
$
|
(7
|
)
|
Jina Paola Forero Daza
Legal representative
|
|
Ernesto Erazo Cardona
Public accountant
T.P 108159–T
Representing Mazars Colombia SAS
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Share Capital
|
Loss of the period
|
Loss Accumulated
|
Adjustment for translation
|
||||||||||||||||
Balance, December 31, 2017
|
$
|
1,764
|
$
|
(7
|
)
|
$
|
-
|
$
|
(88
|
)
|
$
|
1,669
|
||||||||
Loss of the period
|
$
|
-
|
$
|
(4
|
)
|
$
|
-
|
$
|
-
|
$
|
(4
|
)
|
||||||||
Translation
|
$
|
-
|
$
|
7
|
$
|
(7
|
)
|
$
|
-
|
$
|
-
|
|||||||||
Adjustment for translation
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(137
|
)
|
$
|
(137
|
)
|
||||||||
Balance, December 31, 2018
|
$
|
1,764
|
$
|
(4
|
)
|
$
|
(7
|
)
|
$
|
(225
|
)
|
$
|
1,528
|
Jina Paola Forero Daza
Legal representative
|
|
Ernesto Erazo Cardona
Public accountant
T.P 108159–T
Representing Mazars Colombia SAS
|
|
|
|
|
|
|
|
||||||||
Cash Flows in Operating Activities
|
December 31, 2018
|
December 31, 2017
|
||||||
Loss of the period
|
$
|
(4
|
)
|
$
|
(7
|
)
|
||
Net change in non-cash working capital
|
4
|
7
|
||||||
Change in cash during the period
|
-
|
-
|
||||||
Cash and cash equivalent at the beginning of the period
|
-
|
|||||||
Available at end of period
|
$
|
-
|
$
|
-
|
||||
|
Jina Paola Forero Daza
Legal representative
|
|
Ernesto Erazo Cardona
Public accountant
T.P 108159–T
Representing Mazars Colombia SAS
|
|
|
|
|
|
|
1.
|
NATURE AND CONTINUANCE OF OPERATIONS
|
2.
|
BASIS OF PRESENTATION
|
3.
|
SIGNIFICANT ACCOUNTING POLICIES
|
Buildings
|
25 - 40 years
|
|
|
Machinery
|
10 - 15 years
|
|
|
Vehicles
|
3-5 years
|
|
|
Furniture and equipment
|
3-8 years
|
|
Financial instrument classification
|
||
|
|
Under IAS 39
|
Under IFRS 9
|
|
Financial assets
|
||
|
Cash
|
Loans and receivables
|
Amortized cost
|
|
Amounts receivable
|
Loans and receivables
|
Amortized cost
|
|
|
||
|
Financial liabilities
|
||
|
Trade payables and accrued liabilities
|
Other financial liabilities
|
Amortized cost
|
•
|
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.
|
4.
|
CRITICAL JUDGEMENTS AND ESTIMATION UNCERTAINTIES
|
5.
|
December 31, 2018
|
December 31, 2017
|
||
Amounts receivable
|
$ 1,539
|
$ 1,676
|
|
Total
|
$ 1,539
|
$ 1,676
|
6.
|
PREPAID EXPENSES
|
December 31, 2018
|
December 31, 2017
|
||
Prepaid expenses
|
$ 3
|
$ 1
|
|
Total
|
$ 3
|
$ 1
|
7.
|
TRADE PAYABLES AND ACCRUED LIABILITIES
|
December 31, 2018
|
December 31, 2017
|
||
Trade payables and accrued liabilities
|
$ 14
|
|
$ 8
|
Total
|
$ 14
|
|
$ 8
|
8.
|
CAPITAL STOCK
|
a.
|
Authorized
|
b.
|
Common shares issued
|
December 31, 2018
|
December 31, 2017
|
||
Share capital
|
$ 1,764
|
|
$ 1,764
|
Total
|
$ 1,764
|
|
$ 1,764
|
9.
|
INCOME TAX
|
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.
|
10.
|
RELATED PARTY DISCLOSURES
|
11.
|
COMMITMENTS AND CONTINGENCIES
|
12.
|
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
|
(i)
|
Commodity price risk is the risk that future cash flows will fluctuate as a result of changes in commodity prices. Commodity prices for cannabis seeds and plants are impacted by not only the relationship
between the Colombian peso, Canadian and United States dollar, as outlined below, but also global economic events that dictate the levels of supply and demand. Lower commodity prices can also reduce the Company’s ability to raise
capital. As the Company is not generating revenues, commodity price risk does not directly impact the Company’s financial results.
|
(ii)
|
Foreign currency exchange rate risk is the risk that the fair value of future cash flows will fluctuate as a result of changes in foreign exchange rates.
As at December 31, 2018 and 2017, the Company had no liabilities denominated in foreign currencies, they are presented in United States dollars.
|
13.
|
CAPITAL MANAGEMENT
|
14.
|
SUBSEQUENT EVENTS
|
15.
|
APPROVAL OF FINANCIAL STATEMENTS
|
Flora Growth Corp.
|
||||||||||||||||
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
|
||||||||||||||||
(Unaudited - Prepared by Management)
|
||||||||||||||||
(Expressed in U.S. Dollars)
|
||||||||||||||||
For the three months
|
For the three months
|
For the six months
|
For the period from incorporation
|
|||||||||||||
ended
June 30, 2020 |
ended
June 30, 2019
|
ended
June 30, 2020
|
(March 13, 2019) to June 30, 2019
|
|||||||||||||
Expenses
|
||||||||||||||||
Consulting and management fees (Note 11(b) and 14)
|
$
|
585,422
|
$
|
1,550,610
|
$
|
818,866
|
$
|
1,550,610
|
||||||||
Professional fees
|
88,991
|
19,309
|
217,960
|
19,309
|
||||||||||||
General office expenses
|
529,177
|
24,312
|
714,947
|
24,312
|
||||||||||||
Travel expenses
|
206,051
|
219,613
|
233,362
|
219,613
|
||||||||||||
Share based compensation (Note 12)
|
344,406
|
85,870
|
344,406
|
107,024
|
||||||||||||
Amortization (Notes 6 and 8)
|
27,417
|
-
|
56,617
|
-
|
||||||||||||
Research and development
|
24,785
|
-
|
53,405
|
-
|
||||||||||||
Foreign exchange (gain)
|
(75,430
|
)
|
-
|
170,041
|
-
|
|||||||||||
Loss before interest expense and other income
|
1,730,819
|
1,899,714
|
2,609,604
|
1,920,868
|
||||||||||||
Interest expense (Note 9)
|
38,749
|
-
|
72,087
|
-
|
||||||||||||
Other income (Note 5)
|
(52,371
|
)
|
-
|
(80,579
|
)
|
-
|
||||||||||
Net loss for the period
|
$
|
1,717,197
|
$
|
1,899,714
|
$
|
2,601,112
|
$
|
1,920,868
|
||||||||
Other comprehensive loss
|
||||||||||||||||
Exchange differences on foreign operations
|
(67,808
|
)
|
-
|
(19,046
|
)
|
-
|
||||||||||
Total comprehensive loss for the period
|
$
|
1,649,389
|
$
|
1,899,714
|
$
|
2,582,066
|
$
|
1,920,868
|
||||||||
Net loss attributable to:
|
||||||||||||||||
Flora Growth Corp.
|
$
|
1,700,739
|
$
|
1,899,714
|
$
|
2,555,413
|
$
|
1,920,868
|
||||||||
Non-controlling interests
|
$
|
16,458
|
$
|
-
|
$
|
45,699
|
$
|
-
|
||||||||
Comprehensive loss attributable to:
|
||||||||||||||||
Flora Growth Corp.
|
$
|
1,632,931
|
$
|
1,899,714
|
$
|
2,536,367
|
$
|
1,920,868
|
||||||||
Non-controlling interests
|
$
|
16,458
|
$
|
-
|
$
|
45,699
|
$
|
-
|
||||||||
Basic and diluted loss per share attributable to Flora Growth Corp.
|
$
|
0.02
|
$
|
0.82
|
$
|
0.03
|
$
|
1.00
|
||||||||
Weighted average number of common shares
outstanding - basic and diluted (Note 16)
|
85,432,654
|
2,307,692
|
81,126,625
|
1,926,606
|
Flora Growth Corp.
|
||||||||
Interim Condensed Consolidated Statement of Shareholders' Equity (Deficiency)
|
||||||||
(Unaudited - Prepared by Management)
|
||||||||
(Expressed in United States dollars)
|
||||||||
Common Shares
|
Options
|
Warrants
|
Accumulated other comprehensive loss
|
Accumulated Deficit
|
Non-Controlling interest (Deficiency)
|
Shareholders' Equity (Deficiency)
|
||
#
|
$
|
$
|
$
|
$
|
$
|
$ |
$
|
|
Balance, March 13, 2019
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Incorporation share
|
1
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Common shares issued (Note 11(b))
|
69,999,999
|
1,400,000
|
-
|
-
|
-
|
-
|
-
|
1,400,000
|
Options issued (Note 12)
|
-
|
-
|
85,870
|
-
|
-
|
-
|
-
|
85,870
|
Warrants issued (Note 13)
|
-
|
-
|
-
|
21,154
|
-
|
-
|
21,154
|
|
Loss and comprehensive loss for the period
|
-
|
-
|
-
|
-
|
-
|
(1,920,868)
|
-
|
(1,920,868)
|
Balance, June 30, 2019
|
70,000,000
|
1,400,000
|
85,870
|
21,154
|
-
|
(1,920,868)
|
-
|
(413,844)
|
Balance, December 31, 2019
|
70,000,000
|
1,400,000
|
85,870
|
21,154
|
22,877
|
(2,824,326)
|
(10,896)
|
(1,305,321)
|
Regulation A Offering (Note 11(b))
|
17,170,100
|
10,984,300
|
-
|
1,893,275
|
-
|
-
|
-
|
12,877,575
|
Share issuance costs (Note 11(b))
|
-
|
(1,365,276)
|
-
|
(235,908)
|
-
|
-
|
-
|
(1,601,184)
|
Options exercised
|
600,000
|
37,360
|
(7,360)
|
-
|
-
|
-
|
-
|
30,000
|
Options issued (Note 12)
|
-
|
-
|
344,406
|
-
|
-
|
-
|
-
|
344,406
|
Other comprehensive loss - exchange differences on foreign operations
|
-
|
-
|
-
|
-
|
19,046
|
-
|
-
|
19,046
|
Loss and comprehensive loss for the period
|
-
|
-
|
-
|
-
|
-
|
(2,555,413)
|
(45,699)
|
(2,601,112)
|
Balance, June 30, 2020
|
87,770,100
|
11,056,384
|
422,916
|
1,678,521
|
41,923
|
(5,379,739)
|
(56,595)
|
7,763,410
|
Flora Growth Corp.
|
||||||||
Interim Condensed Consolidated Statements of Cash Flows
|
||||||||
(Unaudited - Prepared by Management)
|
||||||||
(Expressed in US dollars)
|
||||||||
For the six months ended
June 30, 2020
|
For the period from incorportion (March 13, 2019) to June 30, 2019
|
|||||||
CASH FROM OPERATING ACTIVITIES:
|
||||||||
Net loss for the period
|
$
|
(2,601,112
|
)
|
$
|
(1,920,868
|
)
|
||
Items not involving cash:
|
||||||||
Share-based compensation (Note 12)
|
344,406
|
107,024
|
||||||
Bonus paid in shares (Note 11(b))
|
-
|
1,400,000
|
||||||
Amortization (Notes 6 and 8)
|
56,617
|
-
|
||||||
Accrued interest on loans receivable (Note 5)
|
(25,124
|
)
|
-
|
|||||
Accrued interest on loans payable (Note 9)
|
13,053
|
-
|
||||||
(2,212,160
|
)
|
(413,844
|
)
|
|||||
Net change in non‑cash working capital (Note 3)
|
||||||||
Amounts receivable
|
(220,182
|
)
|
(238
|
)
|
||||
Prepaid expenses
|
153,254
|
414,082
|
||||||
Trade payables and accrued liabilities
|
142,386
|
- | ||||||
Net cash flows from operating activities
|
(2,136,702
|
)
|
-
|
|||||
CASH FROM FINANCING ACTIVITIES:
|
||||||||
Regulation A Offering (Note 11(b))
|
12,877,575
|
-
|
||||||
Unit issue costs (Note 11(b))
|
(1,601,184
|
)
|
-
|
|||||
Exercise of options (Note 11(b))
|
30,000
|
-
|
||||||
Repayment of lease liability (Note 10)
|
(27,094
|
)
|
-
|
|||||
Loan received (Note 9)
|
6,328
|
-
|
||||||
Interest paid (Note 9)
|
(33,413
|
)
|
-
|
|||||
Loan repayments (Note 9)
|
(1,016,122
|
)
|
-
|
|||||
Net cash flows from financing activities
|
10,236,090
|
-
|
||||||
CASH FROM INVESTING ACTIVITIES:
|
||||||||
Loans provided (Note 5)
|
(1,195,773
|
)
|
-
|
|||||
Advances (Note 5)
|
(345,501
|
)
|
-
|
|||||
Acquisition of equipment (Note 6)
|
(83,416
|
)
|
-
|
|||||
Net cash flow from investing activities
|
(1,624,690
|
)
|
-
|
|||||
Effect of exchange rate change
|
76,583
|
-
|
||||||
CHANGE IN CASH DURING THE PERIOD
|
6,474,698
|
-
|
||||||
CASH, beginning of the period
|
139,892
|
-
|
||||||
CASH AND RESTRICTED CASH, end of the period
|
$
|
6,691,173
|
$
|
-
|
||||
Supplemental cash flows:
|
||||||||
Income taxes paid
|
-
|
-
|
||||||
Interest paid
|
33,413
|
-
|
June 30, 2020
|
December 31, 2019
|
|||||||
HST receivable
|
$
|
223,477
|
$
|
18,840
|
||||
Sundry receivables
|
17,106
|
1,561
|
||||||
Total
|
$
|
240,583
|
$
|
20,401
|
•
|
$131,579 to Grupo Farmaceutico Cronomed S.A.S. (“Cronomed”) (see Note 19);
|
•
|
$189,482 to Breeze Laboratory S.A.S. (“Breeze”);
|
•
|
$24,440 to Kasa.
|
Cost
|
Construction in progress
|
Office equipment
|
Vehicle
|
Right of use asset (land)
|
Total
|
|||||||||||||||
As at March 13, 2019
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Additions
|
99,556
|
715
|
39,903
|
-
|
140,174
|
|||||||||||||||
Asset acquisition (Note 7)
|
-
|
609
|
-
|
288,111
|
288,720
|
|||||||||||||||
Foreign exchange translation
|
3,602
|
249
|
1,444
|
17,537
|
22,832
|
|||||||||||||||
Cost as at December 31, 2019
|
$
|
103,158
|
$
|
1,573
|
$
|
41,347
|
$
|
305,648
|
$
|
451,726
|
||||||||||
Additions
|
35,007
|
48,409
|
-
|
-
|
83,416
|
|||||||||||||||
Foreign exchange translation
|
(13,956
|
)
|
(1,549
|
)
|
(5,299
|
)
|
(39,174
|
)
|
(59,978
|
)
|
||||||||||
Cost as at June 30, 2020
|
$
|
124,209
|
$
|
48,433
|
$
|
36,048
|
$
|
266,474
|
$
|
475,164
|
||||||||||
|
||||||||||||||||||||
Accumulated depreciation
|
||||||||||||||||||||
As at March 13, 2019
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Depreciation
|
-
|
(1,370
|
)
|
(333
|
)
|
(13,133
|
)
|
(14,836
|
)
|
|||||||||||
Foreign exchange translation
|
-
|
(22
|
)
|
(12
|
)
|
(2,336
|
)
|
(2,370
|
)
|
|||||||||||
Accumulated depreciation as at December 31, 2019
|
$
|
-
|
$
|
(1,392
|
)
|
$
|
(345
|
)
|
$
|
(15,469
|
)
|
$
|
(17,206
|
)
|
||||||
Depreciation
|
-
|
(7,975
|
)
|
(1,027
|
)
|
(21,147
|
)
|
(30,149
|
)
|
|||||||||||
Foreign exchange translation
|
-
|
1,447
|
(731
|
)
|
2,009
|
2,725
|
||||||||||||||
Accumulated depreciation as at June 30, 2020
|
$
|
-
|
$
|
(7,920
|
)
|
$
|
(2,103
|
)
|
$
|
(34,607
|
)
|
$
|
(44,630
|
)
|
||||||
Net book value
|
||||||||||||||||||||
As at December 31, 2019
|
$
|
103,158
|
$
|
181
|
$
|
41,002
|
$
|
290,179
|
$
|
434,520
|
||||||||||
As at June 30, 2020
|
$
|
124,209
|
$
|
40,513
|
$
|
33,945
|
$
|
231,867
|
$
|
430,534
|
||||||||||
$
|
||||
Current assets
|
220,582
|
|||
Property and equipment
|
609
|
|||
Right of use asset
|
288,111
|
|||
Intangible asset
|
271,725
|
|||
Trade and other payables
|
(102,892
|
)
|
||
Loans payable to Flora Growth Corp.
|
(299,022
|
)
|
||
Lease liability
|
(290,224
|
)
|
||
Non-controlling interest
|
(8,889
|
)
|
||
Total consideration paid
|
80,000
|
$
|
||||
Balance, March 13, 2019
|
-
|
|||
Acquisition of license (Note 9)
|
271,725
|
|||
Amortization
|
(11,029
|
)
|
||
Foreign currency translation
|
16,082
|
|||
Balance, December 31, 2019
|
276,778
|
|||
Amortization
|
(26,468
|
)
|
||
Foreign currency translation
|
(34,186
|
)
|
||
Balance, June 30, 2020
|
216,124
|
As at December 31, 2019
|
$298,573
|
Lease payments
|
(27,094)
|
Interest expense on lease liability
|
6,563
|
Foreign currency translation
|
(37,896)
|
As at June 30, 2020
|
$240,146
|
Current portion
|
52,715
|
Long term portion
|
$187,431
|
Less than one year
|
$ 63,920
|
One to five years
|
202,870
|
266,790
|
|
Effect of discounting
|
(26,644)
|
240,146
|
|
Potential exposure on extension option (over 5 years) (i)
|
$320,322
|
a.
|
Authorized
|
b.
|
Common shares issued
|
|
|
Number of shares
|
|
Stated value $
|
|
Balance, March 13, 2019
|
-
|
$ -
|
|||
Incorporation share
|
1
|
-
|
|||
Bonus shares
|
69,999,999
|
1,400,000
|
|||
Balance, June 30, 2019 and December 31, 2019
|
|
70,000,000
|
|
$ 1,400,000
|
|
Regulation A Offering
|
17,170,100
|
10,984,300
|
|||
Share issuance costs
|
-
|
(1,365,276)
|
|||
Stock options exercised
|
600,000
|
37,360
|
|||
Balance, June 30, 2020
|
87,770,100
|
$ 11,056,384
|
|
Number of options
|
Weighted average exercise price
|
Balance, March 13, 2019
|
-
|
$ -
|
Granted
|
7,000,000
|
0.05
|
|
|
|
Balance, June 30, 2019 and December 31, 2019
|
7,000,000
|
$ 0.05
|
Granted
|
750,000
|
0.75
|
Exercised
|
(600,000)
|
0.05
|
Balance, June 30, 2020
|
7,150,000
|
$ 0.12
|
Date
|
Options
|
Options
|
Exercise
|
Grant date
|
Remaining life
|
of expiry
|
outstanding
|
exercisable
|
price
|
fair value
|
in years
|
June 28, 2024
|
6,400,000
|
6,400,000
|
$0.05
|
$ 78,510
|
4.00
|
April 23, 2025
|
750,000
|
750,000
|
$0.75
|
344,406
|
4.82
|
7,150,000
|
7,150,000
|
$0.12
|
$ 422,916
|
4.08
|
|
Number of warrants
|
Weighted average exercise price
|
Balance, March 13, 2019
|
-
|
$ -
|
Granted
|
7,000,000
|
0.05
|
Balance, June 30, 2019 and December 31, 2019
|
7,000,000
|
$ 0.05
|
Granted (Note 11(b))
|
8,585,050
|
1.00
|
Balance, June 30, 2020
|
15,585,050
|
$ 0.57
|
Date of expiry
|
Warrants outstanding
|
Exercise price
|
Grant date fair value
|
Remaining life in years
|
March 15, 2022
|
7,000,000
|
$ 0.05
|
$ 21,154
|
1.71
|
July 23, 2021
|
1,232,600
|
1.00
|
272,397
|
1.06
|
July 28, 2021
|
1,155,050
|
1.00
|
255,259
|
1.08
|
August 3, 2021
|
216,400
|
1.00
|
47,823
|
1.09
|
August 5, 2021
|
428,200
|
1.00
|
94,629
|
1.10
|
August 7, 2021
|
92,800
|
1.00
|
20,508
|
1.10
|
August 11, 2021
|
660,000
|
1.00
|
145,856
|
1.12
|
August 14, 2021
|
304,000
|
1.00
|
67,182
|
1.12
|
August 19, 2021
|
213,600
|
1.00
|
47,204
|
1.14
|
August 24, 2021
|
560,000
|
1.00
|
123,756
|
1.15
|
August 26, 2021
|
381,600
|
1.00
|
84,331
|
1.16
|
September 3, 2021
|
265,400
|
1.00
|
58,652
|
1.18
|
September 5, 2021
|
112,000
|
1.00
|
24,751
|
1.18
|
September 9, 2021
|
25,600
|
1.00
|
5,657
|
1.19
|
September 10, 2021
|
56,400
|
1.00
|
12,464
|
1.20
|
September 11, 2021
|
68,200
|
1.00
|
15,072
|
1.20
|
September 16, 2021
|
58,800
|
1.00
|
12,994
|
1.21
|
September 18, 2021
|
59,200
|
1.00
|
13,083
|
1.22
|
September 20, 2021
|
226,400
|
1.00
|
50,033
|
1.22
|
September 23, 2021
|
69,200
|
1.00
|
15,293
|
1.23
|
September 24, 2021
|
18,800
|
1.00
|
4,155
|
1.24
|
September 30, 2021
|
111,400
|
1.00
|
24,619
|
1.25
|
October 2, 2021
|
60,400
|
1.00
|
13,242
|
1.26
|
October 6, 2021
|
43,200
|
1.00
|
9,471
|
1.27
|
October 7, 2021
|
35,800
|
1.00
|
7,849
|
1.27
|
October 14, 2021
|
83,400
|
1.00
|
18,285
|
1.29
|
October 20, 2021
|
220,200
|
1.00
|
48,278
|
1.31
|
October 27, 2021
|
225,000
|
1.00
|
49,330
|
1.33
|
November 1, 2021
|
184,600
|
1.00
|
40,473
|
1.34
|
November 12, 2021
|
158,000
|
1.00
|
34,641
|
1.37
|
November 15, 2021
|
247,600
|
1.00
|
54,285
|
1.38
|
November 22, 2021
|
154,400
|
1.00
|
33,852
|
1.40
|
December 1, 2021
|
172,800
|
1.00
|
37,886
|
1.42
|
December 3, 2021
|
140,800
|
1.00
|
30,870
|
1.43
|
December 10, 2021
|
166,000
|
1.00
|
36,395
|
1.45
|
December 16, 2021
|
160,200
|
1.00
|
35,123
|
1.46
|
December 24, 2021
|
165,800
|
1.00
|
36,351
|
1.48
|
December 29, 2021
|
51,200
|
1.00
|
11,225
|
1.50
|
15,585,050
|
$ 0.57
|
$ 1,914,429
|
1.42
|
|
Three months ended
June 30, 2020
|
Three months ended
June 30, 2019
|
Six months
ended
June 30, 2020
|
Period from
incorporation on
March 13, 2019 to June 30, 2019
|
||
Directors & officers’ compensation
|
|
$ 81,347
|
$ 95,759
|
$ 157,638
|
$ 95,759
|
|
Share-based payments
|
-
|
46,615
|
-
|
67,769
|
||
|
|
|
$ 81,347
|
$ 142,374
|
$ 157,638
|
$ 163,528
|
June 30, 2020
|
|
Stock options (Note 12)
|
7,150,000
|
Warrants (Note 13)
|
15,585,050
|
22,735,050
|
June 30, 2020
|
CAD
|
COP
|
Cash
|
$ 223,350
|
1,173,041,789
|
Loans receivable
|
100,000
|
-
|
Amounts receivable
|
302,767
|
28,120,092
|
Trade payables
|
(826,639)
|
(262,919,485)
|
Accrued liabilities
|
182,201
|
-
|
Lease liability
|
-
|
(902,689,236)
|
$ (18,321)
|
35,553,160
|
-
|
aggregate expenditures of $51,031 related to the period from incorporation on March 13, 2019 to December 31, 2019 had not been appropriately recorded.
|
-
|
founders warrants discussed in Note 13 were revalued to $21,154 from $nil based on a change in the estimated share price in the Black-Scholes model used to value
these instruments.
|
-
|
foreign currency translation of intangible assets was increased from $5 to $16,082 (Note 8).
|
-
|
foreign currency translation of intangible assets was decreased from ($217) to ($33,969) (Note 8).
|
-
|
consolidation of Flora Beauty LLC which impacted net assets by $4,511 and net loss for the period by $52,521
|
|
|
Calle 93 No. 15 – 40 Piso 4
Bogotá, Colombia
Tel: +57 (1) 256 30 04
www.mazars.com.co
|
|
|
|
BREEZE LABORATORY S.A.S.
|
Statements of Financial Position
As at December 31, 2019 and 2018
(Stated in Colombian Pesos)
|
|
Notes
|
December 31, 2019
|
December 31, 2018
|
||||||||||
Assets
|
||||||||||||
Current
|
||||||||||||
Cash
|
$
|
29,457,979
|
$
|
142,035,004
|
||||||||
Trade and other receivables
|
13
|
176,699,802
|
170,275,065
|
|||||||||
Inventories
|
3
|
210,135,959
|
30,157,357
|
|||||||||
Other assets
|
4,574,270
|
-
|
||||||||||
420,868,010
|
342,467,426
|
|||||||||||
Property, plant and equipment
|
4
|
1,182,301,677
|
617,109,648
|
|||||||||
Total Assets
|
$
|
1,603,169,687
|
$
|
959,577,074
|
||||||||
Liabilities
|
||||||||||||
Current
|
||||||||||||
Accounts payable and accrued liabilities
|
$
|
48,716,122
|
$
|
33,551,839
|
||||||||
Current portion of long-term debt
|
5
|
62,923,381
|
15,429,256
|
|||||||||
Deferred revenue
|
17,176,479
|
-
|
||||||||||
Income taxes payable
|
24,252,508
|
38,722,042
|
||||||||||
Due to related parties
|
11
|
827,770,119
|
477,707,381
|
|||||||||
980,838,609
|
565,410,518
|
|||||||||||
Long-term debt
|
5
|
249,076,601
|
194,987,411
|
|||||||||
Total Liabilities
|
1,229,915,210
|
760,397,929
|
||||||||||
Shareholders' Equity
|
||||||||||||
Share capital
|
6
|
52,000,000
|
52,000,000
|
|||||||||
Retained earnings
|
304,490,477
|
133,472,825
|
||||||||||
Restricted retained earnings
|
7
|
16,764,000
|
13,706,320
|
|||||||||
Total Equity
|
373,254,477
|
199,179,145
|
||||||||||
Total Liabilities and Equity
|
$
|
1,603,169,687
|
$
|
959,577,074
|
||||||||
Subsequent Events
|
15
|
|||||||||||
BREEZE LABORATORY S.A.S.
|
Statements of Operations and Comprehensive Income
|
Years Ended December 31, 2019 and 2018
|
(Stated in Colombian Pesos)
|
Years Ended December 31,
|
||||||||||||
Notes |
2019
|
2018
|
||||||||||
Revenue
|
8
|
$
|
1,325,631,530
|
$
|
1,057,618,584
|
|||||||
Cost of Sales
|
3
|
488,391,447
|
573,502,832
|
|||||||||
Gross Profit
|
837,240,083
|
484,115,752
|
||||||||||
General and Administrative Expenses
|
||||||||||||
Salaries, wages and benefits
|
11
|
238,544,466
|
174,684,353
|
|||||||||
Advertising and promotions
|
-
|
97,045,488
|
||||||||||
Professional fees
|
49,469,006
|
46,002,289
|
||||||||||
Occupancy, office expense and others
|
150,797,611
|
80,207,048
|
||||||||||
Amortization
|
71,703,000
|
69,214,460
|
||||||||||
510,514,083
|
467,153,638
|
|||||||||||
Other Income (Expense)
|
||||||||||||
Other income
|
9
|
35,576,976
|
65,123,795
|
|||||||||
Finance costs
|
10
|
(145,350,187
|
)
|
(30,454,414
|
)
|
|||||||
Other expenses
|
(2,966,949
|
)
|
(1,371,713
|
)
|
||||||||
(112,740,160
|
)
|
33,297,668
|
||||||||||
Income Before Taxes
|
213,985,840
|
50,259,782
|
||||||||||
Income tax expense
|
12
|
39,910,508
|
19,683,000
|
|||||||||
Net Income and Comprehensive Income
|
$
|
174,075,332
|
$
|
30,576,782
|
||||||||
Weighted average number of outstanding shares, basic and diluted
|
52,000
|
52,000
|
||||||||||
Basic and diluted earnings per share
|
$
|
3,347.60
|
$
|
588.02
|
BREEZE LABORATORY S.A.S.
|
Statements of Changes in Equity
|
Years Ended December 31, 2019 and 2018
|
(Stated in Colombian Pesos)
|
Notes
|
Number of Shares
|
Share Capital
|
Retained Earnings
|
Restricted Retained Earnings
|
Total
|
|
Balance at December 31, 2017
|
52,000
|
$ 52,000,000
|
$ 105,189,836
|
$ 11,412,527
|
$ 168,602,363
|
|
Transfer to reserve
|
7
|
-
|
-
|
(2,293,793)
|
2,293,793
|
-
|
Net income for the year
|
-
|
-
|
30,576,782
|
-
|
30,576,782
|
|
Balance at December 31, 2018
|
52,000
|
$ 52,000,000
|
$ 133,472,825
|
$ 13,706,320
|
$ 199,179,145
|
|
Balance at December 31, 2018
|
52,000
|
$ 52,000,000
|
$ 133,472,825
|
$ 13,706,320
|
$ 199,179,145
|
|
Transfer to reserve
|
7
|
-
|
-
|
(3,057,680)
|
3,057,680
|
-
|
Net income for the year
|
-
|
-
|
174,075,332
|
-
|
174,075,332
|
|
Balance at December 31, 2019
|
52,000
|
$ 52,000,000
|
$ 304,490,477
|
$ 16,764,000
|
$ 373,254,477
|
BREEZE LABORATORY S.A.S
|
Statements of Cash Flows
|
Years Ended December 31, 2019 and 2018
|
(Stated in Colombian Pesos)
|
|
Years Ended December 31,
|
|||||||
2019
|
2018
|
|||||||
Operating Activities
|
||||||||
Net loss for the year
|
$
|
174,075,332
|
$
|
30,576,782
|
||||
Items not affecting cash:
|
||||||||
Amortization
|
71,409,000
|
76,000,000
|
||||||
245,484,332
|
106,576,782
|
|||||||
Net changes in non-cash working capital:
|
||||||||
Trade and other receivables
|
(6,424,737
|
)
|
149,364,249
|
|||||
Inventories
|
(179,978,602
|
)
|
41,193,068
|
|||||
Other assets
|
(4,574,270
|
)
|
13,463,206
|
|||||
Accounts payable and accrued liabilities
|
15,164,283
|
(1,125,283
|
)
|
|||||
Deferred revenue
|
17,176,479
|
-
|
||||||
Income taxes payable
|
(14,469,534
|
)
|
(6,808,958
|
)
|
||||
Due to related parties
|
350,062,738
|
(195,122,899
|
)
|
|||||
Cash Flows Provided By Operating Activities
|
422,440,689
|
107,540,165
|
||||||
Investing Activities
|
||||||||
Acquisition of property, plant and equipment
|
(636,601,029
|
)
|
(22,426,931
|
)
|
||||
Cash Flows Used In Investing Activities
|
(636,601,029
|
)
|
(22,426,931
|
)
|
||||
Financing Activities
|
||||||||
Proceeds from long-term debt
|
101,583,315
|
-
|
||||||
Repayment of long-term debt
|
-
|
(48,333,336
|
)
|
|||||
Cash Flows Provided By (Used In) Financing Activities
|
101,583,315
|
(48,333,336
|
)
|
|||||
Net Increase in Cash During the Year
|
(112,577,025
|
)
|
36,779,898
|
|||||
Cash, Beginning of Year
|
142,035,004
|
105,255,106
|
||||||
Cash, End of Year
|
$
|
29,457,979
|
$
|
142,035,004
|
Buildings
|
10 years
|
|
Leasehold improvements \
|
Lesser of useful life and term of the lease
|
|
Computing and communications equipment
|
5 years
|
|
Machinery and equipment
|
10 years
|
|
Furniture and appliances
|
10 years
|
|
As at
December 31, 2019
|
As at
December 31, 2018
|
|||||||
Raw materials
|
$
|
206,545,995
|
$
|
30,157,357
|
||||
Finished goods
|
3,589,964
|
-
|
||||||
$
|
210,135,959
|
$
|
30,157,357
|
Buildings and leasehold improvements
|
Machinery and equipment
|
Furniture and appliances
|
Computing and communications equipment
|
Total
|
||||||||||||||||
Cost
|
||||||||||||||||||||
At January 1, 2018
|
$
|
-
|
$
|
13,231,933
|
$
|
15,956,684
|
$
|
8,127,482
|
$
|
48,395,099
|
||||||||||
Additions
|
650,000,000
|
21,815,727
|
611,204
|
-
|
672,426,931
|
|||||||||||||||
At December 31, 2018
|
$
|
650,000,000
|
$
|
35,047,660
|
$
|
16,567,888
|
$
|
8,127,482
|
$
|
720,822,030
|
||||||||||
Accumulated Amortization
|
||||||||||||||||||||
At January 1, 2018
|
$
|
-
|
$
|
2,992,439
|
$
|
9,467,504
|
$
|
4,173,439
|
$
|
27,712,382
|
||||||||||
Additions
|
65,000,000
|
6,359,528
|
3,014,964
|
1,625,508
|
76,000,000
|
|||||||||||||||
At December 31, 2018
|
$
|
65,000,000
|
$
|
9,351,967
|
$
|
12,482,468
|
$
|
5,798,947
|
$
|
103,712,382
|
||||||||||
Net book value at
|
||||||||||||||||||||
December 31, 2018
|
$
|
585,000,000
|
$
|
25,695,693
|
$
|
4,085,420
|
$
|
2,328,535
|
$
|
617,109,648
|
Buildings and leasehold improvements
|
Machinery and equipment
|
Furniture and appliances
|
Computing and communications equipment
|
Total
|
||||||||||||||||
Cost
|
||||||||||||||||||||
At January 1, 2019
|
$
|
650,000,000
|
$
|
35,047,660
|
$
|
16,567,888
|
$
|
8,127,482
|
$
|
720,822,030
|
||||||||||
Additions
|
628,928,259
|
7,558,370
|
114,400
|
-
|
636,601,029
|
|||||||||||||||
At December 31, 2019
|
$
|
1,278,928,259
|
$
|
42,606,030
|
$
|
16,682,288
|
$
|
8,127,482
|
$
|
1,357,423,059
|
||||||||||
Accumulated Amortization
|
||||||||||||||||||||
At January 1, 2019
|
$
|
65,000,000
|
$
|
9,351,967
|
$
|
12,482,468
|
$
|
5,798,947
|
$
|
103,712,382
|
||||||||||
Additions
|
65,000,000
|
4,155,000
|
629,000
|
1,625,000
|
71,409,000
|
|||||||||||||||
At December 31, 2019
|
$
|
130,000,000
|
$
|
13,506,967
|
$
|
13,111,468
|
$
|
7,423,947
|
$
|
175,121,382
|
||||||||||
Net book value at
|
||||||||||||||||||||
December 31, 2019
|
$
|
1,148,928,259
|
$
|
29,099,063
|
$
|
3,570,820
|
$
|
703,535
|
$
|
1,182,301,677
|
|
As at
December 31, 2019 |
As at
December 31, 2018 |
||||||
(a) Term loan - bearing interest at 10.91% per annum, monthly payments of $4,572,590, 120-month term, maturing in June of 2027
|
$
|
185,416,646
|
$
|
210,416,667
|
||||
(b) Term loan - bearing interest at 11.91% per annum, monthly payments of $5,101,214, 36-month term, maturing in June of 2022
|
126,583,336
|
-
|
||||||
311,999,982
|
210,416,667
|
|||||||
Less: current portion
|
(62,923,381
|
)
|
(15,429,256
|
)
|
||||
Long-term portion
|
$
|
249,076,601
|
$
|
194,987,411
|
|
(a) |
On June 12, 2017, the Company entered into a 120-month loan agreement with Banco Caja Social for an amount of $250,000,000. The loan has an effective interest rate of 10.91% and monthly payments of $4,572,590 is required.
|
|
(b) |
On June 10, 2019, the Company entered into a 36-month loan agreement with Bancolombia for an amount of $151,900,000. The loan has an effective interest rate of 11.91% and monthly payments of $5,101,214 is required.
|
|
Number of common shares | Share capital | ||||||
Balance – December 31, 2018 and 2019
|
52,000
|
$
|
52,000,000
|
Year ended
December 31, 2019
|
Year ended December 31, 2018
|
|||||||
Revenue from sale of goods
|
$
|
1,262,446,466
|
$
|
1,055,876,182
|
||||
Revenue from provision of services
|
63,185,064
|
1,742,402
|
||||||
Total
|
$
|
1,325,631,530
|
$
|
1,057,618,584
|
Year ended
December 31, 2019
|
Year ended
December 31, 2018
|
|||||||
Rental income
|
$
|
34,664,443
|
$
|
54,599,582
|
||||
Miscellaneous
|
912,533
|
10,524,213
|
||||||
Total
|
$
|
35,576,976
|
$
|
65,123,795
|
Year ended
December 31, 2019 |
Year ended
December 31, 2018 |
|||||||
Bank fees
|
$
|
6,031,711
|
$
|
2,208,612
|
||||
Interest on loans
|
139,325,558
|
49,501,178
|
||||||
Other interest income
|
(7,082
|
)
|
(21,255,376
|
)
|
||||
Total
|
$
|
145,350,187
|
$
|
30,454,414
|
|
Year ended
December 31, 2019 |
Year ended
December 31, 2018 |
Occupancy
|
$ 37,682,917
|
$ 16,692,000
|
Interest expense
|
94,883,408
|
14,731,243
|
Total
|
$ 132,566,325
|
$ 31,423,243
|
|
Year ended
December 31, 2019 |
Year ended
December 31, 2018 |
Salary and short-term benefits
|
$ 40,617,000
|
$ 37,405,243
|
2019
|
2018
|
|
Net income before income taxes
|
$ 213,985,840
|
$ 50,259,782
|
Non-deductible expenses (income)
|
(93,044,907)
|
9,385,561
|
Income subjected to income taxes
|
120,940,933
|
59,645,343
|
Income tax expense
|
$ 39,910,508
|
$ 19,683,000
|
Weighted average loss rate
|
Gross carrying amount
|
Loss allowance
|
||||||||||
Current (30 days or less)
|
0
|
%
|
$
|
82,892,753
|
$
|
-
|
||||||
31-60 days
|
0
|
%
|
46,230,719
|
-
|
||||||||
61-90 days
|
0
|
%
|
14,394,470
|
-
|
||||||||
Greater than 90 days
|
0
|
%
|
29,481,860
|
-
|
||||||||
$
|
172,999,802
|
$
|
-
|
Weighted average loss rate
|
Gross carrying amount
|
Loss allowance
|
||||||||||
Current (30 days or less)
|
0
|
%
|
$
|
110,564,992
|
$
|
-
|
||||||
31-60 days
|
0
|
%
|
29,851,416
|
-
|
||||||||
61-90 days
|
0
|
%
|
9,790,649
|
-
|
||||||||
Greater than 90 days
|
0
|
%
|
-
|
-
|
||||||||
$
|
150,207,057
|
$
|
-
|
Payments due by period
|
||||||||||||||||
Total
|
<1 year
|
1-3 years
|
> 3 years
|
|||||||||||||
Accounts payable and accrued liabilities
|
$
|
48,716,122
|
$
|
48,716,122
|
$
|
-
|
$
|
-
|
||||||||
Due to related parties
|
827,770,119
|
827,770,119
|
-
|
-
|
||||||||||||
Long-term debt
|
311,999,982
|
62,923,381
|
249,076,601
|
-
|
||||||||||||
Total
|
$
|
1,188,486,223
|
$
|
939,409,622
|
$
|
249,076,601
|
$
|
-
|
||||||||
BREEZE LABORATORY S.A.S
|
||||||||
Interim Condensed Financial Statements
|
||||||||
Three and Six Months Ended June 30, 2020 and June 30, 2019
|
||||||||
(Stated in Colombian Pesos)
|
||||||||
(Unaudited)
|
||||||||
Notice of No Auditor Review of Interim Financial Statements
|
||||||||
Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the interim unaudited condensed financial statements they must be accompanied by a notice indicating that the
interim unaudited condensed financial statements have not been reviewed by an auditor.
|
||||||||
The accompanying interim unaudited condensed financial statements of the Company have been prepared by, and are the responsibility of, the Company’s management. The Company’s independent auditor has not performed a review
of these interim unaudited condensed d financial statements.
|
BREEZE LABORATORY S.A.S
|
|||||||||
Interim Condensed Financial Statements
|
|||||||||
Three and Six Months Ended June 30, 2020 and June 30, 2019
|
|||||||||
Page
|
|||||||||
Interim Condensed Statements of Financial Position
|
F-99
|
||||||||
Interim Condensed Statements of Operations and Comprehensive Income
|
F-100
|
||||||||
Interim Condensed Statements of Changes in Equity
|
F-101
|
||||||||
Interim Condensed Statements of Cash Flows
|
F-102
|
||||||||
Notes to Interim Condensed Financial Statements
|
F-103
|
||||||||
Notes
|
June 30,
2020
|
December 31, 2019
|
||||||||||
Assets
|
||||||||||||
Current
|
||||||||||||
Cash
|
$
|
323,695,836
|
$
|
29,457,979
|
||||||||
Trade and other receivables
|
12
|
385,564,868
|
176,699,802
|
|||||||||
Prepaid expenses
|
79,790,183
|
-
|
||||||||||
Inventories
|
3
|
897,760,893
|
210,135,959
|
|||||||||
Other assets
|
66,212,652
|
4,574,270
|
||||||||||
1,753,024,432
|
420,868,010
|
|||||||||||
Property, plant and equipment
|
4
|
1,350,968,692
|
1,182,301,677
|
|||||||||
Total Assets
|
$
|
3,103,993,124
|
$
|
1,603,169,687
|
||||||||
Liabilities
|
||||||||||||
Current
|
||||||||||||
Accounts payable and accrued liabilities
|
$
|
1,584,222,610
|
$
|
48,716,122
|
||||||||
Current portion of long-term debt
|
5
|
231,312,037
|
62,923,381
|
|||||||||
Deferred revenue
|
8,904,128
|
17,176,479
|
||||||||||
Income taxes payable
|
15,165,508
|
24,252,508
|
||||||||||
Due to related parties
|
11
|
827,885,923
|
827,770,119
|
|||||||||
2,667,490,206
|
980,838,609
|
|||||||||||
Long-term debt
|
5
|
59,308,451
|
249,076,601
|
|||||||||
Total Liabilities
|
2,726,798,657
|
1,229,915,210
|
||||||||||
Shareholders' Equity
|
||||||||||||
Share capital
|
6
|
52,000,000
|
52,000,000
|
|||||||||
Retained earnings
|
305,081,083
|
304,490,477
|
||||||||||
Restricted retained earnings
|
7
|
20,113,384
|
16,764,000
|
|||||||||
Total Equity
|
377,194,467
|
373,254,477
|
||||||||||
Total Liabilities and Equity
|
$
|
3,103,993,124
|
$
|
1,603,169,687
|
||||||||
Subsequent Events
|
14
|
|||||||||||
Director
|
Director
|
|||||||
Notes
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||||||
Revenue
|
8
|
$
|
475,375,361
|
$
|
346,021,074
|
$
|
729,171,617
|
$
|
609,026,617
|
|||||||||||
Cost of Sales
|
3
|
274,686,271
|
68,043,919
|
477,496,508
|
125,543,350
|
|||||||||||||||
Gross Profit
|
200,689,090
|
277,977,155
|
251,675,109
|
483,483,267
|
||||||||||||||||
General and Administrative Expenses
|
||||||||||||||||||||
Salaries, wages and benefits
|
11
|
47,161,249
|
58,851,900
|
95,395,517
|
115,090,966
|
|||||||||||||||
Professional fees
|
12,205,192
|
8,717,379
|
20,364,230
|
19,184,188
|
||||||||||||||||
Occupancy, office expense and others
|
11
|
45,826,450
|
27,228,137
|
61,740,522
|
47,054,537
|
|||||||||||||||
Amortization
|
17,730,327
|
16,453,139
|
36,055,353
|
34,067,145
|
||||||||||||||||
122,923,218
|
111,250,555
|
213,555,622
|
215,396,836
|
|||||||||||||||||
Other Income (Expense)
|
||||||||||||||||||||
Other income
|
9
|
12,963,150
|
9,828,922
|
22,372,938
|
16,514,543
|
|||||||||||||||
Finance costs
|
10, 11
|
(27,262,520
|
)
|
(40,017,324
|
)
|
(60,907,580
|
)
|
(73,889,226
|
)
|
|||||||||||
Other expenses
|
(57,630
|
)
|
(6,586
|
)
|
(1,810,855
|
)
|
(165,985
|
)
|
||||||||||||
(14,357,000
|
)
|
(30,194,988
|
)
|
(40,345,497
|
)
|
(57,540,668
|
)
|
|||||||||||||
Income (Loss) Before Taxes
|
63,408,873
|
136,531,612
|
(2,226,010
|
)
|
210,545,763
|
|||||||||||||||
Income tax (recovery) expense
|
(6,166,000
|
)
|
45,055,432
|
(6,166,000
|
)
|
69,480,102
|
||||||||||||||
Net Income and Comprehensive Income
|
$
|
69,574,873
|
$
|
91,476,180
|
$
|
3,939,990
|
$
|
141,065,661
|
||||||||||||
Weighted average number of outstanding
shares, basic and diluted
|
52,000
|
52,000
|
52,000
|
52,000
|
||||||||||||||||
Basic and diluted earnings per share
|
$
|
1,337.98
|
$
|
1,759.16
|
$
|
75.77
|
$
|
2,712.80
|
Notes
|
Number of Shares
|
Share Capital
|
Retained Earnings
|
Restricted Retained Earnings
|
Total
|
|||||||||||||||||||
Balance at December 31, 2018
|
52,000
|
$
|
52,000,000
|
$
|
133,472,825
|
$
|
13,706,320
|
$
|
199,179,145
|
|||||||||||||||
Transfer to reserve
|
7
|
-
|
-
|
(1,674,692
|
)
|
1,674,692
|
-
|
|||||||||||||||||
Net income for the period
|
-
|
-
|
141,065,661
|
-
|
141,065,661
|
|||||||||||||||||||
Balance at June 30, 2019
|
52,000
|
$
|
52,000,000
|
$
|
272,863,794
|
$
|
15,381,012
|
$
|
340,244,806
|
|||||||||||||||
Balance at December 31, 2019
|
52,000
|
$
|
52,000,000
|
$
|
304,490,477
|
$
|
16,764,000
|
$
|
373,254,477
|
|||||||||||||||
Transfer to reserve
|
7
|
-
|
-
|
(3,349,384
|
)
|
3,349,384
|
-
|
|||||||||||||||||
Net income for the period
|
-
|
-
|
3,939,990
|
-
|
3,939,990
|
|||||||||||||||||||
Balance at June 30, 2020
|
52,000
|
$
|
52,000,000
|
$
|
305,081,083
|
$
|
20,113,384
|
$
|
377,194,467
|
|||||||||||||||
|
Notes |
Six Months Ended June 30,
|
|||||||
2020
|
2019
|
||||||||
Operating Activities
|
|||||||||
Net income for the period
|
$
|
3,939,990
|
$
|
141,065,661
|
|||||
Items not affecting cash:
|
|||||||||
Amortization
|
36,055,353
|
34,067,145
|
|||||||
39,995,343
|
175,132,806
|
||||||||
Net changes in non-cash working capital:
|
|||||||||
Trade and other receivables
|
(208,865,066
|
)
|
38,969,162
|
||||||
Prepaid expenses
|
(79,790,183
|
)
|
(22,503,763
|
)
|
|||||
Inventories
|
(687,624,934
|
)
|
(181,226,992
|
)
|
|||||
Other assets
|
(61,638,382
|
)
|
(9,020,208
|
)
|
|||||
Accounts payable and accrued liabilities
|
1,535,506,488
|
112,518,463
|
|||||||
Deferred revenue
|
(8,272,351
|
)
|
344
|
||||||
Income taxes payable
|
(9,087,000
|
)
|
(38,722,042
|
)
|
|||||
Due to related parties
|
115,804
|
-
|
|||||||
Cash Flows Provided By Operating Activities
|
520,339,719
|
75,147,770
|
|||||||
Investing Activities
|
|||||||||
Acquisition of property, plant and equipment
|
(204,722,368
|
)
|
(138,952,253
|
)
|
|||||
Cash Flows Used In Investing Activities
|
(204,722,368
|
)
|
(138,952,253
|
)
|
|||||
Financing Activities
|
|||||||||
Proceeds from long-term debt
|
-
|
139,399,981
|
|||||||
Repayment of long-term debt
|
(21,379,494
|
)
|
-
|
||||||
Cash Flows (Used In) Provided By Financing Activities
|
(21,379,494
|
)
|
139,399,981
|
||||||
Net Increase in Cash During the Period
|
294,237,857
|
179,142,745
|
|||||||
Cash, Beginning of Period
|
29,457,979
|
142,035,004
|
|||||||
Cash, End of Period
|
$
|
323,695,836
|
$
|
321,177,749
|
|||||
1.
|
Basis of Presentation
|
(a)
|
Statement of compliance
|
(b)
|
Basis of measurement
|
(c)
|
Functional and presentation currency
|
1.
|
Basis of Presentation (continued)
|
(d)
|
Estimates and critical judgements by management
|
(e)
|
Novel Coronavirus (“COVID-19’)
|
2.
|
Adoption of new accounting pronouncements
|
3.
|
Inventories
|
As at
June 30,
2020
|
As at
December 31, 2019
|
|||||||
Raw materials
|
$
|
319,513,942
|
$
|
206,545,995
|
||||
Finished goods
|
578,246,951
|
3,589,964
|
||||||
$
|
897,760,893
|
$
|
210,135,959
|
4.
|
Property, Plant and Equipment
|
Buildings and leasehold improvements
|
Machinery and equipment
|
Furniture and appliances
|
Computing and communications equipment
|
Total
|
||||||||||||||||
Cost
|
||||||||||||||||||||
At January 1, 2019
|
$
|
650,000,000
|
$
|
35,047,660
|
$
|
16,567,888
|
$
|
8,127,482
|
$
|
720,822,030
|
||||||||||
Additions
|
628,928,259
|
7,558,370
|
114,400
|
-
|
636,601,029
|
|||||||||||||||
At December 31, 2019
|
$
|
1,278,928,259
|
$
|
42,606,030
|
$
|
16,682,288
|
$
|
8,127,482
|
$
|
1,357,423,059
|
||||||||||
Accumulated Amortization
|
||||||||||||||||||||
At January 1, 2019
|
$
|
65,000,000
|
$
|
9,351,967
|
$
|
12,482,468
|
$
|
5,798,947
|
$
|
103,712,382
|
||||||||||
Additions
|
65,000,000
|
4,155,000
|
629,000
|
1,625,000
|
71,409,000
|
|||||||||||||||
At December 31, 2019
|
$
|
130,000,000
|
$
|
13,506,967
|
$
|
13,111,468
|
$
|
7,423,947
|
$
|
175,121,382
|
||||||||||
Net book value at
|
||||||||||||||||||||
December 31, 2019
|
$
|
1,148,928,259
|
$
|
29,099,063
|
$
|
3,570,820
|
$
|
703,535
|
$
|
1,182,301,677
|
||||||||||
Buildings and leasehold improvements
|
Machinery and equipment
|
Furniture and appliances
|
Computing and communications equipment
|
Total
|
||||||||||||||||
Cost
|
||||||||||||||||||||
At January 1, 2020
|
$
|
1,278,928,259
|
$
|
42,606,030
|
$
|
16,682,288
|
$
|
8,127,482
|
$
|
1,357,423,059
|
||||||||||
Additions
|
194,138,868
|
5,940,000
|
2,781,000
|
1,862,500
|
204,722,368
|
|||||||||||||||
At June 30, 2020
|
$
|
1,473,067,127
|
$
|
48,546,030
|
$
|
19,463,288
|
$
|
9,989,982
|
$
|
1,562,145,427
|
||||||||||
Accumulated Amortization
|
||||||||||||||||||||
At January 1, 2020
|
$
|
130,000,000
|
$
|
13,506,967
|
$
|
13,111,468
|
$
|
7,423,947
|
$
|
175,121,382
|
||||||||||
Additions
|
33,310,002
|
1,829,400
|
557,175
|
358,776
|
36,055,353
|
|||||||||||||||
At June 30, 2020
|
$
|
163,310,002
|
$
|
15,336,367
|
$
|
13,668,643
|
$
|
7,782,723
|
$
|
211,176,735
|
||||||||||
Net book value at
|
||||||||||||||||||||
June 30, 2020
|
$
|
1,309,757,125
|
$
|
33,209,663
|
$
|
5,794,645
|
$
|
2,207,259
|
$
|
1,350,968,692
|
5.
|
Long-term Debt
|
|
As at
June 30, 2020 |
As at
December 31, 2019 |
||||||
(a) Term loan - bearing interest at 10.91% per annum, monthly payments of $4,572,590, 120-month term, maturing in June of 2027
|
$
|
180,914,928
|
$
|
185,416,646
|
||||
(b) Term loan - bearing interest at 11.91% per annum, monthly payments of $5,101,214, 36-month term, maturing in June of 2022
|
109,705,560
|
126,583,336
|
||||||
290,620,488
|
311,999,982
|
|||||||
Less: current portion
|
(231,312,037
|
)
|
(62,923,381
|
)
|
||||
Long-term portion
|
$
|
59,308,451
|
$
|
249,076,601
|
|
(a) |
On June 12, 2017, the Company entered into a 120-month loan agreement with Banco Caja Social for an amount of $250,000,000. The loan has an effective interest rate of 10.91% and monthly payments of $4,572,590 is required.
|
|
(b) |
On June 10, 2019, the Company entered into a 36-month loan agreement with Bancolombia for an amount of $151,900,000. The loan has an effective interest rate of 11.91% and monthly payments of $5,101,214 is required.
|
6.
|
Share Capital
|
(a)
|
Authorized, issued and outstanding
|
|
Number of common shares | Share capital | ||||||
Balance – June 30, 2020 and December 31, 2019
|
52,000
|
$
|
52,000,000
|
7.
|
Restricted Retained Earnings
|
8.
|
Revenue
|
For the three
months ended
|
For the six
months ended
|
|||||||||||||||
June 30, 2020
|
June 30, 2019
|
June 30, 2020
|
June 30, 2019
|
|||||||||||||
Revenue from sale of goods
|
$
|
446,067,790
|
$
|
333,536,323
|
$
|
682,992,329
|
$
|
587,741,845
|
||||||||
Revenue from provision of services
|
29,307,571
|
12,484,751
|
46,179,288
|
21,284,722
|
||||||||||||
$
|
475,375,361
|
$
|
346,021,074
|
$
|
729,171,617
|
$
|
609,026,617
|
9.
|
Other Income
|
For the three months ended
|
For the six months ended
|
|||||||||||||||
June 30, 2020
|
June 30, 2019
|
June 30, 2020
|
June 30, 2019
|
|||||||||||||
Rental income
|
$
|
6,218,488
|
$
|
9,327,732
|
$
|
15,546,220
|
$
|
16,008,979
|
||||||||
Miscellaneous
|
6,744,662
|
501,260
|
6,826,718
|
505,564
|
||||||||||||
$
|
12,963,150
|
$
|
9,828,922
|
$
|
22,372,938
|
$
|
16,514,543
|
10.
|
Finance costs
|
For the three months ended
|
For the six months ended
|
|||||||||||||||
June 30, 2020
|
June 30, 2019
|
June 30, 2020
|
June 30, 2019
|
|||||||||||||
Bank fees
|
$
|
2,482,639
|
$
|
3,016,266
|
$
|
4,603,521
|
$
|
5,037,466
|
||||||||
Interest on loans
|
24,812,666
|
37,001,058
|
56,336,844
|
68,851760
|
||||||||||||
Other interest income
|
(32,785
|
)
|
-
|
(32,785
|
)
|
-
|
||||||||||
$
|
27,262,520
|
$
|
40,017,324
|
$
|
60,907,580
|
$
|
73,889,226
|
11.
|
Related Party Transactions and Balances
|
(a)
|
Transactions with shareholders, officers and companies controlled by shareholders, officers and/or their families
|
For the three months ended
|
For the six months ended
|
|||||||||||||||
June 30, 2020
|
June 30, 2019
|
June 30, 2020
|
June 30, 2019
|
|||||||||||||
Occupancy
|
$
|
9,985,974
|
$
|
9,420,729
|
$
|
19,971,948
|
$
|
18,841,459
|
||||||||
Interest expense
|
23,720,861
|
23,720,853
|
47,441,724
|
47,441,704
|
||||||||||||
$
|
33,706,835
|
$
|
33,141,582
|
$
|
67,413,672
|
$
|
66,283,163
|
11.
|
Related Party Transactions and Balances (continued)
|
(b)
|
Key management compensation
|
For the three months ended
|
For the six months ended
|
|||||||||||||||
June 30, 2020
|
June 30, 2019
|
June 30, 2020
|
June 30, 2019
|
|||||||||||||
Salary and short-term benefits
|
$
|
10,055,811
|
$
|
10,167,500
|
$
|
18,516,611
|
$
|
19,811,000
|
12.
|
Financial Instruments
|
(a)
|
Credit risk
|
Weighted average loss rate
|
|
Gross carrying amount
|
Loss allowance
|
|||||||||
Current (30 days or less)
|
0%
|
|
$
|
265,153,258
|
$
|
-
|
||||||
31-60 days
|
0%
|
|
23,591,203
|
-
|
||||||||
61-90 days
|
0%
|
|
22,364,61
|
-
|
||||||||
Greater than 90 days
|
0%
|
|
74,456,247
|
-
|
||||||||
$
|
385,564,868
|
$
|
-
|
Weighted average loss rate
|
|
Gross carrying amount
|
Loss allowance
|
|||||||||
Current (30 days or less)
|
0%
|
|
$
|
82,892,753
|
$
|
-
|
||||||
31-60 days
|
0%
|
|
46,230,719
|
-
|
||||||||
61-90 days
|
0%
|
|
14,394,470
|
-
|
||||||||
Greater than 90 days
|
0%
|
|
29,481,860
|
-
|
||||||||
$
|
172,999,802
|
$
|
-
|
(b)
|
Liquidity risk
|
Payments due by period
|
||||||||||||||||
Total
|
<1 year
|
1-3 years
|
> 3 years
|
|||||||||||||
Accounts payable and accrued liabilities
|
$
|
1,584,222,610
|
$
|
1,584,222,610
|
$
|
-
|
$
|
-
|
||||||||
Due to related parties
|
827,885,923
|
827,885,923
|
-
|
-
|
||||||||||||
Long-term debt
|
290,620,488
|
231,312,037
|
59,308,451
|
-
|
||||||||||||
Total
|
$
|
2,702,729,021
|
$
|
2,643,420,570
|
$
|
59,308,451
|
$
|
-
|
||||||||
(c)
|
Market risk
|
(i)
|
Foreign currency risk
|
(ii)
|
Interest rate risk
|
13.
|
Capital Management
|
(a)
|
Sale of Building
|
(b)
|
Acquisition by Flora Growth Corp.
|
(Stated in Thousands of Colombian Pesos)
|
Notes
|
2019
|
2018
|
||||||||||
Assets
|
||||||||||||
Current
|
||||||||||||
Cash
|
4
|
$
|
143,081
|
$
|
54,459
|
|||||||
Trade and other accounts receivable
|
17
|
562,886
|
694,950
|
|||||||||
Inventories
|
5
|
1,189,748
|
1,293,710
|
|||||||||
Prepaids and other assets
|
30,969
|
80,529
|
||||||||||
Income taxes recoverable
|
9
|
14,805
|
39,397
|
|||||||||
1,941,489
|
2,163,045
|
|||||||||||
Property, plant and equipment
|
4,001
|
996
|
||||||||||
Right of use assets
|
6
|
13,679
|
-
|
|||||||||
Total Assets
|
$
|
1,959,169
|
$
|
2,164,041
|
||||||||
Liabilities
|
||||||||||||
Current
|
||||||||||||
Trade and other accounts payable
|
17
|
$
|
967,730
|
$
|
994,576
|
|||||||
Current portion of long-term debt
|
7
|
37,971
|
90,259
|
|||||||||
Current portion of lease liability
|
6
|
14,617
|
-
|
|||||||||
Current portion of due to related party
|
8
|
9,280
|
4,640
|
|||||||||
Sales taxes payable
|
34,225
|
20,359
|
||||||||||
1,063,823
|
1,109,834
|
|||||||||||
Long-term debt
|
7
|
27,445
|
-
|
|||||||||
Due to related party
|
8
|
500,000
|
500,000
|
|||||||||
Payments received in advance
|
9,510
|
25,379
|
||||||||||
Deferred income tax liabilities
|
9
|
3,184
|
2,609
|
|||||||||
Total Liabilities
|
$
|
1,603,962
|
$
|
1,637,822
|
||||||||
Shareholders' Equity
|
||||||||||||
Share capital
|
10
|
$
|
670,000
|
$
|
670,000
|
|||||||
Retained earnings
|
(333,312)
|
|
(162,300)
|
|
||||||||
Restricted retained earnings
|
11
|
18,519
|
18,519
|
|||||||||
Total Equity
|
355,207
|
526,219
|
||||||||||
Total Liabilities and Equity
|
$
|
1,959,169
|
$
|
2,164,041
|
||||||||
Subsequent Events
|
19
|
|||||||||||
|
Notes
|
2019
|
2018
|
||||||||||
Operating revenue
|
||||||||||||
Sale of pharmaceutical products
|
12
|
$
|
4,377,912
|
|
$
|
4,022,889
|
|
|||||
Conditional discounts
|
(352,237)
|
|
(607,033)
|
|
||||||||
Loyalty discounts
|
(15,019)
|
|
-
|
|
||||||||
Sales returns
|
(147,071)
|
|
(88,525)
|
|
||||||||
3,863,585
|
3,327,331
|
|||||||||||
Cost of sales
|
5
|
2,391,317
|
2,257,847
|
|||||||||
Gross profit
|
$
|
1,472,268
|
$
|
1,069,484
|
||||||||
Operating expenses
|
||||||||||||
Administrative expenses
|
13
|
$
|
472,063
|
$
|
456,993
|
|||||||
Sales expenses
|
14
|
884,244
|
919,825
|
|||||||||
1,356,307
|
1,376,818
|
|||||||||||
Operating profit (loss)
|
$
|
115,961
|
$
|
(307,334)
|
|
|||||||
Other income (expense)
|
||||||||||||
Other income
|
15
|
$
|
27,414
|
|
|
$
|
91,796
|
|
||||
Other expenses
|
16
|
(96,683)
|
|
|
(72,500)
|
|
||||||
Interest expenses
|
(98,305)
|
|
|
(91,503)
|
|
|||||||
(167,574)
|
|
|
(72,207)
|
|
||||||||
Income (loss) before taxes
|
$
|
(51,613)
|
|
|
$
|
(379,541)
|
|
|||||
|
||||||||||||
Current income tax
|
9
|
99,401
|
|
30,582
|
|
|||||||
Deferred income tax
|
9
|
(575)
|
|
(2,609)
|
|
|||||||
Local tax
|
20,573
|
|
16,926
|
|
||||||||
Net income (loss) and comprehensive income (loss)
|
$
|
(171,012)
|
|
$
|
(424,440)
|
|
||||||
|
|
|||||||||||
Weighted average number of outstanding shares, basic and diluted
|
134
|
|
134
|
|
||||||||
Basic and diluted earnings per share
|
$
|
(1,276.21)
|
|
$
|
(3,167.46)
|
|
||||||
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Number of Shares
|
|
|
Share Capital
|
|
|
Retained Earnings
|
|
|
Restricted Retained Earnings
|
|
|
Total
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance at December 31, 2017
|
|
|
134
|
|
|
$
|
670,000
|
|
|
$
|
242,341
|
|
$
|
38,318
|
|
|
$
|
950,659
|
|
||
Net loss and comprehensive loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
(424,440)
|
|
|
|
|
|
|
(424,440)
|
|
||
Transfer to restricted retained earnings
|
|
|
|
|
|
|
|
|
|
|
19,799
|
|
|
(19,799)
|
|
|
-
|
|
|||
Balance at December 31, 2018
|
|
|
134
|
|
|
$
|
670,000
|
|
|
$
|
(162,300)
|
|
$
|
18,519
|
|
|
$
|
526,219
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Balance at December 31, 2018
|
|
|
134
|
|
|
$
|
670,000
|
|
|
$
|
(162,300)
|
|
$
|
18,519
|
|
|
$
|
526,219
|
|
||
Net loss and comprehensive loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
(171,012)
|
|
|
-
|
|
|
|
(171,012)
|
|
||
Balance at December 31, 2019
|
|
|
134
|
|
|
$
|
670,000
|
|
|
$
|
(333,312)
|
|
$
|
18,519
|
|
|
$
|
355,207
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
2018
|
||||||
Operating Activities
|
|
|
||||||
Net loss for the period
|
$
|
(171,012)
|
|
$
|
(424,440)
|
|
||
Items not affecting cash:
|
|
|
||||||
Depreciation on property, plant and equipment
|
9,454
|
|
28,326
|
|
||||
Depreciation on right-of-use assets
|
86,431
|
|
-
|
|
||||
Lease interest expense differential
|
8,328
|
|
-
|
|
||||
(66,799)
|
|
(396,114)
|
|
|||||
Net changes in non-cash working capital
|
|
|
||||||
Trade and other accounts receivables
|
132,064
|
|
(71,432)
|
|
||||
Inventories
|
103,962
|
|
24,116
|
|
||||
Prepaids
|
49,560
|
|
60,036
|
|
||||
Income taxes recoverable
|
24,592
|
|
(64,844)
|
|
||||
Trade and other accounts payable
|
(26,846)
|
|
135,887
|
|
||||
Payments received in advance
|
(15,869)
|
|
25,379
|
|
||||
Sales taxes payable
|
13,866
|
|
24,601
|
|
||||
Deferred income tax liabilities
|
575
|
|
(100,695)
|
|
||||
Cash Flows Used in Operating Activities
|
$
|
215,105
|
|
$
|
(363,066
|
|
||
Investing Activities
|
|
|
||||||
Acquisition of property, plant and equipment
|
(12,459)
|
|
(12,385)
|
|
||||
Cash Flows Provided by (Used In) Investing Activities
|
$
|
(12,459)
|
|
$
|
(12,385)
|
|
||
Financing Activities
|
|
|
||||||
Proceeds from long-term debt
|
52,000
|
|
500,000
|
|
||||
Payment of long-term debt
|
(72,203)
|
|
(454,932)
|
|
||||
Principal paid on lease liabilities
|
(85,492)
|
|
-
|
|
||||
Interest paid on lease liabilities
|
(8,329)
|
|
-
|
|
||||
Cash Flows Provided By Financing Activities
|
$
|
(114,024)
|
|
$
|
45,068
|
|
||
|
|
|||||||
Net Increase in Cash During the Period
|
88,622
|
|
(330,383)
|
|
||||
Cash, Beginning of Period
|
54,459
|
|
384,842
|
|
||||
Cash, End of Period
|
$
|
143,081
|
|
$
|
54,459
|
|
||
|
|
|||||||
Supplementary information
|
|
|||||||
Interest paid
|
$
|
75,124
|
67,190
|
|
||||
1.
|
Basis of presentation
|
(a)
|
Statement of compliance
|
(b)
|
Basis of measurement
|
(c)
|
Functional and presentation currency
|
(d)
|
Basis of consolidation
|
1.
|
Basis of presentation (continued)
|
(e)
|
Going concern
|
(f)
|
Estimates and critical judgements made by management
|
(i)
|
Provisions
|
(ii)
|
Expected credit losses on financial assets
|
1.
|
Basis of presentation (continued)
|
(f)
|
Estimates and critical judgements made by management (continued)
|
(iii)
|
Inventory recoverability
|
(iv)
|
Income taxes
|
2.
|
Adoption of new accounting pronouncements
|
|
(a) |
IFRS 16 Leases
|
2.
|
Adoption of new accounting pronouncements (continued)
|
2.1
|
Recently Issued Accounting Pronouncement Not Yet Adopted
|
3.
|
Significant accounting policies
|
(a)
|
Financial instruments
|
(i)
|
Measurement basis
|
Item
|
Measurement Method
|
|
Financial instruments measured at fair value through profit or loss
|
||
None
|
None
|
|
Financial instruments measured at amortized cost
|
||
Cash; Trade and other accounts receivable; Trade and other accounts payable
|
Carrying amount (approximates fair value due to short-term nature)
|
|
Long-term debt; Due to related parties
|
Carrying value at the effective interest rate which approximates fair value
|
(ii)
|
Impairment of financial assets
|
(iii)
|
Fair value hierarchy
|
3.
|
Significant accounting policies (continued)
|
(b)
|
Income taxes
|
(c)
|
Share capital
|
(d)
|
Provisions
|
(e)
|
Basic and diluted earnings per share
|
(f)
|
Inventories
|
3.
|
Significant accounting policies (continued)
|
(g)
|
Revenue Recognition
|
4.
|
Cash
|
2019 | 2018 | ||||||||
Petty cash
|
$
|
14
|
$
|
800
|
|||||
Banco de Bogota
|
62,808
|
32,893
|
|||||||
Banco Davivienda
|
27,998
|
9,625
|
|||||||
Banco Bancolombia
|
52,261
|
11,141
|
|||||||
Total
|
$
|
143,081
|
$
|
54,459
|
5.
|
Inventories
|
2019 | 2018 | ||||||||
Raw materials
|
$
|
701,176
|
$
|
621,399
|
|||||
Finished goods - Food products
|
86,281
|
607,164
|
|||||||
Finished goods - Medications
|
321,362
|
65,147
|
|||||||
Finished goods - Cosmetics
|
80,929
|
-
|
|||||||
Total
|
$
|
1,189,748
|
$
|
1,293,710
|
6.
|
Leases
|
(a)
|
Right-of-Use Assets
|
Balance at January 1, 2019
|
$
|
85,583
|
|||
Additions
|
14,527
|
||||
Depreciation Expense
|
(86,431
|
)
|
|||
Balance at December 31, 2019
|
$
|
13,679
|
(b)
|
Lease Obligation
|
Balance at January 1, 2019
|
$
|
85,583
|
|||
Additions
|
14,527
|
||||
Interest expense
|
8,329
|
||||
Lease payments
|
(93,822
|
)
|
|||
Balance at December 31, 2019
|
$
|
14,617
|
7.
|
Long-term debt
|
2019
|
2018
|
||||||||
(a) Loan from Banco de Bogota - bearing interest at 1.14 % per month, 36-month term, maturing in August of 2020
|
$
|
20,638
|
$
|
90,259
|
|||||
(b) Loan from Bancolombia – bearing interest at 1.04% per month, 36-month term, maturing in July of 2022
|
44,778
|
-
|
|||||||
65,416
|
90,259
|
||||||||
Less: current portion
|
37,971
|
90,259
|
|||||||
Long-term potion
|
$
|
27,445
|
$
|
-
|
(a)
|
On August 28, 2017, the Company entered into a 36-month loan agreement with Banco de Bogota for an amount of $600,000 to finance payments to suppliers.
|
(b)
|
On July 10, 2019, the Company entered into a 36-month loan agreement with Bancolombia for an amount of $52,000 to finance payments to suppliers.
|
8.
|
Related party transactions
|
(a)
|
Transactions with directors, officers and companies controlled by directors, officers and/or their families
|
2019
|
2018
|
||||||||
Loan from shareholder (i)
|
$
|
509,280
|
$
|
504,640
|
|||||
Interest expense on shareholder loan (i)
|
74,300
|
16,250
|
|||||||
Office equipment lease expense from shareholder (ii)
|
4,000
|
2,000
|
(i)
|
On November 8, 2018, the Company took out a loan from Inversiones Montearroyo Asociados SAS, a shareholder, for an amount of $500,000 to finance payments to suppliers and to pay down loan with
Banco de Bogota. The loan is 36-months with monthly interest rate of 1.16% and is interest-only payments with full principal due upon maturity.
|
(ii)
|
On October 31, 2018, the Company begin leasing office equipment from Inversiones Montearroyo Asociados SAS, a shareholder, for a monthly amount of $1,000. The lease is month-to-month and ended
during April 2020. This amount is included under Administrative expenses.
|
(b)
|
Key management compensation
|
2019
|
2018
|
||||||||
Salary and short-term benefits
|
$
|
84,386
|
$
|
100,827
|
9.
|
Income Taxes
|
(a)
|
Effective tax rate reconciliation
|
2019
|
2018
|
||||||||
Net loss before income taxes
|
$
|
(51,613
|
)
|
$
|
(379,541
|
)
|
|||
Local tax
|
20,573
|
16,926
|
|||||||
Non-deductible expenses
|
330,513
|
447,382
|
|||||||
Expenses subject to income taxes
|
299,473
|
84,767
|
|||||||
Income tax expense
|
$
|
98,826
|
$
|
27,973
|
(b)
|
Components of income tax expense
|
2019
|
2018
|
||||||||
Current tax expense
|
$
|
99,401
|
$
|
30,582
|
|||||
Deferred tax expense
|
|||||||||
Temporary differences
|
(575
|
)
|
(2,609
|
)
|
|||||
Income tax expense
|
$
|
98,826
|
$
|
27,973
|
(c)
|
Deferred income tax asset and liability
|
Balance at December 31, 2017
|
$ 103,304
|
|
Deferred income tax recovery
|
(100,695)
|
|
Balance at December 31, 2018
|
2,609
|
|
Deferred tax liabilities
|
575
|
|
Balance at December 31, 2019
|
$ 3,184
|
10.
|
Share Capital
|
(a)
|
Authorized share capital
|
(b)
|
Issued and outstanding
|
2019
|
2018
|
||
134 common shares
|
$ 670,000
|
$ 670,000
|
11.
|
Restricted retained earnings
|
2019
|
2018
|
||
Restricted retained earnings
|
$ 18,519
|
$ 18,519
|
12.
|
Revenues
|
December 31, 2019
|
Domestic (Colombia)
|
International
|
Total
|
||||||||||
Food products
|
$
|
924,270
|
$
|
-
|
$
|
924,270
|
|||||||
Medication
|
2,868,337
|
-
|
2,868,337
|
||||||||||
Cosmetics
|
585,305
|
-
|
585,305
|
||||||||||
Total
|
$
|
4,377,912
|
$
|
-
|
$
|
4,377,912
|
December 31, 2018
|
Domestic (Colombia)
|
International
|
Total
|
||||||||||
Food products
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
Medication
|
4,022,889
|
-
|
4,022,889
|
||||||||||
Cosmetics
|
-
|
-
|
-
|
||||||||||
Total
|
$
|
4,022,889
|
$
|
-
|
$
|
4,022,889
|
13.
|
Administrative expenses
|
2019
|
2018
|
||||||||
Personnel
|
$
|
267,325
|
$
|
113,561
|
|||||
Professional fees
|
65,940
|
110,903
|
|||||||
General office
|
106,884
|
189,626
|
|||||||
Travel, meals and entertainment
|
9,386
|
14,577
|
|||||||
Depreciation
|
22,528
|
28,326
|
|||||||
Total
|
$
|
472,063
|
$
|
456,993
|
14.
|
Sales expenses
|
2019
|
2018
|
||||||||
Personnel
|
$
|
522,645
|
$
|
287,773
|
|||||
Professional fees
|
24,001
|
438
|
|||||||
Advertising
|
38,033
|
34,938
|
|||||||
General office (a)
|
172,664
|
544,330
|
|||||||
Travel, meals and entertainment
|
53,544
|
52,346
|
|||||||
Depreciation
|
73,357
|
-
|
|||||||
Total
|
$
|
884,244
|
$
|
919,825
|
(a)
|
General office expense consists of building maintenance, utilities, communication, office supplies, equipment, bad debt, and other ad-hoc office expenses.
|
15.
|
Other income
|
2019
|
2018
|
||||||||
Reversal of provisions
|
$
|
-
|
$
|
40,000
|
|||||
Gain on sale of investments
|
-
|
8,000
|
|||||||
Recoveries from insurance
|
6,000
|
-
|
|||||||
Other
|
21,414
|
43,796
|
|||||||
Total
|
$
|
27,414
|
$
|
91,796
|
16.
|
Other expenses
|
2019
|
2018
|
||||||||
Bank charges
|
$
|
21,793
|
$
|
19,144
|
|||||
Donations
|
10,033
|
-
|
|||||||
Other (a)
|
64,857
|
53,356
|
|||||||
Total
|
$
|
96,683
|
$
|
72,500
|
(a)
|
Other expenses consists of tax on financial transactions, prior year costs and expenses, penalties, non-deductible expenses, and other extraordinary expenses.
|
17.
|
Financial Instruments
|
(a)
|
Credit risk
|
2019
|
2018
|
||
Trade accounts receivable from customers
|
$ 650,457
|
$ 747,802
|
|
Expected credit losses
|
(88,928)
|
(62,927)
|
|
Net trade receivables
|
561,529
|
684,875
|
|
Other accounts receivables
|
1,357
|
10,075
|
|
|
$ 562,886
|
$ 694,950
|
17.
|
Financial Instruments (continued)
|
(a)
|
Credit risk (continued)
|
December 31, 2019
|
Expected loss rate
|
Gross carrying amount
|
Loss provision
|
||
Current
|
1%
|
$ 389,633
|
$ 3,886
|
||
0-90 days past-due
|
5%
|
167,135
|
8,422
|
||
91-180 days past-due
|
50%
|
22,747
|
11,375
|
||
181-360 days past-due
|
80%
|
8,860
|
7,086
|
||
361-720 days past-due
|
90%
|
39,227
|
35,304
|
||
Greater than 720 days past-due
|
100%
|
22,855
|
22,855
|
||
$ 650,457
|
$ 88,928
|
December 31, 2018
|
Expected loss rate
|
Gross carrying amount
|
Loss provision
|
||
Current
|
1%
|
$ 533,571
|
$ 5,507
|
||
0-90 days past-due
|
5%
|
140,890
|
7,598
|
||
91-180 days past-due
|
27%
|
19,861
|
5,305
|
||
181-360 days past-due
|
78%
|
22,197
|
17,340
|
||
361-720 days past-due
|
87%
|
31,283
|
27,177
|
||
Greater than 720 days past-due
|
100%
|
-
|
-
|
||
$ 747,802
|
$ 62,927
|
Loss allowance
|
|||
Balance at January 1, 2018
|
$ 13,668
|
||
Change in loss allowance
|
53,148
|
||
Balance at December 31, 2018
|
62,927
|
||
Change in loss allowance
|
26,001
|
||
Balance at December 31, 2019
|
$ 88,928
|
17.
|
Financial Instruments (continued)
|
(b)
|
Liquidity risk
|
(c)
|
Market risk
|
(i)
|
Foreign currency risk
|
(ii)
|
Interest rate risk
|
18.
|
Capital Management
|
19.
|
Subsequent events
|
GRUPO FARMACEUTICO CRONOMED S.A.S
|
|||||||||
Interim Condensed Consolidated Financial Statements
|
|||||||||
Three and Six Months Ended June 30, 2020 and 2019
|
|||||||||
(Stated in Thousands of Colombian Pesos)
|
|||||||||
(Unaudited)
|
|||||||||
Notice of No Auditor Review of Interim Condensed Consolidated Financial Statements:
|
|||||||||
Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the interim unaudited condensed consolidated financial
statements they must be accompanied by a notice indicating that the interim unaudited condensed consolidated financial statements have not been reviewed by an auditor.
The accompanying interim unaudited condensed consolidated financial statements of the Company have been prepared by, and are the responsibility of, the Company’s management.
The Company’s independent auditor has not performed a review of these interim unaudited condensed consolidated financial statements.
|
|||||||||
GRUPO FARMACEUTICO CRONOMED S.A.S
|
|||||||
Interim Condensed Consolidated Financial Statements
|
|||||||
Three and Six Months Ended June 30, 2020 and 2019
|
|||||||
Page
|
|||||||
Interim Condensed Consolidated Statements of Financial Position
|
F-135
|
||||||
Interim Condensed Consolidated Statements of Operations and Comprehensive Income
|
F-136
|
||||||
Interim Condensed Consolidated Statements of Changes in Equity
|
F-137
|
||||||
Interim Condensed Consolidated Statements of Cash Flows
|
F-138
|
||||||
Notes to Interim Condensed Consolidated Financial Statements
|
F-139
|
||||||
Notes
|
June 30, 2020
|
December 31, 2019
|
||||||||||
Assets
|
||||||||||||
Current
|
||||||||||||
Cash
|
$
|
117,842
|
$
|
143,081
|
||||||||
Trade and other accounts receivable
|
12
|
446,082
|
562,886
|
|||||||||
Inventories
|
3
|
937,944
|
1,189,748
|
|||||||||
Prepaids and other assets
|
74,203
|
30,969
|
||||||||||
Income taxes recoverable
|
47,551
|
14,805
|
||||||||||
$
|
1,623,622
|
$
|
1,941,489
|
|||||||||
Property, plant and equipment
|
3,839
|
4,001
|
||||||||||
Right of use assets
|
4
|
338,142
|
13,679
|
|||||||||
Total Assets
|
$
|
1,965,603
|
$
|
1,959,169
|
||||||||
Liabilities
|
||||||||||||
Current
|
||||||||||||
Trade and other accounts payable
|
12
|
$
|
617,642
|
$
|
967,730
|
|||||||
Current portion of long-term debt
|
5
|
42,003
|
37,971
|
|||||||||
Current portion of due to related party
|
6
|
49,280
|
9,280
|
|||||||||
Current portion of lease liability
|
4
|
50,918
|
14,617
|
|||||||||
Sales taxes payable
|
14,539
|
34,225
|
||||||||||
$
|
774,382
|
$
|
1,063,823
|
|||||||||
Long-term debt
|
5
|
56,410
|
27,445
|
|||||||||
Due to related party
|
6
|
500,000
|
500,000
|
|||||||||
Lease liability
|
4
|
297,570
|
-
|
|||||||||
Payments received in advance
|
4,555
|
9,510
|
||||||||||
Deferred tax liability
|
3,184
|
3,184
|
||||||||||
Total Liabilities
|
$
|
1,636,101
|
$
|
1,603,962
|
||||||||
Shareholders' Equity
|
||||||||||||
Share capital
|
7
|
$
|
670,000
|
$
|
670,000
|
|||||||
Retained earnings
|
(359,017
|
)
|
(333,312
|
)
|
||||||||
Restricted retained earnings
|
8
|
18,519
|
18,519
|
|||||||||
Total Equity
|
$
|
329,502
|
$
|
355,207
|
||||||||
Total Liabilities and Equity
|
$
|
1,965,603
|
$
|
1,959,169
|
||||||||
Subsequent Events
|
14
|
Director
|
Director
|
|||||||
|
||||||||||||||||||||
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||
Notes
|
2020
|
2019
|
2020
|
2019
|
||||||||||||||||
Operating revenue
|
||||||||||||||||||||
Sale of pharmaceutical products
|
9
|
$
|
868,765
|
$
|
1,049,285
|
$
|
1,819,657
|
$
|
2,118,928
|
|||||||||||
Conditional discounts
|
(74,945
|
)
|
(89,898
|
)
|
(179,394
|
)
|
(178,021
|
)
|
||||||||||||
Loyalty discounts
|
(274
|
)
|
(4,292
|
)
|
(1,348
|
)
|
(7,634
|
)
|
||||||||||||
Sales returns
|
(8,489
|
)
|
(50,000
|
)
|
(17,875
|
)
|
(80,635
|
)
|
||||||||||||
785,057
|
905,095
|
1,621,040
|
1,852,638
|
|||||||||||||||||
Cost of sales
|
3
|
431,745
|
552,773
|
932,332
|
1,105,575
|
|||||||||||||||
Gross profit
|
$
|
353,312
|
$
|
352,322
|
$
|
688,708
|
$
|
747,063
|
||||||||||||
Operating expenses
|
||||||||||||||||||||
Administrative expenses
|
10
|
$
|
152,966
|
$
|
114,042
|
$
|
280,051
|
$
|
206,788
|
|||||||||||
Sales expenses
|
11
|
125,515
|
226,187
|
343,925
|
394,859
|
|||||||||||||||
278,481
|
340,229
|
623,976
|
601,647
|
|||||||||||||||||
Operating profit (loss)
|
$
|
74,831
|
$
|
12,093
|
$
|
64,732
|
$
|
145,416
|
||||||||||||
Other income (expense)
|
||||||||||||||||||||
Other income
|
$
|
734
|
$
|
9,931
|
$
|
1,246
|
$
|
12,888
|
||||||||||||
Other expenses
|
(4,713
|
)
|
(38,417
|
)
|
(13,168
|
)
|
(49,819
|
)
|
||||||||||||
Interest expenses
|
(44,882
|
)
|
(19,663
|
)
|
(70,576
|
)
|
(42,426
|
)
|
||||||||||||
(48,861
|
)
|
(48,149
|
)
|
(82,498
|
)
|
(79,357
|
)
|
|||||||||||||
Income (loss) before taxes
|
$
|
25,970
|
$
|
(36,056
|
)
|
$
|
(17,766
|
)
|
$
|
66,059
|
||||||||||
Local tax expense
|
3,761
|
4,431
|
7,939
|
9,197
|
||||||||||||||||
Net income (loss) and comprehensive income (loss)
|
$
|
22,209
|
$
|
(40,487
|
)
|
$
|
(25,705
|
)
|
$
|
56,862
|
||||||||||
Weighted average number of outstanding shares, basic and
diluted
|
134
|
134
|
134
|
134
|
||||||||||||||||
Basic and diluted earnings (loss) per share
|
$
|
165.74
|
$
|
(302.14
|
)
|
$
|
(191.83
|
)
|
$
|
424.34
|
||||||||||
|
|
Notes |
Number of Shares
|
Share
Capital
|
Retained Earnings
|
Reserves
|
Total
|
|||||||||||||||
Balance at December 31, 2018
|
134
|
$
|
670,000
|
$
|
(162,300
|
)
|
$
|
18,519
|
$
|
526,219
|
|||||||||||
Net income and comprehensive income for the period
|
-
|
-
|
56,862
|
-
|
56,862
|
||||||||||||||||
Balance at June 30, 2019
|
134
|
$
|
670,000
|
$
|
(105,438
|
)
|
$
|
18,519
|
$
|
583,081
|
|||||||||||
Balance at December 31, 2019
|
134
|
$
|
670,000
|
$
|
(333,312
|
)
|
$
|
18,519
|
$
|
355,207
|
|||||||||||
Net loss and comprehensive loss for the period
|
-
|
-
|
(25,705
|
)
|
-
|
(25,705
|
)
|
||||||||||||||
Balance at June 30, 2020
|
134
|
$
|
670,000
|
$
|
(359,017
|
)
|
$
|
18,519
|
$
|
329,502
|
|||||||||||
|
Notes |
2020
|
2019
|
||||||
Operating Activities
|
|||||||||
Net income (loss) for the period
|
$
|
(25,705
|
)
|
$
|
56,862
|
||||
Items not affecting cash:
|
|||||||||
Depreciation on property, plant and equipment
|
762
|
3,389
|
|||||||
Depreciation on right-of-use assets
|
40,200
|
41,036
|
|||||||
Lease interest expense differential
|
26,071
|
5,413
|
|||||||
41,328
|
106,700
|
||||||||
Net changes in non-cash working capital
|
|||||||||
Trade and other accounts receivables
|
116,804
|
116,666
|
|||||||
Inventories
|
251,804
|
(32,955
|
)
|
||||||
Prepaids
|
(43,234
|
)
|
20,158
|
||||||
Income taxes recoverable
|
(32,746
|
)
|
(33,234
|
)
|
|||||
Trade and other accounts payable
|
(350,088
|
)
|
(69,074
|
)
|
|||||
Payments received in advance
|
(4,955
|
)
|
(8,921
|
)
|
|||||
Sales taxes payable
|
(19,686
|
)
|
3,890
|
||||||
Cash Flows Used in Operating Activities
|
(40,773
|
)
|
103,230
|
||||||
Investing Activities
|
|||||||||
Acquisition of property, plant and equipment
|
(600
|
)
|
(9,608
|
)
|
|||||
Cash Flows Provided by (Used In) Investing Activities
|
(600
|
)
|
(9,608
|
)
|
|||||
Financing Activities
|
|||||||||
Proceeds from long-term debt and related party loans
|
82,000
|
-
|
|||||||
Payment of long-term debt and related party loans
|
(9,003
|
)
|
(70,000
|
)
|
|||||
Principal paid on lease liabilities
|
(30,792
|
)
|
(39,177
|
)
|
|||||
Interest paid on lease liabilities
|
(26,071
|
)
|
(5,413
|
)
|
|||||
Cash Flows Provided By Financing Activities
|
16,134
|
(114,590
|
)
|
||||||
Net Increase in Cash During the Period
|
(25,239
|
)
|
(20,968
|
)
|
|||||
Cash, Beginning of Period
|
143,081
|
54,459
|
|||||||
Cash, End of Period
|
$
|
117,842
|
$
|
33,491
|
|||||
1.
|
Basis of presentation
|
(a)
|
Statement of compliance
|
(b)
|
Basis of measurement
|
(c)
|
Functional and presentation currency
|
(d)
|
Basis of consolidation
|
1.
|
Basis of presentation
|
(e)
|
Estimates and critical judgements made by management
|
(f)
|
Novel Coronavirus (“COVID-19”)
|
2.
|
Adoption of new accounting pronouncements
|
3.
|
Inventories
|
As at
June 30,
2020
|
As at December 31, 2019
|
|||||||
Raw materials
|
$
|
648,923
|
$
|
701,176
|
||||
Finished goods - Food products
|
123,536
|
86,281
|
||||||
Finished goods - Medications
|
125,514
|
321,362
|
||||||
Finished goods - Cosmetics
|
39,971
|
80,929
|
||||||
$
|
937,944
|
$
|
1,189,748
|
4.
|
Leases
|
(a)
|
Right-of-Use Assets
|
Balance at January 1, 2019
|
$
|
85,583
|
||
Additions
|
14,527
|
|||
Depreciation Expense
|
(86,431
|
)
|
||
Balance at December 31, 2019
|
$
|
13,679
|
||
Additions
|
364,663
|
|||
Depreciation Expense
|
(40,200
|
)
|
||
Balance at June 30, 2020
|
$
|
338,142
|
(b)
|
Lease Obligation
|
Balance at January 1, 2020
|
$
|
85,583
|
||
Additions
|
14,527
|
|||
Interest expense
|
8,329
|
|||
Lease payments
|
(93,822
|
)
|
||
Balance at December 31, 2019
|
$
|
14,617
|
||
Additions
|
364,633
|
|||
Interest expense
|
26,071
|
|||
Lease payments
|
(56,863
|
)
|
||
Balance at June 30, 2020
|
$
|
348,488
|
||
Current portion
|
(50,918
|
)
|
||
Long-term portion
|
$
|
297,570
|
5.
|
Long-term debt
|
As at
June 30,
2020
|
As at December 31, 2019
|
|||||||
(a) Loan from Banco de Bogota – bearing interest at 1.14 % per month, 36-month term, maturing in August of 2020
|
$
|
20,638
|
$
|
20,638
|
||||
(b) Loan from Bancolombia – bearing interest at 1.04% per month, 36-month term, maturing in July of 2022
|
36,111
|
44,778
|
||||||
(c) Loan from Banco de Bogota – bearing interest at 1.07% per month, 36-month term, maturing in June of 2023
|
41,664
|
-
|
||||||
98,413
|
65,416
|
|||||||
Less: current portion
|
42,003
|
37,971
|
||||||
Long-term potion
|
$
|
56,410
|
$
|
27,445
|
(a)
|
On August 28, 2017, the Company entered into a 36-month loan agreement with Banco de Bogota for an amount of $600,000 to finance payments to suppliers.
|
(b)
|
On July 10, 2019, the Company entered into a 36-month loan agreement with Bancolombia for an amount of $52,000 to finance payments to suppliers.
|
(c)
|
On June 30, 2020, the Company entered into a 36-month loan agreement with Banco de Bogota for an amount of $42,000 to finance payments to suppliers.
|
6.
|
Related party transactions
|
(a)
|
Transactions with directors, officers and companies controlled by directors, officers and/or their families
|
(i)
|
On November 8, 2018, the Company took out a loan from Inversiones Montearroyo Asociados SAS, a shareholder, for an amount of $500,000 to finance payments to suppliers and to
pay down loan with Banco de Bogota. The loan is 36-months with monthly interest rate of 1.16% and is interest-only payments with full principal due upon maturity.
|
6.
|
Related party transactions (continued)
|
(ii)
|
On October 31, 2018, the Company begin leasing office equipment from Inversiones Montearroyo Asociados SAS, a shareholder, for a monthly amount of $1,000. The lease is
month-to-month and ended during April 2020. This amount is included under Administrative expenses.
|
(b)
|
Key management compensation
|
For the three months
ended
|
For the six months
ended
|
|||||||||||||||
June 30, 2020
|
June 30, 2019
|
June 30, 2020
|
June 30, 2019
|
|||||||||||||
Salary and short-term benefits
|
$
|
31,989
|
$
|
27,005
|
$
|
63,495
|
$
|
46,979
|
7.
|
Share Capital
|
(a)
|
Authorized share capital
|
(b)
|
Issued and outstanding
|
As at
June 30,
2020
|
As at December 31, 2019
|
|||||||
134 common shares
|
$
|
670,000
|
$
|
670,000
|
8.
|
Restricted retained earnings
|
9.
|
Revenues
|
For the three months
ended
|
For the six months
ended
|
|||||||||||||||
June 30, 2020
|
June 30, 2019
|
June 30, 2020
|
June 30, 2019
|
|||||||||||||
Food products
|
$
|
368,591
|
$
|
188,941
|
$
|
622,746
|
$
|
391,282
|
||||||||
Medications
|
431,867
|
744,306
|
1,027,949
|
1,475,611
|
||||||||||||
Cosmetics
|
68,307
|
116,038
|
168,962
|
252,035
|
||||||||||||
$
|
868,765
|
$
|
1,049,285
|
$
|
1,819,657
|
$
|
2,118,928
|
10.
|
Administrative expenses
|
For the three months
ended
|
For the six months
ended
|
|||||||||||||||
June 30, 2020
|
June 30, 2019
|
June 30, 2020
|
June 30, 2019
|
|||||||||||||
Personnel
|
$
|
95,902
|
$
|
46,678
|
$
|
204,376
|
$
|
92,008
|
||||||||
Professional fees
|
21,944
|
19,926
|
34,557
|
32,509
|
||||||||||||
General office
|
14,443
|
40,163
|
10,743
|
72,802
|
||||||||||||
Travel, meals and entertainment
|
255
|
577
|
1,639
|
1,722
|
||||||||||||
Depreciation
|
20,422
|
6,698
|
28,736
|
7,747
|
||||||||||||
$
|
152,966
|
$
|
114,042
|
$
|
280,051
|
$
|
206,788
|
11.
|
Sales expenses
|
For the three months
ended
|
For the six months
ended
|
|||||||||||||||
June 30, 2020
|
June 30, 2019
|
June 30, 2020
|
June 30, 2019
|
|||||||||||||
Personnel
|
$
|
96,498
|
$
|
137,644
|
$
|
209,960
|
$
|
253,682
|
||||||||
Professional fees
|
9,000
|
5,400
|
16,400
|
11,951
|
||||||||||||
Advertising
|
283
|
20,397
|
1,190
|
25,436
|
||||||||||||
General office
|
16,701
|
33,293
|
96,560
|
42,144
|
||||||||||||
Travel, meals and entertainment
|
3,033
|
11,114
|
7,589
|
24,968
|
||||||||||||
Depreciation
|
-
|
18,339
|
12,226
|
36,678
|
||||||||||||
$
|
125,515
|
$
|
226,187
|
$
|
343,925
|
$
|
394,859
|
12.
|
Financial Instruments
|
(a)
|
Credit risk
|
As at June 30, 2020
|
As at December 31, 2019
|
|||||||
Trade accounts receivable from customers
|
$
|
543,635
|
$
|
650,457
|
||||
Expected credit losses
|
(101,236
|
)
|
(88,928
|
)
|
||||
Net trade receivables
|
442,399
|
561,529
|
||||||
Other accounts receivable
|
3,683
|
1,357
|
||||||
|
$
|
446,082
|
$
|
562,886
|
June 30, 2020
|
Expected loss rate
|
Gross carrying amount
|
Loss provision
|
|||||||||
Current
|
1
|
%
|
$
|
270,204
|
$
|
2,702
|
||||||
0-90 days past-due
|
4
|
%
|
172,613
|
8,631
|
||||||||
91-180 days past-due
|
50
|
%
|
5,916
|
2,958
|
||||||||
181-360 days past-due
|
80
|
%
|
27,547
|
22,038
|
||||||||
361-720 days past-due
|
90
|
%
|
24,480
|
22,032
|
||||||||
Greater than 720 days past-due
|
100
|
%
|
42,875
|
42,875
|
||||||||
$
|
543,635
|
$
|
101,236
|
December 31, 2019
|
Expected loss rate
|
Gross carrying amount
|
Loss provision
|
|||||||||
Current
|
1
|
%
|
$
|
389,633
|
$
|
3,886
|
||||||
0-90 days past-due
|
4
|
%
|
167,135
|
8,422
|
||||||||
91-180 days past-due
|
50
|
%
|
22,747
|
11,375
|
||||||||
181-360 days past-due
|
80
|
%
|
8,860
|
7,086
|
||||||||
361-720 days past-due
|
90
|
%
|
39,227
|
35,304
|
||||||||
Greater than 720 days past-due
|
100
|
%
|
22,855
|
22,855
|
||||||||
$
|
650,457
|
$
|
88,928
|
Loss allowance
|
||||
Balance at January 1, 2019
|
$
|
62,927
|
||
Change in loss allowance
|
26,001
|
|||
Balance at December 31, 2019
|
88,928
|
|||
Change in loss allowance
|
12,308
|
|||
Balance at June 30, 2020
|
$
|
101,236
|
12.
|
Financial Instruments (continued)
|
(b)
|
Liquidity risk
|
<1 year
|
1-3 years
|
> 3 years
|
||||||||||
Trade and other accounts payables
|
$
|
617,642
|
$
|
-
|
$
|
-
|
||||||
Long-term debt
|
42,003
|
56,410
|
-
|
|||||||||
Due to related party
|
49,280
|
500,000
|
-
|
|||||||||
$
|
708,925
|
$
|
556,410
|
$
|
-
|
(c)
|
Market risk
|
(i)
|
Foreign currency risk
|
(ii)
|
Interest rate risk
|
13.
|
Capital Management
|
14.
|
Subsequent events
|
Kasa Wholefoods Company S.A.S.
|
||||||
Financial Statements
|
||||||
Years Ended December 31, 2019 and 2018
|
||||||
(Stated in Colombian Pesos)
|
||||||
Page
|
||||||
Independent Auditor's Report
|
F-150
|
|||||
Statements of Financial Position
|
F-151
|
|||||
Statements of Operations and Comprehensive Income
|
F-152
|
|||||
Statements of Changes in Equity
|
F-153
|
|||||
Statements of Cash Flows
|
F-154
|
|||||
Notes to Financial Statements
|
F-155
|
|
|
|
|
|
|
Notes
|
2019
|
2018
|
||||||||||
Assets
|
||||||||||||
Current
|
||||||||||||
Cash
|
12
|
$
|
274,674,966
|
$
|
20,107,005
|
|||||||
Trade and other receivables
|
12
|
128,906,808
|
114,513,881
|
|||||||||
Inventories
|
4
|
126,711,015
|
224,377,127
|
|||||||||
Prepaid expenses
|
12,333,307
|
102,869,654
|
||||||||||
$
|
542,626,096
|
$
|
461,867,667
|
|||||||||
Property plant and equipment
|
6
|
9,416,650
|
20,716,654
|
|||||||||
Intangible Assets
|
5
|
1,700,004
|
2,550,000
|
|||||||||
Total Assets
|
$
|
553,742,750
|
$
|
485,134,321
|
||||||||
Liabilities
|
||||||||||||
Current
|
||||||||||||
Current portion of long-term debt
|
7, 12
|
$
|
223,553,471
|
$
|
128,135,923
|
|||||||
Trade and other payables
|
8, 11, 12
|
520,574,492
|
211,820,202
|
|||||||||
Income tax payable
|
10
|
56,246,880
|
88,515,984
|
|||||||||
$
|
800,374,843
|
$
|
428,472,109
|
|||||||||
Long-term debt
|
7, 12
|
180,431,900
|
72,554,848
|
|||||||||
Due to partners and shareholders
|
11, 12
|
-
|
22,369,762
|
|||||||||
Other accounts payable
|
8, 12
|
353,434,938
|
13,167,262
|
|||||||||
Total Liabilities
|
$
|
1,334,241,681
|
$
|
536,563,981
|
||||||||
Shareholders' Deficiency
|
||||||||||||
Share capital
|
9
|
200,000,000
|
200,000,000
|
|||||||||
Deficit
|
(980,498,931
|
)
|
(251,429,660
|
)
|
||||||||
Total Shareholder's Deficiency
|
$
|
(780,498,931
|
)
|
$
|
(51,429,660
|
)
|
||||||
Total Liabilities and Shareholders' Deficiency
|
$
|
553,742,750
|
$
|
485,134,321
|
||||||||
Subsequent Events
|
17
|
|||||||||||
Notes
|
2019
|
2018
|
||||||||||
Operating revenue
|
||||||||||||
Income from ordinary activities
|
14
|
$
|
1,337,561,832
|
$
|
842,468,532
|
|||||||
Cost of sales
|
(847,520,243
|
)
|
(343,132,138
|
)
|
||||||||
Gross profit
|
490,041,589
|
499,336,394
|
||||||||||
Administrative expenses
|
15
|
(383,791,502
|
)
|
(110,236,575
|
)
|
|||||||
Sales operating expenses
|
15
|
(650,820,729
|
)
|
(213,333,038
|
)
|
|||||||
Total operating expenses
|
(1,034,612,231
|
)
|
(323,569,613
|
)
|
||||||||
Operating profit (loss)
|
(544,570,642
|
)
|
175,766,781
|
|||||||||
Other income
|
14
|
22,804,740
|
989,495
|
|||||||||
Other expenses
|
15
|
(56,386,032
|
)
|
(9,674,218
|
)
|
|||||||
Interest expense
|
(68,413,111
|
)
|
(40,771,695
|
)
|
||||||||
Provision for credit losses
|
12
|
(81,760,406
|
)
|
(2,428,863
|
)
|
|||||||
Total other income (expenses)
|
(183,754,809
|
)
|
(51,885,281
|
)
|
||||||||
Income (loss) before tax
|
(728,325,451
|
)
|
123,881,500
|
|||||||||
Income tax provision
|
10
|
743,820
|
48,731,218
|
|||||||||
Net income (loss) and comprehensive income (loss)
|
$
|
(729,069,271
|
)
|
$
|
75,150,282
|
|||||||
Weighted average number of outstanding shares, basic and diluted
|
9
|
20,000
|
8,887
|
|||||||||
Basic and diluted earnings (loss) per share
|
9
|
$
|
(36,453.46
|
)
|
$
|
8,456.20
|
||||||
|
Notes
|
Share capital
|
Retained earnings (deficit)
|
Total equity
|
|||||||||||||
Balance at December 31, 2018
|
$
|
200,000,000
|
$
|
(251,429,660
|
)
|
$
|
(51,429,660
|
)
|
||||||||
Net loss
|
-
|
(729,069,271
|
)
|
(729,069,271
|
)
|
|||||||||||
Shares issuances
|
9
|
-
|
-
|
-
|
||||||||||||
Balance at December 31, 2019
|
$
|
200,000,000
|
$
|
(980,498,931
|
)
|
$
|
(780,498,931
|
)
|
||||||||
Notes
|
Share capital
|
Retained earnings (deficit)
|
Total equity
|
|||||||||||||
Balance at December 31, 2017
|
$
|
85,090,000
|
$
|
(326,579,942
|
)
|
$
|
(241,489,942
|
)
|
||||||||
Net income
|
-
|
75,150,282
|
75,150,282
|
|||||||||||||
Shares issuances
|
9
|
114,910,000
|
-
|
114,910,000
|
||||||||||||
Balance at December 31, 2018
|
$
|
200,000,000
|
$
|
(251,429,660
|
)
|
$
|
(51,429,660
|
)
|
||||||||
2019
|
2018
|
|||||||
Operating Activities
|
||||||||
Net income (loss)
|
$
|
(729,069,271
|
)
|
$
|
75,150,282
|
|||
Items not affecting cash:
|
||||||||
Amortization
|
849,996
|
-
|
||||||
Depreciation
|
11,300,004
|
11,300,004
|
||||||
Net changes in non-cash working capital:
|
||||||||
Trade and other receivables (net)
|
(14,392,927
|
)
|
(45,291,881
|
)
|
||||
Inventories
|
97,666,112
|
(193,295,495
|
)
|
|||||
Prepaid Expenses
|
90,536,347
|
(102,869,654
|
)
|
|||||
Trade and other payables
|
295,587,028
|
13,494,184
|
||||||
Income tax payable
|
(32,269,104
|
)
|
42,233,340
|
|||||
Due to partner and shareholders
|
(22,369,762
|
)
|
22,369,762
|
|||||
Other accounts payable
|
353,434,938
|
13,167,262
|
||||||
Cash Flows Provided By (Used in) Operating Activities
|
$
|
51,273,361
|
$
|
(163,742,196
|
)
|
|||
Investing Activities
|
||||||||
Acquisition of intangible assets
|
-
|
(2,550,000
|
)
|
|||||
Cash Flows Used In Investing Activities
|
$
|
-
|
$
|
(2,550,000
|
)
|
|||
Financing Activities
|
||||||||
Proceeds from share issuances
|
114,910,000
|
|||||||
Repayment of long-term debt
|
(196,705,401
|
)
|
(145,520,444
|
)
|
||||
Proceeds from long-term debt
|
400,000,000
|
181,167,000
|
||||||
Cash Flows Provided By Financing Activities
|
$
|
203,294,599
|
$
|
150,556,556
|
||||
Net Increase in Cash During the Period
|
254,567,960
|
(15,735,640
|
)
|
|||||
Cash, Beginning of Period
|
20,107,005
|
35,842,644
|
||||||
Cash, End of Period
|
$
|
274,674,966
|
$
|
20,107,005
|
||||
Supplemental cash flow information
|
||||||||
Taxes paid
|
$
|
-
|
$
|
8,174,000
|
||||
Interest paid
|
$
|
-
|
$
|
325,000
|
||||
|
(a) |
IFRS 16 Leases
|
|
(i) |
The Company applied the modified retrospective approach and did not restate comparative information. As a result, any adjustment on initial application is recognized in accumulated deficit as at January 1, 2019.
|
|
(ii) |
On transition to IFRS 16, the Company elected to apply the practical expedient to grandfather the assessment of which transactions are leases. Contracts that were not identified as leases
under IAS 17, and IFRIC 4, Determining whether an arrangement contains a lease, were not reassessed for whether there is a lease. The Company applied the definition of a lease under IFRS 16 to contracts entered into or changed on or
after January 1, 2019.
|
As at
December 31, 2019
|
As at
December 31, 2018
|
|||||||
Raw materials
|
$
|
43,672,263
|
$
|
84,808,522
|
||||
Finished goods
|
83,038,752
|
139,568,605
|
||||||
$
|
126,711,015
|
$
|
224,377,127
|
Software license
|
||||
Cost
|
||||
At January 1, 2019
|
$
|
2,550,000
|
||
Additions
|
-
|
|||
Disposals
|
-
|
|||
At December 31, 2019
|
$
|
2,550,000
|
||
Accumulated Amortization
|
||||
At January 1, 2019
|
$
|
-
|
||
Amortization
|
850,000
|
|||
At December 31, 2019
|
||||
Net book value at
|
||||
December 31, 2018
|
$
|
2,550,000
|
||
Net book value at
|
||||
December 31, 2019
|
$
|
1,700,004
|
Vehicles
|
Computer Equipment
|
Total
|
||||||||||
Cost
|
||||||||||||
At January 1, 2019
|
$
|
56,500,000
|
$
|
1,400,000
|
$
|
57,900,000
|
||||||
Additions
|
-
|
-
|
-
|
|||||||||
Disposals
|
-
|
-
|
-
|
|||||||||
At December 31, 2019
|
$
|
56,500,000
|
$
|
1,400,000
|
$
|
57,900,000
|
||||||
Accumulated Depreciation
|
||||||||||||
At January 1, 2019
|
$
|
35,783,346
|
$
|
1,400,000
|
$
|
37,183,346
|
||||||
Depreciation
|
11,300,004
|
-
|
11,300,004
|
|||||||||
At December 31, 2019
|
$
|
47,083,350
|
$
|
1,400,000
|
$
|
48,483,350
|
||||||
Net book value at
|
||||||||||||
December 31, 2019
|
$
|
9,416,650
|
$
|
-
|
$
|
9,416,650
|
Vehicles
|
Computer Equipment
|
Total
|
||||||||||
Cost
|
||||||||||||
At January 1, 2018
|
$
|
56,500,000
|
$
|
1,400,000
|
$
|
57,900,000
|
||||||
Additions
|
-
|
-
|
-
|
|||||||||
Disposals
|
-
|
-
|
-
|
|||||||||
At December 31, 2018
|
$
|
56,500,000
|
$
|
1,400,000
|
$
|
57,900,000
|
||||||
Accumulated Depreciation
|
||||||||||||
At January 1, 2018
|
$
|
24,483,342
|
$
|
1,400,000
|
$
|
25,883,342
|
||||||
Depreciation
|
11,300,004
|
-
|
11,300,004
|
|||||||||
At December 31, 2018
|
$
|
35,783,346
|
$
|
1,400,000
|
$
|
37,183,346
|
||||||
Net book value at
|
||||||||||||
December 31, 2018
|
$
|
20,716,654
|
$
|
-
|
$
|
20,716,654
|
As at
|
As at
|
|||||||||||||||||||||
December 31, 2019
|
December 31, 2018
|
|||||||||||||||||||||
Credit cards
|
$
|
6,430,576
|
$
|
7,934,086
|
||||||||||||||||||
Financing Arrangement
|
10,817,724
|
18,874,171
|
||||||||||||||||||||
Bank loans
|
||||||||||||||||||||||
Principal
|
Interest rate
|
Issued
|
Maturity
|
|||||||||||||||||||
121,000,000
|
14.29
|
%
|
2017-06-07
|
2019-06-07
|
-
|
28,590,590
|
||||||||||||||||
20,000,000
|
27.33
|
%
|
2017-09-21
|
2019-09-21
|
-
|
3,393,203
|
||||||||||||||||
34,700,000
|
18.22
|
%
|
2018-02-19
|
2020-02-19
|
2,891,674
|
20,441,032
|
||||||||||||||||
26,467,000
|
23.48
|
%
|
2018-05-31
|
2020-05-31
|
5,016,744
|
20,313,235
|
||||||||||||||||
30,000,000
|
20.70
|
%
|
2019-08-30
|
2020-08-30
|
10,000,000
|
26,795,662
|
||||||||||||||||
20,000,000
|
22.38
|
%
|
2018-10-25
|
2020-10-25
|
8,333,338
|
18,488,877
|
||||||||||||||||
20,000,000
|
20.34
|
%
|
2018-12-14
|
2020-12-14
|
10,000,004
|
20,269,927
|
||||||||||||||||
50,000,000
|
18.16
|
%
|
2019-04-30
|
2021-04-30
|
33,333,336
|
-
|
||||||||||||||||
197,833,000
|
13.03
|
%
|
2019-05-30
|
2022-05-30
|
159,365,414
|
-
|
||||||||||||||||
102,167,000
|
13.03
|
%
|
2019-05-30
|
2022-05-30
|
82,301,196
|
-
|
||||||||||||||||
50,000,000
|
14.56
|
%
|
2019-12-04
|
2021-12-04
|
50,000,000
|
-
|
||||||||||||||||
50,000,000
|
22.80
|
%
|
2018-04-03
|
2021-04-03
|
25,495,365
|
35,589,988
|
||||||||||||||||
$
|
403,985,371
|
$
|
200,690,771
|
|||||||||||||||||||
Less: current portion
|
$
|
223,553,471
|
$
|
128,135,923
|
||||||||||||||||||
Long-term portion
|
$
|
180,431,900
|
$
|
72,554,848
|
|
At December 31, 2019
|
At December 31, 2018
|
||||||
Trade payables (1)
|
$
|
362,765,414
|
$
|
202,423,029
|
||||
Salaries & Bonus Payable (2)
|
129,529,089
|
1,624,923
|
||||||
Other Payables
|
28,279,989
|
7,772,250
|
||||||
|
$
|
520,574,492
|
$
|
211,820,202
|
As at
|
||||
Suppliers
|
December 31, 2019
|
|||
Union Commercial
|
$
|
77,823,189
|
||
Bon Vibrant
|
53,357,264
|
|||
Frutas Colombianas de Exportacion
|
36,923,787
|
|||
Hot Fill
|
31,394,781
|
|||
Distribuidora Cordoba
|
28,304,578
|
|||
Compañia Internacional Agrofrut
|
14,828,200
|
|||
Litografia Berna
|
8,141,851
|
|||
Central de Insumos
|
3,922,554
|
|||
Organic Evolution
|
1,444,047
|
|||
Estibas y Huacales de la Loma
|
624,750
|
|||
Cartonera Nacional
|
100,000
|
|||
Total suppliers payable
|
$
|
256,865,001
|
As at
|
As at
|
|||||||
Third Party
|
December 31, 2019
|
December 31, 2018
|
||||||
Mora Peñuela Jose Maria
|
$
|
6,918,476
|
$
|
13,167,262
|
||||
Sulliden Mining Capital Inc.
|
296,409,062
|
-
|
||||||
Vallita Petroleum
|
50,000,000
|
-
|
||||||
Viajes Zeppelin
|
107,400
|
-
|
||||||
Total other payables
|
$
|
353,434,938
|
$
|
13,167,262
|
|
Shares Outstanding (#)
|
Shares Outstanding ($)
|
At January 1, 2018
|
8,509
|
85,090,000
|
Shares issuances
|
11,491
|
114,910,000
|
At December 31, 2018
|
20,000
|
200,000,000
|
At December 31, 2019
|
20,000
|
200,000,000
|
2019
|
2018
|
|||||||
Net income before income taxes
|
$
|
-728,325,451
|
$
|
123,881,500
|
||||
Adjusting items
|
730,579,451
|
- 30,796,652
|
||||||
Taxable income
|
2,254,000
|
93,084,848
|
||||||
Income tax expense (33%)
|
$
|
743,820
|
$
|
30,718,000
|
|
2019
|
2018
|
||||||
Corporate tax
|
$
|
743,820
|
$
|
30,718,000
|
||||
Local tax
|
-
|
18,013,218
|
||||||
Total tax
|
$
|
743,820
|
$
|
48,731,218
|
As at
|
As at
|
|
December 31, 2019
|
December 31, 2018
|
|
Financial Assets
|
||
Cash
|
$ 274,674,966
|
$ 20,107,005
|
Trade and other receivables
|
128,906,808
|
114,513,881
|
|
$ 403,581,774
|
$ 134,620,886
|
Financial Liabilities
|
||
Trade and other payables
|
$ 520,574,492
|
$ 211,820,202
|
Current portion of long-term debt
|
223,553,471
|
128,135,923
|
Due to partners
|
-
|
22,369,762
|
Long-term debt
|
180,431,900
|
72,554,848
|
Other accounts payable
|
353,434,938
|
13,167,262
|
|
$ 1,277,994,801
|
$ 448,047,997
|
Trade receivables from customers
|
|
Opening balance
|
115,287,581
|
Origination
|
80,940,304
|
Derecognition
|
(29,420,913)
|
Write-offs
|
(82,295,854)
|
Ending balance
|
84,511,118
|
As at
December 31, 2019 |
As at
December 31, 2018 |
|
Trade receivables from customers
|
$ 84,511,118
|
$ 115,287,581
|
Expected credit loss
|
(1,893,415)
|
(2,428,863)
|
Net trade receivables
|
$ 82,617,703
|
$ 112,858,718
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
Opening balance
|
$ 697,756
|
$ 1,731,107
|
$ -
|
$ 2,428,863
|
Originations
|
164,927
|
1,747
|
64,979,887
|
65,146,561
|
Derecognitions
|
(16,758)
|
(897,146)
|
-
|
(913,904)
|
Remeasurement
|
(37,620)
|
1,124,449
|
16,440,920
|
17,527,750
|
Transfer to Stage 1
|
53,878
|
(53,878)
|
-
|
-
|
Transfer to Stage 2
|
(63,302)
|
63,302
|
-
|
-
|
Transfer to Stage 3
|
-
|
(1,697,575)
|
1,697,575
|
-
|
Provision
|
101,125
|
(1,459,101)
|
83,118,382
|
81,760,407
|
Write-offs
|
-
|
-
|
(82,295,854)
|
(82,295,854)
|
Recoveries
|
-
|
-
|
-
|
-
|
Closing balance
|
$ 798,881
|
$ 272,006
|
$ 822,528
|
$ 1,893,415
|
As at
December 31, 2019 |
As at
December 31, 2018 |
||
Current (30 days or less)
|
$ 81,205,888
|
$ 78,060,363
|
|
31-60 days
|
185,640
|
2,927,628
|
|
61-90 days
|
902,724
|
3,777,493
|
|
Greater than 90 days
|
|
2,216,866
|
30,522,097
|
|
|
$ 84,511,118
|
$ 115,287,581
|
|
<1 year
|
1-3 years
|
> 3 years
|
Total
|
Accounts payable and accrued liabilities
|
$ 520,574,492
|
$ -
|
$ -
|
$ 520,574,492
|
Long-term debt
|
223,553,471
|
180,431,900
|
-
|
403,985,371
|
Total
|
$ 744,127,963
|
$ 180,431,900
|
$ -
|
$ 924,559,863
|
Financial instruments measured at amortized cost
|
|
Cash; trade & other receivables; trade and other payables; other payables; due to partner and shareholders
|
Carrying amount (approximates fair value due to short-term nature)
|
Long-term debt
|
Carrying value at the effective interest rate which approximates fair value
|
2019
|
||
Customer
|
Revenue
|
Concentration of Revenue
|
Tostato
|
$ 1,154,425,480
|
86.31%
|
Colombian Mountain Coffee
|
33,938,457
|
2.54%
|
Sipote Burrito
|
30,603,150
|
2.29%
|
Cencosud
|
29,052,152
|
2.17%
|
Other
|
89,542,593
|
6.69%
|
Total
|
$ 1,337,561,832
|
100.00%
|
2018
|
||
Customer
|
Revenue
|
Concentration of Revenue
|
Tostato
|
$ 613,535,976
|
72.82%
|
Dyval
|
39,347,497
|
4.67%
|
Sipote Burrito
|
39,078,949
|
4.64%
|
Colombian Mountain Coffee
|
36,583,403
|
4.34%
|
Cencosud
|
13,840,262
|
1.64%
|
Other
|
100,082,445
|
11.89%
|
Total
|
$ 842,468,532
|
100.00%
|
|
As at
December 31, 2019 |
As at
December 31, 2018 |
Personnel expenses (1)
|
$ 243,982,673
|
$ 26,683,487
|
Professional fees
|
8,301,873
|
40,397,776
|
Legal expenses (2)
|
105,959,722
|
17,458,827
|
Services
|
7,679,369
|
823,372
|
Maintenance and repairs
|
652,113
|
2,866,871
|
Depreciation
|
11,300,004
|
11,300,004
|
Amortization
|
849,996
|
-
|
Other
|
5,065,752
|
10,706,238
|
Total administrative expenses
|
$ 383,791,502
|
$ 110,236,575
|
As at
|
|
|
December 31, 2019
|
Salaries
|
$ 208,040,831
|
Viaticos
|
323,961
|
Disabilities
|
195,557
|
Transportation
|
2,525,992
|
Layoffs
|
2,907,877
|
Interest on layoffs
|
280,596
|
Service bonus
|
2,758,415
|
Vacation
|
1,273,292
|
Training
|
240,000
|
Security
|
25,436,152
|
Total personnel expenses
|
$ 243,982,673
|
|
As at
December 31, 2019 |
As at
December 31, 2018 |
Personnel expenses
|
$ 48,822,011
|
$ 64,624,788
|
Professional fees
|
-
|
3,802,222
|
Marketing expense (1)
|
403,921,726
|
-
|
Insurance
|
3,115,560
|
4,323,946
|
Services
|
91,448,332
|
75,575,765
|
Maintenance and repairs
|
2,173,788
|
11,006,365
|
Other (2)
|
101,339,312
|
53,999,952
|
Total sales expenses
|
$ 650,820,729
|
$ 213,333,038
|
As at
|
|
|
December 31, 2019
|
Commissions
|
$ 36,918,319
|
Cleaning costs
|
1,772,152
|
Tools and stationery
|
1,324,240
|
Fuel
|
2,153,857
|
Transportation
|
1,080,400
|
Entertainment
|
66,732
|
Parking fees
|
125,904
|
Others (i)
|
57,897,708
|
Total other expenses
|
$ 101,339,312
|
As at
December 31, 2019 |
As at
December 31, 2018 |
|
Bank fees and expenses
|
$ 21,173,767
|
$ 8,859,763
|
Other
|
35,212,265
|
814,455
|
Total other expenses
|
$ 56,386,032
|
$ 9,674,218
|
Kasa Wholefoods Company S.A.S.
|
||||||
Interim Condensed Financial Statements
|
||||||
Six months ended June 30, 2020
|
||||||
(Stated in Colombian Pesos)
|
||||||
(Unaudited)
|
||||||
|
||||||
Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the interim unaudited condensed financial statements they must be accompanied by a notice indicating that the
interim unaudited condensed financial statements have not been reviewed by an auditor.
|
||||||
The accompanying interim unaudited condensed financial statements of the Company have been prepared by, and are the responsibility of, the Company’s management. The Company’s independent auditor has not performed a review
of these interim unaudited condensed d financial statements.
|
Notes
|
2020
|
2019
|
||||||||||
Assets
|
||||||||||||
Current
|
||||||||||||
Cash
|
11, 12
|
$
|
214,957,521
|
$
|
274,674,966
|
|||||||
Trade and other receivables
|
11, 12
|
104,585,197
|
128,906,808
|
|||||||||
Inventories
|
4
|
161,701,620
|
126,711,015
|
|||||||||
Prepaid expenses
|
22,629,023
|
12,333,307
|
||||||||||
$
|
503,873,361
|
$
|
542,626,096
|
|||||||||
Property plant and equipment
|
6
|
3,766,648
|
9,416,650
|
|||||||||
Intangible Assets
|
5
|
34,063,306
|
1,700,004
|
|||||||||
Total Assets
|
$
|
541,703,315
|
$
|
553,742,750
|
||||||||
Liabilities
|
||||||||||||
Current
|
||||||||||||
Current portion of long-term debt
|
7, 11, 12
|
181,877,882
|
223,553,471
|
|||||||||
Trade and other payables
|
8, 11, 12
|
599,766,570
|
520,574,492
|
|||||||||
Income tax payable
|
2,576,496
|
56,246,880
|
||||||||||
$
|
784,220,948
|
$
|
800,374,843
|
|||||||||
Long-term debt
|
7, 11, 12
|
190,162,031
|
180,431,900
|
|||||||||
Other accounts payable
|
8, 11, 12
|
839,329,885
|
353,434,938
|
|||||||||
Total Liabilities
|
$
|
1,813,712,864
|
$
|
1,334,241,681
|
||||||||
Shareholders' Deficiency
|
||||||||||||
Share capital
|
9
|
200,000,000
|
200,000,000
|
|||||||||
Deficit
|
(1,472,009,549
|
)
|
(980,498,931
|
)
|
||||||||
Total Shareholder's Deficiency
|
$
|
(1,272,009,549
|
)
|
$
|
(780,498,931
|
)
|
||||||
Total Liabilities and Shareholders' Deficiency
|
$
|
541,703,315
|
$
|
553,742,750
|
Director
|
Director
|
|||||||
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||
Notes
|
2020
|
2019
|
2020
|
2019
|
||||||||||||||||
Operating revenue
|
||||||||||||||||||||
Income from ordinary activities
|
13
|
$
|
36,506,243
|
$
|
288,276,728
|
$
|
316,170,548
|
$
|
609,963,999
|
|||||||||||
Cost of sales
|
4
|
(1,334,522
|
)
|
(220,331,982
|
)
|
(189,906,034
|
)
|
(365,978,399
|
)
|
|||||||||||
Gross profit
|
35,171,721
|
67,944,746
|
126,264,514
|
243,985,600
|
||||||||||||||||
Administrative expenses
|
14
|
(155,214,219
|
)
|
(80,851,781
|
)
|
(376,319,601
|
)
|
(123,957,632
|
)
|
|||||||||||
Sales operating expenses
|
14
|
(69,242,540
|
)
|
(76,573,949
|
)
|
(153,908,740
|
)
|
(146,960,531
|
)
|
|||||||||||
Total operating expenses
|
(224,456,759
|
)
|
(157,425,730
|
)
|
(530,228,341
|
)
|
(270,918,163
|
)
|
||||||||||||
Operating profit (loss)
|
(189,285,038
|
)
|
(89,480,984
|
)
|
(403,963,827
|
)
|
(26,932,563
|
)
|
||||||||||||
Other income
|
13
|
2,109,673
|
17,376,403
|
6,713,627
|
18,794,915
|
|||||||||||||||
Other expenses
|
14
|
(19,006,766
|
)
|
(23,678,060
|
)
|
(47,912,269
|
)
|
(32,890,811
|
)
|
|||||||||||
Interest expense
|
(15,041,920
|
)
|
(18,897,008
|
)
|
(45,637,722
|
)
|
(28,491,260
|
)
|
||||||||||||
Provision for credit losses
|
11
|
172,210
|
-
|
(710,426
|
)
|
-
|
||||||||||||||
Total other income (expenses)
|
(31,766,804
|
)
|
(25,198,664
|
)
|
(87,546,790
|
)
|
(42,587,156
|
)
|
||||||||||||
Income (loss) before tax
|
(221,051,842
|
)
|
(114,679,648
|
)
|
(491,510,617
|
)
|
(69,519,719
|
)
|
||||||||||||
Income tax provision
|
-
|
-
|
-
|
-
|
||||||||||||||||
Net income (loss) and comprehensive income (loss)
|
$
|
(221,051,842
|
)
|
$
|
(114,679,648
|
)
|
$
|
(491,510,617
|
)
|
$
|
(69,519,719
|
)
|
||||||||
Weighted average number of outstanding
shares, basic and diluted
|
20,000
|
20,000
|
20,000
|
20,000
|
||||||||||||||||
Basic and diluted earnings (loss) per share
|
$
|
(11,053
|
)
|
$
|
(5,734
|
)
|
$
|
(24,576
|
)
|
$
|
(3,476
|
)
|
Notes
|
Share capital
|
Retained earnings (deficit)
|
Total equity
|
|||||||||||||
Balance at December 31, 2019
|
$
|
200,000,000
|
$
|
(980,498,931
|
)
|
$
|
(780,498,931
|
)
|
||||||||
Net loss
|
-
|
(491,510,617
|
)
|
(491,510,617
|
)
|
|||||||||||
Shares issuances
|
9
|
-
|
-
|
-
|
||||||||||||
Balance at June 30, 2020
|
$
|
200,000,000
|
$
|
(1,472,009,549
|
)
|
$
|
(1,272,009,549
|
)
|
||||||||
Notes
|
Share capital
|
Retained earnings
|
Total equity
|
|||||||||||||
Balance at December 31, 2018
|
$
|
200,000,000
|
$
|
(251,429,660
|
)
|
$
|
(51,429,660
|
)
|
||||||||
Net loss
|
-
|
(69,519,719
|
)
|
(69,519,719
|
)
|
|||||||||||
Shares issuances
|
9
|
-
|
-
|
-
|
||||||||||||
Balance at June 30, 2019
|
$
|
200,000,000
|
$
|
(320,949,379
|
)
|
$
|
(120,949,379
|
)
|
2020
|
2019
|
|||||||
Operating Activities
|
||||||||
Net loss
|
$
|
(491,510,617
|
)
|
$
|
(69,519,719
|
)
|
||
Items not affecting cash:
|
||||||||
Amortization
|
424,998
|
424,998
|
||||||
Depreciation
|
5,650,002
|
5,650,002
|
||||||
Net changes in non-cash working capital:
|
||||||||
Trade and other receivables
|
24,321,610
|
52,899,160
|
||||||
Inventories
|
(34,990,605
|
)
|
(151,014,246
|
)
|
||||
Prepaid Expenses
|
(10,295,716
|
)
|
27,961,457
|
|||||
Trade and other payables
|
79,192,078
|
33,165,031
|
||||||
Income tax payable
|
(53,670,384
|
)
|
(84,522,303
|
)
|
||||
Due to partner and shareholders
|
-
|
(4,720,823
|
)
|
|||||
Other accounts payable
|
485,894,947
|
13,124,888
|
||||||
Cash Flows Used in Operating Activities
|
$
|
5,016,313
|
$
|
(176,551,555
|
)
|
|||
Investing Activities
|
||||||||
Acquisition of property, plant and equipment
|
-
|
-
|
||||||
Acquisition of intangible assets
|
(32,788,300
|
)
|
-
|
|||||
Cash Flows Provided by (Used In) Investing Activities
|
$
|
(32,788,300
|
)
|
$
|
-
|
|||
Financing Activities
|
||||||||
Repayment of long-term debt
|
(117,945,459
|
)
|
(81,558,760
|
)
|
||||
Proceeds from long-term debt
|
86,000,000
|
350,000,000
|
||||||
Cash Flows Provided By Financing Activities
|
$
|
(31,945,459
|
)
|
$
|
268,441,240
|
|||
Net Increase in Cash During the Period
|
(59,717,446
|
)
|
91,889,685
|
|||||
Cash, Beginning of Period
|
274,674,966
|
20,107,005
|
||||||
Cash, End of Period
|
$
|
214,957,521
|
$
|
111,996,690
|
||||
Supplemental cash flow information
|
|
|
|
|
|
|
||
Taxes paid
|
$
|
-
|
$
|
-
|
||||
Interest paid
|
$
|
- |
$
|
- |
(a)
|
Statement of compliance
|
(b)
|
Basis of measurement
|
(c)
|
Functional and presentation currency
|
(d)
|
Estimates and critical judgements made by management
|
(e)
|
COVID-19
|
2.
|
Adoption of New or Amended Accounting Pronouncements
|
3.
|
Going Concern
|
4.
|
Inventories
|
|
As at
June 30,
2020
|
As at
December 31, 2019 |
||||||
Raw materials
|
$
|
84,526,575
|
$
|
43,672,262
|
||||
Finished goods
|
77,175,045
|
83,038,752
|
||||||
|
$
|
161,701,620
|
$
|
126,711,015
|
5.
|
Intangible Assets
|
|
Software license
|
|||
Cost
|
||||
At January 1, 2020
|
$
|
2,550,000
|
||
Additions
|
32,788,300
|
|||
Disposals
|
-
|
|||
At June 30, 2020
|
$
|
35,338,300
|
||
Accumulated Amortization
|
||||
At January 1, 2020
|
$
|
849,996
|
||
Amortization
|
424,998
|
|||
At June 30, 2020
|
$
|
1,274,994
|
||
Net book value at
|
||||
December 31, 2019
|
$
|
1,700,004
|
||
Net book value at
|
||||
June 30, 2020
|
$
|
34,063,306
|
6.
|
Property, Plant and Equipment
|
Vehicles
|
Computer Equipment
|
Total
|
||||||||||
Cost
|
||||||||||||
At January 1, 2020
|
$
|
56,500,000
|
$
|
1,400,000
|
$
|
57,900,000
|
||||||
Additions
|
-
|
-
|
-
|
|||||||||
Disposals
|
-
|
-
|
-
|
|||||||||
At June 30, 2020
|
$
|
56,500,000
|
$
|
1,400,000
|
$
|
57,900,000
|
||||||
Accumulated Depreciation
|
||||||||||||
At January 1, 2020
|
$
|
47,083,350
|
$
|
1,400,000
|
$
|
48,483,350
|
||||||
Depreciation
|
5,650,002
|
-
|
5,650,002
|
|||||||||
At June 30, 2020
|
$
|
52,733,352
|
$
|
1,400,000
|
$
|
54,133,352
|
||||||
Net book value at
|
||||||||||||
June 30, 2020
|
$
|
3,766,648
|
$
|
-
|
$
|
3,766,648
|
Vehicles
|
Computer Equipment
|
Total
|
||||||||||
Cost
|
||||||||||||
At January 1, 2019
|
$
|
56,500,000
|
$
|
1,400,000
|
$
|
57,900,000
|
||||||
Additions
|
-
|
-
|
-
|
|||||||||
Disposals
|
-
|
-
|
-
|
|||||||||
At December 31, 2019
|
$
|
56,500,000
|
$
|
1,400,000
|
$
|
57,900,000
|
||||||
Accumulated Depreciation
|
||||||||||||
At January 1, 2019
|
$
|
35,783,346
|
$
|
1,400,000
|
$
|
37,183,346
|
||||||
Depreciation
|
11,300,004
|
-
|
11,300,004
|
|||||||||
At December 31, 2019
|
$
|
47,083,350
|
$
|
1,400,000
|
$
|
48,483,350
|
||||||
Net book value at
|
||||||||||||
December 31, 2019
|
$
|
9,416,650
|
$
|
-
|
$
|
9,416,650
|
7.
|
Long-term Debt
|
As at
|
As at
|
|||||||||||||||||||||
June 30, 2020
|
December 31, 2019
|
|||||||||||||||||||||
Credit cards
|
$
|
5,100,069
|
$
|
6,430,576
|
||||||||||||||||||
Financing Arrangement
|
6,511,247
|
10,817,724
|
||||||||||||||||||||
Bank loans
|
||||||||||||||||||||||
Principal
|
Interest rate
|
Issued
|
Maturity
|
|||||||||||||||||||
34,700,000
|
18.22
|
%
|
2018-02-19
|
2019-02-19
|
-
|
2,891,674
|
||||||||||||||||
26,467,000
|
23.48
|
%
|
2018-05-31
|
2020-05-31
|
-
|
5,016,744
|
||||||||||||||||
30,000,000
|
20.70
|
%
|
2019-08-30
|
2020-08-30
|
-
|
10,000,000
|
||||||||||||||||
20,000,000
|
22.38
|
%
|
2018-10-25
|
2020-10-25
|
-
|
8,333,338
|
||||||||||||||||
20,000,000
|
20.34
|
%
|
2018-12-14
|
2020-12-14
|
-
|
10,000,004
|
||||||||||||||||
50,000,000
|
18.16
|
%
|
2019-04-30
|
2021-04-30
|
-
|
33,333,336
|
||||||||||||||||
197,833,000
|
13.03
|
%
|
2019-05-30
|
2022-08-30
|
142,879,331
|
159,365,414
|
||||||||||||||||
102,167,000
|
13.03
|
%
|
2019-05-30
|
2022-08-30
|
73,787,280
|
82,301,196
|
||||||||||||||||
50,000,000
|
14.56
|
%
|
2019-12-04
|
2022-03-04
|
43,750,001
|
50,000,000
|
||||||||||||||||
50,000,000
|
22.80
|
%
|
2018-03-28
|
2021-06-28
|
15,511,985
|
25,495,365
|
||||||||||||||||
36,000,000
|
16.19
|
%
|
2020-02-27
|
2022-05-27
|
34,500,000
|
-
|
||||||||||||||||
50,000,000
|
14.49
|
%
|
2020-05-27
|
2022-08-27
|
50,000,000
|
-
|
||||||||||||||||
$
|
372,039,913
|
$
|
403,985,371
|
|||||||||||||||||||
Less: current portion
|
$
|
181,877,882
|
$
|
223,553,471
|
||||||||||||||||||
Long-term portion
|
$
|
190,162,031
|
$
|
180,431,900
|
8.
|
Trade Payables and Other Liabilities
|
(a)
|
Trade and other payables
|
As at
June 30,
2020
|
As at
December 31, 2019 |
|||||||
Trade payable
|
$
|
368,559,105
|
$
|
362,765,414
|
||||
Salaries & Bonus Payable
|
171,392,239
|
129,529,089
|
||||||
Other current payables
|
59,815,226
|
28,279,989
|
||||||
|
$
|
599,766,570
|
$
|
520,574,492
|
(b)
|
Other payables
|
9.
|
Share Capital
|
(a)
|
Authorized share capital
|
(b)
|
Issued share capital
|
|
Shares Outstanding (#)
|
Shares Outstanding ($)
|
||||||
At December 31, 2019
|
20,000
|
200,000,000
|
||||||
At June 30, 2020
|
20,000
|
200,000,000
|
||||||
(c)
|
Earnings per share
|
10.
|
Related Party Transactions and Balances
|
11.
|
Financial Instruments
|
As at
|
As at
|
|||||||
|
June 30,
2020
|
December 31, 2019
|
||||||
Financial Assets
|
||||||||
Cash
|
$
|
214,957,521
|
$
|
274,674,966
|
||||
Trade and other receivables
|
104,585,197
|
128,906,808
|
||||||
|
$
|
319,542,718
|
$
|
403,581,774
|
||||
Financial Liabilities
|
||||||||
Trade and other payables
|
$
|
599,766,570
|
$
|
520,574,492
|
||||
Long-term debt
|
372,039,913
|
403,985,371
|
||||||
Other payables
|
839,329,885
|
353,434,938
|
||||||
|
$
|
1,881,136,368
|
$
|
1,277,994,801
|
(a)
|
Credit risk
|
Trade Receivables
|
||||
Opening balance
|
$
|
84,511,118
|
||
Origination
|
54,045,021
|
|||
Derecognition
|
(80,725,508
|
)
|
||
Ending balance
|
$
|
57,830,631
|
As at
June 30, 2020
|
As at
December 31, 2019
|
|||||||
Trade receivables from customers
|
$
|
57,830,631
|
$
|
84,511,118
|
||||
Expected credit loss
|
(2,603,840
|
)
|
(1,893,415
|
)
|
||||
Net trade receivables
|
$
|
55,226,791
|
$
|
82,617,703
|
Expected Credit Loss
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
||||||||||||
Opening balance
|
$
|
798,881
|
$
|
272,006
|
$
|
822,528
|
$
|
1,893,415
|
||||||||
Originations
|
241,606
|
23,855
|
-
|
265,461
|
||||||||||||
Derecognitions
|
(436,821
|
)
|
(62,078
|
)
|
-
|
(498,899
|
)
|
|||||||||
Remeasurement
|
14,718.51
|
46,510.31
|
-
|
61,229
|
||||||||||||
Transfer to Stage 1
|
(47,134
|
)
|
47,133.77
|
-
|
-
|
|||||||||||
Transfer to Stage 2
|
-
|
-
|
-
|
-
|
||||||||||||
Transfer to Stage 3
|
-
|
-
|
-
|
-
|
||||||||||||
Provision
|
(227,630
|
)
|
55,421
|
-
|
(172,210
|
)
|
||||||||||
Write-offs
|
-
|
-
|
-
|
-
|
||||||||||||
Recoveries
|
-
|
-
|
-
|
-
|
||||||||||||
Closing balance
|
$
|
571,250
|
$
|
327,427
|
$
|
822,528
|
$
|
1,721,204
|
Expected Credit Loss
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
||||||||||||
Opening balance
|
$
|
571,250
|
$
|
327,427
|
$
|
822,528
|
$
|
1,721,204
|
||||||||
Originations
|
-
|
1,034,636
|
-
|
1,034,636
|
||||||||||||
Derecognitions
|
(565,483
|
)
|
(212,637
|
)
|
-
|
(778,120
|
)
|
|||||||||
Remeasurement
|
207,479
|
418,640
|
-
|
626,119
|
||||||||||||
Transfer to Stage 1
|
(207,481
|
)
|
207,480.88
|
-
|
-
|
|||||||||||
Transfer to Stage 2
|
-
|
-
|
-
|
-
|
||||||||||||
Transfer to Stage 3
|
-
|
-
|
-
|
-
|
||||||||||||
Provision
|
(565,485
|
)
|
1,448,120
|
-
|
882,635
|
|||||||||||
Write-offs
|
-
|
-
|
-
|
-
|
||||||||||||
Recoveries
|
-
|
-
|
-
|
-
|
||||||||||||
Closing balance
|
$
|
5,765
|
$
|
1,775,547
|
$
|
822,528
|
$
|
2,603,840
|
As at
June 30,
2020
|
As at
December 31, 2019
|
|||||||
Current (30 days or less)
|
$
|
2,971,455
|
$
|
81,205,888
|
||||
31-60 days
|
2,100,746
|
185,640
|
||||||
61-90 days
|
22,277,262
|
902,724
|
||||||
Greater than 90 days
|
30,481,168
|
2,216,866
|
||||||
$
|
57,830,631
|
$
|
84,511,118
|
(b)
|
Liquidity risk
|
|
<1 year
|
1-3 years
|
> 3 years
|
Total
|
||||||||||||
Trade and other payables
|
$
|
599,766,570
|
$
|
-
|
$
|
-
|
$
|
599,766,570
|
||||||||
Long-term debt
|
181,877,882
|
190,162,031
|
-
|
372,039,913
|
||||||||||||
Total
|
$
|
781,644,452
|
$
|
190,162,031
|
$
|
-
|
$
|
971,806,483
|
(c)
|
Market risk
|
(i)
|
Foreign currency risk
|
12.
|
Fair Value of Financial Instruments
|
Financial instruments measured at amortized cost
|
|
Cash; trade & other receivables; trade and other payables; other payables
|
Carrying amount (approximates fair value due to short-term nature)
|
Long-term debt
|
Carrying value at the effective interest rate which approximates fair value
|
13.
|
Revenues
|
(a)
|
Revenues
|
3 months ended June 30, 2019
|
||||||||
Customer
|
Revenue
|
Concentration of Revenue
|
||||||
Tostato
|
$
|
244,475,880
|
84.81
|
%
|
||||
Colombian Mountain Coffee
|
8,203,296
|
2.85
|
%
|
|||||
Cencosud
|
7,578,789
|
2.63
|
%
|
|||||
Sipote Burrito
|
6,864,000
|
2.38
|
%
|
|||||
Other
|
21,154,763
|
7.34
|
%
|
|||||
|
$
|
288,276,728
|
100.00
|
%
|
(b)
|
Other income
|
14.
|
Expenses
|
(a)
|
Administrative expenses
|
3 months
|
||||||||
June 30, 2020
|
June 30, 2019
|
|||||||
Salaries & severance
|
$
|
140,919,988
|
$
|
25,350,698
|
||||
Professional fees
|
12,548,000
|
10,820,540
|
||||||
Legal expenses
|
(4,789,270
|
)
|
21,566,893
|
|||||
Maintenance and repairs
|
-
|
132,113
|
||||||
Depreciation
|
2,825,001
|
2,825,001
|
||||||
Amortization
|
212,499
|
212,499
|
||||||
Other
|
3,498,001
|
19,944,037
|
||||||
Total administrative expenses
|
$
|
155,214,219
|
$
|
80,851,781
|
6 months
|
||||||||
As at
|
As at
|
|||||||
June 30, 2020
|
June 30, 2019
|
|||||||
Salaries & severance
|
$
|
289,585,898
|
$
|
47,278,424
|
||||
Professional fees
|
51,839,330
|
18,053,873
|
||||||
Legal expenses
|
(634,318
|
)
|
21,598,093
|
|||||
Maintenance and repairs
|
982,500
|
132,113
|
||||||
Depreciation
|
5,650,002
|
5,650,002
|
||||||
Amortization
|
424,998
|
424,998
|
||||||
Other
|
28,471,191
|
30,820,129
|
||||||
Total administrative expenses
|
$
|
376,319,601
|
$
|
123,957,632
|
(b)
|
Sales Expenses
|
3 months
|
||||||||
As at
|
As at
|
|||||||
|
June 30, 2020
|
June 30, 2019
|
||||||
Personnel expenses
|
$
|
8,679,920
|
$
|
14,154,273
|
||||
Professional fees
|
12,050,000
|
-
|
||||||
Services
|
31,968,125
|
34,211,123
|
||||||
Legal
|
8,009,846
|
-
|
||||||
Other
|
8,534,649
|
28,208,553
|
||||||
Total sales expenses
|
$
|
69,242,540
|
$
|
76,573,949
|
6 months
|
||||||||
As at
|
As at
|
|||||||
|
June 30, 2020
|
June 30, 2019
|
||||||
Personnel expenses
|
$
|
18,343,821
|
$
|
28,800,822
|
||||
Professional fees
|
24,100,000
|
-
|
||||||
Services
|
72,694,982
|
62,802,104
|
||||||
Legal
|
8,009,846
|
-
|
||||||
Other
|
30,760,091
|
55,357,605
|
||||||
Total sales expenses
|
$
|
153,908,740
|
$
|
146,960,531
|
(c)
|
Other Expenses
|
3 months
|
||||||||
As at
|
As at
|
|||||||
|
June 30, 2020
|
June 30, 2019
|
||||||
Bank fees and expenses
|
$
|
8,845,698
|
$
|
11,413,072
|
||||
Other
|
10,161,068
|
12,264,988
|
||||||
Total other expenses
|
$
|
19,006,766
|
$
|
23,678,060
|
6 months
|
||||||||
As at
|
As at
|
|||||||
June 30, 2020
|
June 30, 2019
|
|||||||
Bank fees and expenses
|
$
|
13,255,536
|
$
|
12,539,778
|
||||
Other
|
34,656,733
|
20,351,033
|
||||||
Total other expenses
|
$
|
47,912,269
|
$
|
32,890,811
|
15.
|
Capital Management
|
Flora Growth Corp.
|
Cronomed
|
Breeze
|
Kasa
|
|
||||||||||||||||||||
For the six months ended
|
For the six months ended
|
For the six months ended
|
For the six months ended
|
Pro Forma
Adjustments
|
Pro Forma
|
|||||||||||||||||||
June 30, 2020
|
June 30, 2020
|
June 30, 2020
|
June 30, 2020
|
(Note 5)
|
Consolidation
|
|||||||||||||||||||
Revenue
|
$
|
-
|
$
|
439,209
|
$
|
197,563
|
$
|
85,664
|
$
|
-
|
722,436
|
|||||||||||||
Cost of sales
|
-
|
252,608
|
129,374
|
51,454
|
-
|
433,436
|
||||||||||||||||||
Gross profit
|
-
|
186,601
|
68,189
|
34,210
|
-
|
289,000
|
||||||||||||||||||
Expenses
|
||||||||||||||||||||||||
Consulting and management fees
|
818,866
|
-
|
-
|
-
|
-
|
818,866
|
||||||||||||||||||
Salaries and benefits
|
-
|
112,261
|
25,847
|
83,431
|
-
|
221,539
|
||||||||||||||||||
Professional fees
|
217,960
|
13,806
|
5,518
|
22,573
|
-
|
259,857
|
||||||||||||||||||
General office expenses
|
714,947
|
29,396
|
16,728
|
36,011
|
-
|
797,082
|
||||||||||||||||||
Travel expenses
|
233,362
|
2,500
|
-
|
-
|
-
|
235,862
|
||||||||||||||||||
Share based compensation
|
344,406
|
-
|
-
|
-
|
-
|
344,406
|
||||||||||||||||||
Amortization
|
56,617
|
11,099
|
9,769
|
1,646
|
-
|
79,131
|
||||||||||||||||||
Research and development
|
53,405
|
-
|
-
|
-
|
-
|
53,405
|
||||||||||||||||||
Loss before the undernoted
|
(2,439,563
|
)
|
17,539
|
10,327
|
(109,451
|
)
|
-
|
(2,521,148
|
)
|
|||||||||||||||
Interest expense (income)
|
72,087
|
19,122
|
16,502
|
12,365
|
-
|
120,076
|
||||||||||||||||||
Other expenses (income)
|
(80,579
|
)
|
3,230
|
(5,571
|
)
|
11,354
|
-
|
(71,566
|
)
|
|||||||||||||||
Foreign exchange loss (gain)
|
170,041
|
-
|
-
|
-
|
-
|
170,041
|
||||||||||||||||||
Income (loss) before income taxes
|
(2,601,112
|
)
|
(4,813
|
)
|
(604
|
)
|
(133,170
|
)
|
-
|
(2,739,699
|
)
|
|||||||||||||
Income tax expense (recovery)
|
-
|
2,151
|
(1,671
|
)
|
-
|
-
|
480
|
|||||||||||||||||
Net income (loss)
|
$
|
(2,601,112
|
)
|
$
|
(6,964
|
)
|
$
|
1,067
|
$
|
(133,170
|
)
|
$
|
-
|
$
|
(2,740,179
|
)
|
||||||||
Other comprehensive income (loss)
|
||||||||||||||||||||||||
Exchange differences on foreign operations
|
19,046
|
(13,767
|
)
|
(14,615
|
)
|
32,936
|
-
|
23,600
|
||||||||||||||||
Total comprehensive loss
|
$
|
(2,582,066
|
)
|
$
|
(20,731
|
)
|
$
|
(13,548
|
)
|
$
|
(100,234
|
)
|
$
|
-
|
$
|
(2,716,579
|
)
|
|||||||
Net income (loss) attributable to:
|
||||||||||||||||||||||||
Flora Growth Corp.
|
(2,555,413
|
)
|
(6,964
|
)
|
960
|
(119,853
|
)
|
-
|
(2,681,270
|
)
|
||||||||||||||
Non-controlling interests
|
(45,699
|
)
|
-
|
107
|
(13,317
|
)
|
-
|
(58,909
|
)
|
|||||||||||||||
Comprehensive loss attributable to:
|
||||||||||||||||||||||||
Flora Growth Corp.
|
(2,536,367
|
)
|
(20,731
|
)
|
(12,193
|
)
|
(90,211
|
)
|
-
|
(2,659,502
|
)
|
|||||||||||||
Non-controlling interests
|
(45,699
|
)
|
-
|
(1,355
|
)
|
(10,023
|
)
|
-
|
(57,077
|
)
|
||||||||||||||
Basic and diluted loss per share
|
$
|
(0.02
|
)
|
|||||||||||||||||||||
Weighted average number of common
shares outstanding - basic and diluted
|
115,075,000
|
Flora Growth Corp
|
|
|
|
|
|||||||||||||||||||||
For the period from March 13, 2019 to
|
Cronomed
For the year ended
|
Breeze
For the year ended
|
Kasa
For the year ended
|
Pro Forma
|
|
||||||||||||||||||||
December 31, 2019
|
December 31, 2019
|
December 31, 2019
|
December 31, 2019
|
Adjustments
(Note 5)
|
Pro Forma
Consolidation
|
||||||||||||||||||||
Revenue
|
$
|
-
|
$
|
1,177,530
|
$
|
404,021
|
$
|
407,657
|
$
|
-
|
$
|
1,989,208
|
|||||||||||||
Cost of sales
|
-
|
728,817
|
148,850
|
258,304
|
-
|
1,135,971
|
|||||||||||||||||||
Gross profit
|
-
|
448,713
|
255,171
|
149,353
|
-
|
853,237
|
|||||||||||||||||||
Expenses
|
|||||||||||||||||||||||||
Consulting and management fees
|
2,000,508
|
-
|
-
|
-
|
-
|
2,000,508
|
|||||||||||||||||||
Salaries and benefits
|
-
|
240,764
|
72,703
|
89,240
|
1,552,140
|
(i)
|
1,954,847
|
||||||||||||||||||
Professional fees
|
182,900
|
27,412
|
15,077
|
2,530
|
-
|
227,919
|
|||||||||||||||||||
General office expenses
|
175,296
|
96,792
|
45,960
|
219,853
|
-
|
537,901
|
|||||||||||||||||||
Travel expenses
|
305,874
|
19,180
|
-
|
-
|
-
|
325,054
|
|||||||||||||||||||
Share based compensation
|
107,024
|
-
|
-
|
-
|
1,999,605
|
(d)
|
4,668,251
|
||||||||||||||||||
2,561,622
|
(q)
|
-
|
|||||||||||||||||||||||
Depreciation and amortization
|
25,865
|
29,223
|
21,853
|
3,703
|
-
|
80,644
|
|||||||||||||||||||
Research and development
|
21,040
|
-
|
-
|
-
|
-
|
21,040
|
|||||||||||||||||||
Acquisition costs
|
-
|
-
|
-
|
-
|
241,579
|
(l)
|
241,579
|
||||||||||||||||||
Income (loss) before the undernoted
|
(2,818,507
|
)
|
35,342
|
99,578
|
(165,973
|
)
|
(6,354,946
|
)
|
(9,204,506
|
)
|
|||||||||||||||
Other expenses (income)
|
-
|
21,112
|
(9,939
|
)
|
10,235
|
-
|
21,408
|
||||||||||||||||||
Foreign exchange loss
|
6,119
|
-
|
-
|
-
|
-
|
6,119
|
|||||||||||||||||||
Provision for credit losses
|
-
|
-
|
-
|
24,919
|
-
|
24,919
|
|||||||||||||||||||
Interest expense (income)
|
19,485
|
29,961
|
44,299
|
20,851
|
-
|
114,596
|
|||||||||||||||||||
Income (loss) before income taxes
|
(2,844,111
|
)
|
(15,731
|
)
|
65,218
|
(221,978
|
)
|
(6,354,946
|
)
|
(9,371,548
|
)
|
||||||||||||||
Income tax expense
|
-
|
36,390
|
12,164
|
227
|
-
|
48,781
|
|||||||||||||||||||
Net income (loss)
|
$
|
(2,844,111
|
)
|
$
|
(52,121
|
)
|
$
|
53,054
|
$
|
(222,205
|
)
|
$
|
(6,354,946
|
)
|
$
|
(9,420,329
|
)
|
||||||||
Other comprehensive income (loss)
|
|||||||||||||||||||||||||
Exchange differences on foreign operations
|
22,877
|
(1,416
|
)
|
-
|
-
|
-
|
21,461
|
||||||||||||||||||
Total comprehensive income (loss)
|
$
|
(2,821,234
|
)
|
$
|
(53,537
|
)
|
$
|
53,054
|
$
|
(222,205
|
)
|
$
|
(6,354,946
|
)
|
$
|
(9,398,868
|
)
|
||||||||
Net income (loss) attributable to:
|
|||||||||||||||||||||||||
Flora Growth Corp.
|
(2,824,326
|
)
|
(52,121
|
)
|
47,749
|
(199,984
|
)
|
(6,354,946
|
)
|
(9,383,628
|
)
|
||||||||||||||
Non-controlling interests
|
(19,785
|
)
|
-
|
5,305
|
(22,221
|
)
|
-
|
(36,701
|
)
|
||||||||||||||||
Comprehensive income (loss) attributable to:
|
|||||||||||||||||||||||||
Flora Growth Corp.
|
(2,801,449
|
)
|
(53,537
|
)
|
47,749
|
(199,984
|
)
|
(6,354,946
|
)
|
(9,362,167
|
)
|
||||||||||||||
Non-controlling interests
|
(19,785
|
)
|
-
|
5,305
|
(22,221
|
)
|
-
|
(36,701
|
)
|
||||||||||||||||
Basic and diluted loss per share
|
$
|
(0.08
|
)
|
||||||||||||||||||||||
Weighted average number of common shares outstanding - basic and diluted
|
115,075,000
|
(a)
|
To eliminate the intercompany loan between Kasa and Flora.
|
(b)
|
To eliminate the intercompany advances between Cronomed, Breeze, Kasa and Flora.
|
(c)
|
To record the issuance of additional units pursuant to Regulation A Financing to December 2020 and record the release of restricted cash from prior issuances. Each unit is comprised of one common
share and one-half of one share purchase warrant. Each whole warrant entitles the subscriber to purchase one common share at an exercise price of $1.00 with an expiry date of eighteen months from the issuance date. The completion
of the raise includes an additional 22,829,900 units at a price of $0.75 per unit. The proceeds are allocated between common shares and warrants. The warrants are valued using the Black-Scholes model, applying the following
assumptions:
|
(d)
|
To record 2,850,000 and 1,500,000 stock options issued to employees, directors, and consultants of Flora subsequent to June 30, 2020. The stock options have an exercise price of $0.75 per share with
a five year expiry date. The stock options which vest immediately subject to a four month hold are valued using the Black-Scholes model, applying the following assumptions:
|
(e)
|
These pro-forma condensed consolidated financial statements exclude amounts to be raised in the intended IPO until a determination of sizing and pricing is reached between the Company and the
Representative of the underwriters.
|
(f)
|
These pro-forma consolidated condensed financial statements exclude any broker fees related to the intended IPO until a determination of sizing and
pricing is reached between the Company and Representative underwriters.
|
(g)
|
To record broker fees related to the Regulation A Financing, which includes warrants equal to 7% of the units issued under the Regulation A Financing subsequent to September 8, 2020. This is
estimated to include 1,196,422 broker warrants with an exercise price of $1.00 per share and an expiry of five years. These issuance costs are allocated between share capital and warrants, consistent with the allocation of the
proceeds of the Regulation A Financing. The warrants are valued using the Black-Scholes model, applying the following assumptions:
|
(h)
|
To record estimated professional fees pursuant to the intended IPO.
|
(i)
|
To record bonus paid in cash to employees, directors, and consultants of Flora subsequent to June 30, 2020.
|
(j)
|
To record cancellation of 50,000 stock options of Flora, which previously vested.
|
(k)
|
To record unit issuance costs pursuant to the Regulation A Financing. These issuance costs are allocated between share capital and warrants, consistent with the allocation of the proceeds of the
Regulation A Financing.
|
(l)
|
To record estimated acquisition costs on Business Combinations, $241,579.
|
(m)
|
To record the Business Combinations in accordance with IFRS 3 as at June 30, 2020. (See Note 3)
|
(i)
|
Cronomed
|
Cash consideration for 100% of common shares of Cronomed
|
$
|
922,776
|
||
Estimated fair value of net assets:
|
||||
Fair value of assets
|
$
|
522,918
|
||
Fair value of liabilities
|
$
|
435,259
|
||
$
|
87,659
|
|||
Goodwill (residual)
|
$
|
835,117
|
(ii)
|
Kasa
|
Cash consideration for 90% of common shares of Kasa
|
$
|
235,600
|
||
Grossed up consideration for 100% of common shares of Kasa
|
$
|
261,778
|
||
Estimated fair value of net assets:
|
||||
Fair value of assets
|
$
|
144,111
|
||
Fair value of liabilities
|
$
|
482,509
|
||
$
|
(338,398
|
)
|
||
Goodwill (residual)
|
$
|
600,176
|
||
Non-controlling interest (10%)
|
$
|
26,178
|
||
(iii)
|
Breeze
|
Cash consideration for 90% of common shares of Breeze
|
$
|
206,200
|
||
Contingent consideration for 90% of common shares of Breeze
|
$
|
186,224
|
||
$
|
392,424
|
|||
Grossed up consideration for 100% of common shares of Breeze
|
$
|
436,027
|
||
Estimated fair value of net assets:
|
||||
Fair value of assets
|
$
|
825,769
|
||
Fair value of liabilities
|
$
|
725,422
|
||
$
|
100,347
|
|||
Goodwill (residual)
|
$
|
335,680
|
||
Non-controlling interest (10%)
|
$
|
43,603
|
(n)
|
To record the acquisition of an additional 10% of Flora Beauty LLC, which was incorporated on February 12, 2020. Flora originally owned 77% of Flora Beauty LLC. To acquire the additional 10%, Flora
issued 190,000 common shares, valued at $0.64 per share and paid $100. As this transaction does not impact Flora’s level of influence, the transaction is accounted for within shareholders’ equity.
|
(o)
|
To record the acquisition of an additional 20% of Hemp Textiles SAS (Colombia), which was incorporated on June 25, 2020. Flora originally owned 80% of this entity. To acquire the additional 20%,
Flora issued 285,000 common shares, valued at $0.64 per share and paid $100. As this transaction does not impact Flora’s level of influence, the transaction is accounted for within shareholders’ equity.
|
(p)
|
To record the acquisition of an additional 10% of Hemp Textiles LLC (USA), which was incorporated on August 14, 2020. Flora originally owned 90% of this entity. To acquire the additional 10%, Flora
paid $100. As this transaction does not impact Flora’s level of influence, the transaction is accounted for within shareholders’ equity.
|
(q)
|
To record 4,000,000 shares issued to an employee of the Company as consideration for services rendered.
|
Share capital | Warrants |
Options
|
Accumulated Other Comprehensive
Income
|
Accumulated
Deficit
|
Non-controlling
interest
|
Total | ||||||||||||||||||||||||||
#
|
$
|
$ | $ |
$
|
$ |
$
|
$ | |||||||||||||||||||||||||
Flora at June 30, 2020
|
87,770,100
|
$
|
11,056,384
|
$
|
1,678,521
|
$
|
422,916
|
$
|
41,923
|
$
|
(5,379,739
|
)
|
$
|
(56,595
|
)
|
$
|
7,763,410
|
|||||||||||||||
-
|
||||||||||||||||||||||||||||||||
Pro forma adjustments (Note 5)
|
||||||||||||||||||||||||||||||||
Issuance of units pursuant to Regulation A
|
22,829,900
|
14,620,395
|
2,502,030
|
-
|
-
|
-
|
-
|
17,122,425
|
||||||||||||||||||||||||
Issuance of stock options
|
-
|
-
|
-
|
1,999,605
|
-
|
-
|
-
|
1,999,605
|
||||||||||||||||||||||||
Issuance of common shares pursuant to IPO
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Share issuance costs pursuant to IPO
|
-
|
(294,500
|
)
|
-
|
-
|
-
|
-
|
-
|
(294,500
|
)
|
||||||||||||||||||||||
Share issuance costs pursuant to Regulation A
|
-
|
(1,878,173
|
)
|
197,380
|
-
|
-
|
-
|
-
|
(1,680,793
|
)
|
||||||||||||||||||||||
Issuance of shares to employee
|
4,000,000
|
2,561,622
|
-
|
-
|
-
|
-
|
2,561,622
|
|||||||||||||||||||||||||
Cancellation of stock options
|
-
|
-
|
-
|
(22,984
|
)
|
-
|
22,984
|
-
|
-
|
|||||||||||||||||||||||
Business combinations
|
-
|
-
|
-
|
-
|
-
|
-
|
69,781
|
69,781
|
||||||||||||||||||||||||
Acquisition of additional interests
|
475,000
|
304,293
|
-
|
-
|
-
|
(287,449
|
)
|
(17,144
|
)
|
(300
|
)
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(6,354,946
|
)
|
-
|
(6,354,946
|
)
|
||||||||||||||||||||||
115,075,000
|
$
|
26,370,022
|
$
|
4,377,930
|
$
|
2,399,537
|
$
|
41,923
|
$
|
(11,999,150
|
)
|
$
|
(3,958
|
)
|
$
|
21,186,304
|
Stock options:
|
|||||||||||
# of stock options outstanding
|
# of stock options exercisable
|
Exercise price
|
Expiry date
|
||||||||
6,400,000
|
6,400,000
|
$
|
0.05
|
June 28, 2024
|
|||||||
750,000
|
750,000
|
$
|
0.75
|
April 23, 2025
|
|||||||
4,300,000
|
4,300,000
|
$
|
0.75
|
June 30, 2025
|
|||||||
Warrants:
|
|||||||||||
# of warrants outstanding
|
# of warrants exercisable
|
Exercise price
|
Expiry date
|
||||||||
7,000,000
|
7,000,000
|
$
|
0.05
|
March 15, 2022
|
|||||||
8,585,050
|
750,000
|
$
|
1.00
|
July 23, 2021 to December 29, 2021
|
|||||||
11,414,950
|
11,414,950
|
$
|
1.00
|
December 29, 2021
|
|||||||
-
|
-
|
$
|
1.65
|
June 30, 2025
|
|||||||
1,196,422
|
1,196,422
|
$
|
1.00
|
June 30, 2025
|
•
|
Acted honestly and in good faith with a view to our best interests;
|
•
|
In the case of a criminal or administration action or proceeding enforced by a monetary penalty, had reasonable grounds to believe the conduct was lawful; and
|
•
|
Was not judged by a court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done.
|
(a)
|
The following exhibits are filed as part of this Registration Statement and are numbered in accordance with Item 601 of Regulation S-K:
|
10.5
|
|
10.6
|
|
10.7
|
|
10.8
|
|
10.9
|
|
10.10
|
|
10.11
|
|
10.12
|
|
10.13
|
|
10.14
|
|
10.15
|
|
10.16
|
|
10.17
|
|
10.18
|
|
10.19
|
10.20
|
|
10.21
|
|
10.22
|
|
10.23
|
|
10.24
|
|
10.26 | |
10.27 | |
10.28 | |
10.29
|
|
10.30
|
|
10.31
|
|
10.32
|
|
10.33
|
|
10.34
|
|
10.35 | |
10.36 | |
10.37 | |
10.38 | |
10.39 |
10.40 | |
10.41
|
|
10.42
|
|
21.1
|
|
23.1
|
|
23.2
|
Consent of Moore Assurance SAS |
23.3
|
Consent of Wildeboer Dellelce LLP (included in Exhibit 5.1).
|
23.4
|
|
23.5 | |
23.6 | |
24.1
|
Power of Attorney (included on the signature page to this Registration Statement).
|
|
(1) |
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
|
(i) |
To include any prospectus required by section 10(a)(3) of the Securities Act;
|
|
(ii) |
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the U.S. Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act if, in the
aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
|
|
(iii) |
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
|
|
(2) |
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.
|
|
(3) |
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
|
|
(4) |
To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Securities Act need not be furnished, provided that the Registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this
paragraph and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements.
|
|
(5) |
That, for the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of the securities:
|
|
(i) |
Any preliminary prospectus or prospectus of the Registrant relating to the offering required to be filed pursuant to Rule 424 under the Securities Act;
|
|
(ii) |
Any free writing prospectus relating to the offering prepared by or on behalf of the Registrant or used or referred to by the Registrant;
|
|
(iii) |
The portion of any other free writing prospectus relating to the offering containing material information about the Registrant or its securities provided by or on behalf of the Registrant; and
|
|
(iv) |
Any other communication that is an offer in the offering made by the Registrant to the purchaser.
|
|
(b) |
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
|
|
(1) |
That, for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A under the Securities Act and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
|
|
(2) |
That, for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof
|
FLORA GROWTH CORP. | |||
|
By:
|
/s/ Luis Merchan
|
|
Name: Luis Merchan
|
|||
Title: Chief Executive Officer
|
|||
/s/Luis Merchan
|
Date: February 11, 2021 | |
Name: Luis Merchan
Title: Chief Executive Officer, President and Director
(Principal Executive Officer)
|
|
|
/s/Deborah Battiston
|
Date: February 11, 2021 | |
Name: Deborah Battiston
Title: Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer) |
|
|
/s/Dr. Bernard Wilson
|
Date: February 11, 2021 | |
Name: Dr. Bernard Wilson
Title: Executive Chairman
|
|
|
/s/Dr. Beverley Richardson | Date: February 11, 2021 | |
Name: Dr. Beverley Richardson
Title: Director
|
|
|
/s/Juan Carlos Gomez Roa | Date: February 11, 2021 | |
Name: Juan Carlos Gomez Roa
Title: Director
|
||
/s/Stan Bharti | Date: February 11, 2021 | |
Name: Stan Bharti
Title: Director
|
||
|
By: |
/s/Luis Merchan
|
|
|
Name: |
Luis Merchan
|
|
|
Title: |
President and Chief Executive Officer
|
|
(a)
|
a certified copy dated ●, 2021 of the constating documents and by-laws of the Corporation;
|
(b)
|
a certificate of status dated ●, 2021 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.
|
(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 Shares will be offered, issued and sold in compliance with applicable United States federal and state securities laws, and in the manner
stated in the Registration 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.
|
1.
|
The first sentence of the first paragraph of the Agreement is hereby replaced in its entirely with the following:
|
2.
|
Paragraph 15 of the Agreement is hereby replaced in its entirely with the following:
|
3.
|
All other terms and conditions of the Agreement are hereby reaffirmed.
|
FLORA GROWTH CORP.
|
|||||
/s/Damian Lopez
|
|||||
Authorized Signing Officer
|
|||||
WITNESS
|
LUIS MERCHAN
|
||||
/s/Aaron Atin
|
/s/Luis Merchan
|
||||
Aaron Atin
|
Luis Merchan
|
||||
|
|
||||
1.
|
The first sentence of the first paragraph of the Agreement is hereby replaced in its entirely with the following:
|
2.
|
The first sentence of the third paragraph of the Agreement is hereby replaced in its entirely with the following:
|
3.
|
A new paragraph 3.1 is hereby added immediately following paragraph 3 as follows:
|
4.
|
Paragraph 12 of the Agreement is hereby replaced in its entirely with the following:
|
5.
|
All other terms and conditions of the Agreement are hereby reaffirmed.
|
FLORA GROWTH CORP.
|
|||||
/s/Deb Battiston
|
|||||
Authorized Signing Officer
|
|||||
|
DAMIAN LOPEZ CONSULTING PROFESSIONAL CORPORATION
|
||||
|
|||||
|
/s/Damian Lopez
|
||||
|
Authorized Signing Officer | ||||
|
|
||||
1.
|
Paragraph 12 of the Agreement is hereby replaced in its entirely with the following:
|
2.
|
All other terms and conditions of the Agreement are hereby reaffirmed.
|
FLORA GROWTH CORP.
|
|||||
/s/Damian Lopez
|
|||||
Authorized Signing Officer
|
|||||
|
JADAN CONSULTING CORPORATION
|
||||
|
|||||
|
/s/ Deb Battiston
|
||||
|
Authorized Signing Officer | ||||
|
|
||||
1.
|
Effective on the date hereof, paragraph 12 of the Agreement is hereby replaced in its entirely with the following:
|
2.
|
All other terms and conditions of the Agreement are hereby reaffirmed.
|
FLORA GROWTH CORP.
|
|||||
/s/Damian Lopez
|
|||||
Authorized Signing Officer
|
|||||
|
2051580 ONTARIO INC.
|
||||
|
|||||
|
/s/Stan Bharti
|
||||
|
Authorized Signing Officer | ||||
|
|
||||
1.
|
Paragraph 12 of the Agreement is hereby replaced in its entirely with the following:
|
2.
|
All other terms and conditions of the Agreement are hereby reaffirmed.
|
FLORA GROWTH CORP.
|
|||||
/s/Damian Lopez
|
|||||
Authorized Signing Officer
|
|||||
|
FORBES & MANHATTAN, INC.
|
||||
|
|||||
|
/s/Stan Bharti
|
||||
|
Authorized Signing Officer | ||||
|
|
||||
FLORA GROWTH CORP.
|
|||||
/s/Damian Lopez
|
|||||
Authorized Signing Officer
|
|||||
WITNESS
|
ORLANDO BUSTOS
|
||||
/s/Aaron Atin
|
/s/Orlando Bustos
|
||||
Aaron Atin
|
Orlando Bustos
|
||||
|
|
||||
1.
|
Paragraph 12 of the Agreement is hereby replaced in its entirely with the following:
|
2.
|
All other terms and conditions of the Agreement are hereby reaffirmed.
|
FLORA GROWTH CORP.
|
|||||
/s/Damian Lopez
|
|||||
Authorized Signing Officer
|
|||||
|
CONSULTANCIES AND CONSULTANCIES OF LATAM BY GM LLC
|
||||
|
|||||
|
/s/Francisco Torres
|
||||
|
Authorized Signing Officer | ||||
|
|
||||
-
|
Que el Cedente es propietario de un derecho de membresía del cinco por ciento (5.0%) (el "derecho de membresía") en FLORA BEAUTY LLC, una compañía de responsabilidad limitada de Colorado (la "Compañía");
|
-
|
Que el Cedente desea mediante esta Cesión asignar al Cesionario todos los Derechos de Membresía del Cedente en la Compañía, y el Cesionario desea por medio de esta Cesión aceptar los mismos.
|
-
|
Que el pago por parte del Cesionario al Cedente corresponde a CIENTO NOVENTA MIL ACCIONES (190.000) de Flora Growth Corp.
|
-
|
Que el Cedente es propietario de un interés de membresía del cinco por ciento (5.0%) (el "interés de membresía") en FLORA BEAUTY LLC, una compañía de responsabilidad limitada de Colorado (la "Compañía");
|
-
|
Que el Cedente desea mediante esta Cesión asignar al Cesionario todos los Intereses de Membresía del Cedente en la Compañía, y el Cesionario desea por medio de esta Cesión aceptar los mismos.
|
-
|
Que el pago por parte del Cesionario al Cedente corresponde a la suma de Cien Dólares Estadounidenses ($ 100.00) USD
|
(a)
|
Santiago is the registered and beneficial owner of 15,741 ordinary shares of Kasa Wholefoods Company S.A.S., a company existing pursuant to the laws of the Republic of Colombia (the “Company”);
|
(b)
|
Laura is the registered and beneficial owner of 2,600 ordinary shares of the Company;
|
(c)
|
Pablo is the registered and beneficial owner of 1,195 ordinary shares of the Company;
|
(d)
|
Stefan is the registered and beneficial owner of 464 ordinary shares of the Company; and
|
(e)
|
The Vendors wish to sell and the Purchaser wishes to purchase an aggregate of 18,000 ordinary shares of the Company, representing 90% of the issued and outstanding equity of the Company
on a fully diluted basis, upon the terms and conditions contained in this Agreement.
|
1.
|
Purchase and Sale..
|
Vendor
|
Company Shares
|
Santiago
|
13,741
|
Laura
|
2,600
|
Pablo
|
1,195
|
Stefan
|
464
|
Total
|
18,000
|
(a)
|
Corporate Authority. The transfer of the Purchased Shares to the Purchaser has been authorized by all necessary corporate action on the part of
the Company;
|
(b)
|
Execution and Binding Obligation. This Agreement has been duly executed and delivered by the Vendor and constitutes a legal, valid and binding
agreement of the Vendor enforceable against it in accordance with its terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application affecting
the enforcement of creditors' rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction;
|
(c)
|
Organization and Good Standing. The Company is a company established and validly existing under the laws of the Republic of Colombia;
|
(d)
|
Qualification to do Business. The Company is duly qualified to carry on business and produce or market its products and services and is in
possession of all permits, authorizations, approvals, licenses, records and consents required in all jurisdictions in which the nature of its business activities make necessary, and all such products and services comply with all technical,
health, environmental or any other regulations that may apply;
|
(e)
|
No Violation or Breach. The execution and delivery of and performance by the Vendor of this Agreement:
|
(i)
|
will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a breach or violation of or a conflict with, or allow any
other person to exercise any rights under any contracts or instruments to which the Company or the Vendor is a party; and
|
(ii)
|
will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a breach or violation of or a conflict with, or allow any
other person to exercise any rights under, any of the terms or provisions of the Company’s constating documents or by-laws; and
|
(iii)
|
will not result in the violation of any law;
|
(f)
|
Litigation. There is no claim, action, suit, grievance, complaint, proceeding, arbitration, charge, audit, indictment or investigation that is
pending or has been commenced or, to the knowledge of the Vendor, is threatened affecting the Company or its subsidiaries or affecting any of their property or assets (whether owned or leased) at law or in equity. Neither the Company, its
Subsidiaries nor any their respective assets or properties is subject to any outstanding judgment, order, writ, injunction or decree material to the Company and its subsidiaries on a consolidated basis;
|
(g)
|
Brokers. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Company or any of its subsidiaries;
|
(i)
|
Employment and Labour.
|
(A)
|
The Company and each of its subsidiaries has been and is now in compliance, in all material respects, with all terms and conditions of employment, with respect to employment and labour,
including, wages, hours of work, overtime, human rights, occupational health and safety and workers compensation, and there are no current, or, to the knowledge of the Vendor, pending or threatened proceedings (including grievances,
arbitration, applications or pending applications) before any governmental entity or labour arbitrator with respect to any matter.
|
(B)
|
Neither the Company nor any of its subsidiaries are party to any:
|
(I)
|
contract providing for termination notice, payment in lieu of termination notice, change of control payments, or severance payments to, or any employment or consulting agreement with, any
current or former director, officer or employee of the Company or its subsidiaries other than such arising from any applicable law; or
|
(II)
|
any collective bargaining agreement or union agreement nor, to the knowledge of the Vendor, subject to any application for certification or threatened union-organizing campaigns for
employees not covered under a collective bargaining agreement or union agreement nor are there any current, or to the knowledge of the Vendor, pending or threatened strikes or lockouts at the Company or its subsidiaries;
|
(C)
|
There are no outstanding assessments, penalties, fines, liens, charges, surcharges, or other amounts due or owing pursuant to any provincial
workers' compensation statute or regulation, and nether the Company nor any of its subsidiaries has been reassessed in any material respect under such statute or regulation during the past three (3) years and, to the knowledge of the
Vendor, no audit of the Company or any its subsidiaries is currently being performed pursuant to any workers' compensation statute or regulation, and, to the knowledge of the Vendor, there are no claims or potential claims which may
materially adversely affect the Company's or any of its subsidiaries' accident cost experience in respect of their businesses;
|
(D)
|
There are no labour disputes, strikes, organizing activities or work stoppages against the Company or any of its subsidiaries pending, or to knowledge of the Vendor, threatened;
|
(E)
|
All personnel providing services to the Company in the ordinary course of its business are subject to a written employment contract with the
Company;
|
(F)
|
All contributions, premiums or taxes required to be made or paid by the Company or any of its subsidiaries under the terms of any employee
plans of the Company and its subsidiaries or by applicable laws have been made in a timely fashion;
|
(ii)
|
Assets. The Company and its
subsidiaries have valid, good and marketable title to all personal property owned by them, free and clear of all encumbrances. The assets and property owned, leased or licensed by the Company and its subsidiaries are sufficient, in all
material respects, for conducting the business, as currently conducted, of the Company;
|
(iii)
|
Intellectual Property. The Company and its subsidiaries own all right, title and interest in and to, or is validly licensed (and are not in
material breach of such licenses), all intellectual property that is material to the conduct of the business, as currently conducted, of the Company and its subsidiaries (collectively, the "Company
Intellectual Property Rights"). All such Company Intellectual Property Rights are sufficient, in all material respects, for conducting the business, as currently conducted, of the Company and its subsidiaries, and to the knowledge
of the Vendor, all such Company Intellectual Property Rights are valid and enforceable (subject to the effects of bankruptcy, insolvency, reorganization, moratorium or laws relating to or affecting creditors' rights generally), do not
infringe upon the intellectual property rights of any third party, and are not subject to any litigation, investigation, complaint or demand respecting an allegation of infringement upon the intellectual property of any third party;
|
(h)
|
Corporate Records. The corporate records of the Company have been delivered to the Purchaser and are complete and accurate in all material
respects and all corporate proceedings and actions reflected therein have been conducted or taken in compliance with all applicable laws and with the constating documents of the Company, and without limiting the generality of the foregoing:
(i) the minute books contain complete and accurate minutes of all meetings of the directors (and any committee thereof) and shareholders of the Company; (ii) such minute books contain all written resolutions passed by the directors (and any
committee thereof) and shareholders of the Company; (iii) the share certificate books, if any, the central securities register and register of transfers, and branch registers, of the Company are complete and accurate, and all transfers of
shares of the Company reflected therein have been duly completed and approved; and (iv) the registers of directors and officers are complete and accurate and all former and present directors and officers of the Company were duly elected or
appointed as the case may be;
|
(i)
|
Authorized and Issued Capital. The authorized capital of the Company consists of 20,000 ordinary shares of
which, at this date, 20,000 ordinary shares (and no more) have been issued and are outstanding as fully paid. All of the Purchased Shares have been issued in
compliance with all applicable laws including, without limitation, applicable securities laws. Except as disclosed in this paragraph (i), there are no securities, options, warrants, stock appreciation rights, restricted stock units,
conversion privileges or other rights, agreements, arrangements or commitments (pre-emptive, contingent or otherwise) of any character whatsoever to which the Company or any of its subsidiaries is a party or by which any of the Company or
its subsidiaries may be bound, obligating or which may obligate the Company or any of its subsidiaries to issue, grant, deliver, extend, or enter into any such security, option, warrant, stock appreciation right, restricted stock unit,
conversion privilege or other right, agreement, arrangement or commitment and no dividend or distribution of any kind is or has been declared, paid or made by the Company on any of the Purchased Shares for the benefit of any Vendor;
|
(j)
|
No Other Agreements to Purchase. Except for the Purchaser's right under this Agreement, no person has any written or oral agreement, option or
warrant or any right or privilege (whether by law, pre‑emptive or contractual) capable of becoming such for the purchase or acquisition from the Vendor of any of the Purchased Shares;
|
(k)
|
Title to Purchased Shares. The Purchased Shares are owned by the Vendor as the registered and beneficial owner with a good title, free and clear
of all liens, charges, pledges, security interests and other encumbrances other than those restrictions on transfer, if any, contained in the articles of the Company. Upon completion of the transaction contemplated by this Agreement, the
Purchaser will have good and valid title to the Purchased Shares, free and clear of all liens, charges, pledges, security interests and other encumbrances other than (i) those restrictions on transfer, if any, contained in the articles of
the Company, and (ii) liens granted by the Purchaser;
|
(l)
|
No Action. The Vendor is not aware of any action, suit or proceeding, at law or at equity, for or by any court or any federal, provincial,
municipal or other governmental department, commission, board, agency or instrumentality which would prevent or materially adversely affect the transactions contemplated by this Agreement;
|
(m)
|
Compliance with Laws. The Company and each of its subsidiaries have complied with and are not in violation, in any material respect, of any
applicable laws, including (but not limited to) consumer protection, advertising, and gaming laws. Neither the Company nor any of its subsidiaries has received any written notices or other written correspondence from any governmental entity
(1) regarding any violation (or any investigation, inspection, audit, or other proceeding by any governmental entity involving allegations of any violation) of any law or (2) of any circumstances that may have existed or currently exist
which could lead to a loss, suspension, or modification of, or a refusal to issue, any material authorization. To the knowledge of the Vendor, no investigation, inspection, audit or other proceeding by any governmental entity involving
allegations of any material violation of any law is threatened or contemplated. Neither the Company, its subsidiaries nor, to the knowledge of the Vendor, any of their directors, executives, representatives, agents or employees (i) has used
or is using any corporate funds for any illegal contributions, gifts, entertainment or other expenses relating to political activity that would be illegal, (ii) has used or is using any corporate funds for any direct or indirect illegal
payments to any foreign or domestic governmental officials or employees, (iii) has violated or is violating any provision of the United States Foreign Corrupt Practices Act of 1977, the Corruption of Foreign Public Officials Act (Canada) or
any similar laws of other jurisdictions, (iv) has established or maintained, or is maintaining, any illegal fund of corporate monies or other properties or (v) has made any bribe, illegal rebate, illegal payoff, influence payment, kickback
or other illegal payment of any nature;
|
(n)
|
Taxes.
|
(A)
|
The Company and each of its subsidiaries has duly and timely filed all material tax returns required to be filed prior to the date hereof with the appropriate governmental entities and
all such tax returns are true and correct in all material respects;
|
(B)
|
The Company and each of its subsidiaries has duly and timely paid all material taxes, including all instalments on account of taxes for the
current year that are due and payable by it whether or not assessed by the appropriate governmental entity;
|
(C)
|
The Company and each of its subsidiaries has duly and timely collected all material amount of all taxes required to be collected and has duly
and timely paid and remitted the same to the appropriate governmental entity;
|
(D)
|
There are no material proceedings, investigations, audits or claims now pending against the Company or its subsidiaries in respect of any taxes and no governmental entity has asserted in
writing, or to the knowledge of the Vendor, has threatened to assert against the Company or its subsidiaries any deficiency or claim for taxes or interest thereon or penalties in connection therewith;
|
(E)
|
There are no outstanding agreements, arrangements, waivers or objections extending the statutory period or providing for an extension of time
with respect to the assessment or reassessment of taxes or the filing of any tax return by, or any payment of taxes by, the Company or any of its subsidiaries;
|
(F)
|
To the knowledge of the Vendor, there are no material encumbrances for taxes upon any property or assets of the Company and its subsidiaries
(whether owned or leased);
|
(G)
|
The Company or its subsidiaries are not a party to any agreement, understanding, or arrangement relating to allocating or sharing any material
amount of taxes; and
|
(H)
|
The Company and each of its subsidiaries has duly and timely withheld from any amount paid or credited by it to or for the account or benefit
of any person, including any employees and any non-resident person, the amount of all material taxes and other deductions required by any laws to be withheld from any such amount and has duly and timely remitted the same to the appropriate
governmental entity;
|
(o)
|
Financial Statements. The Company’s financial statements as at and for the fiscal year ended December 31, 2019 (including the notes thereto) (the "Financial Statements") have been made available to the Purchaser, were prepared in accordance with GAAP acceptable in Colombia, applying IFRS standards, and were consistently applied and present fairly,
in all material respects, the financial position, financial performance and cash flows of the Company for the dates and periods indicated therein and reflect reserves required by GAAP in respect of all material contingent liabilities, if
any, of the Company, and do not contain any false or incorrect statement or omit material information that must be disclosed in accordance with applicable law. There has been no material change in the Company’s accounting policies since
December 31, 2019;
|
(p)
|
No Material Change. Since December 31, 2019,
|
(A)
|
The Company and its subsidiaries has conducted its business only in the ordinary course, excluding matters relating to the proposed Agreement;
|
(B)
|
There has not occurred any event, occurrence or development or a state of circumstances or facts which has had or would, individually or in the
aggregate, reasonably be expected to have any material adverse effect;
|
(C)
|
There has not been any acquisition or sale by the Company or its subsidiaries of any material property or assets;
|
(D)
|
There has not been any incurrence, assumption or guarantee by the Company or its subsidiaries of any material debt for borrowed money, any creation or assumption by the Company or its
subsidiaries of any encumbrance or any making by the Company or its subsidiaries of any material loan, advance or capital contribution to or investment in any other Person, except as disclosed in the Financial Statements; and
|
(E)
|
The Company has not affected or passed any resolution to approve a split, consolidation or reclassification of any of the Purchased Shares;
|
(q)
|
No Undisclosed Liabilities. The Company has no material outstanding indebtedness, liability or obligation (including liabilities or obligations to
fund any operations or work program, to give any guarantees or for taxes), whether accrued, absolute, contingent or otherwise, and is not party to or bound by any suretyship, guarantee, indemnification or assumption agreement, or
endorsement of, or any other similar commitment with respect to the obligations, liabilities or indebtedness of any person; and
|
(r)
|
Books and Records. The financial books, records and accounts of the Company and its subsidiaries (the “Books and Records”): (i) have been delivered to the Purchaser, (ii) have been maintained in accordance with applicable laws and GAAP on a basis consistent with prior years; (ii) are stated in
reasonable detail and accurately and fairly reflect the material transactions, acquisitions and dispositions of the assets of the Company and its subsidiaries; and (iii) accurately and fairly reflect the basis for the Financial Statements.
|
(a)
|
Incorporation and Qualification. The Purchaser is a corporation incorporated and existing under the laws of the Province of Ontario. The Purchaser
has the corporate power to enter into and perform its obligations under this Agreement;
|
(b)
|
Corporate Authority. The execution and delivery of and performance by the Purchaser of this Agreement have been authorized by all necessary
corporate action on the part of the Purchaser;
|
(c)
|
No Violation or Breach. The execution and delivery of and performance by the Purchaser of this Agreement:
|
(i)
|
will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a breach or violation of or a conflict with, or allow any
other person to exercise any rights under, any of the terms or provisions of the Purchaser’s constating documents or by-laws;
|
(ii)
|
will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a breach or violation of or a conflict with, or allow any
other person to exercise any rights under any contracts or instruments to which the Purchaser is a party; and
|
(iii)
|
will not result in the violation of any law;
|
(d)
|
Execution and Binding Obligation. This Agreement has been duly executed and delivered by the Purchaser and constitutes a legal, valid and binding
agreement of the Purchaser enforceable against it in accordance with its terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application
affecting the enforcement of creditors' rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies such as specific
performance and injunction; and
|
(e)
|
Compliance with Laws. Neither the Purchaser nor, to the knowledge of the Purchaser, any of their directors, executives, representatives, agents or
employees (i) has used or is using any corporate funds for any illegal contributions, gifts, entertainment or other expenses relating to political activity that would be illegal, (ii) has used or is using any corporate funds for any direct
or indirect illegal payments to any foreign or domestic governmental officials or employees, (iii) has violated or is violating any provision of the United States Foreign Corrupt Practices Act of 1977, the Corruption of Foreign Public
Officials Act (Canada) or any similar laws of other jurisdictions, (iv) has established or maintained, or is maintaining, any illegal fund of corporate monies or other properties or (v) has made any bribe, illegal rebate, illegal payoff,
influence payment, kickback or other illegal payment of any nature.
|
(1)
|
Deliveries to the Purchaser. Upon execution of this Agreement, the Vendors shall deliver to the Purchaser actual possession of the share
certificates representing the Purchased Shares, duly endorsed in favor of the Purchaser.
|
(2)
|
Receipt by Purchaser. By executing this Agreement, the Purchaser acknowledges receipt of the Purchased Shares.
|
(3)
|
Deliveries to the Vendors. Upon execution of this Agreement, the Purchaser shall deliver to the Vendors evidence of payment in full of the cash purchase price,.
|
(4)
|
Receipt by Vendors. By executing this Agreement, the Vendors acknowledge receipt of the document delivered pursuant to Section 7(3) and
acknowledge that the cash purchase price for the Purchased Shares, being USD$235,000, has been paid in full.
|
/s/Santiago Mora Bahamon | ||||||
Santiago Mora Bahamon
|
||||||
/s/Laura Londono Tapia | ||||||
Laura Londono Tapia
|
||||||
/s/Pablo Silva | ||||||
Pablo Silva
|
||||||
/s/Stefan Lauer | ||||||
Stefan Lauer
|
||||||
FLORA GROWTH CORPORATION | ||||||
By: /s/Luis Merchan
|
||||||
Name:Luis Merchan
|
||||||
Title:CEO
|
Vendor
|
%age of Consideration
|
Santiago
|
78.70%
|
Laura
|
13.00%
|
Pablo
|
5.98%
|
Stefan
|
2.32%
|
(a) |
Ángel is the registered and beneficial owner of 20,228 ordinary shares of Breeze Laboratory S.A.S., a company existing pursuant to the laws of the Republic of Colombia (the “Company”);
|
(b)
|
Sandra is the registered and beneficial owner of 20,228 ordinary shares of the Company;
|
(c)
|
Roberto is the registered and beneficial owner of 11,544 ordinary shares of the Company; and
|
(d)
|
The Vendors wish to sell and the Purchaser wishes to purchase an aggregate of 46,800 ordinary shares of the Company, representing 90% of the issued and outstanding equity of the Company
on a fully diluted basis, upon the terms and conditions contained in this Agreement.
|
Vendor
|
Company Shares
|
Ángel
|
18,205
|
Sandra
|
18,205
|
Roberto
|
10,390
|
Total
|
46,800
|
(a)
|
The consideration payable by the Purchaser to the Vendors for the Purchased Shares shall be as follows:
|
(i)
|
USD$206,200 of which is satisfied by the Purchaser discharging USD$58,900 payable owed by the Vendors to the Company, with the remainder, USD$147,300, being payable to the Vendors in the
percentages set out in Schedule “A” upon transfer of the Purchased Shares to the Purchaser, free and clear of any encumbrances.
|
(b)
|
In the event that the Purchaser elects, in its sole discretion, to merge the Company and Grupo Farmacéutico Cronomed S.A.S. (“Cronomed”), the
Purchaser shall issue that number of shares of the combined entity to the Vendors such that collectively the Vendors shall own a 5% equity interest in the combined entity; and
|
(c)
|
In the event that the Purchaser elects, in its sole discretion, (i) not to merge the Company and Cronomed, and (ii) to sell the Purchased Shares to a third party, at the Vendors’ sole
option, the Purchaser agrees to (A) pay to the Vendors COP$700 million, (B) pay to the Vendors 5% of the proceeds from the sale of the Purchased Shares to the third party, or (C) transfer 10% of the Purchased Shares to the Vendors, and the
Purchaser agrees to provide the Vendors 8 business days’ notice of any such decision, following which the Vendors shall have 8 days to advise the Purchaser in writing of their collective choice,
|
(a)
|
the Purchaser and Vendors shall enter into a unanimous shareholders’ agreement on customary terms providing for, among other things:
|
(i)
|
that the Company’s board shall be comprised of five directors, one of which shall be nominated by the Vendors (collectively), but only for so long as the Vendors collectively maintain at
least a 10% equity interest in the Company;
|
(ii)
|
restrictions on transfer of the Company’s shares;
|
(iii)
|
pre-emptive rights as between the Vendors;
|
(v)
|
rights entitling the Vendors to participate pro rata in future share issuances of the Company in order to maintain their respective holdings in the Company; and
|
(vi)
|
shotgun rights as between the parties hereto, pursuant to which the shares of a shareholder of the Company may be involuntarily acquired by one or more of the other shareholders; and
|
(b)
|
the Purchaser shall cause the Company to:
|
(i)
|
engage Sandra as scientific director for a monthly payment of COP$9 million, plus statutory benefits, for no fewer than 3 years following Closing, provided that the Purchaser may
terminate such engagement unilaterally if Sandra materially breaches the terms of the engagement agreement to be entered into by the Purchaser and Sandra; and
|
(ii)
|
engage Ángel as commercial director for a monthly payment of COP$9 million, plus statutory benefits, for no fewer than 3 years following Closing, provided that the Purchaser may terminate
such engagement unilaterally if Ángel materially breaches the terms of the engagement agreement to be entered into by the Purchaser and Ángel.
|
(a)
|
Corporate Authority. The transfer of the Purchased Shares to the Purchaser has been authorized by all necessary corporate action on the part of
the Company;
|
(b)
|
Organization and Good Standing. The Company is a company established and validly existing under the laws of the Republic of Colombia;
|
(c)
|
Qualification to do Business. The Company is duly qualified to carry on business and produce or market its products and services and is in
possession of all permits, authorizations, approvals, licenses, records and consents required in all jurisdictions in which the nature of its business activities make necessary, and all such products and services comply with all technical,
health, environmental or any other regulations that may apply;
|
(d)
|
No Violation or Breach. The execution and delivery of and performance by the Vendor of this Agreement:
|
(i)
|
will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a breach or violation of or a conflict with, or allow any
other person to exercise any rights under any contracts or instruments to which the Vendor is a party; and
|
(ii)
|
will not result in the violation of any law.
|
(e)
|
Execution and Binding Obligation. This Agreement has been duly executed and delivered by the Vendor and constitutes a legal, valid and binding
agreement of the Vendor enforceable against him or her in accordance with its terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application
affecting the enforcement of creditors' rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction;
|
(f)
|
Corporate Records. The corporate records of the Company have been delivered to the Purchaser and are complete and accurate in all material
respects and all corporate proceedings and actions reflected therein have been conducted or taken in compliance with all applicable laws and with the constating documents of the Company, and without limiting the generality of the foregoing:
(i) the minute books contain complete and accurate minutes of all meetings of the directors (and any committee thereof) and shareholders of the Company; (ii) such minute books contain all written resolutions passed by the directors (and any
committee thereof) and shareholders of the Company; (iii) the share certificate books, if any, the central securities register and register of transfers, and branch registers, of the Company are complete and accurate, and all transfers of
shares of the Company reflected therein have been duly completed and approved; and (iv) the registers of directors and officers are complete and accurate and all former and present directors and officers of the Company were duly elected or
appointed as the case may be;
|
(h)
|
No Other Agreements to Purchase. Except for the Purchaser's right under this Agreement, no person has any written or oral agreement, option or
warrant or any right or privilege (whether by law, pre‑emptive or contractual) capable of becoming such for the purchase or acquisition from the Vendor of any of the Purchased Shares;
|
(i)
|
Title to Purchased Shares. The Purchased Shares are owned by the Vendor as the registered and beneficial owner with a good title, free and clear
of all liens, charges, pledges, security interests and other encumbrances other than those restrictions on transfer, if any, contained in the articles of the Company. Upon completion of the transaction contemplated by this Agreement, the
Purchaser will have good and valid title to the Purchased Shares, free and clear of all liens, charges, pledges, security interests and other encumbrances other than (i) those restrictions on transfer, if any, contained in the articles of
the Company, and (ii) liens granted by the Purchaser;
|
(j)
|
No Action. The Vendor is not aware of any action, suit or proceeding, at law or at equity, for or by any court or any federal, provincial,
municipal or other governmental department, commission, board, agency or instrumentality which would prevent or materially adversely affect the transactions contemplated by this Agreement;
|
(k)
|
Financial Statements. The Company’s financial statements as at and for the fiscal year ended December 31, 2019 (including the notes thereto) (the "Financial Statements") have been made available to the Purchaser, were prepared in accordance with GAAP acceptable in Colombia, applying IFRS standards, and were consistently applied and present fairly,
in all material respects, the financial position, financial performance and cash flows of the Company for the dates and periods indicated therein and reflect reserves required by GAAP in respect of all material contingent liabilities, if
any, of the Company, and do not contain any false or incorrect statement or omit material information that must be disclosed in accordance with applicable law. There has been no material change in the Company’s accounting policies since
December 31, 2019;
|
(l)
|
Absence of Undisclosed Liabilities. The Company has no outstanding indebtedness, liability or obligation, whether accrued, absolute, contingent or
otherwise, and is not party to or bound by any suretyship, guarantee, indemnification or assumption agreement, or endorsement of, or any other similar commitment with respect to the obligations, liabilities or indebtedness of any person;
|
(m)
|
Receivables. The Company’s accounts receivables and credits (i) are free and clear of any encumbrance, (ii) are accurately reflected in the
Financial Statements, (iii) are and will remain following Closing valid, enforceable and collectible in full, except to the extent that the Company has established the appropriate provisions or accounting reserves in the Financial
Statements, and (iv) are a product of the ordinary course of the Company’s business, provided that a Vendor shall not be liable for non-payment of any such receivable following Closing unless non-payment results from an act or omission of
that Vendor;
|
(n)
|
Books and Records. The financial books, records and accounts of the Company and its subsidiaries (the “Books and
Records”): (i) have been delivered to the Purchaser, (ii) have been maintained in accordance with applicable laws and GAAP on a basis consistent with prior years; (ii) are stated in reasonable detail and accurately and fairly
reflect the material transactions, acquisitions and dispositions of the assets of the Company and its subsidiaries; and (iii) accurately and fairly reflect the basis for the Financial Statements;
|
(o)
|
Inventory. The inventory registered in the Books and Records is duly owned by the Company free and clear of any encumbrances and is in a condition
to be used or sold in the ordinary course of the Company’s business, subject to reasonable wear and tear;
|
(p)
|
Bank Accounts. A list of all of the Company’s bank accounts, including details of their locations, bank names, account numbers, balances and names
of all authorized signatories or those who have access, has been made available to the Purchaser;
|
(r)
|
Client List. A true and complete list of all of the Company’s clients and suppliers, including all commercial terms agreed with such clients and
suppliers, has been made available to the Purchaser.
|
(a)
|
Incorporation and Qualification. The Purchaser is a corporation incorporated and existing under the laws of the Province of Ontario. The Purchaser
has the corporate power to enter into and perform its obligations under this Agreement;
|
(b)
|
Corporate Authority. The execution and delivery of and performance by the Purchaser of this Agreement have been authorized by all necessary
corporate action on the part of the Purchaser;
|
(c)
|
No Violation or Breach. The execution and delivery of and performance by the Purchaser of this Agreement:
|
(i)
|
will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a breach or violation of or a conflict with, or allow any
other person to exercise any rights under, any of the terms or provisions of the Purchaser’s constating documents or by-laws;
|
(ii)
|
will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) result in a breach or violation of or a conflict with, or allow any
other person to exercise any rights under any contracts or instruments to which the Purchaser is a party; and
|
(iii)
|
will not result in the violation of any law;
|
(d)
|
Execution and Binding Obligation. This Agreement has been duly executed and delivered by the Purchaser and constitutes a legal, valid and binding
agreement of the Purchaser enforceable against it in accordance with its terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application
affecting the enforcement of creditors' rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies such as specific
performance and injunction; and
|
(e)
|
Investment Canada Act. The Purchaser is not a non‑Canadian within the meaning of the Investment Canada Act
(Canada).
|
(1)
|
(2)
|
Receipt by Purchaser. By executing this Agreement, the Purchaser acknowledges receipt of the Purchased Shares.
|
(3)
|
(4)
|
/s/Ángel Miguel Ramírez | ||||||
Ángel Miguel Ramírez
|
||||||
/s/Sandra Milena Barreto Garzón | ||||||
Sandra Milena Barreto Garzón
|
||||||
/s/Roberto Barreto | ||||||
Roberto Barreto
|
||||||
FLORA GROWTH CORPORATION | ||||||
By:/s/Luis Merchan
|
||||||
Name: Luis Merchan
|
||||||
Title: CEO
|
Vendor
|
%age of Consideration
|
Account Details
|
Sandra
|
38.9%
|
Bank: Banco Caja
Account No.:
Name: Breeze Laboratory S.A.S.
ID: 900495012-7
|
Ángel
|
38.9%
|
Bank: Banco Caja
Account No.:
Name: Breeze Laboratory S.A.S.
ID: 900495012-7
|
Roberto
|
22.2%
|
Bank: Banco Caja
Account No.:
Name: Breeze Laboratory S.A.S.
ID: 900495012-7
|
1.1
|
Que Grupo Farmacéutico Cronomed S.A.S es una sociedad constituida y actualmente existente bajo las leyes de la República de Colombia y con NIT 900013075-3 (“Cronomed” o la “Compañía”).
|
1.2
|
Que los Vendedores son los únicos propietarios de ciento treinta y cuatro (134) acciones, representativas del cien por ciento (100%) del capital social de Cronomed (las “Acciones”).
|
1.1
|
That Grupo Farmacéutico Cronomed S.A.S is a company incorporated and currently existing under the laws of the Republic of Colombia and with NIT 900013075-3 (“Cronomed” or the “Company”).
|
1.2
|
That the Sellers are the sole owners of one hundred thirty-four (134) shares, representing one hundred percent (100%) of Cronomed's capital stock (the “Shares”)
|
1.3
|
Que, los accionistas de CRONOMED dueños del 100% de la participación de capital de la compañía, aprobaron la venta del 100% de las acciones suscritas y de toda la propiedad industrial que se encuentra bajo
registro de la sociedad, aprobada mediante Acta de Asamblea de Accionistas, documento que anexo que hace parte integral del presente contrato.
|
1.3
|
That, the shareholders of CRONOMED, who own 100% of the company's capital participation, approved the sale of 100% of the subscribed shares and of all the industrial property that is under registration of
the company, approved by Act of the Shareholders' Meeting, a document that is attached as an integral part of this contract.
|
1.4
|
Que, los accionistas de CRONOMED desean vender, y FLORA desea comprar, el cien por ciento (100%) de las Acciones en los términos y sujeto a las condiciones que se establecen en este Contrato (la “Transacción”
o el “negocio”),
|
1.5
|
Que, el capital de CRONOMED Autorizado, suscrito y Pagado se encuentra representado a la fecha de este acuerdo de la siguiente manera:
|
Capital autorizado
|
Capital suscrito
|
Capital pagado
|
1.000.000.000
|
670.000.000
|
670.000.000
|
1.6
|
Que, teniendo en cuenta lo anterior, la participación accionaria de la compañía será la siguiente:
|
Accionistas
|
Porcentaje de participación accionaria
|
FLORA
|
100%
|
1.7
|
Que el cierre del negocio se entenderá, una vez se realice el pago completo del valor de la compra y la transferencia de las acciones correspondientes.
|
1.8
|
Que, para el cierre final del negocio, FLORA podrá suscribir el mencionado documento, a través de cualquiera de sus sucursales.
|
1.4
|
That, the shareholders of CRONOMED wish to sell, and FLORA wish to buy, one hundred percent (100%) of the Shares under the terms and subject to the conditions established in this Agreement (the
“Transaction” or the “business”) , including divisions, business units, clients, contracts and without being limited to all assets, personal property,
|
1.5
|
That, the CRONOMED Authorized, subscribed and Paid capital is represented as of the date of this agreement as follows: agreement as follows:
|
Authorized Capital
|
Subscribed Capital
|
Paid-in Capital
|
1.000.000.000
|
670.000.000
|
670.000.000
|
1.6
|
That, Considering the above, the company's shareholding will be as follows:
|
Shareholder
|
Participation Shares percentage
|
FLORA
|
100%
|
1.7
|
That the closing of the business will be understood, once the full payment of the purchase value and the transfer of the corresponding shares is made.
|
1.8
|
That, for the final closing of the business, FLORA may sign the aforementioned document, through any of its branches.
|
a.
|
Los Vendedores transferirán y entregarán los títulos originales representativos de las Acciones debidamente endosados a favor del Comprador (o de la entidad que éste designe para tal
efecto). Libre de cualquier gravamen
|
a.
|
The Sellers will transfer and deliver the original titles representing the Shares duly endorsed in favor of the Buyer (or the entity designated by the latter for that purpose), free and
clear of any encumbrances.
|
b.
|
El representante autorizado de Cronomed aportará constancia de la inscripción en el libro de registro de accionistas al Comprador (o a la entidad que éste designe para tal efecto) como
titular de las Acciones, que deberán representar, en su conjunto, el cien por ciento (100%) del capital social de Cronomed.
|
c.
|
Los Vendedores entregarán al Comprador (o de la entidad que éste designe para tal efecto) los documentos necesarios que evidencien la obtención previa de todas las autorizaciones y
consentimientos corporativos requeridos para la enajenación de las Acciones libres de Gravámenes, requeridas por los estatutos de las sociedades vendedoras, de la Sociedad, o por la que Ley Aplicable.
|
d.
|
Entregar una certificación original suscrita por el Representante Legal de Cronomed y por los Vendedores donde conste que las Declaraciones y Garantías son verdaderas en todos sus
aspectos a la Fecha de Cierre.
|
e.
|
Entregar cualquier otro documento exigido en el presente Contrato o en cualquiera de los documentos de la transacción, o que por la Ley Aplicable sean exigibles a la Fecha de Cierre o
necesarios o adecuados para llevar a cabo la finalización de las transacciones aquí contempladas (el “Cierre”).
|
f.
|
Entregar constancia del registro, libre de Gravámenes, a nombre de la Compañía de treinta y cinco (35) licencias con cincuenta (50) marcas de productos farmacéuticos vigentes, trece (13)
licencias debidamente radicadas y en trámite ante el Invima, así como los documentos, estudios e investigaciones de seis (6) dossiers en desarrollo (en conjunto los “Intangibles”),
|
g.
|
Entregar debidamente suscritos los contratos de compraventa de productos (los “Contratos de Suministro”) entre Cronomed y los Vendedores que venían comprando a Cronomed, los cuales deberán incluir la
obligación de los Vendedores de seguir comprando a la Compañía de acuerdo a su promedio de compras del año anterior a la Fecha de Firma. Los Contratos de Suministro deberán tener una vigencia mínima de tres (3) años.
|
h.
|
En caso de ser aplicable, las constancias de las autorizaciones de terceros requeridas en los contratos en los cuales el cambio de control de la Compañía de lugar a la terminación o
modificación de los términos del respectivo contrato. En caso de que dicha autorización no sea requerida, se entrará una certificación, suscrita por el representante legal de Cronomed, de que dichas autorizaciones no son aplicables en
ninguno de los contratos de la Compañía.
|
b.
|
The authorized representative of Cronomed will provide evidence of the registration of the Buyer (or the entity designated by him for that purpose) as the owner of the Shares, which
must represent, as a whole, one hundred percent (100% ) of Cronomed's share capital.
|
c.
|
The Sellers will deliver to the Buyer (or the entity that the latter designates for that purpose) the necessary documents evidencing the prior obtaining of all authorizations and
corporate consents required for the sale of the Liens-free Shares, required by the statutes. of the selling companies, of the Company, or by the Applicable Law.
|
d.
|
Deliver an original certification signed by Cronomed's Legal Representative and by the Sellers stating that the Declarations and Guarantees are true in all their aspects as of the
Closing Date.
|
e.
|
Deliver any other document required in this Contract or in any of the transaction documents, or that are required by Applicable Law on the Closing Date or are necessary or adequate to
carry out completion of the transactions contemplated herein (the “Closing”).
|
f.
|
Deliver proof of the registration, free of Liens, in the name of the Company of forty-one (41) current health records, thirteen (13) health records ready for filing with INVIMA,
fifty-six (56) trademarks, as well such as the documents, studies and investigations of six (6) dossiers in development (together the "Intangibles").
|
g.
|
Deliver duly signed product sale contracts (the “Supply Contracts”) between Cronomed and the Sellers who had been buying from Cronomed, which must include the obligation of the Sellers to continue buying
from the Company according to their average purchases of the year prior to the Signature Date. The Supply Contracts must have a minimum validity of three (3) years.
|
h.
|
If applicable, the evidence of the authorizations of third parties required in the contracts in which the change of control of the Company leads to the termination or modification of
the terms of the respective contract. In the event that said authorization is not required, a certification will be entered, signed by Cronomed's legal representative, that said authorizations are not applicable in any of the Company's
contracts.
|
a.
|
Entregar el comprobante del pago completo del Precio a los Vendedores de acuerdo con la forma de pago indicada en la Sección 4.2.
|
b.
|
Entregar a Cronomed los documentos corporativos del Comprador que evidencien la obtención previa de las autorizaciones y consentimientos corporativos requeridos para la celebración y
ejecución del presente Contrato.
|
c.
|
Entregar cualquier otro documento exigido en el presente Contrato o en cualquiera de los documentos de la Transacción exigibles a la Fecha de Cierre o necesarios o adecuados para llevar a
cabo el Cierre.
|
6.1
|
Obligación posterior al Cierre
|
a.
|
Deliver evidence of payment in full of the Price to the Sellers in accordance with the payment method indicated in Section 4.2.
|
b.
|
Deliver to Cronomed the Buyer's corporate documents evidencing the prior obtaining of the authorizations and corporate consents required for the execution and execution of this Contract.
|
c.
|
Deliver any other document required in this Contract or in any of the Transaction documents required on the Closing Date or necessary or appropriate to carry out the Closing.
|
a.
|
The subscribed and paid capital of Cronomed amounts to the amount of six hundred and seventy million pesos (COP $ 670,000,000) and is divided into one hundred thirty-four (134) ordinary
shares with a nominal value of five million pesos (COP $ 5,000 .000) each.
|
b.
|
The Sellers are the sole and exclusive owners of the existing and outstanding shares of Cronomed that represent one hundred percent (100%) of the capital stock, all of which are free of
any Liens, pledges, trusts, options, Precautionary measures, litigation, civil lawsuits, usufructs, voting agreements, shareholders agreements, have not been sold or promised for sale, except for the Transaction, and, in general, do not
support any type of Tax, restriction or affectation that prevents, limit or restrict performance of the Contract.
|
c.
|
The existing and outstanding shares of CRONOMED that represent one hundred percent (100%) of the capital stock, are free of any Liens, pledge, trust, options, precautionary measures,
litigation, civil lawsuits, usufructs, voting agreements, shareholder agreements, have not been sold or promised for sale, except for the Transaction, and, in general, do not support any type of Tax, restriction or affectation that
prevents, limits or restricts the execution of the Contract.
|
d.
|
All the Shares have been duly issued and subscribed and paid in full.
|
e.
|
The Shares are duly represented in the securities representing the Shares which have been issued before the Closing Date in due form and subject to Applicable Law as found or will be
found on the Closing Date reflected in the shareholder record book.
|
f.
|
All Shares correspond to ordinary shares. There are no preferential, privileged or special rights shares in CRONOMED (except for the preferential right established in the corporate
bylaws), or other types of shares or securities or bonds or debt convertible into shares, orders, or other rights or options with respect to any title issued by said Company or any other security that entitles the holder and / or owner to
receive CRONOMED shares or any participation in the capital of said Company or its Subsidiary.
|
g.
|
CRONOMED and its Subsidiary have not: (i) approved, promised or otherwise committed to issue, place or reacquire in the future shares (ii) promised, decreed or committed to the payment
of dividends or benefits in the future; (iii) issued bonds convertible into shares; nor (iv) promised for sale or has granted options for the acquisition of its shares, quotas or any other security that entitles the holder and / or owner
to receive shares or quotas from Cronomed or its Subsidiary, or any participation in the capital or any right that may modify the composition of the capital of Cronomed or its Subsidiary. Neither Cronomed, nor its Subsidiary,
|
h.
|
THE SELLERS are not subject to any obligation to issue, sell, deliver, redeem, or in any way transfer shares or any other security issued by Cronomed or its Subsidiary except as provided in this Agreement.
|
i.
|
Once the payment of the Price to the Sellers provided for in this Agreement is made, the Buyer may exercise the political and economic rights that are inherent to the Shares.
|
a.
|
b.
|
Los Estados Financieros (i) son verdaderos, correctos y completos, (ii) presentan verazmente la situación patrimonial y financiera de CRONOMED, así como sus activos,
pasivos y resultados de operaciones y flujos de caja de CRONOMED en las fechas y durante los períodos indicados en dichos Estados Financieros, todo ello de conformidad con los Principios de Contabilidad Generalmente aceptadas en Colombia,
aplicando la estandarización de Normas Internacionales Financieras. (iii) han sido elaborados de conformidad con los Principios de Contabilidad y están en concordancia con los libros y registros de CRONOMED y con las políticas contables
de CRONOMED, las cuales han sido aplicadas de forma apropiada y consistente durante el ejercicio a que se refieren; (iv) no omiten información material que deba ser revelada de conformidad con la Ley Aplicable o este Contrato, salvo la
información que Los Vendedores suministraron a Los Compradores en la etapa precontractual y que es de pleno conocimiento para los mismos
|
c.
|
Cronomed no tiene ningún endeudamiento, pasivo u obligación pendiente, ya sea devengado, absoluto, contingente o de otro tipo, y no es parte ni está obligado por
ningún acuerdo de fianza, garantía, indemnización o asunción, o endoso de, o cualquier otro compromiso similar con respecto a la obligaciones, pasivos o endeudamiento de cualquier persona, Cronomed no ha asumido obligaciones o
responsabilidades (efectivas o contingentes) de ningún tipo, que no se encuentren debidamente reflejadas o que no hayan sido debidamente provisionadas en los Estados Financieros. Los Estados Financieros no contienen declaraciones falsas o
incorrectas, y han sido preparados de acuerdo con los Principios Contables, aplicando la estandarización de las Normas Financieras Internacionales y no omiten información que pueda afectar la situación patrimonial, financiera o de
resultados de Cronomed..
|
a.
|
Included as Annex 5.1.10 are Cronomed's financial statements as of December thirty-one (31), two thousand nineteen (2019) “Financial Statements”).
|
b.
|
The Financial Statements (i) are true, correct and complete, (ii) present truthfully the equity and financial situation of Cronomed, as well as its assets, liabilities and results of
operations and cash flows of Cronomed on the dates and during the periods indicated in said Financial Statements, all in accordance with the Accounting Principles Generally accepted in Colombia, applying the standardization of
International Financial Standards. (iii) they have been prepared in accordance with the Accounting Principles and are in accordance with Cronomed's books and records and with Cronomed's accounting policies, which have been applied
appropriately and consistently during the fiscal year to which they refer; (iv) do not omit information material that must be disclosed in accordance with Applicable Law or this Agreement, Except for the information that The Sellers
provided to The Buyers in the pre-contractual stage and that is fully known to them.
|
c.
|
Cronomed has no outstanding indebtedness, liability or obligation, whether accrued, absolute, contingent or otherwise, and is not party to or bound by any suretyship, guarantee,
indemnification or assumption agreement, or endorsement of, or any other similar commitment with respect to the obligations, liabilities or indebtedness of any person,, which are not duly reflected or which have not been duly provisioned
in the Financial Statements. The Financial Statements do not contain any false or incorrect statements, and have been prepared in accordance with the Accounting Principles, applying the standardization of International Financial Standards
and do not omit information that may affect the equity, financial or results situation of Cronomed.
|
d.
|
CRONOMED ha aplicado correctamente los Principios de Contabilidad sobre provisión para deudas, pérdidas u obligaciones de dudoso recaudo.
|
e.
|
Todas las cuentas por cobrar u otros créditos de CRONOMED son legítimos y cobrables en su monto total, salvo aquellos para los que CRONOMED ha constituido las
oportunas provisiones o reservas contables en los Estados Financieros y en la cuantía de tales provisiones y reservas.
|
a.
b.
|
Los libros y papeles de contabilidad principales y auxiliares, el libro de registro de accionistas, el libro de actas, las cuentas bancarias y todos los demás libros
corporativos, anexos, soportes y papeles de CRONOMED son veraces y se han llevado de acuerdo con las normas jurídicas y las buenas prácticas del negocio, y los asuntos contenidos en los mismos son ciertos y veraces y se reflejan con
precisión en los Estados Financieros.
Todas las decisiones corporativas han sido debidamente incluidas en las actas de los respectivos órganos corporativos conforme a la Ley Aplicable. No existen decisiones corporativas que no se encuentren reflejadas en los libros de
CRONOMED y las actas allí incluidas son las únicas que existen y reflejan verazmente lo ocurrido en la totalidad de reuniones de los órganos sociales de CRONOMED
|
d.
|
Cronomed has correctly applied the Accounting Principles on provision for bad debts, losses or obligations.
|
e.
|
All accounts receivable or other credits from Cronomed are legitimate and collectible in their total amount, except those for which Cronomed has established the appropriate accounting
provisions or reserves in the Financial Statements and in the amount of such provisions and reserves.
|
a.
|
The main and auxiliary accounting books and papers, the shareholder register book, the minute book, the bank accounts and all other corporate books, annexes, supports and papers of
Cronomed are true and have been kept in accordance with legal standards and good business practices, and the matters contained therein are true and truthful and are accurately reflected in the Financial Statements.
|
b.
|
Except for the provisions in the Disclosure Annex, all corporate decisions have been duly included in the minutes of the respective corporate bodies in accordance with Applicable Law.
There are no corporate decisions that are not reflected in Cronomed's books and the minutes included there are the only ones that exist and accurately reflect what happened in all meetings of Cronomed's corporate bodies.
|
a.
|
El Anexo 5.1.19 (b) contiene una lista de clientes y proveedores de Cronomed y su Subsidiaria, incluyendo una descripción de los términos comerciales acordados con ellos.
|
b.
|
Los Contratos establecen obligaciones válidas, vinculantes y exigibles frente a cada una de sus contrapartes, y en los términos allí previstos. En ningún caso los Vendedores serán
responsables por incumplimientos o declaraciones de nulidad de estos contratos posteriores a la Fecha de Cierre, salvo que dicho incumplimiento o declaración de nulidad se deba a hechos ocurridos antes de la Fecha de Cierre
|
a.
|
Annex 5.1.19 (b) contains a list of customers and suppliers of Cronomed and its Subsidiary, including a description of the commercial terms agreed with them.
|
b.
|
The Contracts establish valid, binding and enforceable obligations against each of the counterparties thereof, and in the terms provided therein. In no event will the Sellers be liable
for breaches or declarations of invalidity of these contracts after the Closing Date, unless said breach or declaration of invalidity is due to events that occurred prior to the Closing Date.
|
c.
|
Cronomed y su Subsidiaria están y han cumplido razonablemente con sus obligaciones contractuales bajo los Contratos y relaciones con Clientes y Proveedores. Ni los Vendedores, Cronomed o
su Subsidiaria saben que existe algún reclamo, disputa, acción legal para entablar una acción o litigio contra Cronomed o su Subsidiaria y, no hay ningún reclamo pendiente derivado o relacionado con el desempeño y / o ejecución del
Contratos. o relaciones con clientes y proveedores.
|
d.
|
Salvo los indicados en el Anexo de Divulgación, los Contratos y las relaciones con clientes y proveedores se han celebrado en condiciones de mercado, en debida forma y de conformidad con
la Ley Aplicable.
|
c.
|
Cronomed and its Subsidiary are and have been reasonably in compliance with their contractual obligations under the Contracts and under the relationships with Clients and Suppliers.
Neither the Sellers, Cronomed or its Subsidiary know that there is any claim, dispute, legal action to institute an action or litigation against Cronomed or its Subsidiary and, no claim is pending derived or in relation to the compliance
and / or execution of the Contracts or relationships with customers and suppliers.
|
d.
|
Except for those indicated in the Disclosure Annex, the Contracts and relationships with customers and suppliers have been entered into under market conditions, in due form and in
accordance with Applicable Law.
|
e.
|
The Sellers declare and warrant that they are not aware of the existence of contingencies for Cronomed or its Subsidiary associated with the contracts or relationships with customers and
suppliers or that arise from a total or partial breach of the obligations of some of the parts thereof, nor contingent liabilities arising from claims, disputes or controversies pending on the Closing Date associated with such Contracts
or relationships with customers and suppliers, and that are not duly reflected or disclosed in the Financial Statements.
|
a.
|
FLORA y/o su designado, cumplirán con todas las leyes aplicables a la materia del Contrato;
|
b.
|
FLORA declara con la firma del presente que la información aquí contenida, es verdadera y correcta en la Fecha de Cierre.
|
c.
|
FLORA declara y garantiza que posee todas las facultades para realizar la compra y que cuenta con la autorización que se requiera, por la cuantía de la transacción,
debidamente avalada por la asamblea de accionistas, si fuere el caso.
|
1.
|
Los VENDEDORES deberán abstenerse de participar por sí o por interpuesta persona en interés personal o de terceros, en actividades que impliquen competencia con la sociedad o en actos que
impliquen competencia con las actividades que adelantan FLORA y/o CRONOMED, o en actos respecto de los cuales exista conflicto de intereses.
|
2.
|
LOS VENDEDORES, reconocen expresamente con la firma de este contrato que en modo alguno esta obligación de no hacer, viola sus derechos fundamentales al trabajo o a la iniciativa
empresarial, sino que ello es una consecuencia de su libre y espontánea voluntad, el cual supone el deber de lealtad hacía la sociedad.
|
a.
|
Participar como accionistas, socios, gestores, contratistas o empleados relacionados de alguna manera con personas jurídicas, personas naturales o establecimientos de comercio que
adelanten las mismas actividades de FLORA GROWTH CORP O CRONOMED. Se exceptúan de esta obligación las participaciones de este tipo con las que cuente LOS VENDEDORES, previas a la firma de este
contrato, las cuales serán declaradas en documento anexo.
|
b.
|
Contactar, para propósitos de competencia, a proveedores, clientes, entidades o personas que hagan parte de la cadena de valor del negocio que explota FLORA GROWTH CORP. O CRONOMED.
|
c.
|
Revelar a cualquier persona o empresa, cualquier negocio, secreto técnico o comercial, detalles de la organización de la sociedad o de sus asuntos operacionales, nombres de clientes o
cualquiera otra información que sea susceptible de ser empleada por dichas personas o empresas para desarrollar actividades o emprender acciones de competencia comercial con FLORA GROWTH CORP. O CRONOMED
|
1.
|
The SELLERS must abstain from participating, by themselves or through an intermediary, in personal interests or those of third parties, in activities that imply competition with the
company or in acts that imply competition with the activities carried out by FLORA and/or CRONOMED, or in acts with respect to which there is a conflict of interest.
|
2.
|
THE SELLERS expressly acknowledge, by signing this contract, that in no way does this obligation not to do anything violate their fundamental rights to work or to entrepreneurship, but
that it is a consequence of their free and spontaneous will, which implies a duty of loyalty to society.
|
a.
|
Participating as shareholders, partners, managers, contractors or employees related in any way to legal persons, natural persons or commercial establishments that carry out the same
activities of the partners and FLORA GROWTH CORP. OR CRONOMED . The participations of this type that THE SELLERS have, prior to the signing of this contract, are exempted from this obligation, which
will be declared in an attached document.
|
b.
|
Contact, for competition purposes, suppliers, clients, entities or people that are part of the value chain of the business that FLORA GROWTH CORP. OR CRONOMED.
|
c.
|
Reveal to any person or company, any business, technical or commercial secret, details of the organization of the company or of its operational affairs, names of clients or any other
information that may be used by said persons or companies to develop activities or undertake commercial competition actions with FLORA GROWTH CORP. OR CRONOMED.
|
d.
|
Inducir, influenciar o convencer a cualquier cliente, proveedor, empleado o relacionado con los negocios de la sociedad para que abandone su relación contractual o comercial con ella o
para que inicie relaciones de la misma naturaleza con compañías o personas que sean competencia directa o indirecta de la sociedad.
|
e.
|
Participar como accionistas, socios, gestores, contratistas, colaboradores o empleados relacionados de alguna manera con personas jurídicas, personas naturales o establecimientos de
comercio que adelanten, actividades de cultivo de cannabis psicoactivo y/o no psicoactivo (lo que incluye cáñamo), fabricación de derivados de cannabis psicoactivo y/o no psicoactivo (lo que incluye cáñamo) en cualquiera de sus
variedades, usos médicos, científicos, industriales, textiles, veterinarios, cosméticos, alimenticios, o farmacéuticos de cannabis psicoactivo y/o no psicoactivo (lo que incluye cáñamo), comercialización, exportación e importación de
materia prima o productos terminados de cannabis psicoactivo y/o no psicoactivo (lo que incluye cáñamo).
|
d.
|
Induce, influence or convince any client, supplier, employee or related to the business of the company to abandon their contractual or commercial relationship with it or to initiate
relationships of the same nature with companies or people that are direct or indirect competition of the society.
|
e.
|
Participate as shareholders, partners, managers, contractors, collaborators or employees related in any way to legal entities, natural persons or commercial establishments that carry out
psychoactive and / or non-psychoactive cannabis cultivation activities (which includes hemp), manufacture of derivatives of psychoactive and / or non-psychoactive cannabis (which includes hemp) in any of its varieties, medical,
scientific, industrial, textile, veterinary, cosmetic, food, or pharmaceutical uses of psychoactive and / or non-psychoactive cannabis (which includes hemp), marketing, export and import of raw material or finished products of
psychoactive and / or non-psychoactive cannabis (which includes hemp).
|
a.
|
El Tribunal estará integrado por un (1) árbitro designados por las Partes de común acuerdo dentro de los cinco (5) días siguientes a la fecha en que cualquiera de ellas solicite por
escrito a la otra tal designación. En caso de que no fuere posible, el árbitro será designado por el Centro de Arbitraje y Conciliación de la Cámara de Comercio de Bogotá, a solicitud de cualquiera de las Partes, por sorteo entre los
árbitros inscritos en la lista “A” en dicho Centro de Arbitraje.
|
b.
|
El Tribunal decidirá en derecho.
|
c.
|
El Tribunal sesionará en las instalaciones del Centro de Arbitraje y Conciliación de la Cámara de Comercio de Bogotá.
|
d.
|
La organización interna, tarifas y honorarios del tribunal se sujetarán a las reglas previstas para el efecto por el Centro de Arbitraje y Conciliación de la Cámara de Comercio de Bogotá.
|
e.
|
Cada parte asumirá los costos y gastos que demande su representación ante el tribunal arbitral que se conforme para la solución de la correspondiente disputa.
|
a.
|
The Tribunal shall be composed of one (1) arbitrator appointed by the Parties by mutual agreement within five (5) days following the date on which either of them requests such
appointment in writing from the other. In the event that this is not possible, the arbitrator will be appointed by the Arbitration and Conciliation Center of the Bogotá Chamber of Commerce, at the request of any of the Parties, by lottery
among the arbitrators registered on list "A" in said Center. of Arbitration.
|
b.
|
The Court will decide in law.
|
c.
|
The Court will meet at the facilities of the Arbitration and Conciliation Center of the Bogotá Chamber of Commerce.
|
d.
|
The internal organization, rates and fees of the court will be subject to the rules provided for that purpose by the Arbitration and Conciliation Center of the Bogotá Chamber of
Commerce.
|
e.
|
Each party will assume the costs and expenses demanded by its representation before the arbitral tribunal that is established for the solution of the corresponding dispute.
|
-
|
Que el Cedente es propietario de un derecho de membresía del diez por ciento (10%) (el "derecho de membresía") en HEMP TEXTILES & CO LLC, una compañía de responsabilidad limitada de Florida (la
"Compañía");
|
-
|
Que el Cedente desea mediante esta Cesión asignar al Cesionario todos los Derechos de Membresía del Cedente en la Compañía, y el Cesionario desea por medio de esta Cesión aceptar los mismos.
|
-
|
Que el pago por parte del Cesionario al Cedente corresponde a la suma de Cien Dólares Estadounidenses ($ 100.00) USD
|
|
2. GARANTÍAS
|
-
|
i. That, on the Signature Date, the company has an authorized capital of five hundred million pesos, of which TWO HUNDRED THOUSAND (200,000) shares are subscribed, and TWO HUNDRED THOUSAND (200,000) paid,
(hereinafter the "Shares") , and, being the latter, those that represent 100% of the paid capital of HEMP TEXTILES & CO SAS, a simplified joint stock company constituted and existing in accordance with the Laws of the Republic of
Colombia, duly constituted and identified with NIT. 901,391,015-5 (hereinafter the “Company”).
|
-
|
ii. That the nominal value of each of the Shares amounts to the sum of THOUSAND COLOMBIAN PESOS (COP $ 1,000).
|
-
|
iii. That the Assignor wishes to sell and transfer to the Assignee all the Shares of which he is the owner, that is, he wishes to transfer to the Assignee TEN THOUSAND SHARES (the “Hemp Shares”), together
with all current and future rights, which represent FIVE PERCENT (5%) of the total shares.
|
-
|
iv. That the Assignee, in turn, intends to acquire the Shares, in return, the Assignor will receive from the Assignee NINETY-FIVE THOUSAND (95.000) shares of FLORA GROWTH CORP. Therefore, the parties
agree as follows:
|
-
|
Que, en la Fecha de Firma, la empresa tiene un capital autorizado de quinientos millones de pesos, de los cuales DOSCIENTAS MIL (200.000) acciones se encuentran suscritas, y, DOSCIENTAS MIL (200.000)
pagadas, (en adelante las “Acciones”), y, siendo estas últimas, las que representan el 100% del capital pagado de HEMP TEXTILES & CO S.A.S., sociedad por acciones simplificada constituida y existente de conformidad con las Leyes de
la República de Colombia, debidamente constituida e identificada con NIT. 901.391.015-5 (en adelante la “Compañía”).
|
-
|
Que el valor nominal de cada una de las Acciones asciende a la suma de MIL PESOS COLOMBIANOS (COP $1.000).
|
-
|
Que el CEDENTE desea vender y transferir al CESIONARIO la totalidad de las Acciones de las cuales es titular, es decir, desea transferir al CESIONARIO DIEZ MIL ACCIONES, junto con todos los derechos
actuales y futuros, que representan el CINCO POR CIENTO (5%) del total de las Acciones.
|
-
|
Que el CESIONARIO, a su vez, tiene la intención de adquirir las Acciones, en contraprestación, éste recibirá de parte del CEDENTE NOVENTA Y CINCO MIL (95.000) acciones de FLORA GROWTH CORP.
|
-
|
i. That, on the Signature Date, the company has an authorized capital of five hundred million pesos, of which TWO HUNDRED THOUSAND (200,000) shares are subscribed, and TWO HUNDRED THOUSAND (200,000) paid,
(hereinafter the "Shares") , and, being the latter, those that represent 100% of the paid capital of HEMP TEXTILES & CO SAS, a simplified joint stock company constituted and existing in accordance with the Laws of the Republic of
Colombia, duly constituted and identified with NIT. 901,391,015-5 (hereinafter the “Company”).
|
-
|
ii. That the nominal value of each of the Shares amounts to the sum of THOUSAND COLOMBIAN PESOS (COP $ 1,000).
|
-
|
iii. That the Assignor wishes to sell and transfer to the Assignee all the Shares of which he is the owner, that is, he wishes to transfer to the Assignee TWENTY THOUSAND SHARES (the “Hemp Shares”),
together with all current and future rights, which represent TEN PERCENT (10%) of the total shares.
|
-
|
That the Assignee, in turn, intends to acquire the Shares, in return, he will receive from the BUYER ONE HUNDRED NINETY THOUSAND (190,000) shares of FLORA GROWTH CORP.
|
-
|
Que, en la Fecha de Firma, la empresa tiene un capital autorizado de quinientos millones de pesos, de los cuales DOSCIENTAS MIL (200.000) acciones se encuentran suscritas, y, DOSCIENTAS MIL (200.000)
pagadas, (en adelante las “Acciones”), y, siendo estas últimas, las que representan el 100% del capital pagado de HEMP TEXTILES & CO S.A.S., sociedad por acciones simplificada constituida y existente de conformidad con las Leyes de
la República de Colombia, debidamente constituida e identificada con NIT. 901.391.015-5 (en adelante la “Compañía”).
|
-
|
Que el valor nominal de cada una de las Acciones asciende a la suma de MIL PESOS COLOMBIANOS (COP $1.000).
|
-
|
Que el CEDENTE desea vender y transferir al CESIONARIO la totalidad de las Acciones de las cuales es titular, es decir, desea transferir al CESIONARIO DIEZ MIL ACCIONES, junto con todos los derechos
actuales y futuros, que representan el DIEZ POR CIENTO (10%) del total de las Acciones.
|
-
|
Que el CESIONARIO, a su vez, tiene la intención de adquirir las Acciones, en contraprestación, éste recibirá de parte del COMPRADOR CIENTO NOVENTA MIL (190.000) acciones de FLORA GROWTH CORP.
|
|
2. |
GUARANTEE.
|
-
|
i. That, on the Signature Date, the company has an authorized capital of five hundred million pesos, of which TWO HUNDRED THOUSAND (200,000) shares are subscribed, and TWO HUNDRED THOUSAND (200,000) paid,
(hereinafter the "Shares") , and, being the latter, those that represent 100% of the paid capital of HEMP TEXTILES & CO SAS, a simplified joint stock company constituted and existing in accordance with the Laws of the Republic of
Colombia, duly constituted and identified with NIT. 901,391,015-5 (hereinafter the “Company”).
|
-
|
ii. That the nominal value of each of the Shares amounts to the sum of THOUSAND COLOMBIAN PESOS (COP $ 1,000).
|
-
|
iii. That the Assignor wishes to sell and transfer to the Assignee all the Shares of which he is the owner, that is, he wishes to transfer to the Assignee TEN THOUSAND SHARES (the “Hemp Shares”), together
with all current and future rights, which represent FIVE PERCENT (5%) of the total shares.
|
-
|
iv. That the Assignee, in turn, intends to acquire the Shares, in return, he will receive from the BUYER the sum of ONE HUNDRED US DOLLARS (100 USD)
|
-
|
Que, en la Fecha de Firma, la empresa tiene un capital autorizado de quinientos millones de pesos, de los cuales DOSCIENTAS MIL (200.000) acciones se encuentran suscritas, y, DOSCIENTAS MIL (200.000)
pagadas, (en adelante las “Acciones”), y, siendo estas últimas, las que representan el 100% del capital pagado de HEMP TEXTILES & CO S.A.S., sociedad por acciones simplificada constituida y existente de conformidad con las Leyes de
la República de Colombia, debidamente constituida e identificada con NIT. 901.391.015-5 (en adelante la “Compañía”).
|
-
|
Que el valor nominal de cada una de las Acciones asciende a la suma de MIL PESOS COLOMBIANOS (COP $1.000).
|
-
|
Que el CEDENTE desea vender y transferir al CESIONARIO la totalidad de las Acciones de las cuales es titular, es decir, desea transferir al CESIONARIO DIEZ MIL ACCIONES, junto con todos los derechos
actuales y futuros, que representan el CINCO POR CIENTO (5%) del total de las Acciones.
|
-
|
Que el CESIONARIO, a su vez, tiene la intención de adquirir las Acciones, en contraprestación, éste recibirá de parte del COMPRADOR la suma de CIEN DÓLARES ESTADOUNIDENSES (100 USD)
|
1.
|
That LABORATORIOS QUIPROPHARMA SAS is a company incorporated and currently existing under the laws of the Republic of Colombia whose corporate purpose is the
manufacture, distribution of pharmaceutical products, cosmetics, dietary supplements and phytotherapeutics.
|
2.
|
That in exchange for a price, QUIPROPHARMA intends to sell to FLORA a Pharmaceutical Plant including equipment.
|
3.
|
The Parties have agreed to enter into this ASSETS PURCHASE AGREEMENT, (hereinafter the “Contract”), in accordance with the following:
|
1.
|
Purpose of the Sale. By virtue of this Agreement, QUIPROFARMA sells the Pharmaceutical Plant to FLORA, composed of the
following assets, (hereinafter the “Assets”) The Machinery and Equipment detailed in Annex 1.
|
1.1
|
The assets that make up this purchase contract are understood as Ad Corpus, fully covering the material and intangible elements that are inventoried by the parties,
in the audit process and in the closed-door negotiation.
|
2.
|
Price and payment method. The Buying Party will pay the Selling Party a total price of ONE
THOUSAND TWO HUNDRED MILLION COLOMBIAN PESOS ($ 1,200,000,000 COP).
|
2.1
|
VAT will not be applied to the purchase price as it involves a transfer of rights and sale of assets that constitute fixed assets for the Purchasing Party, not taxed
with VAT in accordance with the provisions of articles 60 and Paragraph 1 of article 420 of the Tax Statute.
|
2.2
|
The total price must be paid within five (5) business days following the signing of this contract, a sum which will be consigned in the bank account of the Selling
Party:
|
✔
|
Bank: AV Villas
|
✔
|
Account Type: Savings
|
✔
|
Number: [*]
|
3.
|
Effective Date. For all purposes of this Contract, the Parties agree that the effective date of the sale and transfer of the
Assets under this contract will be the date of this contract (hereinafter “Effective date”).
|
4.
|
Specifications on the Purchase of Machinery and Equipment.
|
4.1
|
Within the scope of the object of this Contract, the Selling Party will transfer ownership of the Machinery and Equipment used, detailed in Annex 1 (Hereinafter "Machinery and Equipment"), in the state in which they are.
|
4.2
|
The Selling Party will make the material delivery of the Machinery and Equipment to the Buying Party for the development of its activities on the Effective Date.
|
4.3
|
As of the delivery of the Machinery and Equipment, the Buying Party undertakes to carry out all maintenance and repairs to the Machinery and Equipment at its own cost
and assumes the risk of loss or destruction from that date.
|
5.
|
Approval of corporate bodies. The conclusion of this contract has been authorized by the
General Assembly of Shareholders of the Selling Party. Likewise, the conclusion of this contract has been authorized by the Headquarters of the Buying Party.
|
6.
|
Confidentiality. From the date of execution of this Agreement, neither Party may, without
the prior written consent of the other Party, directly or indirectly, reveal, communicate, disclose, disseminate, or use any Confidential Information, with the exception of their professional advisers, staff and that of its Affiliates.
However, such disclosure of Confidential Information will be allowed, in compliance with Applicable Law or orders from the competent Government Authorities as long as the Party that discloses (i) promptly provides the other Party with
notification of any request or requirement for such Confidential Information, and (ii) cooperates with the other Party in order to: (A) legally reduce the amount of Confidential Information disclosed and (B) until concurrent with what
the other Party requests, and at the latter's exclusive expense, seek an appropriate protective order or other remedy to limit such disclosure.
|
7.
|
Communications and Notifications. For all legal purposes, the communications and notifications addresses of the Parties
will be the following:
|
8.
|
Prohibition of Assignment. This Agreement may not be assigned or transferred (in whole
or in part) by one Party to another person except with the prior, express and written consent of the other Party.
|
9.
|
Modifications, Integrity and Efficacy.
|
9.1
|
Any of the stipulations contemplated in this Contract may be modified by agreement of the Parties, which must be expressly stated in a document signed by both.
|
9.2
|
Either Party may release or waive the obligations or commitments of the other, provided that such waiver is expressly and in writing.
|
9.3
|
The delays or omissions of the Parties in the exercise of any of the rights contemplated in their favor will not be considered or interpreted as release or waivers in the exercise that
the Contract and the Applicable Law confer on them.
|
9.4
|
This Contract and all its Annexes constitute the integral agreement between the Parties with respect to the object, obligations and commitments contemplated herein, and therefore
supersedes and renders without any legal effect any prior agreement, contract or understanding, written or verbal, that the Parties would have had on the same object.
|
9.5
|
If any provision of this Contract is prohibited, null, ineffective or cannot be enforced in accordance with Applicable Law, in accordance with the decision of a competent court, the
other provisions of the Contract will survive with their full binding and mandatory effects for the Parties, unless the prohibited, null, ineffective or unenforceable provision is essential to the Contract so that the interpretation or
fulfillment thereof in the absence of such provision is not possible. In making such a determination, the Parties will negotiate in good faith to modify this Agreement to reflect the original intent of the Parties, as closely as possible.
|
9.6
|
None of the Parties will develop any activity, execute any act or enter into any contract or agreement that includes terms that are designed with the purpose of violating the intention
of the Parties, as set forth in this Contract.
|
10.
|
Penalty Clause.
|
11.
|
Indemnity.
|
a.
|
Claims or convictions for damages or losses inflicted on its workers or third parties.
|
b.
|
Claims, lawsuits or convictions for civil liability against the Purchasing Party and that have been generated prior to the Effective Date.
|
c.
|
Sanctions or fines imposed by the authorities of any order, administrative, police, surveillance and control, that have been generated prior to the Effective Date. Consequently, the
Selling Party is obliged to directly assume said payments and to compensate the Buying Party for the outlays or expenses that it must face as a result of the breach of the obligations of the Selling Party.
|
11.1
|
The indemnity obligation is continuous and will continue even after the termination of the contract.
|
11.2
|
In the event that the Buying Party is condemned to any payment for the reasons stated above in the development of this Contract, the Selling Party must assume such values and reimburse
them to the Purchasing Party within ten (10) days following the date. of the notification made by the Buying Party. In the event that payment is not obtained, The Selling Party accepts, acknowledges and authorizes the Buying Party to deduct
such sums from those that it must pay.
|
11.3
|
Each of THE PARTIES undertakes to stand up for the other in any judicial or extrajudicial claim, for the aforementioned reasons, originating
from the development of this Contract.
|
12.
|
Applicable Law. This Contract will be subject to and must be interpreted in
accordance with the Laws in force in the Republic of Colombia (the “Applicable Law”).
|
Equiment name
|
Origen
|
Year(antiquity)
|
Brand
|
Production Capacity
|
Condition GRAL
|
Conveyor Belt # 1
|
Colombia
|
2010
|
Mold Pak
|
N/A
|
Okay
|
RGX10 Liquid Packaging Machine
|
Colombia
|
2010
|
RG
|
2.000 units / Hour
|
Modifications
|
Tank of 1000 L. No 1
|
Colombia
|
2010
|
Mold Pak
|
1.000 L
|
Okay
|
Tank of 500 L.
|
Colombia
|
2010
|
Mold Pak
|
500 L
|
Okay
|
Tank of 1000 L. No 2
|
Colombia
|
2010
|
Mold Pak
|
1.000 L
|
Okay
|
300 L boiling pan. No 1
|
Colombia
|
2010
|
Mold Pak
|
300 L
|
Okay
|
300 L boiling pan No 2
|
Colombia
|
2010
|
Mold Pak
|
300 L
|
Okay
|
Trasigo Pump No 1
|
Spain
|
2010
|
Inoxpa
|
N/A
|
Okay
|
Trasigo Pump No 2
|
Spain
|
2010
|
Inoxpa
|
N/A
|
Okay
|
Pneumatic Packaging Machine
|
Colombia
|
2010
|
RG
|
500 units / Hour
|
Okay
|
Metal tube packaging machine
|
USA
|
2000
|
Gasti
|
1000 units / Hour
|
Change of dosing block and general paint
|
Domino A 200 encoder
|
USA
|
2010
|
Domino
|
2500 units / Hour
|
Band tape change.
|
300 L kettle No 3
|
Colombia
|
2010
|
Mold Pak
|
300 L
|
Okay
|
300 L kettle No 4
|
2010
|
Mold Pak
|
300 L
|
Okay
|
Colombia
|
|||||
Tank of 1000 L. No 3
|
Colombia
|
2010
|
Mold Pak
|
1.000 L
|
Okay
|
Transfer Pump No 3
|
Spain
|
2010
|
Inoxpa
|
N/A
|
Okay
|
Two Nozzle Packaging Machine
|
Colombia
|
2010
|
Mold Pak
|
1.800 units / Hour
|
Metering system and main piston arrangement.
|
Powder Packing Machine
|
USA
|
2005
|
Sisten 400
|
2.000 units / Hour
|
Electrical panel arrangement.
|
Jar Capping Machine
|
Colombia
|
2010
|
Mold Pak
|
600 units / Hour
|
Okay
|
Ribbon Mixer
|
Colombia
|
2010
|
Mold Pak
|
500 Kg
|
Gasket, cover and gate
|
V mixer
|
Colombia
|
2010
|
Mold Pak
|
100 Kg
|
Okay
|
Packaging and Conditioning Line (10 Units)
|
China
|
2011
|
Remach y Bauer
|
N/A
|
Env.Caps. band motor arrangement and Etiq.
Coding system.
|
Passenger and Cargo Elevators
|
Colombia / Germany
|
2010
|
Tragfa y Kronel
|
450 Kg / 200
Kg
|
Okay
|
Compressor-Compressed Air System
|
Germany
|
2009
|
Aircenter
|
120 PSI
|
Okay
|
Purified Air System Equipment (10 Units)
|
Colombia
|
2010
|
Gilyco
|
N/A
|
Validation, change of filters, pre-filters and belts.
|
Water Treatment System Equipment
|
Colombia
|
2010
|
Walter Purifers
|
450 L / Hour
|
Filter and pressure gauge maintenance
|
Enlofanadora
|
Hindu
|
2011
|
Pharma Chine
|
1.500 Foil / Hour
|
Okay
|
Jar Blower
|
Colombia
|
2010
|
Mold Pak
|
1.500 Frascos
/ Hour
|
Okay
|
Hydraulic Stacker
|
China
|
2010
|
Hu Lift
|
2.500 Kg
|
Okay
|
Conveyor Belt # 2
|
Colombia
|
2010
|
Mold Pak
|
N/A
|
Okay
|
Vacuum pump
|
USA
|
2012
|
Thomas
|
N/A
|
Okay
|
Dehumidifier # 1
|
China
|
2012
|
Kenmore
|
N/A
|
Okay
|
Dehumidifier # 2
|
China
|
2010
|
Woods
|
N/A
|
Okay
|
Plastic pipe sealer # 1
|
Colombia
|
2013
|
Thor
|
1.500 Tubos / Hour
|
Okay
|
Horizontal sachetera packaging machine
|
Colombia
|
2013
|
Mec Lec
|
3.000 Sobres
/ Hour
|
Okay
|
Mobile Shaker
|
Colombia
|
2013
|
Silverson
|
N/A
|
Okay
|
Coloidal Windmill
|
USA
|
2000
|
GW
|
30 L
|
Okay
|
Ventilation system water equipment
|
Colombia
|
2014
|
Villamarin
|
N/A
|
Okay
|
Homogenizer Shaker
|
Colombia
|
2015
|
Silverson
|
N/A
|
Okay
|
Cream packaging machine
|
China
|
2015
|
Thor Hualian
|
1.500 Tubos / Hour
|
Okay
|
Plastic pipe sealer # 2
|
Colombia
|
2013
|
Thor
|
1.500 Tubos / Hour
|
Electrical damage, main board.
|
Semi-automatic encapsulator
|
China
|
2017
|
Sinoped Group
|
8.000
Cápsulas / Hour
|
Okay
|
Automatic liquid packaging machine
|
Colombia
|
2018
|
CTD
|
1.500 Frascos
/ Hour
|
Jar capper arrangement.
|
/s/ DAVIDSON & COMPANY LLP | |
Vancouver, Canada
|
Chartered Professional Accountants
|
February 10, 2021
|
Subsidiary
|
Jurisdiction
|
Cosechemos YA SAS
|
Colombia
|
Flora Beauty LLC
|
USA
|
Breeze Laboratory SAS
|
Colombia
|
Flora Growth Corp. Sucursal Colombia
|
Colombia
|
Grupo Farmaceutico Cronomed
|
Colombia
|
Hemp Textiles & Co LLC
|
USA
|
Hemp Textiles & Co SAS
|
Colombia
|
Kasa Wholefoods Company SAS Colombia
|
Colombia
|