Financial Performance - For the years ended December 31, 2024 and 2023, the company reported losses of $15.9 million and $56.3 million, respectively, with an accumulated deficit of $158.1 million as of December 31, 2024[77]. - The company had cash and cash equivalents of $6.1 million as of December 31, 2024, with a loss of $15.9 million for the year and an accumulated deficit of $158.1 million[135]. - The company's ability to continue as a going concern is dependent on obtaining additional capital, as current cash levels are insufficient for growth and meeting obligations[135]. - Management has raised substantial doubt about the company's ability to continue as a going concern, which could impair financing operations through equity or debt offerings[136]. - The company continues to incur increased costs associated with operating as a public company, impacting financial condition and operational flexibility[161]. - The market price of Common Shares could experience significant fluctuations due to various risk factors, potentially leading to substantial losses for investors[180]. Acquisitions and Growth Strategy - The company has acquired 100% equity interests in Just Brands, Franchise Global Health, AV, and TruHC, indicating a history of acquisitive activity[80]. - The company is investing significant resources to expand into additional consumer markets, including the United States and international markets, but may face challenges such as competitive merchandising and distribution[97]. - The anticipated benefits of acquisitions and strategic investments may not be realized, exposing the company to unknown risks or liabilities[83]. - The company may face difficulties in integrating recent acquisitions, which could divert management attention and harm operational results[80]. - The company expects to incur significant ongoing costs related to infrastructure, growth, and regulatory compliance, which may adversely affect its financial condition[194]. Regulatory and Compliance Risks - Compliance with evolving cannabis laws and regulations may incur substantial costs and adversely affect the company's business[86]. - The company is subject to various regulatory requirements that could lead to increased compliance costs or operational restrictions, impacting business activities[128]. - The company is subject to evolving regulations, with significant risks related to inconsistent federal and state laws regarding cannabis[121]. - The company may incur significant costs to defend its intellectual property rights, which are crucial for its future success[115]. - The company may be classified as a Passive Foreign Investment Company (PFIC), which could have adverse tax consequences for U.S. investors[148]. - Changes in U.S. federal income tax laws may adversely affect the Company and holders of Common Shares, with ongoing legislative proposals that could have retroactive effects[152]. - The Inflation Reduction Act of 2022 imposes a minimum tax on the book income of large corporations, which could impact the Company's financial performance[153]. - The European Union's Minimum Tax Directive, adopted on December 15, 2022, mandates a global minimum level of taxation for multinational companies, potentially affecting the Company's effective tax rate and cash flows[154]. Operational Risks - The company faces risks related to product liability claims, which could adversely affect its reputation and financial condition[91]. - Fluctuations in the cost and availability of raw materials, labor, and transportation could harm the company's gross margins and ability to meet customer demand[98]. - The company relies on third-party vendors for critical raw materials and manufacturing, which poses risks if these relationships are disrupted[99]. - The company's inventory includes products with a shelf life, and any write-downs due to expiration could materially affect its financial condition[101]. - The company relies on third-party transportation services, which could lead to logistical problems and increased costs affecting financial performance[109]. - The company faces wholesale price volatility in the pharmaceutical and cannabis industries, which could adversely affect revenues and gross margins[106]. - The legalization of recreational cannabis may increase competition in the medical cannabis market, potentially reducing sales and profit margins[108]. - The cannabis industry is in a nascent stage, making it difficult to quantify the target market size, and the company has not generated net income[130]. - The company may face challenges in marketing CBD products due to FDA regulations prohibiting health claims, potentially affecting revenues[129]. Management and Human Resources - The company may not successfully implement its business plan or attract and retain an experienced management team, which could hinder its growth[79]. - The loss of key management or employees could have a material adverse effect on the company's operations[189]. - The company faces potential conflicts of interest due to the involvement of its officers and directors in other business activities[169]. Cybersecurity and Legal Risks - Cybersecurity risks could disrupt operations and expose the company to financial losses and reputational damage[112]. - The company may face legal proceedings that could negatively impact its financial results[186]. - There is no assurance that the company's insurance coverage will be sufficient to cover all claims, potentially impacting its financial condition[195]. Market and Economic Conditions - Seasonal trends significantly impact the company's financial results, with a disproportionate amount of net revenue expected in the third and fourth quarters[102]. - Political, social, and geopolitical conditions may adversely affect the company's business and financial results[183]. - Future issuances of debt securities and preferred stock may adversely affect the returns for holders of Common Shares[178]. - The company's success depends on its ability to enhance product offerings in response to technological and regulatory changes[188].
Flora Growth(FLGC) - 2024 Q4 - Annual Report