Flora Growth(FLGC) - 2022 Q2 - Quarterly Report

Financial Performance - Revenue for the six months ended June 30, 2022, was $14,917,000, a significant increase from $2,118,000 in the same period of 2021, representing a growth of 605%[7] - Gross profit for the same period was $6,546,000, compared to $1,012,000 in 2021, indicating a growth of 546%[7] - The net loss for the six months ended June 30, 2022, was $32,716,000, compared to a net loss of $5,138,000 in 2021, reflecting a deterioration of 536%[7] - The company reported a net loss of $0.4 million for JustCBD, which generated revenue of $10.0 million since the acquisition date[54] - For the six months ended June 30, 2022, net revenue was $1,631,000, a decrease of 21% compared to $2,069,000 for the same period in 2021[139] - Gross profit for the six months ended June 30, 2022, was $999,000, down from $1,009,000 in the prior year, reflecting a slight decline[139] Assets and Liabilities - Total current assets decreased to $27,156,000 as of June 30, 2022, down from $47,943,000 at the end of 2021, a decline of 43.5%[2] - Total liabilities increased to $16,599,000 as of June 30, 2022, compared to $8,538,000 at the end of 2021, an increase of 94.5%[2] - Shareholders' equity decreased to $62,469,000 as of June 30, 2022, down from $76,941,000 at the end of 2021, a decline of 18.8%[2] - Cash and cash equivalents decreased to $10,268,000 as of June 30, 2022, down from $37,614,000 at the end of 2021, a decline of 72.7%[2] - Non-current assets at June 30, 2022, totaled $51,912,000, compared to $37,536,000 at December 31, 2021, indicating growth in asset base[139] Cash Flow and Investments - Total cash used in operating activities for the six months ended June 30, 2022, was $10,483,000, compared to $5,770,000 for the same period in 2021, indicating an 81% increase in cash outflow[12] - The company reported a total of $16,179,000 used in investing activities for the six months ended June 30, 2022, compared to $5,171,000 for the same period in 2021, marking a 212% increase in cash used for investments[13] - Cash outflows from leases totaled $999,000 for the six months ended June 30, 2022, compared to $86,000 in the same period of 2021[67] Acquisitions and Goodwill - The company completed the acquisition of Just Brands LLC and High Roller Private Label LLC for a total purchase consideration of $34.6 million to expand its product offerings and market presence[49] - The company acquired JustCBD's intangible assets valued at $4.8 million, including tradenames ($3.4 million), customer relationships ($1.2 million), and know-how ($0.2 million)[55] - The goodwill assigned to cash-generating units as of June 30, 2022, totaled $28.666 million, reflecting the impact of the recent acquisitions[61] Shareholder and Stock Information - The weighted average number of common shares outstanding increased to 76,944,000 from 39,604,000 in the previous year, an increase of 94.3%[7] - The company issued common shares for business combinations amounting to $14,917,000 during the reporting period[13] - The company issued 9,500,000 common shares valued at $14.7 million in February 2022 as part of the acquisition of JustCBD[72] - A total of 100,000 common shares valued at $0.2 million were issued to acquire the remaining 10% of Flora Beauty LLC on January 18, 2022[73] - The total expense related to stock options granted in the period ended June 30, 2022, was $2.9 million, significantly higher than $0.1 million in 2021[82] Legal and Regulatory Matters - The company is engaged in various legal proceedings, including a claim for 3.0 million common shares by Gerardo Andres Garcia Mendez, which the company disputes[93] - The company believes that the probable resolution of ongoing legal proceedings will not have a material adverse effect on its financial condition as of June 30, 2022[89] - The company has made expenditures to comply with environmental laws and regulations, which are continually changing and becoming more restrictive[107] Tax and Management Compensation - The total compensation for key management personnel for the six months ended June 30, 2022, was $1,013,000, compared to $2,484,000 for the same period in 2021[103] - The company has not recorded any current or deferred income tax expense for the six months ended June 30, 2022, resulting in an effective income tax rate of nil%[98] Currency and Financial Instruments - The company does not currently hedge its foreign exchange exposure, which may adversely affect its financial position due to unfavorable currency fluctuations[119] - A 10% change in foreign currency rates could result in an estimated impact of approximately $0.3 million on net loss as of June 30, 2022[122] - The company's financial instruments measured at amortized cost approximate fair value due to their short-term maturity as of June 30, 2022[108]