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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~June~~ September 30, 2025

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

For the transition period from _____________ to _____________

Commission file number 001-40397

Flora Growth Corp.

(Exact name of registrant as specified in its charter)

Province of Ontario	Not Applicable
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3230 W. Commercial Boulevard, Suite 180
Fort Lauderdale, Florida	33309
(Address of principal executive offices)	(Zip Code)

(954) 842-4989

(Registrant's telephone number, including area code)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, no par value	FLGC	Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐ No ☒

As of ~~July~~October 2830, 2025, the registrant had 22741,~~568,653~~ 261 shares of its common shares, no par value ("common shares") outstanding.

Table of Contents

	Page
Cautionary Statement Regarding Forward-Looking Statements	2
PART I
Item 1. Financial Statements	4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	2629
Item 3. Quantitative and Qualitative Disclosures About Market Risk	41
Item 4. Controls and Procedures	41
PART II
Item 1. Legal Proceedings	42
Item 1A. Risk Factors	42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	4249
Item 3. Defaults Upon Senior Securities	4350
Item 4. Mine Safety Disclosures	4350
Item 5. Other Information	4350
Item 6. Exhibits	4451
Signatures	4653

Cautionary Statement Regarding Forward-Looking Statements

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

our limited operating history and net losses;
~~changes~~fluctuations in ~~cannabis~~the ~~laws~~market price of $0G, ~~regulations~~the native token of the 0G Chain, a layer-1 blockchain designed to enable users to deploy and ~~guidelines~~operate decentralized artificial intelligence ("AI") applications and data ("0G Tokens", each a "0G Token"or "0G") or any other digital assets we might hold;
~~decrease~~the inpossibility ~~demand~~that ~~for~~any ~~cannabis~~one ~~and~~of ~~derivative~~the ~~products~~Cryptocurrencies ~~due~~(as todefined ~~certain~~below) ~~research~~may ~~findings,~~be ~~proceedings,~~classified oras ~~negative~~a ~~media attention~~"security";
decrease in liquidity of 0G Tokens or any other digital assets we might hold;
our ability to continue as a going concern absent access to sources of liquidity;
damage to our reputation as a result of negative publicity;
exposure to product liability claims, actions and litigation;
risks associated with product recalls;
product viability;
continuing research and development efforts to respond to technological and regulatory changes;
shelf life of inventory;
our ability to successfully integrate businesses that we acquire;
our ability to achieve economies of scale;
our ability to fund overhead expenses, including costs associated with being a publicly-listed company
maintenance of effective quality control systems;
changes to energy prices and supply;
risks associated with expansion into new jurisdictions;
regulatory compliance risks;
opposition to the cannabinoid industry;
potential delisting resulting in reduced liquidity of our common shares; and
the other risks described under Part I, Item 1A, "Risk Factors" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "2024 Annual Report") filed with the Securities and Exchange Commission (the "SEC") on March 24, 2025, as well as described from time to time in our other filings with the SEC.

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

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

PART I

Item 1. Financial Statements

Flora Growth Corp.

Table of Contents

Unaudited Condensed Interim Consolidated Financial Statements:		Page
Unaudited Condensed Interim Consolidated Statements of Financial Position as of June 30, 2025 and December 31, 2024		5
Unaudited Condensed Interim Consolidated Statements of Financial Position as of September 30, 2025 and December 31, 2024		4
Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss for the Three and Six Months Ended June 30, 2025 and 2024		6
Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss for the Three and Nine Months Ended September 30, 2025 and 2024		5
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (Deficiency) for the Three and Six Months Ended June 30, 2025 and 2024		7
Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (Deficiency) for the Three and Nine Months Ended September 30, 2025 and 2024		6
Unaudited Condensed Interim Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024		8
Unaudited Condensed Interim Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024		7
Notes to Unaudited Condensed Interim Consolidated Financial Statements		98

Flora Growth Corp.

Unaudited Condensed Interim Consolidated Statements of Financial Position

(in thousands of United States dollars, except share amounts which are in thousands of shares)

As at:		~~June~~September 30, 2025			December 31, 2024
ASSETS
Current
Cash	$	113,~~471~~100		$	65,~~017~~223
Restricted cash		3525			3525
Trade and amounts receivable, net of $938 allowance ($611 at December 31, 2024)		5,088			3,061
Trade and amounts receivable, net of $3 allowance ($nil at December 31, 2024)		2,292			1,567
Prepaid expenses and other current assets		~~661~~92			~~638~~13
Indemnification receivables		-			4,241
Inventory		42,~~801~~483			52,~~771~~239
Digital assets		~~1,141~~98			-
Total current assets		13,197			19,763
Current assets held for sale		-			6,455
Total current assets		18,090			19,763
Non-current
Property, plant and equipment		~~414~~151			~~312~~81
Operating lease right of use assets		~~1,475~~411			~~1,297~~174
Intangible assets		2,718			2,746
Restricted digital assets		55,308			-
Goodwill		4,698			2,006
Other assets		56			35
Other assets		165			103
Noncurrent assets held for sale		-			6,174
Total assets	$	2274,~~667~~016		$	26,227
LIABILITIES
Current
Trade payables	$	32,~~807~~961		$	53,~~464~~572
Contingencies		~~3,151~~639			64,~~936~~241
Current portion of debt		2,~~755~~697			2,080
Current portion of debt - related parties		226			-
Current portion of operating lease liability		177			130
Current portion of operating lease liability		833			791
Contingent purchase considerations		-			651
Contingent purchase considerations		515			835
Other accrued liabilities		2,223			1,169
Other accrued liabilities		2,521			2,726
Current liabilities held for sale		-			6,989
Total current liabilities		138,~~808~~697			18,832
Non-current
Non-current portion of debt		~~326~~64			-
Non-current portion of debt - related parties		1,669			-
Non-current operating lease liability		307			122
Non-current operating lease liability		1,965			2,029
Deferred tax		28			-
Deferred tax		876			856
Noncurrent liabilities held for sale		-			2,763
Total liabilities		189,~~644~~096			21,717
SHAREHOLDERS' EQUITY
Share capital, no par value, unlimited authorized, 22,569 issued and outstanding (18,512 at December 31, 2024)		-			-
Share capital, no par value, unlimited authorized, 712 issued and outstanding (478 at December 31, 2024)		-			-
Additional paid-in capital		~~165~~232,~~082~~609			162,871
Accumulated other comprehensive income (loss)		~~251~~196			(221	)
Deficit		(~~161~~167,~~310~~885	)		(158,140	)
Total shareholders' equity		464,~~023~~920			4,510
Total liabilities and shareholders' equity	$	2274,~~667~~016		$	26,227

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

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

		For the threemonths endedJune 30, 2025			For the threemonths endedJune 30, 2024			For the sixmonths endedJune 30, 2025			For the six monthsended June 30,2024
		For the threemonths endedSeptember 30,2025			For the threemonths endedSeptember 30,2024			For the ninemonths endedSeptember 30,2025			For the ninemonths endedSeptember 30, 2024
Revenue	$	149,~~796~~748		$	157,~~683~~238		$	26,~~582~~323		$	3328,~~714~~219
Cost of sales		119,~~966~~413			126,~~516~~743			2024,~~864~~834			26,~~693~~309
Gross profit		~~2,830~~335			~~3,167~~495			51,~~718~~489			71,~~021~~910
Operating expenses
Consulting and management fees		21,~~202~~240			21,~~349~~130			42,~~103~~793			42,~~651~~803
Professional fees		~~707~~445			~~1,146~~512			1,~~290~~611			12,~~599~~019
General and administrative		~~760~~473			~~587~~409			1,~~230~~061			~~1,029~~821
Promotion and communication		945			1,125			1,850			2,229
Travel expenses		31			53			141			105
Travel expenses		106			123			204			192
Share based compensation		541			406			885			428
Share based compensation		172			12			344			22
Operating lease expense		38			28			114			72
Research and development		73			62			186			109
Depreciation and amortization		7			8			19			25
Operating lease expense		162			199			329			364
Bad debt expense		(10	)		-			-			-
Depreciation and amortization		195			257			377			331
Asset impairment		-			-			46			31
Bad debt expense		259			172			330			219
Gain on disposal of insolvent subsidiaries		-			-			(1,119	)		-
Asset impairment		-			160			46			1,058
Other (income) expenses, net		836			65			1,350			828
Gain on disposal of insolvent subsidiaries		-			-			(1,162	)		-
Total operating expenses		3,601			2,611			6,901			7,132
Other (income) expenses, net		(185	)		513			134			1,241
Operating loss		(3,266	)		(2,116	)		(5,412	)		(5,222		)
Total operating expenses		5,396			6,705			9,261			13,044
Interest expense		61			26			164			22
Operating loss		(2,566	)		(3,538	)		(3,543	)		(6,023	)
Foreign exchange loss (gain)		25			(73	)		(24	)		109
Interest expense (income)		96			(25	)		147			(3	)
Unrealized loss (gain) from changes in fair value		257			323			(158	)		114
Foreign exchange (gain) loss		(56	)		51			(59	)		183
Net loss before income taxes and discontinued operations		(3,609	)		(2,392	)		(5,394	)		(5,467		)
Unrealized gain from changes in fair value		(146	)		(872	)		(451	)		(265	)
Income tax expense (benefit)		18			(66	)		113			80
Net loss before income taxes		(2,460	)		(2,692	)		(3,180	)		(5,938	)
Net loss from continuing operations		(3,627	)		(2,326	)		(5,507	)		(5,547		)
Income tax (benefit) expense		(48	)		(35	)		(10	)		93
Loss from discontinued operations, net of taxes		(3,032	)		(1,474	)		(4,322	)		(4,284		)
Net loss for the period		(26,~~412~~659	)		(23,~~657~~800	)		(39,~~170~~829	)		(69,~~031~~831	)	)
Net loss attributable to noncontrolling interest		-			(27	)		-			(2754	)	)
Net loss attributable to Flora Growth	$	(26,~~412~~659	)	$	(23,~~630~~773	)	$	(39,~~170~~829	)	$	(69,~~004~~777	)	)
Basic loss per share attributable to Flora Growth Corp.	$	(0.11	)	$	(0.21	)	$	(0.16	)	$	(0.57	)
Basic loss per share from continuing operations	$	(4.93	)	$	(6.80	)	$	(9.19	)	$	(18.80		)
Diluted loss per share attributable to Flora Growth Corp.	$	(0.11	)	$	(0.21	)	$	(0.16	)	$	(0.57	)
Diluted loss per share from continuing operations	$	(4.93	)	$	(6.80	)	$	(9.19	)	$	(18.80		)
Weighted average number of common shares outstanding - basic		21,454			12,278			20,265			10,597
Basic loss per share attributable to Flora Growth Corp.	$	(9.05	)	$	(11.03	)	$	(16.41	)	$	(33.14		)
Weighted average number of common shares outstanding - diluted		21,454			12,278			20,265			10,597
Diluted loss per share attributable to Flora Growth Corp.	$	(9.05	)	$	(11.03	)	$	(16.41	)	$	(33.14		)
Other comprehensive loss
Weighted average number of common shares outstanding - basic		736			342			599			295
Net loss for the period	$	(2,412	)	$	(2,657	)	$	(3,170	)	$	(6,031	)
Weighted average number of common shares outstanding - diluted		736			342			599			295
Derecognition of equity related to insolvent subsidiaries, net of income taxes of $nil ($nil in 2024)		-			-			(595	)		-
Other comprehensive loss
Foreign currency translation, net of income taxes of $nil ($nil in 2024)		447			(19	)		1,067			8
Net loss for the period	$	(6,659	)	$	(3,800	)	$	(9,829	)	$	(9,831		)
Comprehensive loss for the period		(1,965	)		(2,676	)		(2,698	)		(6,023	)
Derecognition of equity related to insolvent subsidiaries, net of income taxes of $nil ($nil in 2024)		-			-			(595	)		-
Comprehensive loss attributable to noncontrolling interest		-			(27	)		-			(27	)
Derecognition of equity related to discontinued operations, net of income taxes of $nil ($nil in 2024)		489			-			489			-
Comprehensive loss	$	(1,965	)	$	(2,649	)	$	(2,698	)	$	(5,996	)
Foreign currency translation, net of income taxes of $nil ($nil in 2024)		(544	)		317			523			325
Comprehensive loss for the period		(6,714	)		(3,483	)		(9,412	)		(9,506		)
Comprehensive loss attributable to noncontrolling interest		-			(27	)		-			(54		)
Comprehensive loss	$	(6,714	)	$	(3,456	)	$	(9,412	)	$	(9,452		)

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

Flora Growth Corp.

Unaudited Condensed Interim Consolidated Statement of Shareholders' Equity (Deficiency)

(in thousands of United States dollars, except for share amounts which are in thousands of shares)

	CommonShares					Additional paid-inCapital			Accumulatedothercomprehensive(loss) income			Accumulateddeficit			Non-controllinginterests insubsidiaries(deficiency)			Shareholders'equity(deficiency)
	#
For the six months ended June 30, 2025
For the nine months ended September 30, 2025
Balance, December 31, 2024	~~18,512~~478		$	-	$	162,871		$	(221	)	$	(158,140	)	$	-		$	4,510
Equity offerings	~~3,133~~201			-		169,~~158~~293			-			-			-			169,~~158~~293
Equity offering issuance costs	-			-		(~~104~~1,169	)		-			-			-			(~~104~~1,169	)
Equity issued for business combinations	~~924~~24			-		813			-			-			-			813
Restricted stock vested	-			-		17			-			-			-			17
Exercise of pre-funded warrants	9			-		-			-			-			-			-
SARs vested	-			-		327			-			-			-			327
Options forfeited	-			-		(84	)		-			84			-			-
Restricted stock vested	-			-		22			-			-			-			22
SARs vested	-			-		863			-			-			-			863
Derecognition of equity related to insolvent subsidiaries	-			-		-			(595	)		-			-			(595	)
Other comprehensive loss - exchange differences (net of income taxes of $nil)	-			-		-			1,067			-			-			1,067
Derecognition of equity related to discontinued operations	-			-		-			489			-			-			489
Net loss	-			-		-			-			(3,170	)		-			(3,170	)
Other comprehensive loss - exchange differences (net of income taxes of $nil)	-			-		-			523			-			-			523
Balance, June 30, 2025	22,569		$	-	$	165,082		$	251		$	(161,310	)	$	-		$	4,023
Net loss	-			-		-			-			(9,829	)		-			(9,829	)
For the three months ended June 30, 2025
Balance, September 30, 2025	712		$	-	$	232,609		$	196		$	(167,885	)	$	-		$	64,920
Balance, March 31, 2025	19,436		$	-	$	163,852		$	(196	)	$	(158,898	)	$	-		$	4,758
For the three months ended September 30, 2025
Equity offerings	3,133			-		1,158			-			-			-			1,158
Balance, June 30, 2025	582		$	-	$	165,082		$	251		$	(161,310	)	$	-		$	4,023
Equity offering issuance costs	-			-		(101	)		-			-			-			(101	)
Equity offerings	121			-		68,135			-			-			-			68,135
Restricted stock vested	-			-		9			-			-			-			9
Equity offering issuance costs	-			-		(1,065	)		-			-			-			(1,065	)
SARs vested	-			-		164			-			-			-			164
Exercise of pre-funded warrants	9			-		-			-			-			-			-
Other comprehensive loss - exchange differences (net of income taxes of $nil)	-			-		-			447			-			-			447
Options forfeited	-			-		(84	)		-			84			-			-
Net loss	-			-		-			-			(2,412	)		-			(2,412	)
Restricted stock vested	-			-		5			-			-			-			5
Balance, June 30, 2025	22,569		$	-	$	165,082		$	251		$	(161,310	)	$	-		$	4,023
SARs vested	-			-		536			-			-			-			536
For the six months ended June 30, 2024
Derecognition of equity related to discontinued operations	-			-		-			489			-			-			489
Balance, December 31, 2023	8,935		$	-	$	149,093		$	(140	)	$	(142,549	)	$	-		$	6,404
Other comprehensive loss - exchange differences (net of income taxes of $nil)	-			-		-			(544	)		-			-			(544	)
Common stock offerings	1,700			-		3,230			-			-						3,230
Net loss	-			-		-			-			(6,659	)		-			(6,659	)
Common stock offering issuance costs	-			-		(375	)		-			-			-			(375	)
Balance, September 30, 2025	712		$	-	$	232,609		$	196		$	(167,885	)	$	-		$	64,920
Equity issued for business combinations	2,685			-		3,969			-			-			991			4,960
For the nine months ended September 30, 2024
Equity issued for other agreements	50			-		55			-			-			-			55
Balance, December 31, 2023	232		$	-	$	149,093		$	(140	)	$	(142,549	)	$	-		$	6,404
Common stock offerings	44			-		3,230			-			-						3,230
Common stock offering issuance costs	-			-		(384	)		-			-			-			(384	)
Equity issued for business combinations	69			-		3,969			-			-			991			4,960
Equity issued for other agreements	1			-		55			-			-			-			55
Options vested	-			-		5			-			-			-			5
Options forfeited	-			-		(316	)		-			316			-			-
Restricted stock vested	-			-		2634			-			-			-			2634
Restricted stock cancelled	(3-	)		-		(9	)		-			-			-			(9	)
Other comprehensive loss - exchange differences (net of income taxes of $nil)	-			-		-			8			-			-			8
SARs vested	-			-		398			-			-			-			398
Net loss	-			-		-			-			(6,004	)		(27	)		(6,031	)
Other comprehensive loss - exchange differences (net of income taxes of $nil)	-			-		-			325			-			-			325
Balance, June 30, 2024	13,367		$	-	$	155,678		$	(132	)	$	(148,237	)	$	964		$	8,273
Net loss	-			-		-			-			(9,777	)		(54	)		(9,831	)
For the three months ended June 30, 2024
Balance, September 30, 2024	346		$	-	$	156,075		$	185		$	(152,010	)	$	937		$	5,187
Balance, March 31, 2024	8,982		$	-	$	148,871		$	(113	)	$	(145,620	)	$	-		$	3,138
For the three months ended September 30, 2024
Common stock offering	1,700			-		3,230			-			-			-			3,230
Balance, June 30, 2024	346		$	-	$	155,678		$	(132	)	$	(148,237	)	$	964		$	8,273
Common stock offering issuance costs	-			-		(391	)		-			-			-			(391	)
Restricted stock vested	-			-		8			-			-			-			8
Equity issued for business combinations	2,685			-		3,969			-			-			991			4,960
SARs vested	-			-		398			-			-			-			398
Options forfeited	-			-		(13	)		-			13			-			-
Share issuance costs	-			-		(9	)		-			-			-			(9	)
Restricted stock vested	-			-		12			-			-			-			12
Other comprehensive loss - exchange differences (net of income taxes of $nil)	-			-		-			317			-			-			317
Other comprehensive loss - exchange differences (net of income taxes of $nil)	-			-		-			(19	)		-			-			(19	)
Net loss	-			-		-			-			(3,773	)		(27	)		(3,800	)
Net loss	-			-		-			-			(2,630	)		(27	)		(2,657	)
Balance, September 30, 2024	346		$	-	$	156,075		$	185		$	(152,010	)	$	937		$	5,187
Balance, June 30, 2024	13,367		$	-	$	155,678		$	(132	)	$	(148,237	)	$	964		$	8,273

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

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

		For the six months endedJune 30, 2025			For the six months endedJune 30, 2024
		For the nine months endedSeptember 30, 2025			For the nine months endedSeptember 30, 2024
Cash flows from operating activities:
Net loss	$	(39,~~170~~829	)	$	(69,~~031~~831	)	)
Adjustments to net loss:
Depreciation and amortization		~~377~~578			~~331~~557
Share based compensation		~~344~~885			22428
Inventory impairments through costs of sales		~~291~~364			1,~~031~~423
Asset impairments		461,453			1,~~058~~471
Changes in financial instruments at fair value		(~~451~~227	)		~~(265~~57	)
Bad debt expense		~~330~~500			~~219~~266
Loss on asset disposals		187			-47
Gain on disposal of insolvent subsidiaries		(1,229	)		-
Interest expense		~~147~~208			(324	)
Interest paid		(93121	)		3(24		)
Income tax		(10	)		93(71		)
		(3,400	)		(3,542	)
		(7,401	)		(5,653		)
Net change in non-cash working capital:
Trade and other receivables		~~(2,380~~178	)		(~~605~~1,394	)	)
Inventory		~~846~~2,923			~~1,152~~(350		)
Prepaid expenses and other assets		~~(120~~487	)		~~328~~330
Trade payables and accrued liabilities		(~~562~~1,703	)		13,~~062~~381
Net cash used in operating activities		(5,~~616~~516	)		(13,~~605~~686	)	)
Cash flows from financing activities:
Equity instruments issued		114,~~158~~597			3,230
Equity issue costs		(661,169	)		(398	)	)
Loan borrowings		2,766			4,393
Payment of contingent consideration		(1,800	)		-
Loan repayments		(2,346	)		(3,857	)
Loan borrowings		4,316			6,804
Net cash provided by financing activities		1,512			3,368
Loan repayments		(3,877	)		(6,525		)
Cash flows from investing activities:
Net cash provided by financing activities		12,067			3,111
Purchase and sale of digital assets		(1,010	)		-
Cash flows from investing activities:
Purchases of property, plant and equipment and intangible assets		(89	)		(114	)
Purchase and sale of digital assets		697			-
Net cash on asset disposals		2			17
Purchases of property, plant and equipment and intangible assets		(98	)		(134		)
Cash acquired in business combination		461			64
Net cash on disposal of Cannabis Business		(413	)		273
Net cash used in investing activities		(636	)		(33	)
Cash acquired in business combination		461			64
Effect of exchange rate on changes on cash		194			47
Net cash provided by investing activities		647			203
Change in cash during the period		(4,546	)		1,777
Effect of exchange rate on changes on cash		679			231
Cash and restricted cash at beginning of period		6,052			4,385
Change in cash during the period		7,877			(141		)
Cash and restricted cash at end of period	$	1,506		$	6,162
Cash and restricted cash at beginning of period		5,248			4,385
Supplemental disclosure of non-cash investing and financing activities
Cash and restricted cash at end of period	$	13,125		$	4,244
Common shares issued for business combinations	$	813		$	3,969
Supplemental disclosure of non-cash investing and financing activities
Debt issued for business combinations		2,135			-
Equity issued for digital assets	$	54,696		$	-
Common shares issued for other agreements		-			55
Common shares issued for business combinations		813			3,969
Option cancellations reclassified to equity		-			316
Debt issued for business combinations		2,135			-
Operating lease additions to right of use assets		325			2,143
Common shares issued for other agreements		-			55
Option cancellations reclassified to equity		84			316
Operating lease additions to right of use assets		1,375			2,172

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

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

1. NATURE OF OPERATIONS

Flora Growth Corp. (the "Company" or "Flora") was incorporated under the laws of the Province of Ontario, Canada on March 13, 2019. The Company, which will be rebranded as ZeroStack, is a ~~manufacturer~~decentralized ~~and~~AI ~~distributor~~treasury company that is investing in the future of ~~global~~AI ~~cannabis~~infrastructure ~~and~~through ~~pharmaceutical~~strategic ~~products~~ownership ~~and~~in ~~brands,~~0G ~~building~~Tokens a(as ~~connected~~defined below), ~~design-led~~an ~~collective~~AI ofinfrastructure ~~plant-based~~company ~~wellness~~that has created an open and ~~lifestyle~~decentralized ~~brands~~AI network fueled by the 0G Token. The Company is a global pharmaceutical distributor through its wholly owned subsidiary Phatebo GmbH. The Company's registered office is located at 40 King Street, W Suite 2400, Toronto, Ontario, M5H 3S1, Canada and our principal place of business in the United States is located at 3230 W. Commercial Boulevard, Suite 180, Fort Lauderdale, Florida 33309.

2. BASIS OF PRESENTATION

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

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

Cryptocurrency Treasury Strategy

In early 2025 following a due diligence process, the Company began implementing an expansion strategy focused on identifying and pursuing complementary growth opportunities within the global digital asset market.

On May 2, 2025, the Company entered into a securities purchase agreement (the "May 2025 Securities Purchase Agreement") with certain investors (the "May 2025 Investors") in connection with the issuance and sale by the Company to the May 2025 Investors via a private placement (the "May 2025 Private Placement") of an aggregate of 80,340 common shares at a purchase price of $11.70 per share (the "Common Shares") and 18,642 pre-funded warrants of the Company at a purchase price of $11.6961 per warrant (the "May 2025 Pre-funded Warrants") each to purchase one Common Share (each, a "May 2025 Pre-funded Warrant Share") which were immediately exercisable and expire when exercised in full, at an exercise price of $0.0039 per share.

The net proceeds from the sale of the Common Shares and May 2025 Pre-funded Warrants were approximately $1.1 million after deducting estimated expenses relating to the May 2025 Private Placement. The Company used $0.4 million of the net proceeds from the May 2025 Private Placement to purchase Solana, $0.4 million of the net proceeds from the May 2025 Private Placement to purchase Ethereum, $0.1 million of the net proceeds from the May 2025 Private Placement to purchase Sui, $0.1 million of the net proceeds from the May 2025 Private Placement to purchase Ripple (collectively, the "Owned Cryptocurrencies"), and the balance of the net proceeds from the May 2025 Private Placement for general corporate and working capital purposes and to pay any fees and expenses in connection with the issuance of the Common Shares and the May 2025 Pre-funded Warrants.

On September 19, 2025, the Company entered into securities purchase agreements with certain investors pursuant to which the Company agreed to sell and issue the following securities in private placement offerings (collectively, the "PIPE Offering"): (i) 116,340 common share units ("PIPE Common Share Units") at a unit price of $25.19, payable in cash, for aggregate gross proceeds of $2.9 million, with each unit consisting of one common share ("PIPE Common Share") and 0.2 of a warrant to purchase one common share at an exercise price of $25.19 ("PIPE Warrant"); (ii) 412,037 pre-funded warrant units ("PIPE Pre-Funded Warrant Units") at a unit price of $25.1899, payable in cash, for aggregate gross proceeds of $10.4 million, with each unit consisting of one pre-funded warrant to purchase one common share at an exercise price of $0.0001 ("PIPE Pre-Funded Warrant") and 0.2 of a PIPE Warrant; (iii) 8,546,955 PIPE Pre-Funded Warrants at a unit price of $25.1899, payable in 71,766,135 0G Tokens (as defined below) based on an agreed value of $3 per 0G Token; and (iv) an unsecured convertible note in an aggregate original principal amount of 95,333 Solana (the "PIPE Note").

On September 26, 2025, in connection with the first closing of the PIPE Offering, the Company issued 116,340 PIPE Common Share Units and 412,037 PIPE Pre-Funded Warrant Units for aggregate gross cash proceeds of $13.3 million, and 2,592,212 PIPE Pre-Funded Warrants for 21,766,135 0G Tokens, valued at $54.7 million on the issuance date. The remaining 5,954,473 PIPE Pre-Funded Warrant Units were issued on October 9, 2025, for 50,000,000 0G Tokens. The PIPE Note was issued on October 24, 2025, at which date the original principal amount of 95,333 Solana was received.

Flora Growth Corp.
Notes to the unaudited condensed interim consolidated financial statements

For the three and nine months ended September 30, 2025 and 2024

(In thousands of United States dollars, except shares and per share amounts)

On September 19, 2025, the Company entered into an arrangement with Zero Gravity Labs Inc. ("Zero Gravity") pursuant to which the Company agreed to (i) borrow 50,000,000 0G Tokens from Zero Gravity under a term loan agreement ("Loan Agreement"), and (ii) issue to Zero Gravity in a private placement offering 1,786,423 warrants to purchase one common share at an exercise price of $0.01 ("Loan Agreement Warrants"). On September 22, 2025, the Company entered into an agreement with Zero Gravity for the issuance of an unsecured convertible note in an aggregate original principal amount of 50,000,000 0G Tokens (the "Zero Gravity Convertible Note") that will replace the Loan Agreement and Loan Agreement Warrants, subject to closing. The Zero Gravity Convertible Note was issued on October 23, 2025, at which date the 50,000,000 0G Tokens were received.

The Company intends to use the net proceeds from the PIPE Offering and the Zero Gravity Convertible Note (collectively, the "Cryptocurrency Offering") to further the Company's new digital asset treasury strategy linked to $0G, the native tokens of the Zero Gravity (0G) blockchain ("0G Tokens" or "0G"), and to explore and expand the use of the native AI functionality of the 0G Tokens to enhance the business of the Company and the balance of the net proceeds will be used for general corporate and working capital purposes.

Adoption of accounting standards and amendments

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

Going concern

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

The Company had cash of $113.51 million at ~~June~~September 30, 2025, a net loss of $39.28 million for the ~~six~~nine months ended ~~June~~September 30, 2025, and an accumulated deficit of $~~161~~167.39 million at ~~June~~September 30, 2025. ~~Current~~With ~~economic~~the ~~and~~first ~~market~~closing ~~conditions~~of ~~have put pressure on~~ the ~~Company's~~PIPE ~~growth~~Offering ~~plans. The Company's ability to continue as a going concern is dependent~~ on ~~its~~September ~~ability~~26, ~~to obtain additional capital. The Company believes that its current level of cash is not sufficient to continue investing in growth~~2025, ~~while~~as atwell ~~the same time meeting its obligations~~ as ~~they become due. These conditions raise substantial doubt regarding~~ the ~~Company's~~closings ~~ability to continue as a going concern for a period~~ of ~~at least one year from~~ the ~~date~~PIPE ofOffering ~~issuance~~subsequent ~~of these unaudited condensed interim consolidated financial statements. To alleviate these conditions, management is currently evaluating various cost reductions and other alternatives and may seek~~ to ~~raise~~September ~~additional funds through the issuance of equity~~30, ~~debt securities~~2025, ~~through arrangements with strategic partners, through obtaining credit from financial institutions or otherwise. The actual amount that~~ the Company ~~may~~believes bethat ~~able~~its toexisting ~~raise~~cash ~~under~~and ~~these~~digital ~~alternatives~~assets ~~will~~are ~~depend on market conditions~~ and ~~other~~will ~~factors. As it seeks additional sources of financing, there can~~ be nosufficient ~~assurance that such financing would be available to the Company on favorable terms or at all. The Company's ability to obtain additional financing~~ in ~~the~~both ~~debt and equity capital markets is subject to several factors, including but not limited to market and economic conditions,~~ the ~~Company's~~short ~~performance~~ and ~~investor~~long ~~sentiment~~term ~~with respect~~ to itmeet ~~and~~our ~~its~~working ~~industry.~~capital ~~The~~requirements ~~unaudited condensed interim consolidated financial statements do not include any adjustments for the recovery~~ and ~~classification~~future ~~of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern~~obligations.

Basis of consolidation

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

On February 4, 2025, the Company completed the closing of the acquisition of 100% of the issued and outstanding shares of United Beverage Distribution Inc., a United States corporation with a functional currency of the United States dollar. See discussion of the acquisition in Note 9.

During the nine months ended September 30, 2025, each of Franchise Global Health Inc. ("FGH"), Franchise Cannabis Corp., CBDMed Therapeutics Inc., Harmony Health One Inc., 1200325 B.C. Ltd., Fayber Technologies Inc., ACA Mueller ADAG Pharma Vertriebs GmbH, Sativa Verwaltungs GmbH, and Sativa Verwaltungs GmbH and Co. KG (together, the "Insolvent Subsidiaries") made insolvency filings in the appropriate jurisdictions. Each of the Insolvent Subsidiaries was a direct or indirect subsidiary of the Company and was part of the Company's acquisition of FGH in December 2022. See discussion in Note 4.

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

On ~~February~~September 426, 2025, the Company ~~completed~~transferred 100% of the ~~closing~~issued and outstanding equity interests of the ~~acquisition~~following ofdirect ~~100%~~and ofindirect wholly-owned subsidiaries, which collectively comprise the ~~issued~~Company's legacy hemp and ~~outstanding~~cannabis ~~shares~~business: of(i) Australian Vaporizers Pty LTD, an Australian limited company; (ii) Vessel Brand Canada Inc., a Canadian corporation; (iii) Klokken Aarhus Inc., a Canadian corporation; (iv) Rangers Pharmaceuticals A/S, a Danish stock-based corporation; (v) TruHC Pharma GmbH, a German limited company; (vi) Vessel Brand Inc., a Delaware corporation; (vii) High Roller Private Label LLC, a Florida limited liability company; (viii) Just Brands LLC; a Florida limited liability company; (ix) Just Brands FL LLC, a Florida limited liability company; (x) Just Brands International LTD, a United Kingdom limited company; and (xi) United Beverage Distribution Inc., a ~~United~~South ~~States~~Dakota corporation ~~with~~(collectively, the "Transferred Interests") to Flora Growth US Holdings LLC, a ~~functional~~Florida ~~currency~~limited liability company and certain noteholders ("Noteholders") of the ~~United~~Company, ~~States~~in ~~dollar.~~exchange ~~See~~for ~~discussion~~full satisfaction of the balance receivable under the promissory notes issued by the Company to such Noteholders as part of the Company's acquisition of United Beverage Distribution Inc. on January 30, 2025 (Note 9). See discussion in Note 83.

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

Minimum bid price requirement

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

On ~~July~~August 314, 2025, the Company ~~announced~~effected ~~that it will effect~~ a 1-for-39 share consolidation of the Company’'s issued and outstanding common shares, ~~which~~by isfiling ~~expected~~Articles of Amendment to bethe ~~effective~~Company's atamended and restated Articles of Incorporation with the ~~open~~Ontario Ministry of Public and Business Service Delivery and Procurement. The Company common shares began trading on ~~August~~a 4,post-share ~~2025.~~consolidation ~~See~~basis ~~Note~~as 20of ~~for~~the ~~subsequent~~opening ~~reverse~~of ~~stock~~the ~~split~~Nasdaq on August 4, 2025.

3From August 4, 2025 through August 18, 2025, a period of 10 consecutive trading days, the closing bid price of the Company's Common Shares was greater than $1. ~~INSOLVENCY~~00 ~~AND~~per ~~DECONSOLIDATION~~share. OFAccordingly, ~~CERTAIN~~on ~~SUBSIDIARIES~~August 19, 2025, the Company received formal notice from Nasdaq that it had regained compliance with the Minimum Bid Price Requirement and that the matter has been closed. Flora is now in compliance with all applicable continued listing standards and its Common Shares continue to be listed and traded on Nasdaq.

Corporate governance requirement

On August 25, 2025, Harold Wolkin, a director of the Company passed away. Prior to his passing, Mr. Wolkin served as an "Independent Director", as defined in Nasdaq Listing Rule 5605(a)(2), of the Company's audit committee, the compensation committee, and the nominating and corporate governance committee of the Board. On August 26, 2025, Nasdaq was informed that because of Mr. Wolkin's passing, the Company is no longer in compliance with certain Corporate Governance Requirements as set forth in Nasdaq Listing Rule 5605.

Pursuant to Nasdaq Listing Rule 5605(b)(1), a majority of the Board of a listed company must be comprised of Independent Directors. With Mr. Wolkin's passing, the Board is currently comprised of only four members, Daniel Reis-Faria, Michael Heinrich, Edward Woo and Manfred Leventhal. Only two of the four, Mr. Woo and Mr. Leventhal, qualify as Independent Directors. Therefore, the Company's Board is no longer comprised of a majority of Independent Directors as required by Nasdaq Listing Rule 5605(b)(1).

Pursuant to Nasdaq Listing Rule 5605(c)(2)(A), a listed company must have an audit committee of at least three members, each of whom must be an Independent Director and meet the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). With Mr. Wolkin's passing, the Company's audit committee is currently comprised of only two members, Mr. Woo and Mr. Leventhal, each of whom meet the independence requirements set forth in Nasdaq Rule 5605(a)(2) and Rule 10-A3(b)(1) of the Exchange Act. Therefore, the Company's audit committee is no longer comprised of at least three members meeting the aforementioned independence requirements as required by Nasdaq Listing Rule 5605(c)(2)(A).

The Company is in the process of reviewing and evaluating potential options to regain compliance with Nasdaq Listing Rules 5605(b)(1) and 5605(c)(2)(A) within the cure period set forth in 5605(b)(1)(A), which will be before the earlier of one year from August 25, 2026 and the next annual meeting.

Flora Growth Corp.
Notes to the unaudited condensed interim consolidated financial statements

For the three and nine months ended September 30, 2025 and 2024

(In thousands of United States dollars, except shares and per share amounts)

3. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

On September 20, 2025, the Company entered into an Equity Transfer and Debt Repayment Agreement (the “Agreement”) with a group of investors (the “Investors”), which included Clifford Starke and Sammy Dorf, each of whom are directors of Flora, and Dany Vaiman, the Company’s chief financial officer. Under the Agreement, the Investors acquired assets from the Company relating to the Company’s hemp and cannabis related businesses, including Just Brands LLC, Just Brands FL LLC, Just Brands International LTD, High Roller Private Label LLC (together with Just Brands LLC, Just Brands FL LLC, Just Brands International LTD (“JustCBD”), Vessel Brand Inc., Vessel Brand Canada Inc. (together with Vessel Brand Inc. “Vessel”), United Beverage Distribution Inc. (“United”), Klokken Aarhus Inc., Rangers Pharmaceuticals A/S (together with Klokken Aarhus Inc. “Klokken”), TruHC Pharma GmbH (“TruHC”), Australian Vaporizers Pty LTD and the Company’s investment in an early-stage European cannabis company (collectively the “Cannabis Business”). The sale of the Cannabis Business occurred following signing on September 26, 2025.

The consideration received by the Company for the sale of the Cannabis Business consisted of the cancellation by the Investors of all of the Company's obligations pursuant to promissory notes owed to the Investors with five year maturities currently held by the Company with an aggregate amount of principal and accrued interest of approximately $2.2 million.

The sale enabled the Company to concentrate on its international pharmaceutical distribution business. The sale was part of several strategic changes to become a digital assets treasury company.

The Company has presented the associated assets and liabilities of the Cannabis Business as held for sale. The major classes of assets and liabilities classified as held for sale as of September 30, 2025 and December 31, 2024 were as follows:

		September 30, 2025		December 31, 2024
Assets held for sale
Cash	$	-	$	804
Trade and amounts receivable		-		1,494
Prepaid expenses and other current assets		-		625
Inventory		-		3,532
Total current assets held for sale		-		6,455
Property, plant and equipment		-		231
Operating lease right of use assets		-		1,123
Intangible assets		-		2,746
Goodwill		-		2,006
Other assets		-		68
Total noncurrent assets held for sale		-		6,174
Total assets held for sale	$	-	$	12,629
Liabilities held for sale
Trade and other payables	$	-	$	1,892
Contingencies		-		2,695
Current portion of operating lease liability		-		660
Current portion of contingent purchase considerations		-		184
Other accrued liabilities		-		1,558
Total current liabilities held for sale		-		6,989
Non-current operating lease liability		-		1,907
Deferred tax		-		856
Total liabilities held for sale	$	-	$	9,752

Flora Growth Corp.
Notes to the unaudited condensed interim consolidated financial statements

For the three and nine months ended September 30, 2025 and 2024

(In thousands of United States dollars, except shares and per share amounts)

The following table summarizes the major classes of line items included in loss from discontinued operations, net of tax, for the three and nine months ended September 30, 2025 and 2024:

		For the three months ended September 30, 2025			For the three months ended September 30, 2024			For the nine months ended September 30, 2025			For the nine months ended September 30, 2024
Revenue	$	4,492		$	5,227		$	14,499		$	17,960
Cost of sales		2,770			2,883			8,214			10,010
Gross profit from discontinued operations		1,722			2,344			6,285			7,950
Operating expenses
Consulting and management fees		1,248			1,349			3,798			4,327
Professional fees		113			138			237			230
General and administrative		205			312			971			945
Promotion and communication		623			899			2,349			3,114
Travel expenses		41			71			134			212
Research and development		52			118			238			227
Operating lease expense		168			150			421			470
Depreciation and amortization		194			220			559			533
Bad debt expense		180			47			500			266
Asset impairment		1,407			413			1,407			1,440
Other expense		550			202			128			678
Operating loss from discontinued operations		(3,059	)		(1,575	)		(4,457	)		(4,492	)
Interest expense		-			1			44			2
Foreign exchange loss (gain)		2			(3	)		(8	)		(2	)
Unrealized gain from changes in fair value		(32	)		-			(68	)		(57	)
Net loss before income taxes		(3,029	)		(1,573	)		(4,425	)		(4,435	)
Income tax benefit		3			(99	)		(103	)		(151	)
Loss from discontinued operations	$	(3,032	)	$	(1,474	)	$	(4,322	)	$	(4,284	)
Basic and diluted loss per share from discontinued operations	$	(4.12	)	$	(4.23	)	$	(7.22	)	$	(14.34	)

The following table summarizes the significant operating and investing items related to the Cannabis Business for the nine months ended September 30, 2025 and 2024:

		For the nine months ended September 30, 2025		For the nine months ended September 30, 2024
Operating activities of discontinued operations
Depreciation and amortization	$	559	$	533
Bad debt expense		500		266
Asset impairment		1,407		1,440
Investing activities of discontinued operations
Purchases of property, plant and equipment	$	17	$	100

The subsidiaries sold included TruHC Pharma GmbH, Klokken Aarhus Inc. and Rangers Pharmaceuticals A/S, which were part of the commercial and wholesale segment; Just Brands LLC, Just Brands FL LLC, Just Brands International LTD, High Roller Private Label LLC, Vessel Brand Inc., Vessel Brand Canada Inc., United Beverage Distribution Inc. and Australian Vaporizers Pty LTD which made up the entirety of the house of brands segment; and the Company's investment in an early stage European cannabis company which was part of the Company's corporate segment.

The Company applies significant judgement in determining whether a disposal meets the criteria to present as held for sale at the reporting date, and whether the disposal represents a strategic shift that has (or will have) a major effect on its operations and financial results in order to be classified as a discontinued operation. The criteria evaluated are both quantitative and qualitative in nature, to evaluate the significance of the disposal relative to the operations of the Company as a whole. The Company has determined this disposition represents a strategic shift in operations that will have a major effect on the Company's operations and financial results, and accordingly, has been presented as discontinued operations.

During the three and nine months ended September 30, 2025, the Company recorded a gain on disposal of $nil as the sales price equaled the carrying value of the assets being sold.

During the three and nine months ended September 30, 2025, the Company recorded a gain on disposal of $0.5 million because of the derecognition of equity components related to the Cannabis Businesses for which the Company lost control.

Flora Growth Corp.
Notes to the unaudited condensed interim consolidated financial statements

For the three and nine months ended September 30, 2025 and 2024

(In thousands of United States dollars, except shares and per share amounts)

4. INSOLVENCY AND DECONSOLIDATION OF CERTAIN SUBSIDIARIES

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

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

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

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

Cash	$	67
Trade and amounts receivable		40
Indemnification receivables		4,329
Total assets	$	4,436

Trade and other payables	$	1,935
Contingencies		4,329
Current portion of long term debt		4
Current portion of operating lease liability		6
Total liabilities	$	6,274

Net liabilities deconsolidated		1,838
Impairment of receivables from Insolvent Subsidiaries		(676	)

Gain on deconsolidation of Insolvent Subsidiaries	$	1,162

~~Flora~~The ~~Growth~~gain ~~Corp.Notes~~on todeconsolidation of Insolvent Subsidiaries is recorded in gain on disposal of insolvent subsidiaries in the unaudited condensed interim consolidated ~~financial~~ statements ~~For~~of loss and comprehensive loss. The Insolvent Subsidiaries reported a combined net loss and comprehensive loss of $nil and less than $0.1 million in the three and ~~six~~nine months ended ~~June~~September 30, 2025, ~~and~~respectively (2024 ~~(In~~- ~~thousands~~net ofloss ~~United~~and ~~States~~comprehensive ~~dollars,~~loss ~~except~~of ~~shares~~less than $0.1 million and ~~per~~$0.4 ~~share~~million, ~~amounts~~respectively).

		March 14, 2025
Cash	$	67
Trade and amounts receivable		40
Indemnification receivables		4,329
Total assets	$	4,436
Trade and other payables	$	1,935
Contingencies		4,329
Current portion of long term debt		4
Current portion of operating lease liability		6
Total liabilities	$	6,274
Net liabilities deconsolidated		1,838
Impairment of receivables from Insolvent Subsidiaries		(676	)
Gain on deconsolidation of Insolvent Subsidiaries	$	1,162

~~The~~Flora ~~gain~~Growth onCorp.Notes ~~deconsolidation~~to ~~of Insolvent Subsidiaries is recorded in gain on disposal of insolvent subsidiaries in~~ the unaudited condensed interim consolidated financial statements ofFor ~~loss and comprehensive loss. The Insolvent Subsidiaries reported a combined net loss and comprehensive loss of $nil and less than $0.1 million in~~ the three and ~~six~~nine months ended ~~June~~September 30, 2025, ~~respectively~~and (2024 -(In ~~net~~thousands ~~loss~~of ~~and~~United ~~comprehensive~~States ~~loss~~dollars, ofexcept ~~$0.1~~shares ~~million~~ and ~~0.4~~per ~~million,~~share ~~respectively~~amounts).

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

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

45. TRADE AND AMOUNTS RECEIVABLE

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

		June 30, 2025			December 31, 2024
		September 30, 2025			December 31, 2024
Trade accounts receivable	$	~~4,351~~786		$	~~2,334~~713
Allowance for expected credit losses		(~~938~~3	)		~~(611~~-	)
HST/VAT receivable		1,~~041~~048			660
Other receivables		~~634~~461			~~678~~194
Total	$	52,~~088~~292		$	31,~~061~~567

Changes in the trade accounts receivable allowance in the three and ~~six~~nine months ended ~~June~~September 30, 2025 relate to establishing an allowance for expected credit losses. There ~~were~~was ~~$0.2~~less ~~million~~than ~~and~~ $0.31 million in write-offs of trade receivables during both the three and ~~six~~nine months ended ~~June~~September 30, 2025, ~~respectively~~ (2024 - $~~0.1~~nil ~~million~~for ~~and $0.1 million, respectively~~both). The Company has no amounts written- off that are still subject to collection enforcement activity as at ~~June~~September 30, 2025. The Company's aging of trade accounts receivable is as follows:

		June 30, 2025		December 31, 2024
		September 30, 2025		December 31, 2024
Current	$	~~2,038~~22	$	~~441~~46
1-30 Days		~~469~~181		~~710~~521
31-60 Days		~~495~~237		~~257~~146
61-90 Days		6311		~~440~~-
91-180 Days		~~1,286~~335		~~486~~-
180+ Days		-		-
Total trade receivables	$	786	$	713
Total trade receivables	$	4,351	$	2,334

116. INVENTORY

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

5. INVENTORY

Inventory is comprised of the following:

		June 30, 2025		December 31, 2024
		September 30, 2025		December 31, 2024
Raw materials and supplies	$	~~348~~30	$	~~508~~27
Finished goods		42,453		52,~~263~~212
Total	$	42,~~801~~483	$	52,~~771~~239

During the three and ~~six~~nine months ended ~~June~~September 30, 2025, the Company recorded inventory impairment as a write-down to cost of sales in the amount of $~~0.1~~nil ~~million~~ and less than $0.31 million, respectively (2024 - $~~0.8~~nil ~~million~~for ~~and $1.0 million, respectively~~both).

67. DIGITAL ASSETS

As discussed in Note 2, the Company received 21,766,135 0G Tokens on September 26, 2025, in exchange for the issuance of 2,592,212 PIPE Pre-Funded Warrants. The 0G Tokens were initially valued at $54.7 million, equal to the fair value of the PIPE Pre-Funded Warrants at issuance, which reflects the Company's common share closing price of $21.10 per unit on that date. As at September 30, 2025, these 0G Tokens were classified as restricted digital assets ~~consist~~as ofthey were held in an escrow account under the ~~following~~Company's asname. ofOn ~~June~~October 309, 2025:, these digital assets were released from escrow as the conditions for their release were met.

	Number of Units		Cost Basis		Fair Value
Ethereum (ETH)	219.16143	$	410	$	542
Solana (SOL)	3,274.36698		509		500
Ripple (XRP)	44,653.30117		100		99
Total digital assts		$	1,019	$	1,141

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

In accordance with ASC Topic 820, Fair Value Measurement, the Company measures the fair value of its digital assets based on the quoted end-of-day price on the measurement date for a single digital asset on an active trading platform, Binance.com. Management has determined that Binance.com, an active exchange market, represents a principal market for the digital assets it holds and the end-of-day quoted price is both readily available and representative of fair value (Level 1 inputs). The Company recorded a gain of $0.1 million in the value of its digital assets for the three and six months ended June 30, 2025, which was reported in the unrealized gain from changes in fair value in the unaudited condensed interim consolidated statements of loss and comprehensive loss.14

7Flora Growth Corp. ~~PROPERTY~~Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, ~~PLANT~~2025 ~~AND~~and ~~EQUIPMENT~~2024 (In thousands of United States dollars, except shares and per share amounts)

	Digital Assets					Restricted Digital Assets

	Number of Units		Cost Basis		Fair Value	Number of Units		Cost Basis		Fair Value
Bitcoin (BTC)	0.856737	$	100	$	98	-	$	-	$	-
Zero Gravity (0G)	-		-		-	21,766,135.50		54,696		55,308
Total digital assts		$	100	$	98		$	54,696	$	55,308

The following table presents a reconciliation of the fair values of the Company's investments in digital assets for the nine months ended September 30, 2025:

		Digital Assets			Restricted Digital Assets		Total
Balance as of December 31, 2025	$	-		$	-	$	-
Purchases		1,418			54,696		56,114
Dispositions		(2,015	)		-		(2,015	)
Realized gains on dispositions		575			-		575
Unrealized gains from changes in fair value of digital assets		120			612		732
Balance as of September 30, 2025	$	98		$	55,308	$	55,406

In accordance with ASC Topic 820, Fair Value Measurement, the Company measures the fair value of its digital assets based on the quoted end-of-day price on the measurement date for a single digital asset on an active trading platform, Bitgo.com. Management has determined that Bitgo.com, an active exchange market, represents a principal market for the digital assets it holds and the end-of-day quoted price is both readily available and representative of fair value (Level 1 inputs). The Company recorded a gain of $1.2 million and $1.3 million in the value of its digital assets for the three and nine months ended September 30, 2025, respectively, which was reported in the unrealized gain from changes in fair value in the unaudited condensed interim consolidated statements of loss and comprehensive loss.

8. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

		June 30, 2025			December 31, 2024
		September 30, 2025			December 31, 2024
Buildings	$	-112		$	3132
Machinery and office equipment		~~715~~154			~~655~~133
Vehicles		488			227
Total		~~763~~274			~~708~~172
Less: accumulated depreciation		(~~349~~123	)		(~~396~~91	)
Property, plant and equipment, net	$	~~414~~151		$	~~312~~81

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

~~8. BUSINESS COMBINATIONS~~15

Flora Growth Corp.
Notes to the unaudited condensed interim consolidated financial statements

For the three and nine months ended September 30, 2025 and 2024

(In thousands of United States dollars, except shares and per share amounts)

9. BUSINESS COMBINATIONS

United Beverage Distribution Inc. business combination

On January 30, 2025, the Company and United Beverage Distribution Inc. ("United"), a South Dakota corporation, entered into a Share Purchase Agreement (the "Purchase Agreement") pursuant to which the Company purchased 100% of the issued and outstanding common shares of United (the "United Common Shares"). Under the terms of the Purchase Agreement, Flora agreed to purchase the United Common Shares from the group of sellers listed in the Purchase Agreement (the "Sellers"), which included Clifford Starke and Sammy Dorf, each of whom are directors of Flora (the "Flora Directors"), and Flora's chief financial officer, Dany Vaiman (together with the Flora Directors, the "Related Parties") for (i) ~~923~~23,~~744~~688 shares of the Company, valued at $0.8 million utilizing the $034.8832 share price on February 4, 2025, and representing 4.99% of the outstanding common shares of Flora as of January 30, 2025, issued to the Sellers who are not Related Parties and (ii) promissory notes with five year maturities that accrue interest at a rate of 6% per annum in an aggregate principal amount of $2.1 million issued to the Sellers. Total consideration for the United acquisition was $2.9 million.

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

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

(Thousands of Untied States dollars)
Current assets
Cash	$	461
Trade receivables		68
Inventory		167
Prepaid expenses and other current assets		3
Total current assets		699

Non-current assets
Property, plant and equipment, net		30
Goodwill		2,441
Total assets		3,170

Current liabilities
Trade and amounts payables		(180	)
Loan payable		(27	)
Other accrued liabilities		(15	)
Total current liabilities		(222	)

Total net assets acquired	$	2,948

~~Since~~As ~~the~~discussed ~~acquisition~~in ~~date~~Note ~~through~~2 ~~June~~and ~~30,~~Note ~~2025~~3, ~~United~~the ~~reported~~Company ~~revenue~~transferred 100% of ~~$0.4 million~~the issued and ~~net~~outstanding ~~loss~~equity interests of United to Flora Growth US Holdings LLC and ~~comprehensive~~certain ~~loss~~Noteholders of ~~$0.4~~the ~~million~~Company in exchange for full satisfaction of the balance receivable under the promissory notes.

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

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

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

9. INTANGIBLE ASSETS AND GOODWILL

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

		Licenses		Trademarks and Brands		Goodwill		Total
Cost
At December 31, 2024	$	3,193	$	1,351	$	2,044	$	6,588
Additions		-		-		2,441		2,441
At June 30, 2025	$	3,193	$	1,351	$	4,485	$	9,029
Accumulated Amortization
At December 31, 2024	$	487	$	1,265	$	-	$	1,752
Additions		327		9		-		336
At June 30, 2025	$	814	$	1,274	$	-	$	2,088
Foreign currency translation		257		5		213		475
Net book value at June 30, 2025	$	2,636	$	82	$	4,698	$	7,416

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

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

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

2025	$	360
2026		721
2027		721
2028		721
2029		192
Thereafter		3
Total	$	2,718

10. ASSET IMPAIRMENT

~~Goodwill~~Discontinued operations

~~The~~As ~~Company~~discussed ~~tests~~in ~~its~~Note ~~goodwill~~3, ~~for~~the ~~impairment~~Company assold ~~part~~the ofCannabis ~~its~~Business ~~annual~~on ~~fourth~~September ~~quarter~~26, ~~impairment~~2025. ~~test~~Prior to the sale, the Company assessed the goodwill and atlong-lived ~~interim~~assets ~~periods~~of ~~when~~each ~~impairment~~of the Cannabis Businesses for indicators ~~exist~~of impairment. ~~The~~While no indicators of impairment were noted, the Company's ~~goodwill~~determined isthe ~~assigned~~fair tovalue of the ~~reporting~~disposal ~~units~~group ~~associated~~was ~~with~~less than the ~~original~~carrying ~~acquisition~~value of ~~those~~the ~~operations~~net assets. AtThe ~~June~~carrying 30value of the TruHC reporting unit was $4.9 million, ~~2025~~comprised mainly of goodwill of $2.2 million and licenses of $2.5 million. Because the fair value of the disposal group was less than the carrying amount of the net assets, the Company ~~determined~~recorded ~~that~~an ~~there~~impairment ~~were~~of nogoodwill ~~indicators~~of ~~present~~$1.4 ~~for~~million ~~its~~within ~~TruHC~~the commercial and ~~United~~wholesale ~~reporting~~segment. ~~units~~This item was recorded in the loss from discontinued operations, net of taxes caption on the unaudited condensed interim consolidated statements of loss and comprehensive loss.

~~Long-lived assets~~16

AsFlora ~~discussed~~Growth ~~in Note 12, the Company had been subleasing retail space in Miami, Florida to a third party since the third quarter of 2023~~Corp.Notes ~~The Company is leasing this retail space pursuant~~ to ~~a lease agreement that expires in November 2026, which is~~ the ~~same~~unaudited ~~term~~condensed asinterim ~~the~~consolidated ~~sublease~~financial ~~agreement.~~statements InFor ~~March 2025,~~ the ~~sublessor~~three ~~informed~~and ~~the~~nine ~~Company~~months ~~that~~ended itSeptember ~~planned to terminate the sublease agreement~~30, ~~effective in May~~ 2025. ~~The Company considers this to be an indicator of impairment,~~ and, ~~thus,~~2024 ~~performed~~(In athousands ~~quantitative analysis as~~ of ~~March~~United ~~31,~~States 2025 to determine if impairment existed by comparing the carrying amount of the operating lease right of use asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. This analysis indicated the asset values may not be recoverable. The Company then calculated the fair value of this asset using an income approach. As a resultdollars, ~~the~~except ~~Company~~shares ~~recorded an impairment of operating lease right of use assets within its corporate asset group~~ and ~~segment~~per ~~totaling~~share less than $0.1 million. These charges were recorded in the asset impairment caption on the unaudited condensed interim consolidated statements of loss and comprehensive loss. The Company has found a new sublessor for this space under an agreement with similar payment terms as the original sublease. Therefore, there were no further indicators of impairment as of June 30, 2025.amounts)

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

11. DEBT

Euro credit facility

The Company, through Phatebo, has credit facilities totaling 2.4 million Euro ($2.8 million USD), at three different banks in Germany. These arrangements are open ended without predetermined maturity dates. Principal and interest payments are due at the end of each term. Interest rates can change with each new amount drawn. As of ~~June~~September 30, 2025, the total outstanding amount on these credit facilities was 2.3 million Euro ($2.7 million USD) with interest rates ranging from 4.76% to 5.1908% and due within the next twelve months. These credit facilities were secured by various guarantees, including payment guarantees upon default.

United promissory notes (Related Parties)

As discussed in Note 89, the Company issued promissory notes with five-year maturities that accrue interest at a rate of 6% per annum in an aggregate principal amount of $2.1 million to the Sellers of United on January 30, 2025. The promissory notes ~~require~~required the first payments of principal and interest to be made in February 2026. On September 26, 2025, the Company transferred the equity and assets of the Cannabis Businesses in exchange for the cancellation of the promissory notes. See Note 3. At ~~June~~September 3026, 2025, the total outstanding amount of these promissory notes was $2.2 million, $0.34 million of which was due within the next 12 months. Of the total amount outstanding at ~~June~~September 3026, 2025, $1.9 million was owed to the Related Parties. These promissory notes were secured by payments guarantees and a default interest rate of 11% upon default.

12. LEASES

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

		Three months ended June 30, 2025			Three months ended June 30, 2024			Six months ended June 30, 2025			Six months ended June 30, 2024
		Three months ended September 30, 2025			Three months ended September 30, 2024			Nine months ended September 30, 2025			Nine months ended September 30, 2024
Components of lease expense
Operating lease expense	$	~~162~~38		$	~~199~~28		$	~~329~~114		$	~~364~~72
Short-term lease expense		2320			3813			936			~~180~~37
Sublease income		(9226	)		(9426	)		(~~184~~79	)		(~~178~~77	)
Total lease expense	$	9332		$	~~143~~15		$	~~154~~71		$	~~366~~32
Other Information
Operating cash flows from operating leases	$	~~288~~53		$	~~403~~52		$	~~561~~154		$	~~748~~115
ROU assets obtained in exchange for new operating lease liabilities		-			~~896~~29			325			~~2,143~~75
Weighted-average remaining lease term in years for operating leases								3.45			42.01
Weighted-average discount rate for operating leases								109.83%			108.74%

15Maturities of operating lease liabilities as of September 30, 2025 are as follows:

Thousands of United States dollars		Operating Leases
2025	$	55
2026		194
2027		110
2028		102
2029		88
Thereafter		16
Total future lease payments		565
Less: imputed interest		(81	)
Total lease liabilities		484
Less: current lease liabilities		(177	)
Total non-current lease liabilities	$	307

~~Maturities of operating lease liabilities as of June 30, 2025 are as follows:~~17

Thousands of United States dollars		Operating Leases
2025	$	544
2026		1,070
2027		861
2028		574
2029		267
Thereafter		28
Total future lease payments		3,344
Less: imputed interest		(546	)
Total lease liabilities		2,798
Less: current lease liabilities		(833	)
Total non-current lease liabilities	$	1,965

Flora Growth Corp.
Notes to the unaudited condensed interim consolidated financial statements

For the three and nine months ended September 30, 2025 and 2024

(In thousands of United States dollars, except shares and per share amounts)

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

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

The Company began subleasing ~~warehousing~~retail ~~and office~~ space in ~~Carlsbad~~Miami, CAFlorida to a third party during the ~~fourth~~third quarter of 2023. The sublease isagreement was effective through ~~August~~November 3130, ~~2027~~2026 and ~~does~~contains ~~not~~one ~~contain~~option ~~renewal~~to ~~options~~renew for five more years. The Company received notification from the sublessor in March 2025 of its intention to exit the sublease. In July 2025, the Company began subleasing the retail space to a new third party with the new sublease agreement effective through November 30, 2026 and contains one option to renew for five more years.

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

13. SHARE CAPITAL

The Company had the following significant common share transactions:

~~Six~~Nine months ended ~~June~~September 30, 2025

SEPTEMBER PRIVATE PLACEMENT

As discussed in Note 2, the Company issued 116,340 PIPE Common Shares on September 26, 2025, in connection with the first closing of the PIPE Offering. The PIPE Common Shares were issued for cash proceeds in bundled transactions that included PIPE Warrants and, in certain cases, PIPE Pre-Funded Warrants. For each transaction, cash proceeds were allocated among the underlying securities based on relative fair values at issuance. The fair values of the PIPE Common Shares and PIPE Pre-Funded Warrants reflect the Company's common share closing price of $21.10 per share on that date. The fair value of the PIPE Warrants was determined using the Black-Scholes option pricing model with the following inputs: share price of $21.10, risk-free interest rate of 3.7%, expected volatility of 102.5%, expected term of 1,825 days, and dividend yield of 0%. Of the $13.3 million of total cash proceeds, $2.5 million were allocated to PIPE Common Shares. PIPE Common Shares are recorded net of $1.1 million of issuance costs.

SEPTEMBER AT THE MARKET ("ATM") OFFERING

On September 23, 2025, the Company entered into an ATM sales agreement (the "Sales Agreement") with Revere Securities LLC (the "Agent") pursuant to which the Company may sell from time to time, at its option, common shares through the Agent in its capacity as sales agent. The sale of common shares, if any, will be made under the Company's Registration Statement, by any method that is deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act.

Unless otherwise agreed between the Company and the Agent, settlement for sales of the Common Shares will occur on the first trading day following the date on which any sales are made. Sales of the Common Shares will be settled through the facilities of The Depository Trust Company or by such other means as the Company and the Sales Agents may agree.

The aggregate compensation payable to the Agent, in cash, upon each sale of Common Shares through the Agent pursuant to the Sales Agreement, is an amount equal to: (i) 3.00% of the first $150 million in aggregate gross proceeds from the sale of Common Shares, (ii) 2.00% of the next $350 million in aggregate gross proceeds from the sale of the Common Shares, and (iii) 1.25% of any gross proceeds in excess of $500 million from the sale of the Common Shares. In addition, the Company has agreed in the Sales Agreement to provide indemnification and contribution to the Agent against certain liabilities, including liabilities under the Securities Act, in addition to certain other covenants, representations and warranties customary for an agreement of this type.

Flora Growth Corp.
Notes to the unaudited condensed interim consolidated financial statements

For the three and nine months ended September 30, 2025 and 2024

(In thousands of United States dollars, except shares and per share amounts)

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

The Company issued a total of 4,700 common shares of the Company at a purchase price of $27.47 per share for gross proceeds of $0.1 million in the nine months ended September 30, 2025. See Note 20 for issuances subsequent to September 30, 2025.

REVERSE STOCK SPLIT

As a result of the Reverse Stock Split, every thirty-nine common shares issued and outstanding were automatically reclassified into one new common share. The Reverse Stock Split did not modify any rights or preferences of the common shares. Proportionate adjustments will be made to the exercise or conversion prices and the number of common shares underlying the Company's outstanding equity awards, convertible securities and warrants, as well as to the number of common shares issued and issuable under the Company's equity incentive plans. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split were automatically rounded up to the nearest whole common share.

All common shares and per share amounts have been restated to give retroactive effect to the share consolidation.

MAY PRIVATE PLACEMENT

On May 2, 2025, the Company entered into a securities purchase agreement with certain investors (the "Investors") in connection with the issuance and sale by the Company to the Investors via a private placement (the "Private Placement") of an aggregate of 380,~~133,011~~340 common shares of the Company, no par value per share at a purchase price of $011.3070 per share (the "May Common Shares") and ~~726~~18,~~992~~642 pre-funded warrants of the Company at a purchase price of $011.~~2999~~6961 per warrant (the "Pre-funded Warrants") each to purchase one May Common Share which shall be immediately exercisable and expire when exercised in full, at an exercise price of $0.~~0001~~0039 per share. See Note 15. The Company filed a registration statement on Form S-3 on May 14, 2025.

FEBRUARY PAYMENT TO UNITED OWNERS

As discussed in Note 89, the Company issued ~~923~~23,~~744~~688 of its common shares valued at $0.8 million to certain prior owners of United, who were also Related Parties, as part of the Company's acquisition of 100% of the issued and outstanding common shares of United on February 4, 2025.

16Nine months ended September 30, 2024

See Note 20 for subsequent reverse stock split.

Six months ended June 30, 2024

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

The Company issued ~~550~~14,~~000~~103 of its common shares valued at $0.6 million to the prior owners of AV as part of the Company's acquisition of 100% of the issued and outstanding common shares of AV on June 4, 2024.

APRIL 2024 PAYMENT TO TRUHC OWNERS

The Company issued 254,~~135,199~~751 of its common shares valued at $3.3 million to the prior owners of TruHC Pharma GmbH ("TruHC") as part of the first closing of the Company's acquisition of TruHC on April 22, 2024. The first closing made up 77% of the total agreed upon share price of 271,~~770,562~~044 common shares of the Company. The remaining ~~635~~16,~~363~~293 common shares of the Company were issued to the prior owners of TruHC as part of the second closing on November 27, 2024, after receiving shareholder approval for such issuance in accordance with the rules of the Nasdaq Stock Capital Market at its annual general meeting of shareholders, held August 14, 2024.

APRIL 2024 EQUITY OFFERING

On April 8, 2024, the Company closed an offering of 143,~~700,000~~590 of the Company's common shares at a public offering price of $174.9010 per common share for gross proceeds of $3.2 million. The Company paid $0.4 million in issuance costs relating to the April 2024 equity offering.

Flora Growth Corp.
Notes to the unaudited condensed interim consolidated financial statements

For the three and nine months ended September 30, 2025 and 2024

(In thousands of United States dollars, except shares and per share amounts)

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

ATAPRIL ~~THE MARKET ("~~ATM") OFFERING

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

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

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

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

OTHER ISSUANCES

On March 8, 2024, the Company entered into a settlement agreement with a third party pursuant to which the Company issued 501,~~000~~283 common shares of the Company, valued at $0.1 million, to a third party to settle outstanding amounts owed.

14. SHARE BASED COMPENSATION

The Company's 2022 Incentive Compensation Plan (the "2022 Plan") and its previous "'rolling" stock option plan (the "Prior Plan") are described in the Company's 2024 Form 10-K. The 2022 Plan was amended to increase the number of shares issuable thereunder from 264,~~500,000~~103 to 4115,~~500,000~~385 shares at the Company's annual and special shareholder meeting on June 30, 2025.

OPTIONS

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

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

	Options Outstanding
	Number of options (in thousands)			Weighted average exercise price	Weighted average remaining life (years)		Aggregate intrinsic value
	Number of options			Weighted average exercise price	Weighted average remaining life (years)		Aggregate intrinsic value
Outstanding balance, December 31, 2024	21546		$	381,490.1810	3.9	$	-
Outstanding balance, June 30, 2025	21		$	38.18	3.4	$	-
Expired	(107	)	$	1,755.00	-		-
Exercisable balance, June 30, 2025	21		$	38.18	3.4	$	-
Outstanding balance, September 30, 2025	439		$	1,425.54	4.0	$	-
Exercisable balance, September 30, 2025	439		$	1,425.54	4.0	$	-

The total expense related to the options granted in the three and six months ended June 30, 2025 was $nil (2024 - $nil and less than $0.1 million, respectively). This expense is included in the share-based compensation line on the unaudited condensed interim consolidated statements of loss and comprehensive loss. Generally, the options granted in 2023 vest one to two years following the date of grant provided that the recipient is still employed or engaged by the Company.20

AtFlora ~~June~~Growth Corp.Notes to the unaudited condensed interim consolidated financial statements For the three and nine months ended September 30, 2025 ~~the~~and ~~total~~2024 ~~remaining~~(In ~~stock~~thousands ~~option~~of ~~cost~~United ~~for~~States ~~nonvested~~dollars, ~~awards~~except isshares ~~$nil.~~and per share amounts)

~~See~~The ~~Note~~total 20expense ~~for~~related ~~subsequent~~to ~~forfeiture~~the options granted in the three and nine months ended September 30, 2025 was $nil (2024 - $nil and less than $0.1 million, respectively). This expense is included in the share-based compensation line on the unaudited condensed interim consolidated statements of loss and comprehensive loss. Generally, the options granted in 2023 vest one to two years following the date of grant provided that the recipient is still employed or engaged by the Company.

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

RESTRICTED STOCK AWARDS

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

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

	Number of restricted stock awards			Weighted average grant date fair value
	Thousands
Balance, December 31, 2024	335		$	289.18
Balance, December 31, 2024	13		$	7.41
Vested	(69	)		366.60
Balance, June 30, 2025	13		$	7.41
Balance, September 30, 2025	266		$	269.10

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

18The outstanding restricted stock awards vest over the next year provided the award holder is still employed or engaged by the Company. As of September 30, 2025, the Company had less than $0.1 million of unrecognized compensation expense related to restricted stock awards which will be recognized over the next year.

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

STOCK APPRECIATION RIGHTS ("SARs")

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

On August 14, 2024, the Company granted 141,~~603,984~~139 and ~~534~~13,~~661~~712 SARs to its Chief Executive Officer and Chief Financial Officer, respectively, which was approved by a majority of the Company's shareholders at the Company's annual meeting held on August 14, 2024. The fair value of the SARs at August 14, 2024 was determined using a Monte Carlo simulation incorporating Brownian motion with 100,000 trials through a binomial model. The significant inputs to the valuation include an 11-year term to maturity, the Company's closing share price at August 14, 2024 ($035.9149), estimated volatility (110%) based on the Company's common share and comparable companies' historical volatilities, and risk-free rate of 3.8% to discount the ending result to present value. The valuation also includes a derived service period, which is the median time to vest, as calculated by the model. This derived service period inherently contains some degree of estimation uncertainty.

On December 15, 2024, the Company granted ~~440~~11,~~000~~286 SARS to officers, directors, employees and consultants of the Company pursuant to the 2022 Plan. The fair value of the SARS at December 15, 2024 was determined using a Black Scholes pricing model with the following assumptions: the $150.3070 price of the Company's common shares; expected dividend yield of 0%; expected volatility of 110% based on the Company's common share and comparable companies' historical volatilities; risk-free interest rate of 4.35% and an expected life of 10.0 years.

On June 30, 2025, Flora's shareholders approved the repricing and amendment of vesting terms of certain outstanding SARS granted to certain employees and executive officers of the Company, including the SARs granted on August 14, 2024 and on December 15, 2024. The new base price of these SARs will be $0.58, the closing share price of the Company's stock as of June 30, 2025.21

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

On June 30, 2025, Flora's shareholders approved the repricing and amendment of vesting terms of certain outstanding SARS granted to certain employees and executive officers of the Company, including the SARs granted on August 14, 2024 and on December 15, 2024. The new base price of these SARs will be $22.62, the closing share price of the Company's stock as of June 30, 2025.

The vesting terms of the SARs granted on August 14, 2024 to the Company's Chief Executive Officer were amended such that the first of nine tranches will vest upon the Company's share price increasing by 25% from $22.62, with each tranche thereafter requiring an additional 25% increase in share price. The vesting terms of the SARs granted on August 14, 2024 to the Company's Chief Financial Officer were amended such that the first of eight tranches will vest upon the Company's share price increasing by 25% from $22.62, with each tranche thereafter requiring an additional 25% increase in share price. In accordance with ASC 718, the Company treated this modification of terms as an exchange of the original award for a new award. The fair value of the new SARs award was determined using a Monte Carlo simulation incorporating Brownian motion with 100,000 trials through a binomial model. The significant inputs to the valuation include an 10.1-year term to maturity, the Company's closing share price at June 30, 2025 ($22.62), estimated volatility (110%) based on the Company's common share and comparable companies' historical volatilities, and risk-free rate of 4.2% to discount the ending result to present value. The valuation also includes a new derived service period, which is the median time to vest, as calculated by the model. The new valuation resulted in an incremental value of less than $0.1 million, which, along with the unrecognized compensation cost, will be recognized as compensation cost over the new requisite service period.

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

~~Information~~As ~~relating~~discussed toin ~~SARs~~Note ~~outstanding~~2, atMr. ~~June~~Clifford 30Starke resigned as director and Chief Executive Officer of the Company on October 1, 2025. ~~and~~Under ~~December~~terms 31of Mr. Starke's SARs agreement, ~~2024~~this istriggered asthe ~~follows:~~full vesting of his remaining outstanding SARS.

	SARs Outstanding
	Number of SARS (in thousands)		Weighted average exercise price	Weighted average remaining life (years)		Aggregate intrinsic value
Outstanding balance, December 31, 2024	2,579
Outstanding balance, June 30, 2025	2,579	$	0.58	9.7	$	255
Exercisable balance, June 30, 2025	440	$	0.58	9.5	$	255

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

SARs Outstanding

Number of

SARS

Weighted

average

exercise price

Weighted average

remaining life

(years)

Aggregate

intrinsic value

Outstanding balance, December 31, 2024

66,137

Outstanding balance, September 30, 2025

66,137

22.62

9.4

1,024

Exercisable balance, September 30, 2025

59,281

22.62

9.5

1,024

~~Flora~~The ~~Growth~~total ~~Corp.Notes~~expense related to ~~the~~SARs ~~unaudited~~granted ~~condensed~~in ~~interim consolidated financial statements For~~ the three and ~~six~~nine months ended ~~June~~September 30, 2025 was $0.5 million and ~~2024~~$0.9 ~~(In~~million, ~~thousands~~respectively of(2024 ~~United~~- ~~States~~$0.4 ~~dollars~~and 0.4, ~~except~~respectively). ~~shares~~This expense is included in the share based compensation line on the unaudited condensed interim consolidated statements of loss and ~~per~~comprehensive loss. The share ~~amounts)~~based compensation expense of the SARs granted in 2024 will be recognized in tranches over the derived service period, ranging from zero to one year, provided that the recipient is still employed or engaged by the Company.

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

15. WARRANTS

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

As discussed in Note 13, the May 2, 2025 Private Placement included 18,642 Pre-funded Warrants at a purchase price of $11.6961 per warrant each to purchase one common share which shall be immediately exercisable and expire when exercised in full, at an exercise price of $0.0039 per share. The ~~following~~Pre-Funded ~~summarizes~~Warrants are classified as equity because they are freestanding financial instruments, are immediately exercisable, permit the holder to receive a fixed number of ~~warrants~~the ~~outstanding~~Company's ascommon shares and do not provide any guarantee of ~~June~~value or return. Due to the nominal exercise price and no expiration date, the Pre-funded Warrants were allocated a value of $0.2 million at issuance based on the number issued multiplied by $11.6961 per unit cash immediately received. There were 9,321 Pre-funded Warrants exercised during the three and nine months ending September 30, 2025, ~~not~~and ~~including~~ the total number of Pre-funded Warrants: outstanding was 9,321 as of September 30, 2025.

	Number of warrants		Weighted average exercise price
	Thousands
Balance, December 31, 2024	2,384	$	9.90
Balance, June 30, 2025	2,384	$	9.90

SEPTEMBER PRIVATE PLACEMENT

Date of expiry	Warrants outstanding		Exercise price		Grant date fair value	Remaining life in years
	Thousands
November 18, 2026	221	$	75.00	$	6,729	1.39
November 18, 2027	23		66.00		1,055	2.39
December 8, 2027	25		8.80		149	2.44
September 21, 2028	691		2.50		712	3.23
September 21, 2028	55		2.39		81	3.23
March 21, 2029	1,369		2.50		1,120	3.73
	2,384	$	9.90	$	9,846	3.33

As discussed in Note 2, the Company issued an aggregate of 3,004,249 PIPE Pre-Funded Warrants and 105,666 PIPE Warrants on September 26, 2025, in connection with the first closing of the PIPE Offering. Subject to shareholder approval, each PIPE Pre-Funded Warrant entitles the holder to purchase one common share at an exercise price of $0.0001, and each PIPE Warrant entitles the holder to purchase one common share at an exercise price of $25.19. The PIPE Pre-Funded Warrants have no expiry date, whereas the PIPE Warrants expire 1,825 days after shareholder approval.

Flora Growth Corp.
Notes to the unaudited condensed interim consolidated financial statements

For the three and nine months ended September 30, 2025 and 2024

(In thousands of United States dollars, except shares and per share amounts)

The PIPE Pre-Funded Warrants and the PIPE Warrants are classified as equity because the Company has the ability to settle the instrument in its own shares and the settlement is not based on a variable monetary amount.

Of the total PIPE Pre-Funded Warrants issued, 2,592,212 were exchanged for 0G Tokens and recorded at fair value of $54.7 million, based on the Company's common share closing price of $21.10 per share on the issuance date.

The remaining PIPE Pre-Funded Warrants and PIPE Warrants were issued for cash proceeds in bundled transactions that, in certain cases, also included PIPE Common Shares. For each transaction, cash proceeds were allocated among the underlying securities based on relative fair values at issuance. The fair values of the PIPE Common Shares and PIPE Pre-Funded Warrants reflect the Company's common share closing price of $21.10 per share on that date. The fair value of the PIPE Warrants was determined using the Black-Scholes option pricing model with the following inputs: share price of $21.10, risk-free interest rate of 3.7%, expected volatility of 102.5%, expected term of 1,825 days, and dividend yield of 0%. Of total cash proceeds of $13.3 million, $9.0 million was allocated to PIPE Pre-Funded Warrants and $1.7 million allocated to PIPE Warrants.

There were no PIPE Pre-Funded Warrants exercised during the three and nine months ending September 30, 2025, and the total number of PIPE Pre-Funded Warrants outstanding was 3,004,249 as of September 30, 2025. See Note 20 for issuances subsequent to September 30, 2025.

The following summarizes the number of warrants outstanding as of September 30, 2025, excluding the Pre-Funded Warrants:

	Number of warrants		Weighted average exercise price
Balance, December 31, 2024	61,144	$	386.31
Issued	105,666		25.19
Balance, September 30, 2025	166,810	$	157.56

Date of expiry	Warrants outstanding		Exercise price		Grant date fair value	Remaining life in years
November 18, 2026	5,675	$	2,925.00	$	6,729	1.13
November 18, 2027	590		2,574.00		1,055	2.13
December 8, 2027	642		343.20		149	2.19
September 21, 2028	17,727		97.50		712	2.98
September 21, 2028	1,405		93.21		81	2.98
March 21, 2029	35,105		97.50		1,120	3.47
December 19, 2030 (1)	105,666		25.19		1,735	5.22
	166,810	$	157.56	$	11,581	4.44

(1) Estimated date of expiry for PIPE Warrants based on 1,825 days from the date of shareholder approval.

16. COMMITMENTS AND CONTINGENCIES

Provisions

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

		Legal disputes			~~Sales tax~~			~~Total~~
Balance as at December 31, 2024	$	4,241		$	~~2,695~~		$	~~6,936~~
Payments/Settlements		(4,329	)		(241	)		(4,570	)
Payments/settlements		(4,329	)
Additional provisions		~~548~~717			~~227~~			~~775~~
Foreign currency translation		10			-			10
Balance as at June 30, 2025	$	470		$	2,681		$	3,151
Balance as at September 30, 2025	$	639

The legal disputes balance as of ~~June~~September 30, 2025 involves a legal proceeding that was brought against the Company and Vessel Brand Inc., which was formerly a wholly owned subsidiary of the Company, by the lessor of the warehousing and office space in Carlsbad, CA on June 2, 2025, in the Superior Court of California, County of San Diego. The lessor is claiming breach of lease and written guaranty agreements by the Company and is seeking damages for $0.46 million in unpaid rent, 10% interest on its damages, and reasonable attorneys' fees of the lessor. The Company has assessed the claims and concluded that it is probable that a liability has been incurred and the Company is able to reasonably estimate the loss of $0.56 million. As a result, without acknowledgement (explicitly or implicitly) of any amount of liability arising from this claim, the Company recognized a provision of $0.56 million to reflect the value of the claim. At ~~June~~September 30, 2025, this balance was ~~reclassified~~included ~~from~~in ~~trade~~the ~~payables to~~ contingencies line on the unaudited condensed interim consolidated statement of financial position.

2023

~~The~~On ~~Sales~~April ~~tax~~30, ~~relates~~2024, toa ~~estimated~~group ~~amounts~~representing ~~owed~~the sellers of Just Brands LLC to ~~certain~~Flora ~~jurisdictions~~in February 2022 (the "Plaintiffs") brought an action against the Company in the ~~Unites~~United States District Court for ~~sales~~the ~~from~~Southern District of New York (the "Court") claiming that the Company's ~~JustCBD~~failed ~~operations~~to promptly issue additional shares in accordance with a specific formula set forth in the securities purchase agreement after the two-year anniversary of the closing, which occurred on February 24, 2024. The ~~ending~~plaintiffs ~~balance~~claim isthat ~~recorded~~they are entitled to 16,218 common shares and $38.0 million to complete the acquisition of Just Brands LLC. On March 27, 2025, the Court dismissed both the claims brought under the securities laws without prejudice and the state law claims for lack of subject matter jurisdiction because the parties did not have diversity of citizenship in order to maintain those claims in the Court. The Plaintiffs did not amend their complaint against the Company within ~~contingencies~~the onthirty-day period allotted by the ~~unaudited~~Court, ~~condensed~~and, ~~interim~~thus, ~~consolidated~~as ~~statement~~of April 28, 2025, this litigation is no longer active. On May 9, 2025, the Plaintiffs filed a new action in New York State Supreme Court claiming that the Company failed to issue additional shares in accordance with a specific formula set forth in the securities purchase agreement after the two-year anniversary of ~~financial~~the ~~position~~closing, which occurred on February 24, 2024. The Plaintiffs sought specific performance of the issuance of shares as well as monetary damages. The Company had assessed the claims and ~~additions~~concluded that it was probable that a liability has been incurred and that the Company was able to reasonably estimate the ~~provision~~loss based on the fair value of 16,218 common shares of the Company, which was valued at $0.4 million as of June 30, 2025. On September 18, 2025, the Company and the Plaintiffs entered into a ~~reduction~~settlement and release agreement (the "Settlement Agreement") whereby the Company will pay the Plaintiffs $1.8 million and the Plaintiffs forfeit and waive any claim to shares of ~~revenue~~the onCompany, as well as release, waive and forever discharge the ~~unaudited~~Company from any and all known and unknown claims, both current and in the future. The Settlement Agreement was accepted by the New York State Supreme Court, and this litigation is no longer considered active. The $1.4 million difference between the $1.8 million paid by the Company to the Plaintiffs and the $0.4 million estimate prior to the settlement was recorded in other (income) expense net on the condensed interim consolidated ~~statements~~statement of loss and comprehensive loss for the three and nine months ended September 30, 2025.

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

Legal proceedings

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

OnAs ~~May~~discussed 31above, ~~2023~~on June 2, ~~Maria~~2025, ~~Beatriz~~Vessel ~~Fernandez~~Brand, ~~Otero~~Inc., and ~~Sara~~Flora ~~Cristina~~Growth ~~Jacome~~Corp. Dewere ~~Torres~~served ~~brought~~by ~~an action against~~ the ~~Company~~plaintiffs in the ~~Ontario~~ Superior Court of ~~Justice~~California ~~claiming~~in ~~that~~ the ~~Company~~County isof ~~obligated~~San toDiego ~~issue 500,000 common shares (pre-splits) each~~ for abreach ~~purchase price~~ of ~~$0.05~~lease ~~per~~and ~~share.~~written ~~The~~guaranty ~~plaintiffs~~agreement ~~claim~~in ~~that~~a ~~they~~civil ~~are~~case ~~entitled to such shares as compensation~~ for ~~alleged consulting services performed~~$0.6 ~~The~~million ~~Company~~plus ~~disputes~~interest ~~their claim~~ and ~~intends~~legal ~~to vigorously defend against this action~~fees. The Company believes that an unfavorable settlement in this matter is ~~remote~~probable, and the loss can be reasonably estimated, and, as such, has ~~not~~ accrued a liability of $0.6 million to reflect the value of the claim as of ~~June~~September 30, 2025.

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

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

Flora Growth Corp.
Notes to the unaudited condensed interim consolidated financial statements

For the three and nine months ended September 30, 2025 and 2024

(In thousands of United States dollars, except shares and per share amounts)

17. LOSS PER SHARE

The Company calculates basic earnings per share based upon the weighted average number of common shares outstanding during the period, while the calculation of diluted earnings per share includes the dilutive effect of potential common shares outstanding during the period. The calculation of diluted earnings per share excludes all potential common shares if their inclusion would have an anti-dilutive effect. Restricted stock award recipients under the 2022 Plan have a non-forfeitable right to receive dividends declared by the Company and are therefore included in computing earnings per share. A total of 3,022,891 Pre-funded Warrants are included in the computing earnings per share because the exercise price of the Pre-funded Warrants is nominal and there are no conditions that must be satisfied prior to their exercise.

	Three months ended	Three months ended	~~Six~~Nine months ended	~~Six~~Nine months ended
	June 30, 2025	June 30, 2024	June 30, 2025	June 30, 2024
	September 30, 2025	September 30, 2024	September 30, 2025	September 30, 2024
Stock options	21439	21546	21439	21546
Warrants	2166,~~384~~810	261,~~384~~144	2166,~~384~~810	261,~~384~~144
Pre-funded warrants	727	-	727	-
Restricted stock awards	266	335	266	335
Restricted stock awards	13	24	13	24
Stock appreciation rights	59,281	8,441	59,281	8,441
Stock appreciation rights	440	-	440	-
JustCBD potential additional shares to settle contingent consideration	-	16,218	-	16,218
JustCBD potential additional shares to settle contingent consideration	632	632	632	632
Total anti-dilutive	226,796	86,684	226,796	86,684
Total anti-dilutive	4,217	3,061	4,217	3,061

18. FINANCIAL INSTRUMENTS

Fair value

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

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

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

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

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

The Company's contingent purchase considerations ~~consist~~consisted of the estimated fair value of contingent purchase consideration from the ~~acquisitions~~acquisition of JustCBD in February 2022 ~~and Original Hemp in March 2023~~. The amount for JustCBD iswas measured at FVPL as a Level 2 fair value financial instrument within the fair value hierarchy asin atprior ~~June 30, 2025~~periods. The fair value was determined using a simplified calculation which took the expected shares to be issued (~~632~~16,~~484~~218) multiplied by the Company's closing share price at ~~June 30, 2025 ($0.58). The amount for Original Hemp is measured at FVPL as a Level 3 fair value financial instrument within~~ the ~~fair~~end ~~value~~of ~~hierarchy~~each asreporting ~~at June 30, 2025~~period. The ~~fair~~contingent ~~value~~purchase consideration was ~~determined~~fully ~~using~~settled ~~discounted~~on ~~cash~~September ~~flow~~22, ~~models~~2025 ~~utilizing~~when ~~two~~the ~~different~~Company ~~rates,~~paid ~~high (26~~$1.~~0%)~~8 ~~and~~million ~~low (18.5%),~~ to ~~estimate~~ the ~~present~~former ~~value~~owners of ~~the future cash outflows~~JustCBD. AsThe ~~valuations~~difference ofbetween ~~investments~~the ~~for~~$1.8 ~~which~~million ~~market~~paid ~~quotations~~and ~~are~~the ~~not~~$0.7 ~~readily~~million ~~available~~balance ~~are~~in ~~inherently~~contingent ~~uncertain,~~purchase ~~may~~consideration ~~fluctuate~~at ~~within~~December ~~short~~31, ~~periods~~2024 ofwas ~~time~~recorded ~~and~~in ~~are~~the ~~based~~unrealized ongain ~~estimates,~~from ~~determination~~changes ofin fair value ~~may~~line ~~differ~~on ~~materially~~condensed ~~from~~interim ~~the~~consolidated ~~values~~statement ~~that~~of ~~would~~loss ~~have~~and ~~resulted~~comprehensive ifloss ~~a ready market existed~~ for the ~~investments.~~three ~~Such~~and ~~changes~~nine ~~may~~months ~~have~~ended aSeptember ~~significant~~30, ~~impact on the Company's financial condition or operating results~~2025.

~~The~~As ~~following~~valuations ~~tables~~of ~~present~~investments ~~information~~for ~~about~~which ~~the~~market ~~Company's~~quotations ~~financial~~are ~~instruments~~not ~~and~~readily ~~their~~available ~~classifications~~are asinherently atuncertain, ~~June~~may ~~30,~~fluctuate ~~2025~~within ~~and~~short ~~December~~periods ~~31,~~of ~~2024~~time and ~~indicate~~are ~~the~~based on estimates, determination of fair value ~~hierarchy~~may ofdiffer materially from the ~~valuation~~values ~~inputs~~that ~~utilized~~would tohave ~~determine~~resulted ~~such~~if ~~fair~~a ~~value~~ready market existed for the investments. Such changes may have a significant impact on the Company's financial condition or operating results.

Fair value measurements at June 30, 2025 using:
		Level 1		Level 2		Level 3		Total
Financial assets:
Digital assets	$	1,141	$	-	$	-	$	1,141
Financial liabilities:
Contingent purchase consideration from asset acquisitions and business combinations	$	-	$	367	$	148	$	515
Fair value measurements at December 31, 2024 using:
		Level 1		Level 2		Level 3		Total
Financial liabilities:
Contingent purchase consideration from asset acquisitions and business combinations	$	-	$	651	$	184	$	835

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

The less than $0.1 million change in the Level 3 contingent purchase consideration from the Original Hemp acquisition was recorded as a gain in the unrealized gain from changes in fair value on the unaudited condensed interim consolidated statements of loss and comprehensive loss.25

Flora Growth Corp.
Notes to the unaudited condensed interim consolidated financial statements

For the three and nine months ended September 30, 2025 and 2024

(In thousands of United States dollars, except shares and per share amounts)

Fair value measurements at September 30, 2025 using:

Level 1

Level 2

Level 3

Total

Financial liabilities:

Contingent purchase consideration from asset acquisitions and business combinations

Fair value measurements at December 31, 2024 using:
		Level 1		Level 2		Level 3		Total
Financial liabilities:
Contingent purchase consideration from asset acquisitions and business combinations	$	-	$	651	$	-	$	651

19. SEGMENTED INFORMATION

The Company ~~reports~~formerly reported its financial results for the following two operating segments, which are also its reportable segments: commercial and wholesale (primarily the Phatebo and TruHC subsidiaries), which sell pharmaceutical products, and house of brands (~~primarily~~ JustCBD, Vessel, United and ~~Vessel~~AV subsidiaries), which sells a mix of products across multiple categories including food and beverage, cannabis accessories and technology, personal care and wellness. ~~TruHC,~~As ~~acquired~~discussed in ~~April~~Note ~~2024~~3, isthe ~~included~~Company indisposed ~~commercial~~of ~~and~~the ~~wholesale,~~entirety ~~while,~~of ~~AV,~~the ~~acquired~~house inof ~~June~~brands ~~2024~~segment on September 26, ~~and~~2025. ~~United~~As a result, ~~acquired~~the inCompany ~~February~~had ~~2025~~only one operating segment, ~~are~~commercial ~~included~~and inwholesale, ~~house~~through ofSeptember ~~brands~~30, 2025. ~~These~~This ~~segments~~segment ~~reflect~~reflects how the Company's operations are managed, how the Company Chief Executive Officer, who is the chief operating decision maker, allocates resources and evaluates performance, and how the Company's internal management financial reporting is structured. The chief operating decision maker uses net income to evaluate income generated from segment assets in deciding whether to reinvest profits into the segment or into other parts of the Company, such as for acquisitions. Net income is used to monitor actual results versus budget and prior year, which is used to assess the performance of the segment.

22The Company's operates its distribution business within its Germany subsidiary. The Corporate segment reflects balances and expenses that do not directly influence business unit operations and includes the Company's digital assets.

~~Flora~~As ~~Growth~~discussed ~~Corp.Notes~~in toNote 2, the ~~unaudited~~Company ~~condensed~~began ~~interim~~implementing ~~consolidated~~an ~~financial~~expansion ~~statements~~strategy ~~For~~focused on identifying and pursuing complimentary growth opportunities within the global digital asset market in 2025. As a result of this strategy, management has re-evaluated its segment reporting structure and determined that a new segment, digital asset treasury, would be created. As of the three and ~~six~~nine months ended ~~June~~September 30, 2025, ~~and~~the ~~2024~~digital ~~(In~~asset ~~thousands~~treasury segment would have reported gains of ~~United~~$1.2 ~~States~~million ~~dollars~~and $1.3 million, ~~except~~respectively, ~~shares~~in ~~and~~the ~~per~~changes ~~share~~in ~~amounts)~~financial instruments fair value line item. These items are currently reported within the corporate segment. There were no other impacts to the current or prior periods.

The ~~Company's~~following ~~operates~~table ~~its~~shows ~~manufacturing~~information ~~and~~regarding ~~distribution business within its United States, Germany and Australia subsidiaries. Management has defined~~ the ~~reportable~~Company's segments offor the ~~Company~~nine ~~based~~months onended ~~this~~September ~~internal business unit reporting~~30, ~~which is by major product line, and aggregates similar businesses into the house of brands segment below~~2025. The Corporate segment reflects balances and expenses that do not directly influence business unit operations and includes the Company's long-term investments. The eliminations represent sales within the house of brands segment.

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

		Commercial & Wholesale			Corporate & Eliminations			Total

Revenue	$	26,323		$	-		$	26,323
Cost of sales		24,834			-			24,834
Gross profit		1,489			-			1,489
Consulting and management fees		1,090			1,703			2,793
Share based compensation		-			885			885
Depreciation and amortization		19			-			19
Impairment expense		-			46			46
Gain on disposal of insolvent subsidiaries		(11,589	)		10,470			(1,119	)
Changes in financial instruments fair value		-			(158	)		(158	)
Interest expense, net		108			56			164
Other segment items (1)		1,286			2,967			4,253
Net income (loss) before income taxes		10,575			(15,969	)		(5,394	)
Income taxes		113			-			113
Net income (loss) from continuing operations	$	10,462		$	(15,969	)	$	(5,507	)

		Commercial &Wholesale			House ofBrands			Corporate &Eliminations			Total
Revenue	$	16,748		$	12,188		$	(2,354	)	$	26,582
Cost of sales		15,723			7,495			(2,354	)		20,864
Gross profit		1,025			4,693			-			5,718
Consulting and management fees		912			2,394			797			4,103
Promotion and communication		1			1,726			123			1,850
Share based compensation		-			-			344			344
Depreciation and amortization		347			30			-			377
Impairment expense		-			-			46			46
Gain on disposal of insolvent subsidiaries		(11,632	)		-			10,470			(1,162	)
Changes in financial instruments fair value		-			(36	)		(415	)		(451	)
Interest expense, net		97			25			25			147
Other segment items (1)		399			1,571			1,674			3,644
Net income (loss) before income taxes		10,901			(1,017	)		(13,064	)		(3,180	)
Income taxes		(10	)		-			-			(10	)
Net income (loss) from continuing operations	$	10,911		$	(1,017	)	$	(13,064	)	$	(3,170	)

~~The~~Flora ~~following~~Growth ~~table~~Corp.Notes ~~shows~~to ~~information~~the ~~regarding~~unaudited ~~the~~condensed ~~Company's~~interim ~~segments~~consolidated ~~for~~financial statements For the three and nine months ended ~~June~~September 30, 2025. and 2024 (In thousands of United States dollars, except shares and per share amounts)

		Commercial &Wholesale			House ofBrands			Corporate &Eliminations			Total
Revenue	$	9,881		$	6,223		$	(1,308	)	$	14,796
Cost of sales		9,391			3,883			(1,308	)		11,966
Gross profit		490			2,340			-			2,830
Consulting and management fees		485			1,268			449			2,202
Promotion and communication		-			933			12			945
Share based compensation		-			-			172			172
Depreciation and amortization		180			15			-			195
Changes in financial instruments fair value		-			-			(146	)		(146	)
Interest expense, net		72			4			20			96
Other segment items (1)		18			928			880			1,826
Net loss before income taxes		(265	)		(808	)		(1,387	)		(2,460	)
Income taxes		(48	)		-			-			(48	)
Net loss from continuing operations	$	(217	)	$	(808	)	$	(1,387	)	$	(2,412	)

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

		Commercial & Wholesale			Corporate & Eliminations			Total

Revenue	$	9,748		$	-		$	9,748
Cost of sales		9,413			-			9,413
Gross profit		335			-			335
Consulting and management fees		334			906			1,240
Share based compensation		-			541			541
Depreciation and amortization		7			-			7
Changes in financial instruments fair value		-			257			257
Interest expense, net		30			31			61
Other segment items (1)		668			1,170			1,838
Net loss before income taxes		(704	)		(2,905	)		(3,609	)
Income taxes		18			-			18
Net loss from continuing operations	$	(722	)	$	(2,905	)	$	(3,627	)

~~Flora~~The ~~Growth~~following ~~Corp.Notes~~table toshows ~~the~~information ~~unaudited~~regarding ~~condensed~~the ~~interim~~Company's ~~consolidated~~segments ~~financial~~for ~~statements For~~ the ~~three~~nine ~~and six~~ months ended ~~June~~September 30, ~~2025 and~~ 2024 ~~(In thousands of United States dollars, except shares and per share amounts)~~.

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

		Commercial & Wholesale			Corporate & Eliminations			Total

Revenue	$	28,219		$	-		$	28,219
Cost of sales		26,309			-			26,309
Gross profit		1,910			-			1,910
Consulting and management fees		1,982			821			2,803
Share based compensation		-			428			428
Depreciation and amortization		25			-			25
Impairment expense		31			-			31
Interest expense (income), net		67			(45	)		22
Changes in financial instruments fair value		-			114			114
Other segment items (1)		85			3,869			3,954
Net loss before income taxes		(280	)		(5,187	)		(5,467	)
Income taxes		80			-			80
Net loss from continuing operations	$	(360	)	$	(5,187	)	$	(5,547	)

		Commercial &Wholesale			House ofBrands			Corporate &Eliminations			Total
Revenue	$	20,981		$	15,144		$	(2,411	)	$	33,714
Cost of sales		19,566			9,538			(2,411	)		26,693
Gross profit		1,415			5,606			-			7,021
Consulting and management fees		1,214			2,939			498			4,651
Promotion and communication		-			2,214			15			2,229
Share based compensation		-			-			22			22
Depreciation and amortization		184			147			-			331
Impairment expense		31			1,027			-			1,058
Interest expense, net		28			1			(32	)		(3	)
Changes in financial instruments fair value		-			(57	)		(208	)		(265	)
Other segment items (1)		200			1,918			2,818			4,936
Net loss before income taxes		(242	)		(2,583	)		(3,113	)		(5,938	)
Income taxes		93			-			-			93
Net loss from continuing operations	$	(335	)	$	(2,583	)	$	(3,113	)	$	(6,031	)

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

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

		Commercial & Wholesale			Corporate & Eliminations			Total

Revenue	$	7,238		$	-		$	7,238
Cost of sales		6,743			-			6,743
Gross profit		495			-			495
Consulting and management fees		807			323			1,130
Share based compensation		-			406			406
Depreciation and amortization		8			-			8
Interest expense (income), net		39			(13	)		26
Changes in financial instruments fair value		-			323			323
Other segment items (1)		(41	)		1,035			994
Net loss before income taxes		(318	)		(2,074	)		(2,392	)
Income taxes		(66	)		-			(66	)
Net loss from continuing operations	$	(252	)	$	(2,074	)	$	(2,326	)

		Commercial &Wholesale			House ofBrands			Corporate &Eliminations			Total
Revenue	$	9,639		$	7,124		$	(1,080	)	$	15,683
Cost of sales		8,831			4,765			(1,080	)		12,516
Gross profit		808			2,359			-			3,167
Consulting and management fees		617			1,457			275			2,349
Promotion and communication		-			1,119			6			1,125
Share based compensation		-			-			12			12
Depreciation and amortization		175			82			-			257
Impairment expense		(3	)		163			-			160
Interest expense, net		(7	)		-			(18	)		(25	)
Changes in financial instruments fair value		-			(57	)		(815	)		(872	)
Other segment items (1)		161			1,212			1,480			2,853
Net loss before income taxes		(135	)		(1,617	)		(940	)		(2,692	)
Income taxes		(35	)		-			-			(35	)
Net loss from continuing operations	$	(100	)	$	(1,617	)	$	(940	)	$	(2,657	)

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

Flora Growth Corp.
Notes to the unaudited condensed interim consolidated financial statements

For the three and nine months ended September 30, 2025 and 2024

(In thousands of United States dollars, except shares and per share amounts)

Other significant items and disaggregation by geographic area:

As at		~~June~~September 30, 2025		December 31, 2024
Assets
Commercial & Wholesale	$	115,~~560~~596	$	14,642
House of Brands		~~9,015~~-		7,422
Corp & Eliminations		268,~~092~~420		4,163
	$	2274,~~667~~016	$	26,227

24All of the Company's sales during the three and nine months ended September 30, 2025 and the three and nine months ended September 30, 2024 were generated at Phatebo, the Company's German subsidiary.

		For the three months ended		For the three months ended		For the six months ended		For the six months ended
		June 30, 2025		June 30, 2024		June 30, 2025		June 30, 2024
Net Sales
United States	$	4,393	$	5,605	$	9,057	$	12,123
Germany		9,881		9,638		16,748		20,981
Australia		489		241		643		241
United Kingdom		33		199		134		369
	$	14,796	$	15,683	$	26,582	$	33,714

20. SUBSEQUENT EVENTS

~~REVERSE~~SECOND ~~STOCK~~CLOSING ~~SPLIT~~OF THE SEPTEMBER PRIVATE PLACEMENT

On ~~July~~October 319, 2025, the ~~Company~~final ~~announced~~7,938 ~~that~~PIPE ~~it will effect a 1~~Pre-~~for-39~~Funded ~~share~~Warrants ~~consolidation of the Company’s issued~~ and ~~outstanding common shares (the “Reverse Stock Split”). The Reverse Stock Split will be effective at 5:00 p.m. Eastern Time on August 3~~1,586 PIPE ~~2025.~~Warrants ~~The~~that ~~Company’s~~were ~~common~~part ~~shares~~of ~~are~~the ~~expected~~Cash toPIPE ~~begin~~were ~~trading~~issued onfor ~~The~~total ~~Nasdaq~~proceeds ~~Capital Market on a post-Reverse Stock Split basis at the open~~ of ~~trading~~$0.2 ~~on August 4, 2025~~million.

~~The~~On ~~Company’s~~October ~~shareholders~~9, ~~previously~~2025, ~~approved~~in ~~the~~connection ~~Reverse~~with ~~Stock Split at~~ the ~~annual~~second ~~and~~closing ~~special meeting~~ of ~~shareholders~~the ~~held~~PIPE ~~on June 30~~Offering, ~~2025~~the atCompany aissued ~~ratio~~the ~~ranging~~remaining ~~from~~5,954,743 1PIPE Pre-~~for-10~~Funded upWarrants to aDaniel ~~ratio of 1~~Reis-~~for-100~~Faria, ~~such ratio and~~ the ~~implementation and timing of such Reverse Stock Split to be determined by the~~ Company’'s ~~board~~Chief ofExecutive ~~directors~~Officer, atin ~~its~~exchange ~~sole~~for ~~discretion~~50, ~~if at all~~000,000 ~~within~~0G ~~one year of the date the proposal is approved by shareholders~~Tokens.

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

On October 24, 2025, in connection with the third and final closing of the PIPE Offering, the Company issued the PIPE Note in exchange for its principal amount of 95,333.33 Solana. Interest on the PIPE Note accrues at an annual rate of 8%, paid quarterly, with payment-in-kind interest allowed until September 30, 2026. The PIPE Note is denominated in Solana, but the holder can demand repayment of principal and interest in USD at a fixed conversion rate of $240. After shareholder approval, the holder may convert principal and interest into common shares at a fixed price. The PIPE Note matures in September 2030, but the holder can demand full prepayment during two 60-day windows after the 1st and 2nd anniversaries of issuance. The Solana is locked under the PIPE Note and will unlock equally each month in November 2025 through January 2028. Once unlocked, it can be sold on a Solana exchange.

ZERO GRAVITY PRIVATE PLACEMENT

On October 23, 2025, the Company issued the Zero Gravity Convertible Note in exchange for its principal amount of 50,000,000 0G Tokens. Interest on the Zero Gravity Convertible Note accrues at an annual rate of 8%, paid quarterly, with payment-in-kind interest allowed until September 30, 2026. The Zero Gravity Convertible Note is denominated in 0G Tokens, but the holder can demand repayment of principal and interest in USD at a fixed conversion rate of $3.00. After shareholder approval, the holder may convert principal and interest into common shares at a fixed price. The Zero Gravity Convertible Note matures in September 2035. Upon issuance of the Zero Gravity Convertible Note, the Loan Agreement and Loan Warrants were cancelled.

The Company's Executive Chairman of the Board, Michael Heinrich, is the Chief Executive Officer of Zero Gravity.

OTHER

~~Subsequent~~On toOctober ~~June 30~~15, 2025, a9,321 ~~total~~Pre-funded ofWarrants ~~4,166~~from ~~options~~the May Private Placement were ~~forfeited~~exercised.

25In October 2025, Company issued a total of 19,585 common shares of the Company at a purchase price of $17.02 per share for gross proceeds of $0.3 million as part of the September ATM Offering.

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

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

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

Overview of our Business

WeFlora ~~are~~Growth ~~a multi-national cannabis company that manufactures and distributes consumer packaged goods and distributes medicinal cannabis and pharmaceutical products~~Corp. ("Flora" ~~exists~~or ~~to create a world where~~ the ~~benefits~~"Company"), ofwhich ~~cannabis~~will ~~are~~be ~~accessible~~rebranded toas ~~everyone.~~ZeroStack, ~~Our business strategy~~ is ~~built~~the onfirst ~~two core pillars: House of Brands~~ and ~~Commercial~~largest &decentralized ~~Wholesale.~~AI ~~This~~treasury ~~strategy~~company ~~allows~~that usis toinvesting ~~access~~in ~~to markets around~~ the ~~globe~~future ~~based on the legal standing~~ of ~~cannabis~~AI ininfrastructure ~~the~~through ~~geographical~~strategic ~~locations~~ownership in ~~which~~0G ~~we operate. Our approach to executing our strategy enables us to develop distribution networks~~Tokens, ~~build~~an ~~customer~~AI ~~bases,~~infrastructure ~~establish~~company ~~operations~~that ashas ~~regulatory~~created ~~frameworks~~an ~~evolve~~open and ~~allow~~decentralized ~~for~~AI ~~expanded~~network ~~access~~fueled toby ~~cannabis~~the ~~and~~0G ~~its derivatives~~Token.

~~Our~~The ~~brand~~Company ~~portfolio~~is ~~consists~~a global pharmaceutical distributor through its wholly owned subsidiary Phatebo. Based in Germany, Phatebo is a wholesale pharmaceutical distribution company with import and export capabilities of a ~~mix~~wide range of pharmaceutical goods and medical products ~~across~~to ~~multiple~~treat ~~categories~~a variety of health indications, including ~~food~~drugs ~~and~~related ~~beverage~~to cancer therapies, ~~nutraceuticals~~ADHD, ~~cannabis~~multiple ~~accessories~~sclerosis and ~~technology~~anti-depressants, ~~personal~~among ~~care, and wellness~~others. ~~Flora's~~Phatebo ~~consumer~~is ~~packaged~~focused ~~goods~~on ~~brands~~distributing ~~allow~~pharmaceutical ~~Flora~~products towithin ~~move~~28 ~~assertively~~countries ~~into~~globally, ~~nascent~~primarily ~~markets~~in Europe, ~~develop~~but ~~customer~~also ~~bases~~with ~~and~~sales ~~distribution~~to ~~channels~~Asia, Latin America, and ~~gather~~North ~~consumer~~America. ~~insights~~Additionally, ~~that~~the ~~would~~Phatebo ~~not~~warehouse beprovides ~~possible~~a ~~with~~logistics ~~traditional~~outpost ~~cannabis~~for ~~sales~~Flora's ~~alone.~~growing ~~Through~~product ~~this~~portfolio ~~channel~~and wedistribution ~~seek~~network towithin ~~build~~the ~~loyalty,~~European ~~credibility~~Union. ~~and~~On ~~enjoy~~September ~~healthy~~20, ~~margins~~2025, ~~that~~we ~~help~~entered tointo ~~support~~an agreement for the ~~rapid~~disposition ~~growth~~of certain components of our existing hemp and cannabis business, as described below under the header "Sale of Legacy Hemp and Cannabis Business."

~~House~~Cryptocurrency ofTreasury ~~Brands~~Strategy

~~JustCBD~~On isMay ~~Flora's~~2, ~~leading~~2025, ~~consumer~~the ~~packaged~~Company ~~goods~~entered ~~brand.~~into ~~JustCBD~~a ~~was~~securities ~~launched~~purchase inagreement ~~2017~~(the "May 2025 Securities Purchase Agreement") with acertain ~~mission~~investors to(the ~~bring~~"May ~~high-quality,~~2025 ~~trustworthy,~~Investors") in connection with the issuance and ~~budget-friendly~~sale ~~CBD~~by ~~products~~the Company to ~~market.~~the ~~JustCBD~~May ~~products~~2025 ~~are~~Investors ~~available~~via ~~for~~a ~~purchase~~private inplacement ~~smoke~~(the ~~and~~"May ~~vape~~2025 ~~shops,~~Private ~~clinics,~~Placement") ~~spas~~of ~~and~~an ~~pet~~aggregate ~~stores~~of 80,340 ascommon ~~well~~shares asat ~~other~~a ~~independent~~purchase ~~non-traditional~~price ~~retail~~of ~~channels~~$11.70 ~~JustCBD's~~per ~~products~~share ~~are~~(the ~~both~~"May ~~internally~~2025 Common Shares") and ~~third~~18,642 pre-~~party~~funded ~~lab~~warrants of the Company at a purchase price of $11.6961 per warrant (the "May 2025 Pre-~~tested~~funded Warrants") each to ~~ensure~~purchase ~~quality~~one common share (each, a "May 2025 Pre-funded Warrant Share") which were immediately exercisable and expire when exercised in full, at an exercise price of $0.0039 per share.

~~Vessel~~The isnet ~~Flora's~~proceeds ~~cannabis~~from ~~accessory~~the ~~and~~sale ~~technology~~of ~~brand~~the ~~currently~~May ~~servicing~~2025 ~~the~~Common ~~United~~Shares ~~States~~ and ~~Canada~~the ~~through~~May ~~direct~~2025 Pre-funded Warrants were approximately $1.1 million after deducting estimated expenses relating to~~-consumer~~ ~~and~~the ~~retail~~May ~~sales~~2025 Private Placement. ~~Vessel's~~The ~~products~~Company ~~include~~used ~~cannabis~~$0.4 ~~consumption~~million ~~accessories,~~of ~~personal~~the ~~storage~~net proceeds from the May 2025 Private Placement to purchase Solana, ~~and~~$0.4 ~~travel~~million ~~accessories~~of ~~for~~the net proceeds from the ~~vape~~May ~~and~~2025 ~~dry~~Private ~~herb~~Placement ~~categories~~to purchase Ethereum, ~~which~~$0.1 ~~are~~million ~~sold~~of the net proceeds from the May 2025 Private Placement to ~~consumers~~purchase Sui, ~~dispensaries~~$0.1 million of the net proceeds from the May 2025 Private Placement to purchase Ripple (collectively, ~~smoke~~the ~~shops~~"Owned Cryptocurrencies"), and ~~cannabis~~the ~~brands.~~balance ~~Vessel~~of ~~has~~the ~~been~~net ~~fully~~proceeds ~~integrated~~from ~~into~~the ~~JustCBD~~May 2025 Private Placement for general corporate and ~~now~~working ~~benefits~~capital ~~from~~purposes ~~operational,~~and ~~logistical~~to pay any fees and ~~sales~~expenses ~~synergies~~in connection with ~~JustCBD~~the issuance of the May 2025 Common Shares and the May 2025 Pre-funded Warrants.

~~Australian~~On ~~Vaporizers~~September 19, 2025, the Company entered into securities purchase agreements with certain investors pursuant to which the Company agreed to sell and issue the following securities in private placement offerings (collectively, the "AVPIPE Offering"): ~~was~~(i) ~~founded~~116,340 incommon ~~2010~~share ~~and~~units ~~has~~("PIPE ~~become~~Common aShare ~~prominent~~Units") ~~online~~at ~~retailer~~a unit price of ~~vaporizers~~$25.19, ~~hardware~~payable in cash, ~~and~~for ~~accessories~~aggregate ingross ~~Australia~~proceeds of $2.9 AVmillion, iswith each unit consisting of one common share ("PIPE Common Share") and 0.2 of ~~the~~a ~~leading~~warrant ~~online~~to ~~authorities~~purchase ~~for~~one ~~aromatherapy~~common ~~products~~share at an exercise price of $25.19 ("PIPE Warrant"); (ii) 412,037 ~~specializing~~pre-funded inwarrant ~~dry~~units ~~herb~~("PIPE ~~vaporizers~~Pre-Funded Warrant Units") at a unit price of $25.1899, Itpayable ~~provides~~in ~~vapes~~cash, ~~accessories~~for ~~and~~aggregate ~~knowledge~~gross proceeds of $10.4 million, with each unit consisting of one pre-funded warrant to ~~enthusiasts~~purchase ~~and~~one ~~newcomers~~common ~~alike~~share at an exercise price of $0.0001 ~~Its~~("PIPE ~~website~~Pre-Funded ~~www~~Warrant") and 0.~~australianvaporizers.com.au~~2 isof a ~~popular~~PIPE ~~destination~~Warrant; in(iii) ~~the~~8,546,955 ~~country~~PIPE ~~with~~Pre-Funded Warrants at a ~~large~~unit ~~database~~price of ~~satisfied~~$25.1899, ~~customers~~payable in 71,766,135 0G Tokens based on an agreed value of $3 per 0G Token; and (iv) an unsecured convertible note in an aggregate original principal amount of 95,333 Solana (the "PIPE Note").

During 2025, we acquired United Beverage Distribution Inc. ("United"). United was founded in 2024 and is a distributor of cannabis-infused drinks. It holds supply agreements with several large national and regional beverage retailers.29

~~Commercial~~On &September ~~Wholesale~~19, 2025, the Company entered into an arrangement with Zero Gravity Labs Inc. ("Zero Gravity") pursuant to which the Company agreed to (i) borrow 50,000,000 0G Tokens from Zero Gravity under a term loan agreement ("Loan Agreement"), and (ii) issue to Zero Gravity in a private placement offering 1,786,423 warrants to purchase one common share at an exercise price of $0.01 ("Loan Agreement Warrants"). On September 22, 2025, the Company entered into a securities purchase agreement with Zero Gravity for the issuance of an unsecured convertible note in an aggregate original principal amount of 50,000,000 0G Tokens (the "Zero Gravity Convertible Note") that will replace the Loan Agreement and Loan Agreement Warrants, subject to closing. The Zero Gravity Convertible Note was issued on October 23, 2025, at which date the 50,000,000 0G Tokens were received.

The Company's ~~Commercial~~intends ~~and~~to ~~Wholesale~~use ~~pillar encompasses~~ the ~~distribution~~net ofproceeds ~~pharmaceutical~~from ~~products~~the toPIPE ~~international~~Offering ~~markets.~~and ~~This~~the ~~pillar~~Zero isGravity ~~anchored~~Convertible byNote ~~Flora's wholly owned subsidiary~~(collectively, ~~Phatebo,~~the a"Cryptocurrency ~~multi-national~~Offering") ~~operator~~to infurther ~~pharmaceutical~~the ~~and~~Company's ~~medical~~new ~~cannabis~~digital ~~distribution,~~asset ~~with~~treasury ~~principal~~strategy ~~operations~~linked ~~in Germany. Phatebo is a wholesale pharmaceutical distribution company with import and export capabilities of a wide range of pharmaceutical goods and medical cannabis products~~ to ~~treat~~0G ~~a variety of health indications~~Tokens, ~~including~~and ~~drugs related~~ to ~~cancer~~explore ~~therapies, ADHD, multiple sclerosis~~ and ~~anti-depressants,~~expand ~~among others. Phatebo holds a license for~~ the ~~Trade~~use inof ~~Narcotic Drugs (including~~ the ~~cannabis~~native ~~sales~~AI ~~license~~functionality ~~amendment) and a wholesale trading license, both~~ of ~~which are issued by BfArM (~~the ~~largest~~0G ~~drug~~Tokens ~~approval authority in Europe). Phatebo is focused on distributing pharmaceutical products within 28 countries globally, primarily in Europe, but also with sales~~ to ~~Asia,~~enhance ~~Latin~~the ~~America,~~business ~~and~~of ~~North~~the ~~America~~Company. InThe ~~November~~balance ~~2018, Phatebo also received a medical cannabis import and distribution license. We intend to leverage Phatebo's existing network~~ of ~~pharmacies as Flora begins to move medicinal cannabis from third parties into Germany. Additionally,~~ the ~~Phatebo~~net ~~warehouse~~proceeds ~~provides~~will abe ~~logistics~~used ~~outpost~~ for ~~Flora's~~general ~~growing~~corporate ~~product portfolio~~ and ~~distribution~~working ~~network~~capital ~~within the European Union~~purposes.

~~During~~In ~~2024,~~connection wewith ~~acquired~~the ~~TruHC~~Cryptocurrency Offering, anon ~~early-stage~~October ~~cannabis~~1, ~~company based in Hamburg~~2025, ~~Germany~~Mr. ~~TruHC~~Clifford ~~holds~~Starke aresigned ~~GDP~~as ~~wholesale,~~a ~~and~~director ~~an EU-GMP processing~~ and ~~production~~the ~~license~~Chief ~~for~~Executive ~~medical~~Officer ~~cannabis.~~of Itthe ~~also~~Company ~~owns~~ and ~~operates~~Mr. anSammy ~~EU-GMP~~Dorf ~~certified~~resigned ~~laboratory ready for instant cannabis analysis~~ as ~~required for~~ the ~~newly~~Executive ~~legalized~~Chairman ~~cannabis social clubs. The facility~~ of ~~TruHC~~the ~~is a flexible production space with EU-GMP certified modules that can be extended and customized for any production process from processing to extraction~~Company. ~~TruHC also holds a narcotic license with EU-GMP certified storage.~~

~~Factors~~On ~~Impacting~~October ~~our~~1, ~~Business~~2025, the Board of Directors (the "Board") appointed Mr. Daniel Reis-Faria and Michael Heinrich as non-independent directors of the Board, and in connection with their appointments to the Board, Mr. Reis-Faria, was also appointed as the Chief Executive Officer of the Company and Mr. Heinrich was also appointed as Executive Chairman effective October 1, 2025.

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

~~Consistent~~On ~~profitability~~September ~~and~~26, ~~positive~~2025, ~~operating~~the ~~cash~~Company ~~flows.~~transferred A100% ~~key~~of ~~determinant~~the issued and outstanding equity interests of the following direct and indirect wholly-owned subsidiaries, which collectively comprise the Company's ~~success~~legacy ishemp toand ~~deliver~~cannabis ~~profitable~~business: ~~results~~(i) ~~and~~Australian ~~positive~~Vaporizers ~~cashflows~~Pty ~~from~~LTD, ~~operating~~an ~~activities.~~Australian ~~The~~limited ~~Company's~~company; ~~results~~(ii) ~~have~~Vessel ~~not~~Brand ~~yet~~Canada ~~achieved~~Inc., ~~the~~a ~~prerequisite~~Canadian ~~consistency~~corporation; to(iii) ~~achieve~~Klokken ~~self-sufficiency~~Aarhus Inc., ~~Since~~a ~~its~~Canadian ~~inception~~corporation; (iv) Rangers Pharmaceuticals A/S, ~~only~~a ~~the~~Danish ~~third~~stock-based ~~quarter~~corporation; of(v) ~~2023~~TruHC ~~yielded~~Pharma ~~net~~GmbH, ~~income~~a ~~and~~German ~~positive~~limited ~~cashflows~~company; ~~from~~(vi) ~~operating~~Vessel ~~activities~~Brand Inc., ~~There~~a isDelaware nocorporation; ~~assurance~~(vii) ~~that~~High ~~the~~Roller ~~Company~~Private ~~will~~Label beLLC, ~~able~~a toFlorida ~~produce~~limited ~~adequate~~liability ~~levels~~company; of(viii) ~~sustained~~Just ~~profitability~~Brands ~~and~~LLC, ~~become~~a ~~cash~~Florida ~~flow~~limited ~~positive.~~liability ~~These~~company; ~~factors,~~(ix) ~~amongst~~Just ~~others~~Brands FL LLC, ~~raise~~a ~~substantial~~Florida ~~doubt~~limited ~~about~~liability ~~the~~company; ~~Company's~~(x) ~~ability~~Just toBrands ~~continue~~International asLTD, a ~~going~~United ~~concern~~Kingdom limited company; and (xi) United Beverage Distribution Inc., ~~Management's~~a ~~plans~~South inDakota ~~regard~~corporation (collectively, the "Transferred Interests") to ~~these~~Flora ~~matters~~Growth ~~are~~US ~~described~~Holdings inLLC, ~~Note~~a 2Florida limited liability company and certain noteholders ("Noteholders") of the Company's, ~~unaudited~~in ~~condensed~~exchange ~~interim~~for ~~consolidated~~full ~~financial~~satisfaction ~~statements~~of ~~for~~ the ~~six~~balance ~~months~~receivable ~~ended~~under ~~June~~the ~~30,~~promissory ~~2025.~~notes ~~For~~issued ~~more~~by ~~information,~~the ~~see~~Company ~~Item~~to 1Asuch ~~"Risk~~Noteholders ~~Factors"~~as inpart of the Company's ~~2024~~acquisition ~~Annual~~of ~~Report~~United Beverage Distribution Inc. on January 30, 2025.

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

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

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

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

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

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

Public Company Costs

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

Minimum Bid Price Requirement

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

On July 31, 2025, the Company announced that it will effect a 1-for-39 share consolidation (the “Reverse Stock Split”) of the Company’s issued and outstanding common shares by the filing of Articles of Amendment to the Company's amended and restated Articles of Incorporation with the Ontario Ministry of Public and Business Service Delivery and Procurement. The Reverse Stock Split will become effective at 5:00 p.m. Eastern Time on August 3, 2025. The Company anticipates that the common shares will begin to trade on a post-Reverse Stock Split basis as of the opening of the Nasdaq Capital Market on August 4, 2025.30

On August 4, 2025, the Company filed an Articles of Amendment to the Company's amended and restated Articles of Incorporation with the Ontario Ministry of Public and Business Service Delivery and Procurement to effect a reverse stock split of the Company's common shares at a ratio of 1-for-39, which became effective at 5:00 p.m. Eastern Time on August 3, 2025 (the "Reverse Stock Split"). As a result of the Reverse Stock Split, every 39 common shares issued and outstanding were automatically reclassified into one new common share. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split were automatically rounded up to the nearest whole common share. From August 4, 2025 through August 18, 2025, a period of 10 consecutive trading days, the closing bid price of the Company's common shares was greater than $1.00 per share. Accordingly, on August 19, 2025, the Company received formal notice from Nasdaq that it had regained compliance with the Minimum Bid Price Requirement and that the matter has been closed. Flora is now in compliance with all applicable continued listing standards and its common shares continue to be listed and traded on Nasdaq.

Minimum Independent Directors Requirement

On August 25, 2025, Harold Wolkin, a director of the Company, passed away. Prior to his passing, Mr. Wolkin served as an "Independent Director", as defined in Nasdaq Listing Rule 5605(a)(2), of the Company's audit committee, the compensation committee, and the nominating and corporate governance committee of the Board. On August 26, 2025, Nasdaq was informed that because of Mr. Wolkin's passing, the Company is no longer in compliance with certain Corporate Governance Requirements as set forth in Nasdaq Listing Rule 5605.

Pursuant to Nasdaq Listing Rule 5605(c)(2)(A), a listed company must have an audit committee of at least three members, each of whom must be an Independent Director and meet the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). With Mr. Wolkin's passing, the Company's audit committee is currently comprised of only two members, each of whom meet the independence requirements set forth in Nasdaq Rule 5605(a)(2) and Rule 10-A3(b)(1) of the Exchange Act. Therefore, the Company's audit committee is no longer comprised of at least three members meeting the aforementioned independence requirements as required by Nasdaq Listing Rule 5605(c)(2)(A).

Key Components of Results of Operations

Revenue

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

~~(1)~~The ~~House~~Company ofoperates ~~Brands;~~its ~~and~~global pharmaceutical distribution business through its subsidiary in the Germany.

(2) Commercial and Wholesale.

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

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

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

1. Identify the contract with a customer;

2. Identify the performance obligations in the contract;

3. Determine the transaction price;

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

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

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

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

Cost of ~~sales~~Sales

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

Operating Expenses

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

Consulting and management fees include salary and benefit expenses for employees, directors and consultants for the Company's corporate activities, other than those included in one of general and administrative, share-based compensation, and research and development.
Professional fees include legal, audit and other expenses incurred by third-party service providers.
General and administrative include certain public company costs, ~~merchant fees~~ and temporary labor and subcontractor costs for the Company's operating subsidiaries.
Promotion and communication expenses consist primarily of services engaged in marketing and promotion of our products and costs associated with initiatives and development programs and salary and benefit expenses for certain employees.
Travel expenses relate to flight, lodging and incidental expenses for attending conferences, events and key business meetings.
Share-based compensation includes the cost of vesting of the Company's equity awards, including share options, restricted share awards, and stock appreciation rights ("SARs").
Research and development expenses primarily consist of salary and benefit expenses for employees engaged in research and development activities, as well as other general costs associated with R&D activities.
Operating lease expense represents the cost of the Company's operating leases, primarily consisting of real estate and equipment.
Depreciation and amortization expense is provided on a straight-line basis over the corresponding assets' estimated useful lives.
Bad debt expense consists of changes in the provision for the Company's expected credit losses. The Company utilizes a provision matrix to estimate lifetime expected credit losses.
Asset impairment includes the difference between the fair value and carrying amount of the asset group. An impairment loss is recognized when the sum of projected undiscounted cash flows is less than the carrying value of an asset group.
Gain on disposal of insolvent subsidiaries includes the difference between the fair value of any consideration received and the carrying values of the net assets of subsidiaries that have been deconsolidated as a result of filing for bankruptcy.
Other expenses (income), net include miscellaneous expenses that do not fit the criteria for recognition in another category.

29Non-Operating Loss (Income)

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

Non-operating expenses include interest income and expenses, foreign exchange (gains) losses and unrealized losses and gains from changes in fair value. Interest is primarily related to the Company's lease liabilities and operating lines of credit. Foreign exchange is largely related to the revaluation of balances denominated in foreign currencies to U.S. dollars. Unrealized losses and gains from changes in fair value pertain to fluctuations in the fair values of the Company's digital assets, investments and liabilities.32

Income Tax

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

Loss from Discontinued Operations

Loss from discontinued operations includes the net loss, net of tax, of the Company's legacy hemp and cannabis business sold on September 26, 2025. It also includes an expected gain on the disposal as the expected sale price exceeded the carrying value of the assets being sold.

Results of Operations

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

		For the threemonths endedJune 30, 2025			For the threemonths endedJune 30, 2024			For the Sixmonths endedJune 30, 2025			For the Sixmonths endedJune 30, 2024
		For the threemonths endedSeptember 30,2025			For the threemonths endedSeptember 30, 2024			For the Nine months ended September 30, 2025			For the Nine months endedSeptember 30, 2024
Revenue	$	149,~~796~~748		$	157,~~683~~238		$	26,~~582~~323		$	3328,~~714~~219
Cost of sales		119,~~966~~413			126,~~516~~743			2024,~~864~~834			26,~~693~~309
Gross profit		~~2,830~~335			~~3,167~~495			51,~~718~~489			71,~~021~~910
Consulting and management fees		21,~~202~~240			21,~~349~~130			42,~~103~~793			42,~~651~~803
Professional fees		~~707~~445			~~1,146~~512			1,~~290~~611			12,~~599~~019
General and administrative		~~760~~473			~~587~~409			1,~~230~~061			~~1,029~~821
Promotion and communication		945			1,125			1,850			2,229
Travel expenses		31			53			141			105
Travel expenses		106			123			204			192
Share based compensation		541			406			885			428
Share based compensation		172			12			344			22
Operating lease expense		38			28			114			72
Research and development		73			62			186			109
Depreciation and amortization		7			8			19			25
Operating lease expense		162			199			329			364
Bad debt expense		(10	)		-			-			-
Depreciation and amortization		195			257			377			331
Asset impairment		-			-			46			31
Bad debt expense		259			172			330			219
Gain on disposal of insolvent subsidiaries		-			-			(1,119	)		-
Asset impairment		-			160			46			1,058
Other expenses, net		836			65			1,350			828
Gain on disposal of insolvent subsidiaries		-			-			(1,162	)		-
Operating loss		(3,266	)		(2,116	)		(5,412	)		(5,222	)
Other (income) expenses, net		(185	)		513			134			1,241
Non-operating loss (income)		343			276			(18	)		245
Operating loss		(2,566	)		(3,538	)		(3,543	)		(6,023	)
Net loss before taxes and discontinued operations		(3,609	)		(2,392	)		(5,394	)		(5,467	)
Non-operating income		(106	)		(846	)		(363	)		(85	)
Income tax		18			(66	)		113			80
Net loss before taxes		(2,460	)		(2,692	)		(3,180	)		(5,938	)
Net loss from continuing operations		(3,627	)		(2,326	)		(5,507	)		(5,547	)
Income tax		(48	)		(35	)		(10	)		93
Loss from discontinued operations, net of tax		(3,032	)		(1,474	)		(4,322	)		(4,284	)
Net loss for the period	$	(26,~~412~~659	)	$	(23,~~657~~800	)	$	(39,~~170~~829	)	$	(69,~~031~~831	)

~~Insolvency~~For ofthe ~~Certain~~Three ~~Canadian~~Months ~~and~~Ended ~~German~~September ~~Subsidiaries~~30, 2025 and 2024

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

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

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

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

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

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

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

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

For the Three Months Ended June 30, 2025 and 2024

Revenue

Revenue totaled $149.8 million and $~~15.~~7.2 million for the three months ended ~~June~~September 30, 2025 and 2024, respectively. The ~~decrease~~revenue for both the three months ended September 30, 2025 and 2024 was ~~primarily~~generated ~~driven~~entirely by the ~~following:~~Company's Phatebo subsidiary.

~~Phatebo contributed $9.7 million in the three months ended June 30, 2025 compared to $9.7 million in the three months ended June 30, 2024.~~33

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

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

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

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

Gross Profit

Gross profit totaled $20.83 million and $30.25 million for the three months ended ~~June~~September 30, 2025 and 2024, respectively. The decrease was primarily driven by the decreased margins inat the ~~Commercial and Wholesale segment, where~~ Phatebo ~~contributed~~subsidiary ~~$0.6 million~~ in the three months ended ~~June~~September 30, 2025 ~~compared to $0~~.8 million in the three months ended June 30, 2024. JustCBD contributed $1.6 million in the three months ended June 30, 2025, compared to $1.5 million for the three months ended June 30, 2024. Vessel contributed $0.6 million in the three months ended June 30, 2025, compared to $0.8 million in the three months ended June 30, 2024. As a percentage of net sales, or gross margin, the Company reported 193% and 207% for the three months ended ~~June~~September 30, 2025 and 2024, respectively. The decrease is primarily due to unfavorable mix, with a higher percentage of lower margin sales at Phatebo ~~which distributes relatively lower margin pharmaceuticals~~.

Operating Expenses

Operating expenses totaled $53.46 million and $62.76 million for the three months ended ~~June~~September 30, 2025 and 2024, respectively. The ~~decrease~~increase is driven by ~~reduced~~a ~~professional~~contingency ~~fees and other expenses~~loss.

Consulting and Management Fees

Consulting and management fees were $21.2 million for the three months ended ~~June~~September 30, 2025 compared to $21.31 million for the three months ended ~~June~~September 30, 2024. These fees are related to employment and consulting contracts with most of the Company's management, as well as directors. ~~The decrease is primarily due to a reduction in the Company's total headcount across all its business units.~~

Professional Fees

Professional fees totaled $0.74 million for the three months ended ~~June~~September 30, 2025 compared to $10.15 million for the three months ended ~~June~~September 30, 2024. These expenses are associated with legal, accounting and audit services. ~~The decrease is primarily due to costs incurred in 2024 related to the acquisitions of TruHC and AV.~~

General and Administrative Expenses

General and administrative expenses totaled $0.85 million for the three months ended ~~June~~September 30, 2025 compared to $0.64 million for the three months ended ~~June~~September 30, 2024. The primary expenses included in both periods were filing services and shareholder communications, as well as professional dues and subscriptions.

Promotion and Communication Expenses

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

Travel Expenses

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

Share-based Compensation Expenses

Share -based compensation expenses totaled $0.25 million for the three months ended ~~June~~September 30, 2025 compared to ~~less than~~ $0.14 million for the three months ended ~~June~~September 30, 2024. These expenses represent the amortization of the fair value of share-based payments. The increase is due to the grants of SARs to key employees during the year ended December 31, 2024.

Research and Development Expenses

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

Operating Lease Expenses

Operating lease expenses totaled less than $0.21 million for both the three months ended ~~June~~September 30, 2025 and the three months ended ~~June~~September 30, 2024.

Depreciation and Amortization Expense

Depreciation and amortization expenses ~~totaled~~were less than $0.21 million for both the three months ended ~~June~~September 30, 2025 ~~compared~~and ~~to $0.3 million for~~ the three months ended ~~June~~September 30, 2024. ~~The increase is primarily due to the recent acquisitions of TruHC and United.~~

Bad Debt Expense

Bad debt expense totaled less than $0.31 million for the three months ended ~~June~~September 30, 2025 compared to $~~0.2~~nil ~~million~~ for the three months ended ~~June~~September 30, 2024. The amounts reflect the Company's estimate of lifetime expected losses related to outstanding trade receivables.

~~Asset Impairment~~34

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

Other ~~(Income)~~expenses ~~Expenses~~totaled $0.8 million for the three months ended September 30, 2025 compared to other expense of $0.1 million for the three months ended September 30, 2024. For both periods, this income and expense consists mainly of insurance, repairs and maintenance and royalties partially offset by miscellaneous incomes. The increase in expense in the three months ended September 30, 2025 was driven by a $0.6 million contingency loss recorded for a legal proceeding brought against Vessel Brand Inc, a former subsidiary of the Company, and the Company on June 2, 2025.

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

~~Non~~Flora realized $0.3 million in non-operating loss for both the three months ended September 30, 2025 and the three months ended September 30, 2024. This loss consists of unrealized losses from changes in fair value, interest (~~Income~~income) ~~Expenses~~expense and foreign exchange loss (gain).

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

Income Tax

We recognized less than $0.1 million in income tax ~~benefit~~expense for ~~both~~ the three months ended ~~June~~September 30, 2025 ~~and~~compared to $0.1 million in income tax benefit for the three months ended ~~June~~September 30, 2024. Our effective tax rate during the periods ended ~~June~~September 30, 2025 and 2024 was 2.-0.5% and 12.38%, respectively. We maintain valuation allowances when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in the tax provision in the period of change. In determining whether a valuation allowance is required, we consider such factors as prior earnings history, expected future earnings, carry-back and carry-forward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. We continue to believe our deferred tax assets are not more-likely-than-not to be realized and a full valuation allowance remains recorded against net deferred taxes as of ~~June~~September 30, 2025 and 2024.

Loss from Discontinued Operations

Loss from discontinued operations totaled $3.0 million in the three months ended September 30, 2025 compared to $1.5 million in the three months ended September 30, 2024. The increase in loss in the three months ended September 30, 2025 was driven by $1.4 million in goodwill impairment recorded at the former TruHC subsidiary.

Net Loss

WeThe Company recorded a net loss of $26.47 million for the three months ended ~~June~~September 30, 2025 compared to a net loss of $23.78 million for the three months ended ~~June~~September 30, 2024. This ~~decrease~~increase in net loss is driven by ~~lower~~increased ~~operating~~loss ~~expenses~~from ~~partially~~discontinued ~~offset~~operations ~~by lower gross profit~~ and ~~non-~~higher operating ~~income~~expenses.

For the ~~Six~~Nine Months Ended ~~June~~September 30, 2025 and 2024

Revenue

Revenue totaled $26.63 million and $3328.72 million for the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024, respectively. The ~~decrease~~revenue for both the nine months ended September 30, 2025 and 2024 was ~~primarily~~generated ~~driven~~entirely by the ~~following:~~Company's Phatebo subsidiary.

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

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

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

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

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

Gross Profit

Gross profit totaled $51.75 million and $71.09 million for the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024, respectively. The decrease was primarily driven by the decreased ~~sales~~margins at ~~JustCBD, which contributed $3.2 million in~~ the ~~six months ended June 30, 2025 compared to $4.2 million in the six months ended June 30, 2024.~~ Phatebo ~~contributed~~subsidiary ~~$1.2 million~~ in the ~~six~~nine months ended ~~June~~September 30, 2025~~, compared to $1~~.4 ~~million in the six months ended June 30, 2024. Vessel contributed $1.2 million in the six months ended June 30, 2025, compared to $1.3 million in the six months ended June 30, 2024.~~ As a percentage of net sales, or gross margin, the Company reported 226% and 217% for the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024, respectively. The ~~increase~~decrease is primarily due to ~~slight~~unfavorable ~~increases~~mix, inwith ~~margins~~a athigher ~~both~~percentage ~~Phatebo~~of ~~and~~lower ~~Just~~margin ~~CBD~~sales at Phatebo.

Operating Expenses

Operating expenses totaled $96.39 million and $137.01 million for the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024, respectively. The decrease is driven by a $1.2 million gain on the disposal and deconsolidation of insolvent subsidiaries~~, as well as lower headcount-related costs and asset impairments~~.

Consulting and Management Fees

Consulting and management fees were $42.18 million for both the ~~six~~nine months ended ~~June~~September 30, 2025 ~~compared~~and ~~to $4.7 million for~~ the ~~six~~nine months ended ~~June~~September 30, 2024. These fees are related to employment and consulting contracts with most of the Company's management, as well as directors. ~~The decrease is primarily due to a reduction in the Company's total headcount across all its business units.~~

Professional Fees

Professional fees totaled $1.36 million for the ~~six~~nine months ended ~~June~~September 30, 2025 compared to $12.60 million for the ~~six~~nine months ended ~~June~~September 30, 2024. These expenses are associated with legal, accounting and audit services.

General and Administrative Expenses

General and administrative expenses totaled $1.21 million for the ~~six~~nine months ended ~~June~~September 30, 2025 compared to $1.0.8 million for the ~~six~~nine months ended ~~June~~September 30, 2024. The primary expenses included in both periods were filing services and shareholder communications, as well as professional dues and subscriptions.

Promotion and Communication Expenses

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

Travel Expenses

Travel expenses totaled $0.21 million for both the ~~six~~nine months ended ~~June~~September 30, 2025 and the ~~six~~nine months ended ~~June~~September 30, 2024. These expenses were for various trips related to the subsidiaries and the Company's promotional activities.

Share-based Compensation Expenses

Share -based compensation expenses totaled $0.39 million for the ~~six~~nine months ended ~~June~~September 30, 2025 compared to ~~less than~~ $0.14 million for the ~~six~~nine months ended ~~June~~September 30, 2024. These expenses represent the amortization of the fair value of share-based payments. The increase is due to the grants of SARs to key employees during the year ended December 31, 2024.

Research and Development Expenses

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

Operating Lease Expenses

Operating lease expenses totaled $0.31 million for both the ~~six~~nine months ended ~~June~~September 30, 2025 ~~compared~~and ~~to $0.4 million for~~ the ~~six~~nine months ended ~~June~~September 30, 2024.

Depreciation and Amortization Expense

Depreciation and amortization expenses totaled less than $0.41 million for both the ~~six~~nine months ended ~~June~~September 30, 2025 ~~compared~~and ~~to $0.3 million for~~ the ~~six~~nine months ended ~~June~~September 30, 2024. ~~The increase is primarily due to the recent acquisitions of TruHC and United.~~

Bad Debt Expense

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

Asset Impairment

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

Gain on Disposal of Insolvent Subsidiaries

Gain on disposal of insolvent subsidiaries totaled $1.21 million for the ~~six~~nine months ended ~~June~~September 30, 2025 compared to $nil for the ~~six~~nine months ended ~~June~~September 30, 2024. The gain was the result of certain subsidiaries of the Company filing for bankruptcy during March 2025. The Company deconsolidated these subsidiaries when it lost control upon each ~~subsidiaries~~subsidiary's filing for bankruptcy.

Other ~~(Income)~~ Expenses

Other expense totaled $0.1.4 million for the ~~six~~nine months ended ~~June~~September 30, 2025 compared to $10.28 million for the ~~six~~nine months ended ~~June~~September 30, 2024. For both periods, this ~~income and~~ expense consists mainly of insurance, repairs and maintenance and royalties partially offset by miscellaneous incomes. The ~~decrease~~increase in expense in the ~~six~~nine months ended ~~June~~September 30, 2025 was driven by ~~reduced~~a ~~royalty~~$0.6 ~~fees,~~million ascontingency ~~well~~loss asrecorded for a ~~gain~~legal ~~recorded~~proceeding onbrought against Vessel Brand Inc, a ~~supplier~~former ~~agreement~~subsidiary atof ~~TruHC~~the Company, and the Company on June 2, 2025.

~~Non-operating (Income) Expenses~~36

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

We realized less than $0.1 million in non-operating income for the nine months ended September 30, 2025 compared to non-operating loss of $0.2 million for the nine months ended September 30, 2024. This income and expense consist of unrealized (gains) losses from changes in fair value, interest (income) expense and foreign exchange loss (gain). The increase in income is primarily due to a $1.3 million gain on the revaluation of the Company's digital assets partially offset by $1.1 million in loss related to the settlement of the JustCBD contingent consideration recorded during the nine months ended September 30, 2025.

Income Tax

We recognized ~~less than~~ $0.1 million in income tax ~~benefit and $0.1 million in income tax~~ expense for both the ~~six~~nine months ended ~~June~~September 30, 2025 and ~~2024~~the nine months ended September 30, ~~respectively~~2024. Our effective tax rate during the periods ended ~~June~~September 30, 2025 and 2024 was 0-2.31% and -1.65%, respectively. We maintain valuation allowances when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in the tax provision in the period of change. In determining whether a valuation allowance is required, we consider such factors as prior earnings history, expected future earnings, carry-back and carry-forward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. We continue to believe our deferred tax assets are not more-likely-than-not to be realized and a full valuation allowance remains recorded against net deferred taxes as of ~~June~~September 30, 2025 and 2024.

35Loss from Discontinued Operations

Loss from discontinued operations totaled $4.3 million for both the nine months ended September 30, 2025 and the nine months ended September 30, 2024.

Net Loss

WeThe Company recorded a net loss of $39.28 million for both the ~~six~~nine months ended ~~June~~September 30, 2025 ~~compared~~and ~~to a net loss of $6.0 million for~~ the ~~six~~nine months ended ~~June~~September 30, 2024. ~~This decrease in net loss is driven by a $1.2 million gain on the disposal and deconsolidation of insolvent subsidiaries as well as lower operating expenses of $2.6 million.~~

EBITDA and Adjusted EBITDA

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

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

(In thousands of United States dollars)		JustCBD			United			Vessel			Germany(3)			AV			Corporate& Other			Consolidated
Net income (loss)	$	39		$	(369	)	$	(636	)	$	(716	)	$	(50	)	$	(1,438	)	$	(3,170	)
Income tax benefit		-			-			-			(10	)		-			-			(10	)
Interest expense (income)		25			2			(3	)		97			1			25			147
Depreciation and amortization		19			3			2			347			6			-			377
EBITDA		83			(364	)		(637	)		(282	)		(43	)		(1,413	)		(2,656	)
Non-operating income (1)		(1	)		-			-			-			(9	)		(49	)		(59	)
Share based compensation		-			-			-			-						344			344
Asset impairment		-			-			-			-			-			46			46
Unrealized gain from changes in fair value (2)		(36	)		-			-			-			-			(415	)		(451	)
Charges related to the flow-through of inventory step-up on business combinations		-			67			-			-			-			-			67
Other acquisition and transaction costs		-			-			-			-			-			164			164
Adjusted EBITDA	$	46		$	(297	)	$	(637	)	$	(282	)	$	(52	)	$	(1,323	)	$	(2,545	)

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

(In thousands of United States dollars)		JustCBD			Vessel			Germany(3)			AV		Corporate& Other			Consolidated
Net (loss) income	$	(1,331	)	$	(1,318	)	$	(51	)	$	66	$	(3,397	)	$	(6,031	)
Income tax expense		-			-			77			-		16			93
Interest expense (income)		1			-			65			-		(69	)		(3	)
Depreciation and amortization		110			34			178			3		6			331
EBITDA		(1,220	)		(1,284	)		269			69		(3,444	)		(5,610	)
Non-operating loss (1)		1			-			-			-		182			183
Share based compensation		-			-			-					22			22
Asset impairment		93			934			-			-		31			1,058
Unrealized gain from changes in fair value (2)		(57	)		-			-			-		(208	)		(265	)
Charges related to the flow-through of inventory step-up on business combinations		-			-			-			20		-			20
Other acquisition and transaction costs		-			-			216			33		20			269
Adjusted EBITDA	$	(1,183	)	$	(350	)	$	485		$	122	$	(3,397	)	$	(4,323	)

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

(In thousands of United States dollars)		JustCBD			United			Vessel			Germany(3)			AV			Corporate& Other			Consolidated
Net loss	$	(78	)	$	(316	)	$	(383	)	$	(218	)	$	(30	)	$	(1,387	)	$	(2,412	)
Income tax benefit		-			-			-			(48	)		-			-			(48	)
Interest expense (income)		3			1			(1	)		72			-			21			96
Depreciation and amortization		9			2			1			180			3			-			195
EBITDA		(66	)		(313	)		(383	)		(14	)		(27	)		(1,366	)		(2,169	)
Non-operating income (1)		-			-			-			-			(8	)		(48	)		(56	)
Share based compensation		-			-			-			-						172			172
Unrealized gain from changes in fair value (2)		-			-			-			-			-			(146	)		(146	)
Charges related to the flow-through of inventory step-up on business combinations		-			40			-			-			-			-			40
Other acquisition and transaction costs		-			-			-			-			-			21			21
Adjusted EBITDA	$	(66	)	$	(273	)	$	(383	)	$	(14	)	$	(35	)	$	(1,367	)	$	(2,138	)

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

(In thousands of United States dollars)		JustCBD			Vessel			Germany(3)			AV		Corporate& Other			Consolidated
Net (loss) income	$	(1,442	)	$	(241	)	$	(45	)	$	66	$	(995	)	$	(2,657	)
Income tax expense (benefit)		-			-			12			-		(47	)		(35	)
Interest expense (income)		-			-			29			-		(54	)		(25	)
Depreciation and amortization		62			16			172			3		4			257
EBITDA		(1,380	)		(225	)		168			69		(1,092	)		(2,460	)
Non-operating loss (1)		-			-			-			-		51			51
Share based compensation		-			-			-					12			12
Asset impairment		93			70			-			-		(3	)		160
Unrealized gain from changes in fair value (2)		(57	)		-			-			-		(815	)		(872	)
Charges related to the flow-through of inventory step-up on business combinations		-			-			-			20		-			20
Other acquisition and transaction costs		-			-			216			33		20			269
Adjusted EBITDA	$	(1,344	)	$	(155	)	$	384		$	122	$	(1,827	)	$	(2,820	)

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

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

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

Liquidity and Capital Resources

Since the Company's inception, we have funded our operations and capital spending through cash flows from product sales and proceeds from the sale of our capital stock. The Company is generating cash from sales and is deploying its capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term to support our business growth and expansion. WeWhile we have generated significant operating losses and negative cash flows from operations as reflected in our accumulated deficit and unaudited condensed interim consolidated statements of cash flows. Wemainly ~~expect~~through toour ~~continue~~legacy tohemp ~~incur~~and ~~operating~~cannabis ~~losses~~businesses, we began implementing an expansion strategy focused on identifying and ~~negative~~pursuing ~~cash~~complementary ~~flows~~growth opportunities within the global digital asset market in early 2025. This has resulted in $55.4 million in restricted and unrestricted digital assets on the ~~foreseeable~~Company's ~~future~~condensed consolidated balance sheet as of September 30, 2025. Our current principal sources of liquidity are cash and cash equivalents provided by our operations and prior equity offerings. Cash consists primarily of cash on deposit with banks. Cash was $113.51 million and $65.12 million as of ~~June~~September 30, 2025, and December 31, 2024, respectively. As ofa ~~June~~result ~~30,~~of ~~2025,~~ the ~~Company's~~PIPE ~~current~~Offering ~~working~~that ~~capital,~~closed ~~anticipated~~on ~~operating~~September ~~expenses~~26, ~~and net losses~~2025, ~~and~~ the ~~uncertainties~~Company ~~surrounding~~believes that its ~~ability~~existing tosources ~~raise~~of ~~additional~~liquidity ~~capital~~are ~~as needed, raise substantial doubt as to whether existing cash~~ and ~~cash equivalents~~ will be sufficient toin ~~meet~~both ~~its obligations as they come due within twelve months from~~ the ~~date~~short ~~the~~and ~~unaudited~~long ~~condensed~~term ~~interim~~to ~~consolidated~~meet ~~financial~~our ~~statements~~working ~~were~~capital ~~issued.~~requirements ~~The unaudited condensed interim consolidated financial statements do not include any adjustments for the recovery~~ and ~~classification~~future ~~of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern~~obligations.

37The Company's primary uses of cash are for working capital requirements and capital expenditures. Additionally, from time to time, it may use capital for acquisitions and other investing and financing activities. Working capital is used principally for the Company's personnel as well as costs related to the distribution of pharmaceutical products. The Company's capital expenditures consist primarily of additional facilities, improvements in existing facilities and product development.

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

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

Cash Flows

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

(In thousands of United States dollars)		For the sixmonths endedJune 30, 2025			For the sixmonths endedJune 30, 2024
Cash used in operating activities	$	(5,616	)	$	(1,605	)
Cash from financing activities		1,512			3,368
Cash used in investing activities		(636	)		(33	)
Effect of exchange rate change		194			47
Change in cash during the period		(4,546	)		1,777
Cash, beginning of period		6,052			4,385
Cash, end of period	$	1,506		$	6,162

(In thousands of United States dollars)		For the nine months ended September 30, 2025			For the nine months ended September 30, 2024
Cash used in operating activities	$	(5,516	)	$	(3,686	)
Cash from financing activities		12,067			3,111
Cash from investing activities		647			203
Effect of exchange rate change		679			231
Change in cash during the period		7,877			(141	)
Cash, beginning of period		5,248			4,385
Cash, end of period	$	13,125		$	4,244

Cash used in Operating Activities

Net cash used in operating activities in the ~~six~~nine months ended ~~June~~September 30, 2025 was $5.65 million compared to net cash used in operating activities of $13.67 million for the ~~six~~nine months ended ~~June~~September 30, 2024. Cash flows used in operating activities for the periods ended ~~June~~September 30, 2025 and 2024 were due primarily to operating expenses exceeding the gross profit for the periods.

Cash provided by Financing Activities

Net cash provided by financing activities for the ~~six~~nine months ended ~~June~~September 30, 2025 totaled $112.51 million compared to $3.41 million for the ~~six~~nine months ended ~~June~~September 30, 2024. Cash flows provided from financing activities for the period ending ~~June~~September 30, 2025 were due to the sale of common shares of the Company in May 2025 and September 2025 as well as net borrowings on the credit facilities in Germany through the Company's Phatebo subsidiary. Cash flows provided from financing activities for the period ending ~~June~~September 30, 2024 were due to the sale of common shares of the Company in April 2024 as well as net borrowings on the credit facilities in Germany through the Company's Phatebo subsidiary.

38Cash provided by Investing Activities

Net cash provided by investing activities for the nine months ended September 30, 2025 totaled $0.6 million compared to $0.2 million for the nine months ended September 30, 2024. Cash ~~used~~flows inprovided ~~Investing~~by ~~Activities~~investing activities for the period ended September 30, 2025 were primarily related to the acquisition and sale of digital assets. Cash flows provided by investing activities for the period ended September 30, 2024 were primarily proceeds from the sale of property, plant and equipment.

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

Working Capital

As of ~~June~~September 30, 2025, we had working capital of ($09.6)4 million, including $113.51 million of cash. The Company's primary cash flow needs are for the development of its operating activities, administrative expenses and for general working capital to support growing sales with related receivables and payables.

Funding Requirements

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

On September 19, 2025, the Company entered into the PIPE Offering pursuant to which the Company agreed to sell and issue the following securities in private placement offerings: (i) 116,340 PIPE Common Share Units at a unit price of $25.19, payable in cash, for aggregate gross proceeds of $2.9 million, with each unit consisting of one PIPE Common Share and 0.2 PIPE Warrants to purchase one common share at an exercise price of $25.19; (ii) 412,037 PIPE Pre-Funded Warrant Units at a unit price of $25.1899, payable in cash, for aggregate gross proceeds of $10.4 million, with each unit consisting of one PIPE Pre-Funded Warrant to purchase one common share at an exercise price of $0.0001 and 0.2 of a PIPE Warrant; (iii) 8,546,955 PIPE Pre-Funded Warrants at a unit price of $25.1899, payable in 71,766,135 0G Tokens based on an agreed value of $3 per 0G Token; and (iv) the PIPE Note in an aggregate original principal amount of 95,333 Solana.

On September 19, 2025, the Company entered into an arrangement with Zero Gravity pursuant to which the Company agreed to (i) borrow 50,000,000 0G Tokens from Zero Gravity under the Loan Agreement, and (ii) issue to Zero Gravity in a private placement offering 1,786,423 Loan Agreement Warrants. On September 22, 2025, the Company entered into an agreement with Zero Gravity for the issuance of the Zero Gravity Convertible Note in an aggregate original principal amount of 50,000,000 0G Tokens that will replace the Loan Agreement and Loan Agreement Warrants, subject to closing. The Zero Gravity Convertible Note was issued on October 23, 2025, at which date the 50,000,000 0G Tokens were received.

On May 2, 2025, the Company closed a private placement offering of 80,340 common shares of the Company at a price of $11.70 per common share and 18,642 pre-funded warrants at a price of $11.6961 per warrant for gross proceeds of $1.2 million, of which the Company immediately invested $1.0 million in digital assets. On December 16, 2024, the Company closed a registered direct offering of 73,077 units of the Company at a price of $48.75 per unit for gross proceeds of $3.6 million. On December 10, 2024 and December 11, 2024, the Company sold an aggregate of 10,899 of the Company's common shares at a price of $65.13 per common share for gross proceeds of $0.7 million pursuant to separate subscription agreements entered into between the Company and certain institutional investors. On April 8, 2024, the Company closed a registered direct offering of 43,590 common shares of the Company at a price of $74.10 per common share for gross proceeds of $3.2 million. There were no other equity offerings in the periods ended September 30, 2025 and September 30, 2024.

Debt

In addition to the equity offerings described above, the Company also has access to credit facilities through its Phatebo subsidiary. The credit facilities total €2.4 million with three different German banks and are secured by default guarantees. On ~~June~~September 30, 2025, the outstanding amount was €2.3 million ($2.7 million USD) and was due within the next ~~twelve~~12 months. The credit facilities have interest rates ranging from 4.76% to 5.1908% per year and does not have a set maturity date. The interest rate is reset every time a new amount is drawn.

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

Off-Balance Sheet Arrangements

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

Contractual Obligations

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

(In thousands of United States dollars)		Total		Less than 1Year		1 - 3 Years		More than 3Years
Sales tax (1)	$	2,681	$	2,681	$	-	$	-
Legal disputes (1)	$	639	$	639	$	-	$	-
Legal disputes (1)		470		470		-		-
Operating lease obligations (2)		565		55		304		206
Contingent purchase consideration (2)		515		515		-		-
Debt (3)		2,761		2,697		54		10
Operating lease obligations (3)		3,344		544		1,931		869
Total	$	3,965	$	3,391	$	358	$	216
Debt (4)		5,349		2,981		1,309		1,059
Total	$	12,359	$	7,191	$	3,240	$	1,928

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

(2) ~~Contingent~~See ~~purchase~~Note ~~consideration~~12 ~~related~~of to the ~~February~~Company's ~~2022~~unaudited ~~acquisition~~condensed ofinterim ~~JustCBD~~consolidated ~~and~~financial ~~the~~statements, ~~March~~included ~~2023~~elsewhere ~~acquisition~~in ofthis ~~Original~~Quarterly ~~Hemp~~Report.

(3) See Note 1211 of the Company's unaudited condensed interim consolidated financial statements, included elsewhere in this Quarterly Report.

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

Critical Accounting Estimates

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

Recently Adopted Accounting Principles

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

Adoption of ~~accounting~~Accounting ~~standards~~Standards and ~~amendments~~Amendments

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Control over Financial Reporting

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

PART II

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

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

~~Our~~Risks ~~financial~~Related ~~results~~to ~~and~~Investing ~~the~~in ~~market price of our common shares may be affected by the prices of digital assets.~~Cryptocurrency

As0G ~~part~~is ofa ~~our~~highly ~~capital~~volatile ~~allocation strategy for assets that are not required to provide working capital for our ongoing operations~~asset, ~~we have invested,~~ and ~~may~~fluctuations ~~invest more,~~ in ~~digital~~the ~~assets. The~~ price of ~~digital~~0G assets has historically been subject to price fluctuations and volatility. Moreover, digital assets are relatively novel and the application of securities laws and other regulations to such digital assets may beinfluence ~~unclear~~our infinancial ~~some~~results ~~respects. It is possible that regulators may interpret laws~~ and~~/or~~ ~~regulations in a manner that adversely affects~~ the ~~liquidity~~market orprice ~~value~~ of ~~digital~~our ~~assets~~listed securities.

~~Any~~Our ~~decrease~~financial inresults and the ~~fair~~market ~~value~~price of our ~~digital~~listed ~~assets~~securities ~~could~~would ~~require~~be usadversely ~~to incur an unrealized loss on the digital asset investment~~affected, and ~~such~~our ~~charge~~business ~~could~~and ~~be material to our~~ financial ~~results~~condition ~~for~~would ~~the~~be ~~applicable~~negatively ~~reporting period~~impacted, ~~which~~if ~~may create significant volatility in our reported earnings. Any decrease in reported earnings or increased volatility of such earnings could have a material adverse effect on~~ the ~~market~~ price of ~~our~~0G ~~common~~decreased ~~shares. In addition~~substantially, ~~the~~including ~~application~~as of generally accepted accounting principles in the United States with respect to digital assets remains uncertain in some respects, and any future changes in the manner in which we account for our digital assets could have a ~~material~~result ~~adverse effect on our financial results and the market price~~ of ~~our common shares.~~:

Indecreased ~~addition,~~user ifand ~~investors~~investor ~~view~~confidence ~~the value of our common shares as dependent upon or linked to the value or change~~ in ~~the value of our digital asset holdings, the price of our digital assets may significantly influence the market price of our common shares.~~0G;
investment and trading activities such as (i) activities of highly active retail and institutional users, speculators and investors or (ii) actual or expected significant dispositions of 0G by large holders, including the expected liquidation of digital assets seized by governments or associated with entities that have filed for bankruptcy protection, or associated with tokens vested by the Zero Gravity core team;
a decrease in the price of other digital assets, to the extent the decrease in the price of such other digital assets may cause a decrease in the price of 0G or adversely affect investor confidence in digital assets generally;
changes in consumer preferences and the perceived value or prospects of 0G or the utility of Zero Gravity;
negative publicity, media or social media coverage, or sentiment due to events in or relating to, or perception of, 0G, Zero Gravity or the broader digital assets industry;
competition from other decentralized exchanges or digital assets that exhibit comparable or better speed, security, scalability or energy efficiency, or that feature other more favored characteristics that are backed by governments, including the U.S. government, or reserves of fiat currencies, or that represent ownership or security interests in physical assets;
developments relating to the Zero Gravity blockchain (the "0G Blockchain"), including (i) changes to the 0G Blockchain that impact its security, speed, scalability, usability or value, such as changes to the cryptographic security protocol underpinning the 0G Blockchain, changes to the maximum number of 0G Tokens outstanding, changes to the mutability of transactions, changes relating to the size of blockchain blocks, and similar changes; (ii) failures to make upgrades to the 0G Blockchain and the 0G interface to adapt to security, technological, legal or other challenges; and (iii) changes to the 0G Blockchain that introduce software bugs, security risks or other elements that adversely affect 0G;
disruptions, failures, unavailability, or interruptions in services of venues for acquiring 0G;
the filing for bankruptcy protection by, liquidation of, or market concerns about the financial viability of digital asset custodians, trading venues, lending platforms, investment funds, or other digital asset industry participants;
regulatory, legislative, enforcement and judicial actions that adversely affect access to, functionality of or performance of Zero Gravity or associated products such as cryptocurrency perpetual futures, the price, ownership, transferability, trading volumes, legality or public perception of, 0G, Zero Gravity or other similar blockchains, or that adversely affect the operations of or otherwise prevent digital asset custodians, trading venues, lending platforms or other digital assets industry participants from (i) accessing 0G or Zero Gravity or associated products or (ii) operating in a manner that allows them to continue to deliver services to the digital assets industry;

transaction congestion and fees associated with processing transactions on the Zero Gravity network;
macroeconomic changes, such as changes in the level of interest rates and inflation, fiscal and monetary policies of governments, trade restrictions and fiat currency devaluations; and
changes in national and international economic and political conditions, including, without limitation, federal government policies, trade tariffs and trade disputes and the adverse impacts attributable to global conflicts, including those between Russia and Ukraine and in the Middle East.

Moreover, the price of our listed securities has been and is likely to continue to be volatile, and with the adoption of our new cryptocurrency treasury strategy, we expect to see additional volatility in our stock price. In addition, if investors view the value of our listed securities as dependent upon or linked to the value or change in the value of our 0G holdings, the price of 0G may significantly influence the market price of our listed securities. The price of 0G has been, and is likely to continue to be, volatile.

We plan to use a portion of our capital raised that is not required to provide working capital for our ongoing operations to acquire 0G, which may adversely affect our financial results and the market price of our securities.

We plan to use a portion of our capital raised that is not required to provide working capital for our ongoing operations to acquire 0G. For example, we plan to use net proceeds from the Cryptocurrency Offering to further our new digital asset treasury strategy linked to 0G, and to explore and expand the use of the native AI functionality of the 0G to enhance the business of the Company and the balance of the net proceeds will be used for general corporate and working capital purposes. The price of 0G is newly established and highly volatile. Moreover, digital assets are relatively novel, and the application of securities laws and other regulations to such assets is unclear in many respects. It is possible that regulators may interpret laws in a manner that adversely affects the liquidity or value of our 0G holdings. Further, the acquisition of large amounts of 0G may become difficult or more costly, which would make it more difficult for us to implement our strategy. In addition, the application of generally accepted accounting principles in the United States with respect to digital assets remains uncertain in some respects, and any future changes in the manner in which we account for our 0G holdings could have a material adverse effect on our financial results and the market price of our securities. In addition, if investors view the value of our securities as dependent upon or linked to the value or change in the value of our 0G holdings, the price of such digital assets may significantly influence the market price of our securities.

Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our 0G holdings.

Because we only recently initiated our 0G treasury strategy, our historical financial statements do not reflect the potential variability in earnings that we may experience in the future from holding or selling significant amounts of 0G. The price of digital assets has historically been subject to dramatic price fluctuations and is highly volatile. In December 2023, the FASB issued ASU 2023-08, which we have adopted. ASU 2023-08 requires us to measure our 0G holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of our 0G in net income each reporting period. ASU 2023-08 also requires us to provide certain interim and annual disclosures with respect to our 0G holdings. As a result, volatility in our earnings may be significantly more than what we experienced in prior periods.

The concentration of our 0G holdings could enhance the risks inherent in our 0G treasury strategy.

The concentration of our 0G holdings limits the risk mitigation that we could achieve if we were to purchase a more diversified portfolio of treasury assets, and the absence of diversification enhances the risks inherent in our 0G treasury strategy. Any future significant declines in the price of 0G would have a more pronounced impact on our financial condition than if we used our cash to purchase a more diverse portfolio of assets.

Absent federal regulations, there is a possibility that 0G may be classified as a "security." Classification of 0G as a "security" would subject us to additional regulation and could materially impact the operation of our business.

Neither the SEC nor any other U.S. federal or state regulator has formally stated whether they agree that any of the Owned Cryptocurrencies, 0G Tokens and any other digital asset we might hold (collectively, the "Cryptocurrencies") are a "security." Despite the Executive Order titled "Strengthening American Leadership in Digital Financial Technology" which includes as an objective, "protecting and promoting the ability of individual citizens and private sector entities alike to access and ... to maintain self-custody of digital assets," the Cryptocurrencies have not yet been formally classified with respect to U.S. federal securities laws. Therefore, while (for the reasons discussed below) we believe that none of the Cryptocurrencies, other than Solana, are a "security" within the meaning of the U.S. federal securities laws, and registration of the Company under The Investment Company Act of 1940, as amended (the "Investment Company Act"), is therefore not required under the applicable securities laws, we acknowledge that a regulatory body or federal court may determine otherwise. Our belief, even if reasonable under the circumstances, would not preclude legal or regulatory action based on such a finding that any of the Cryptocurrencies, other than Solana, are a "security" which would require us to register as an investment company under the Investment Company Act.

We have also adapted our process for analyzing the U.S. federal securities law status of the Cryptocurrencies and other cryptocurrencies over time, as guidance and case law have evolved. As part of our U.S. federal securities law analytical process, we take into account a number of factors, including the various definitions of "security" under U.S. federal securities laws and federal court decisions interpreting the elements of these definitions, such as the U.S. Supreme Court's decisions in the Howey and Reves cases, as well as court rulings, reports, orders, press releases, public statements, and speeches by the SEC Commissioners and the SEC Staff providing guidance on when a digital asset or a transaction to which a digital asset may relate may be a security for purposes of U.S. federal securities laws. Our position that none of the Cryptocurrencies, other than Solana, are a "security" is premised, among other reasons, on our conclusion none of Cryptocurrencies meet the elements of the Howey test. Among the reasons for our conclusion none of Cryptocurrencies are a security, other than Solana, is that holders of the Cryptocurrencies do not have a reasonable expectation of profits from our efforts in respect of their holding of the Cryptocurrencies. Also, ownership of the Cryptocurrencies does not convey the right to receive any interest, rewards, or other returns.

We acknowledge, however, that the SEC, a federal court or another relevant entity could take a different view. The regulatory treatment of the Cryptocurrencies is such that it has drawn significant attention from legislative and regulatory bodies, in particular the SEC which has previously stated it deemed the certain digital assets a security. Application of securities laws to the specific facts and circumstances of digital assets is complex and subject to change. Our conclusion, even if reasonable under the circumstances, would not preclude legal or regulatory action based on a finding that any of the Cryptocurrencies is a "security." As such, we are at risk of enforcement proceedings against us, which could result in potential injunctions, cease-and-desist orders, fines, and penalties if any of the Cryptocurrencies are determined to be a security by a regulatory body or a court. Such developments could subject us to fines, penalties, and other damages, and adversely affect our business, results of operations, financial condition, and prospects.

If we were deemed to be an investment company under the Investment Company Act, applicable restrictions likely would make it impractical for us to continue segments of our business as currently contemplated.

Under Sections 3(a)(1)(A) and (C) of the Investment Company Act, a company generally will be deemed to be an "investment company" if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act and cash items) on an unconsolidated basis. Rule 3a-1 under the Investment Company Act generally provides that notwithstanding the Section 3(a)(1)(C) test described in clause (ii) above, an entity will not be deemed to be an "investment company" for purposes of the Investment Company Act if no more than 45% of the value of its assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act and cash items) consists of, and no more than 45% of its net income after taxes (for the past four fiscal quarters combined) is derived from, securities other than U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, securities issued by employees' securities companies, securities issued by qualifying majority owned subsidiaries of such entity, and securities issued by qualifying companies that are controlled primarily by such entity. We do not believe that we are an "investment company" as such term is defined in either Section 3(a)(1)(A) or Section 3(a)(1)(C) of the Investment Company Act.

Recently, we have begun focusing on pursuing opportunities to expand our portfolio into digital assets. With respect to Section 3(a)(1)(A), following the Cryptocurrency Offering, approximately 95% of the proceeds of the Cryptocurrency Offering will be used to acquire Cryptocurrencies, which is an amount in excess of 40% of our total assets. Since we believe none of the Cryptocurrencies are an investment security, other than Solana, our holdings of which will not exceed 40% of our total assets, we do not hold ourselves out as being engaged primarily, or propose to engage primarily, in the business of investing, reinvesting, or trading in securities within the meaning of Section 3(a)(1)(A) of the Investment Company Act.

With respect to Section 3(a)(1)(C), we believe we satisfy the elements of Rule 3a-1 and therefore are deemed not to be an investment company under, and we intend to conduct our operations such that we will not be deemed an investment company under, Section 3(a)(1)(C). We believe that we are not an investment company pursuant to Rule 3a-1 under the Investment Company Act because, on a consolidated basis with respect to wholly-owned subsidiaries but otherwise on an unconsolidated basis, no more than 45% of the value of the Company's total assets (exclusive of U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, and cash items) consists of, and no more than 45% of the Company's net income after taxes (for the last four fiscal quarters combined) is derived from, securities other than U.S. government securities, shares of registered money market funds under Rule 2a-7 of the Investment Company Act, securities issued by employees' securities companies, securities issued by qualifying majority owned subsidiaries of the Company and securities issued by qualifying companies that are controlled primarily by the Company.

The Cryptocurrencies and other digital assets, as well as new business models and transactions enabled by blockchain technologies, present novel interpretive questions under the Investment Company Act. There is a risk that assets or arrangements that we have concluded are not securities could be deemed to be securities by the SEC or another authority for purposes of the Investment Company Act, which would increase the percentage of securities held by us for Investment Company Act purposes. The SEC has requested information from a number of participants in the digital assets ecosystem, regarding the potential application of the Investment Company Act to their businesses. For example, in an action unrelated to the Company, in February 2022, the SEC issued a cease-and-desist order under the Investment Company Act to BlockFi Lending LLC, in which the SEC alleged that BlockFi was operating as an unregistered investment company because it issued securities and also held more than 40% of its total assets, excluding cash, in investment securities, including the loans of digital assets made by BlockFi to institutional borrowers.

If we were deemed to be an investment company, Rule 3a-2 under the Investment Company Act is a safe harbor that provides a one-year grace period for transient investment companies that have a bona fide intent to be engaged primarily, as soon as is reasonably possible (in any event by the termination of such one-year period), in a business other than that of investing, reinvesting, owning, holding, or trading in securities, with such intent evidenced by the company's business activities and an appropriate resolution of its board of directors. The grace period is available not more than once every three years and runs from the earlier of (i) the date on which the issuer owns securities and/or cash having a value exceeding 50% of the issuer's total assets on either a consolidated or unconsolidated basis or (ii) the date on which the issuer owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer's total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Accordingly, the grace period may not be available at the time that we seek to rely on Rule 3a-2; however, Rule 3a-2 is a safe harbor and we may rely on any exemption or exclusion from investment company status available to us under the Investment Company Act at any given time. Furthermore, reliance on Rule 3a-2, Section 3(a)(1)(C), or Rule 3a-1 could require us to take actions to dispose of securities, limit our ability to make certain investments or enter into joint ventures, or otherwise limit or change our service offerings and operations. If we were to be deemed an investment company in the future, restrictions imposed by the Investment Company Act - including limitations on our ability to issue different classes of stock and equity compensation to directors, officers and employees and restrictions on management, operations and transactions with affiliated persons - likely would make it impractical for us to continue our business as contemplated, and could have a material adverse effect on our business, results of operations, financial condition and prospects.

The Cryptocurrencies are created and transmitted through the operations of the peer-to-peer networks, decentralized networks of computers running software following the respective protocols. If the networks of any of the Cryptocurrencies is disrupted or encounters any unanticipated difficulties, the value of the Cryptocurrencies could be negatively impacted.

If the network of any of the Cryptocurrencies is disrupted or encounters any unanticipated difficulties, then the processing of transactions on such network may be disrupted, which in turn may prevent us from depositing or withdrawing the Cryptocurrencies from our accounts with our custodian or otherwise effecting transactions of the Cryptocurrencies. Such disruptions could include, for example: the price volatility of the Cryptocurrencies; the insolvency, business failure, interruption, default, failure to perform, security breach or other problems of participants, custodians or others; the closing of trading platforms of the Cryptocurrencies due to fraud, failures, security breaches or otherwise; or network outages or congestion, power outages or other problems or disruptions affecting the networks of the Cryptocurrencies.

In addition, although we do not currently intend to mine any of the Cryptocurrencies, digital asset validating operations can consume significant amounts of electricity, which may have a negative environmental impact and give rise to public opinion against allowing, or government regulations restricting, the use of electricity for validating operations. Additionally, validators may be forced to cease operations during an electricity shortage or power outage.

We face risks relating to the custody of the Cryptocurrencies, including the loss or destruction of private keys required to access our Cryptocurrencies and cyberattacks or other data loss relating to our Cryptocurrencies, including smart contract related losses and vulnerabilities.

We hold our Cryptocurrencies with regulated custodians that have duties to safeguard our private keys. Our custodial services contracts do not restrict our ability to reallocate our Cryptocurrencies among our custodians, and our holdings of the Cryptocurrencies may be concentrated with a single custodian from time to time. In light of the significant amount of the Cryptocurrencies we anticipate that we will hold, we continually seek to engage additional custodians to achieve a greater degree of diversification in the custody of our Cryptocurrencies as the extent of potential risk of loss is dependent, in part, on the degree of diversification. However, multiple custodians may utilize similar wallet infrastructure, cloud service providers or software systems, which could increase systemic technology risk.

If there is a decrease in the availability of digital asset custodians that we believe can safely custody our Cryptocurrencies, for example, due to regulatory developments or enforcement actions that cause custodians to discontinue or limit their services in the United States, we may need to enter into agreements that are less favorable than our current agreements or take other measures to custody our Cryptocurrencies, and our ability to seek a greater degree of diversification in the use of custodial services would be materially adversely affected. While we conduct due diligence on our custodians and any smart contract platforms we may use, there can be no assurance that such diligence will uncover all risks, including operational deficiencies, hidden vulnerabilities or legal noncompliance.

As of September 22, 2025, the insurance that covers losses of our holdings of the Cryptocurrencies may cover none or only a small fraction of the value of the entirety of our holdings of the Cryptocurrencies, and there can be no guarantee that such insurance will be maintained as part of the custodial services we have or that such coverage will cover losses with respect to our Cryptocurrencies. Moreover, our use of custodians exposes us to the risk that the Cryptocurrencies our custodians hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such Cryptocurrencies. Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our Cryptocurrencies. The legal framework governing digital asset ownership and rights in custodial or insolvency contexts remains uncertain and continues to evolve, which could result in unexpected losses, protracted recovery processes or adverse treatment in insolvency proceedings.

Each of the respective Cryptocurrencies is controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet in which the respective Cryptocurrency is held. While the certain blockchain ledger requires a public key relating to a digital wallet to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the certain Cryptocurrencies held in such wallet. To the extent the private key(s) for a digital wallet are lost, destroyed or otherwise compromised and no backup of the private key(s) is accessible, neither we nor our custodians will be able to access the Cryptocurrencies held in the related digital wallet. Furthermore, we cannot provide assurance that our digital wallets, nor the digital wallets of our custodians held on our behalf, will not be compromised as a result of a cyberattack. The Cryptocurrencies and blockchain ledger, as well as other digital assets and blockchain technologies, have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities.

As part of our treasury management strategy, we may engage in staking, restaking or other permitted activities that involve the use of "smart contracts" or decentralized applications. The use of smart contracts or decentralized applications entails certain risks including risks stemming from the existence of an "admin key" or coding flaws that could be exploited, potentially allowing a bad actor to issue or otherwise compromise the smart contract or decentralized application, potentially leading to a loss of our Cryptocurrencies. Like all software code, smart contracts are exposed to risk that the code contains a bug or other security vulnerability, which can lead to loss of assets that are held on or transacted through the contract or decentralized application. Smart contracts and decentralized applications may contain bugs, security vulnerabilities or poorly designed permission structures that could result in the irreversible loss of the Cryptocurrencies or other digital assets. Exploits, including those stemming from admin key misuse, admin key compromise or protocol flaws, have occurred in the past and may occur in the future.

Our 0G treasury strategy subjects us to enhanced regulatory oversight.

There has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist activities or circumvent sanctions regimes, including those sanctions imposed in response to the ongoing conflict between Russia and Ukraine. We intend to implement and maintain policies and procedures reasonably designed to promote compliance with applicable anti-money laundering ("AML") and sanctions laws and regulations and to only acquire our 0G through entities subject to anti-money laundering regulation and related compliance rules in the United States. Our initial 0G transactions will be executed by working together with reputable digital asset trading service providers that have what we believe to be comprehensive and robust AML policies and procedures. In addition, we plan to adopt policies and procedures to help ensure AML compliance with respect to any potential 0G transactions handled by us directly, including conducting comprehensive, enterprise-wide AML risk assessments, taking steps to identify investors and beneficial owners, performing ongoing sanctions screening, monitoring transactions for suspicious activities, providing training to employees and directors and managing third-party service provider risks through due diligence and contractual requirements. Notwithstanding these planned efforts, if we are found to have purchased any of our 0G from bad actors that have used 0G to launder money or persons subject to sanctions, we may be subject to regulatory proceedings and any further transactions or dealings in 0G by us may be restricted or prohibited.

Increased enforcement activity and changes in the regulatory environment, including evolving or changing interpretations and the implementation of new or varying regulatory requirements by the government or any new legislation affecting 0G, as well as enforcement actions involving or impacting our trading venues, counterparties and custodians, may impose significant costs or significantly limit our ability to hold and transact in 0G.

In addition, private actors that are wary of 0G or the regulatory concerns associated with 0G have in the past taken and may in the future take further actions that may have an adverse effect on our business or the market price of our listed securities. For example, it is possible that a financial institution could restrict customers from buying our securities if it were to determine that the value of our securities is closely tied to the performance of 0G, signaling a reluctance to facilitate exposure to virtual currencies.

Competition from the emergence or growth of other digital assets could have a negative impact on the price of 0G and adversely affect the value of our 0G holdings.

The digital asset market is highly competitive and rapidly evolving, with numerous alternative cryptocurrencies, blockchains, and decentralized finance (DeFi) platforms vying for market share in areas such as perpetual futures trading, staking, and on-chain liquidity provision, which are core to the Zero Gravity ecosystem and its 0G token. Existing or emerging competitors could attract users and developers away from the Zero Gravity ecosystem by providing superior technology, lower fees, faster transaction speeds or broader ecosystem integrations, potentially eroding Zero Gravity's market position and leading to reduced trading volumes, staking participation and overall demand. Many consortiums and financial institutions are also researching and investing resources into private or permissioned blockchain platforms rather than open platforms like the Zero Gravity network. 0G is newly minted and supported by fewer trading platforms than more established digital assets, such as Bitcoin and Ether, which could impact its liquidity. In addition, the Zero Gravity network is in direct competition with other smart contract platforms, such as the Ethereum, Solana, Polkadot, Avalanche and Cardano networks. Competition from the emergence or growth of alternative digital assets or other smart contract platforms could have a negative impact on the demand for, and price of, 0G, and thereby adversely affect the value of our 0G holdings.

Investors may also invest in 0G through means other than our securities, including through direct investments in 0G and other financial vehicles, including securities backed by or linked to 0G and digital asset treasury companies similar to us. Market and financial conditions, and other conditions beyond our control, may make it more attractive to gain exposure to 0G through other vehicles, rather than our securities.

Our 0G holdings will be less liquid than our cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.

Historically, the cryptocurrency market has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our 0G at favorable prices or at all. As a result, our 0G holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.

Further, the 0G we hold with our custodians and transact with our trade execution partners does not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation.

Additionally, we may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered 0G or otherwise generate funds using our 0G holdings, including in particular during times of market instability or when the price of 0G has declined significantly. If we are unable to sell our 0G, enter into additional capital raising transactions, including capital raising transactions using 0G as collateral, or otherwise generate funds using our 0G holdings, or if we are forced to sell our 0G at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.

Many countries and regulatory authorities are studying the impact of AI and may implement regulations on AI that may be difficult or impossible for the 0G Blockchain to implement and comply with.

The 0G Blockchain is designed to enable and support AI modules utilizing decentralized AI infrastructure. If there is regulation adopted in the U.S. or globally to regulate AI and machine learning modules, the 0G Blockchain, as a decentralized blockchain and protocol, may be unable to comply with such regulations which may adversely affect the 0G Blockchain and the 0G Token or could require the 0G Blockchain to terminate or suspect certain features, services and tools. Further, as a decentralized network, it is possible that the 0G Blockchain continues to operate without complying with applicable regulations, which could materially affect our business and our financial condition could be negatively impacted.

Other Risk Factors

There are risks relating to the sale of our legacy hemp and cannabis business.

On September 20, 2025, we entered into the Equity Transfer and Debt Repayment Agreement to sell certain subsidiaries comprising our legacy hemp and cannabis business to our Noteholders, in exchange for the repayment of the notes held by such Noteholders. This disposition closed on September 26, 2025. While we have agreed to only limited indemnification and other obligations in connection with the disposition, there can be no assurance that we will not be subjected to indemnification claims or other liabilities in connection with the disposition.

Further, achieving the anticipated benefits of the disposition is subject to a number of uncertainties. There can be no assurance that we will realize the full benefits of strategic focus, cost savings and operating efficiencies that we currently expect from the transaction or that such benefits will be achieved within the anticipated time frames. Failure to achieve these anticipated benefits could result in increased costs and diversion of management's time and energy and could materially adversely affect our business, financial position, results of operations and cash flows.

The disposition may be subject to regulatory actions or private litigation that could expose us to costly and time-consuming proceedings. Failure to prevail in any such regulatory actions or private litigation could result in significant fines or monetary damages, which may require us to raise additional capital.

We may experience difficulties due to changes in management.

In connection with the Cryptocurrency Offering, on October 1, 2025, Mr. Clifford Starke resigned as a director and the Chief Executive Officer of the Company and Mr. Sammy Dorf resigned as the Executive Chairman of the Company. Further, on October 1, 2025, the Board appointed Mr. Daniel Reis-Faria and Michael Heinrich as non-independent directors of the Board, and in connection with their appointments to the Board, Mr. Reis-Faria, was also appointed as the Chief Executive Officer of the Company and Mr. Heinrich was also appointed as Executive Chairman effective October 1, 2025. Neither new executive officer has previously served as an executive officer of a publicly-traded company. In addition to devoting substantial time becoming integrated into our business and increasing their familiarity with our operations, each new executive officer may be required to devote substantial time fulfilling their public company compliance obligations. Such changes in our management could impair relationships with key business contacts, make it more difficult to retain employees or result in the loss of confidence in our investor base, any of which events could harm our performance. There can be no assurance that our reconstituted management will function effectively.

The Company may be a "passive foreign investment company" for its current tax year, which may have adverse U.S. federal income tax consequences for U.S. investors.

The Company believes that it was not a "passive foreign investment company" ("PFIC") within the meaning of Section 1297(a) of the United States Internal Revenue Code of 1986, as amended (the "Code") for its most recently completed tax year. The Company's anticipated PFIC status for its current tax year and future tax years is uncertain and may depend on, among other things, how quickly the Company may raise cash pursuant to its recent PIPE Private Offering, the manner in which, and how quickly, the Company utilizes its cash on hand and the cash proceeds received from the offering, the business conducted by the Company going forward and the assets held by the Company in connection with such business, as well as on changes in the market value of common shares. If the Company is a PFIC for any year during a U.S. taxpayer's holding period of common shares, then such U.S. taxpayer generally will be required to treat any gain realized upon a disposition of the common shares or any so-called "excess distribution" received on its common shares as ordinary income, and to pay an interest charge on a portion of such gain or distribution. In certain circumstances, the sum of the tax and the interest charge may exceed the total amount of proceeds realized on the disposition, or the amount of excess distribution received, by the U.S. taxpayer. Subject to certain limitations, these tax consequences may be mitigated if a U.S. taxpayer makes a timely and effective "QEF election" under Section 1295 of the Code ("QEF Election") or a "mark-to-market" election under Section 1296 of the Code ("Mark-to-Market Election"). U.S. taxpayers should be aware that there can be no assurances that the Company will satisfy the record keeping requirements that apply to a qualified electing fund (a "QEF"), or that the Company will supply U.S. taxpayers with information that such U.S. taxpayers are required to report under the QEF rules, in the event the Company is a PFIC. Thus, U.S. Holders may not be able to make a QEF Election with respect to the Company. A U.S. taxpayer who makes a Mark-to-Market Election generally must include as ordinary income each year the excess of the fair market value of the common shares over the taxpayer's adjusted tax basis therein. Each potential investor who is a U.S. taxpayer should consult its own tax advisor regarding the PFIC rules and the tax consequences of the ownership and disposition of the common shares acquired pursuant to this prospectus supplement.

We may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition and results of operations.

As 0G Tokens and other digital assets are relatively novel and the application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of 0G Tokens. The U.S. federal government, states, regulatory agencies and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of 0G Tokens or the ability of individuals or institutions such as us to own or transfer 0G Tokens.

If 0G Tokens are determined to constitute a security for purposes of the federal securities laws, the additional regulatory restrictions imposed by such a determination could adversely affect the market price of 0G Tokens and in turn adversely affect the market price of our common share. Moreover, the risks of us engaging in a 0G Tokens treasury strategy have created, and could continue to create complications due to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future.

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

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

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

On May 2, 2025, the Company entered ~~into~~the aMay ~~securities~~2025 ~~purchase~~Securities ~~agreement~~Purchase Agreement with ~~certain~~the ~~investors~~May ~~(the~~2025 "Investors") in connection with the issuance and sale by the Company to the May 2025 Investors via ~~a private placement pursuant to Rule506(b) of Regulation D under~~ the ~~Securities~~May ~~Act (the~~2025 "Private Placement") of an aggregate of 380,~~133,011~~340 May ~~common~~2025 ~~shares~~Common ofShares ~~the~~and ~~Company~~18,642 ~~no par value per share at a purchase price~~ of ~~$0.30 per share (~~the "May ~~Common~~2025 ~~Shares") and 726,992 pre~~Pre-~~funded~~Funded ~~warrants~~Warrants of the Company at a purchase price of $011.~~2999~~6961 per warrant ~~(the "Pre-funded Warrants")~~ each to purchase one common share, ~~which~~a ~~shall~~May be2025 Pre-Funded Warrant Share, which were immediately exercisable and expire when exercised in full, at an exercise price of $0.~~0001~~0039 per share. The Company filed a registration statement on Form S-3 on May 14, 2025 (File No. 333-287261), which was declared effective by the SEC on May 22, 2025, that registers the May Common Shares and common shares underlying Pre-Funded Warrants by the selling securityholders named therein. The net proceeds from the sale of the May Common Shares and Pre-funded Warrants were approximately $1.1 million after deducting estimated expenses relating to the Private Placement. The Company used $0.4 million of the net proceeds from the Private Placement to purchase Solana, $0.4 million to purchase Ethereum, $0.1 million to purchase Sui, $0.1 million to purchase Ripple, and the balance for general corporate and working capital purposes and to pay any fees and expenses in connection with the issuance of the May Common Shares and the Pre-funded Warrants.

42The net proceeds from the sale of the May 2025 Common Shares and the May 2025 Pre-funded Warrants were approximately $1.1 million after deducting estimated expenses relating to the May 2025 Private Placement. The Company used $0.4 million of the net proceeds from the May 2025 Private Placement to purchase the Owned Cryptocurrencies, including Solana, $0.4 million of the net proceeds from the May 2025 Private Placement to purchase Ethereum, $0.1 million of the net proceeds from the May 2025 Private Placement to purchase Sui, $0.1 million of the net proceeds from the May 2025 Private Placement to purchase Ripple, and the balance of the net proceeds from the May 2025 Private Placement for general corporate and working capital purposes and to pay any fees and expenses in connection with the issuance of the common shares and the May 2025 Pre-Funded Warrants.

The Company intends to use the net proceeds from the Cryptocurrency Offering to further the Company's new digital asset treasury strategy linked to 0G Tokens, and to explore and expand the use of the native AI functionality of the 0G Tokens to enhance the business of the Company. The balance of the net proceeds will be used for general corporate and working capital purposes.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

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

4350

Item 6. Exhibits

		Incorporated by Reference
Exhibit Number	Description	Form	Exhibit	Filing Date
3.1	Articles of Incorporation of Flora Growth Corp.	1-A	2.1	10/10/2019
3.2	Articles of Amendment of Flora Growth Corp. effective April 30, 2021	F-1	3.3	11/16/2021
3.3	Articles of Amendment of Flora Growth Corp. effective June 9, 2023	8-K	3.1	07/07/2023
3.4	Bylaw No. 1-A of Flora Growth Corp.	6-K	99.3	07/06/2022
3.5	Articles of Amendment of Flora Growth Corp. effective August 3, 2025	8-K	3.1	08/04/2025
3.6	Bylaw No. 1-A of Flora Growth Corp.	6-K	99.3	07/06/2022
4.1	Form of Unit Warrant	F-1	4.5	11/16/2021
4.2	Form of Investor Warrant	6-K	4.1	12/13/2022
4.2	Form of Placement Agent Warrant	6-K	4.2	12/13/2022
4.4	Form of Investor Warrant	8-K	4.1	09/21/2023
4.5	Form of Placement Agent Warrant	8-K	4.2	09/21/2023
4.6	Form of Warrant Amendment	8-K	10.3	09/21/2023
4.7	Form of ~~Promissory~~Pre-funded ~~Note~~Warrant ofdated ~~Flora~~as ~~Growth~~of ~~Corp.,~~September ~~dated January 30~~19, 2025	8-K	104.21	0209/0523/2025
4.8	Form of ~~Pre-funded~~Common Warrant dated ~~May~~as 2of September 19, 2025	8-K	4.12	0509/0223/2025
4.9	~~2022~~Form ~~Incentive~~of ~~Compensation~~Convertible ~~Plan~~Note dated as of September 19, 2025	8-K	4.13	0609/3023/2025
10.1	Form of Securities Purchase Agreement dated May 2, 2025	8-K	10.1	05/02/2025
4.10	Form of Convertible Note dated as of September 22, 2025	8-K	4.4	09/23/2025
10.2	Form of Unvested Stock Appreciation Rights Agreement, dated June 30, 2025	8-K	10.1	06/30/2025
10.3	Form of Vested Stock Appreciation Rights Agreement, dated June 30, 2025	8-K	10.2	06/30/2025
31.1*	Certification of Principal Executive Officer of Flora Growth Corp. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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10.1	Form of Securities Purchase Agreement, dated as of September 19, 2025, by and between the Company and the Cash Investors identified therein	8-K	10.1	09/23/2025
10.2	Form of Securities Purchase Agreement, dated as of September 19, 2025, by and between the Company and the Token Investors identified therein	8-K	10.2	09/23/2025
10.3	Form of Securities Purchase Agreement, dated as of September 19, 2025, by and between the Company and the Note Investor identified therein	8-K	10.3	09/23/2025
10.4	Form of Securities Purchase Agreement, dated as of September 22, 2025, by and between the Company and Zero Gravity Labs Inc.	8-K	10.4	09/23/2025
10.5	Equity Transfer and Debt Repayment Agreement, dated as of September 20, 2025	8-K	10.5	09/23/2025
10.6#	Employment Agreement, dated September 20, 2025, by and between Flora Growth Corp. and Daniel Reis-Faria	8-K	10.6	09/23/2025
10.7#	Employment Agreement, dated September 20, 2025, by and between Flora Growth Corp. and Dany Vaiman	8-K	10.7	09/23/2025
10.8#	Employment Agreement, dated September 20, 2025, by and between Flora Growth Corp. and Michael Heinrich	8-K	10.8	09/23/2025
10.9	Sales Agreement by and among Flora Growth Corp. and RevereSecurities LLC, dated September 23, 2025	8-K	1.1	09/23/2025
31.1*	Certification of Principal Executive Officer of Flora Growth Corp. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Principal Financial Officer of Flora Growth Corp. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Principal Executive Officer of Flora Growth Corp. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Principal Financial Officer of Flora Growth Corp. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Inline ~~XBRL Instance Document–the instance document does not appear in the~~ Interactive Data File ~~as its XBRL tags are embedded within the Inline XBRL document~~
101.INS	Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File

# Indicates management contract or compensatory plan or arrangement.

* Furnished herewith.

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SIGNATURES

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

Dated: August 1, 2025		Flora Growth Corp.
Dated: November 5, 2025		Flora Growth Corp.
	By:	/s/ ~~Clifford~~Daniel ~~Starke~~Reis-Faria
		Clifford Starke
		Daniel Reis-Faria
		Chief Executive Officer (Principal Executive Officer)
Dated: August 1, 2025
Dated: November 5, 2025
	By:	/s/ Dany Vaiman
		Dany Vaiman
		Chief Financial Officer (Principal Financial and Accounting Officer)

4653

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