Flora Growth Corp

Previous wording

Amounts are expressed in United States dollars ("$" or "USD") unless otherwise stated to be in Canadian dollars ("CAD"), Euro ("€" or "EUR"), or Colombia pesos ("COP"). Amounts stated in foreign currencies include approximate USD amounts based on exchange rates on March 31, 2024. Variance, ratio, and percentage changes in this section are based on unrounded numbers. This section reports the Company's activities through March 31, 2024, unless otherwise indicated.

Current wording

Amounts are expressed in United States dollars ("$" or "USD") unless otherwise stated to be in Canadian dollars ("CAD") or Euros ("€" or "EUR"). Amounts stated in foreign currencies include approximate USD amounts based on exchange rates on June 30, 2024. Variance, ratio, and percentage changes in this section are based on unrounded numbers. This section reports the Company's activities through June 30, 2024, unless otherwise indicated.

Previous wording

We are a multi-national cannabis company that manufactures and distributes consumer packaged goods and distributes medicinal cannabis and pharmaceutical products. Flora exists to create a world where the benefits of cannabis are accessible to everyone. Our primary businesses include JustCBD, Vessel and Phatebo.

Current wording

We are a multi-national cannabis company that manufactures and distributes consumer packaged goods and distributes medicinal cannabis and pharmaceutical products. Flora exists to create a world where the benefits of cannabis are accessible to everyone. Our primary businesses include JustCBD, Vessel and Phatebo. TruHC and Australian Vaporizers Pty Ltd were acquired in April 2024 and June 2024, respectively.

Previous wording

Consistent profitability and positive operating cash flows. A key determinant of the Company's success is to deliver profitable results and positive cashflows from operating activities. The Company's results have not yet achieved the prerequisite consistency to achieve self-sufficiency. Since its inception, only the third quarter of 2023 yielded net income and positive cashflows from operating activities. There is no assurance that the Company will be able to produce adequate levels of sustained profitability and cash flow positive, or at all. These factors, amongst others, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2 of the Company's unaudited condensed interim consolidated financial statements for the three months ended March 31, 2024. For more information, see Item 1A "Risk Factors" in the Company's 2023 Annual Report.

Current wording

Consistent profitability and positive operating cash flows. A key determinant of the Company's success is to deliver profitable results and positive cashflows from operating activities. The Company's results have not yet achieved the prerequisite consistency to achieve self-sufficiency. Since its inception, only the third quarter of 2023 yielded net income and positive cashflows from operating activities. There is no assurance that the Company will be able to produce adequate levels of sustained profitability and cash flow positive, or at all. These factors, amongst others, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2 of the Company's unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2024. For more information, see Item 1A "Risk Factors" in the Company’s 2023 Annual Report.

Previous wording

After giving effect to Mr. Cahill's appointment, the audit committee of the Board has three independent members asrequired by Nasdaq Listing Rule 5605(c)(2)(A). As a result of the foregoing, the Company has regained compliance withthe audit committee composition requirements of Nasdaq Listing Rule 5605(c)(2)(A).

Current wording

After giving effect to Mr. Cahill's appointment, the audit committee of the Board has three independent members as required by Nasdaq Listing Rule 5605(c)(2)(A). As a result of the foregoing, the Company has regained compliance with the audit committee composition requirements of Nasdaq Listing Rule 5605(c)(2)(A).

Previous wording

The Company's operates its manufacturing and distribution business through its subsidiaries in the United States and Germany. Until the sale of the Colombia Assets, the Company also was engaged in the growth, cultivation, and development of medicinal cannabis and medicinal cannabis derivative products in Colombia.

Current wording

The Company's operates its manufacturing and distribution business through its subsidiaries in the United States, Germany and Australia. Until the sale of the Colombia Assets, the Company also was engaged in the growth, cultivation, and development of medicinal cannabis and medicinal cannabis derivative products in Colombia.

Previous wording

Non-operating expenses include interest income and expenses, foreign exchange losses and unrealized losses 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 from changes in fair value pertain to fluctuations in the fair values of the Company's investments and liabilities.

Current wording

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

Previous wording

Loss from discontinued operations includes the net income (loss), net of tax, of the Colombian subsidiaries sold on July 5, 2023 and on November 1, 2023. It also includes an expected loss on the disposal as the carrying value of the assets being sold exceeded the expected sale price.

Current wording

Loss from discontinued operations includes the net loss, net of tax, of the Colombian subsidiaries sold on July 5, 2023 and on November 1, 2023. It also includes an expected loss on the disposal as the carrying value of the assets being sold exceeded the expected sale price.

Previous wording

The following tables provide sets forth the Company's consolidated results of operations for the three months ended March 31, 2024 and 2023 (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 months ended March 31, 2024 and 2023 included elsewhere in this Quarterly Report.

Current wording

The following tables provide sets forth the Company's consolidated results of operations for the three and six months ended June 30, 2024 and 2023 (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 months ended June 30, 2024 and 2023 included elsewhere in this Quarterly Report.

Previous wording

The Company estimates that the disruption from these stop sale orders had an unfavorable impact of $0.7 million on revenue during the three months ended March 31, 2024. The total value of inventory impacted by the stop sale orders was $1.9 million at March 31, 2024.

Current wording

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. The total value of inventory impacted by the stop sale orders was $1.9 million. As per the agreement with the Department, all of the impacted inventory has been moved and is being sold outside the state of Florida.

Previous wording

Consulting and management fees were $2.3 million for the three months ended March 31, 2024 compared to $3.7 million for the three months ended March 31, 2023. 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 a substantial reduction in the Company's corporate office headcount that resulted in $1.2 million lower expenses in the quarter.

Current wording

Consulting and management fees were $2.3 million for the three months ended June 30, 2024 compared to $3.7 million for the three months ended June 30, 2023. 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 substantial reduction in the Company's total headcount across all its business units.

Previous wording

Professional fees totaled $0.5 million for the three months ended March 31, 2024 compared to less than $0.1 million for the three months ended March 31, 2023. These expenses are associated with legal, accounting and audit services. In the three months ended March 31, 2023, the Company received credit notes from certain service providers.

Current wording

Professional fees totaled $1.1 million for the three months ended June 30, 2024 compared to $0.7 million for the three months ended June 30, 2023. These expenses are associated with legal, accounting and audit services. The increase is due to costs related to the acquisitions of TruHC and AV during the three months ended June 30, 2024, as well as credit memos received during the three months ended June 30, 2023.

Previous wording

Promotion and communication expenses totaled $1.1 million for the three months ended March 31, 2024 compared to $1.3 million for the three months ended March 31, 2023. 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.

Current wording

Promotion and communication expenses totaled $1.1 million for the three months ended June 30, 2024 compared to $1.3 million for the three months ended June 30, 2023. The decrease is due to reduced sales as well as cost-cutting initiatives by the Company aimed at reducing 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.

Previous wording

Share based compensation expenses totaled less than $0.1 million for the three months ended March 31, 2024 compared to $0.7 million for the three months ended March 31, 2023. These expenses represent the amortization of the fair value of share-based payments. The decrease is primarily due to the granting of fewer stock based compensation awards during 2023 than in 2022.

Current wording

Share based compensation expenses totaled less than $0.1 million for the three months ended June 30, 2024 compared to $0.3 million for the three months ended June 30, 2023. These expenses represent the amortization of the fair value of share-based payments. The decrease is primarily due to the granting of fewer stock-based compensation awards during 2023 as well as a substantial reduction in total headcount across all its business units.

Previous wording

Research and development expenses totaled less than $0.1 million for both the three months ended March 31, 2024 and the three months ended March 31, 2023. 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.

Current wording

Research and development expenses totaled $0.1 million for the three months ended June 30, 2024 compared to less than $0.1 million for the three months ended June 30, 2023. 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.

Previous wording

Operating lease expenses totaled $0.2 million for the three months ended March 31, 2024 compared to $0.3 million for three months ended March 31, 2023. The decrease is due to the impairment of the right-of-use operating lease assets during 2023.

Current wording

Operating lease expenses totaled $0.2 million for the three months ended June 30, 2024 compared to $0.3 million for three months ended June 30, 2023. The decrease is due to the impairment of the right-of-use operating lease assets during 2023, causing reduced operating lease expense in 2024.

Previous wording

Depreciation and amortization expenses totaled $0.1 million for the three months ended March 31, 2024 compared to $0.9 million for the three months ended March 31, 2023. The decrease is primarily due to the impairment recorded on the Company's long-lived assets during 2023.

Current wording

Depreciation and amortization expenses totaled $0.3 million for the three months ended June 30, 2024 compared to $0.9 million for the three months ended June 30, 2023. The decrease is primarily due to the impairment recorded on the Company's long-lived assets during 2023, causing reduced depreciation and amortization in 2024, partially offset by the acquisitions of TruHC and AV during the three months ended June 30, 2024.

Previous wording

Bad debt expense totaled less than $0.1 million for both the three months ended March 31, 2024 and the three months ended March 31, 2023. The amounts reflect the Company's estimate of lifetime expected losses related to outstanding trade receivables.

Current wording

Bad debt expense totaled $0.2 million for the three months ended June 30, 2024 compared to less than $0.1 million for the three months ended June 30, 2023. The amounts reflect the Company's estimate of lifetime expected losses related to outstanding trade receivables.

Previous wording

Other expenses totaled $0.7 million for the three months ended March 31, 2024 compared to $0.4 million for the three months ended March 31, 2023. For both periods, these expenses consist mainly of insurance, repairs and maintenance and royalties partially offset by miscellaneous incomes. The increase is due to higher royalty fees.

Current wording

Other expenses totaled $0.5 million for the three months ended June 30, 2024 compared to $1.1 million for the three months ended June 30, 2023. For both periods, these expenses consist mainly of insurance, repairs and maintenance and royalties partially offset by miscellaneous incomes. The decrease is due to lower royalty fees and increased sublease income during the three months ended June 30, 2024.

Previous wording

Flora realized $0.8 million in non-operating expenses for the three months ended March 31, 2024 compared to non-operating expense of $0.9 million for the three months ended March 31, 2023. These expenses consist of unrealized losses from changes in fair value, interest (income) expense and foreign exchange loss (gain). The decrease in expense is primarily due to a $0.6 million loss on the value of the contingent consideration related to the JustCBD acquisition during the three months ended March 31, 2024 compared to a $0.8 million loss during the three months ended March 31, 2023.

Current wording

Flora realized $0.8 million in non-operating income for the three months ended June 30, 2024 compared to non-operating income of $2.0 million for the three months ended June 30, 2023. These incomes consist of unrealized gains from changes in fair value, interest (income) expense and foreign exchange loss (gain). The decrease in income is primarily due to a $0.8 million gain on the value of the contingent consideration related to the JustCBD acquisition during the three months ended June 30, 2024 compared to a $2.0 million gain during the three months ended June 30, 2023.

Previous wording

We recognized $0.1 million expense and $0.1 million in income tax benefit for the three months ended March 31, 2024 and 2023, respectively. Our effective tax rate during the periods ended March 31, 2024 and 2023 was -3.9% and 2.4%, 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 March 31, 2024 and 2023. The income tax benefit in the three months ended March 31, 2023 is primarily related to the tax effect of the amortization on the intangible assets at FGH.

Current wording

The Company recognized less than $0.1 million and $1.1 million in income tax benefit for the three months ended June 30, 2024 and 2023, respectively. The Company's effective tax rate during the periods ended June 30, 2024 and 2023 was 1.3% and 2.9%, 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 30, 2024 and 2023. The income tax benefit in the three months ended June 30, 2023 is primarily related to the tax effect of the amortization and impairment on the intangible assets at FGH.

Previous wording

Loss from discontinued operations totaled $nil in the three months ended March 31, 2024 compared to loss from discontinued operations of $0.7 million in the three months ended March 31, 2023. The sale of the Colombian entities was completed during the third and fourth quarters of 2023.

Current wording

Loss from discontinued operations totaled $nil in the three months ended June 30, 2024 compared to loss from discontinued operations of $7.6 million in the three months ended June 30, 2023. The sale of the Colombian subsidiaries was completed during the third and fourth quarters of 2023.

Previous wording

Flora recorded a net loss of $3.4 million for the three months ended March 31, 2024 compared to a net loss of $3.9 million for the three months ended March 31, 2023. This decrease in net loss is driven by lower operating expenses of $1.4 million and the $0.7 million loss from the disposed Colombia operations in 2023 partially offset by lower gross profit of $1.5 million.

Current wording

Flora recorded a net loss of $2.7 million for the three months ended June 30, 2024 compared to a net loss of $44.6 million for the three months ended June 30, 2023. This decrease in net loss is driven by lower operating expenses and the loss from the disposed Colombia operations in 2023 partially offset by lower gross profit, non-operating income and income tax benefit.

Previous wording

JustCBD contributed $5.4 million in the three months ended March 31, 2024 compared to $9.8 million in the three months ended March 31, 2023. The decrease was driven by the Company's decision to discontinue several unprofitable product lines during 2023, as well as the stop sales orders discussed above.

Current wording

JustCBD contributed $9.8 million in the six months ended June 30, 2024 compared to $18.8 million in the six months ended June 30, 2023. The decrease was driven by the Company's decision to discontinue several unprofitable product lines during 2023, increased competition and market saturation, as well as the stop sales orders discussed above.

Previous wording

This was partially offset by an increase at FGH, which contributed $11.3 million in the three months ended March 31, 2024, compared to $8.0 million in the three months ended March 31, 2023.

Current wording

This was partially offset by an increase at FGH, which contributed $21.0 million in the six months ended June 30, 2024, compared to $18.7 million in the six months ended June 30, 2023.

Previous wording

Gross profit totaled $3.9 million and $5.3 million for the three months ended March 31, 2024 and 2023, respectively. The decrease was primarily driven by the decreased sales at JustCBD, which contributed $2.7 million in the three months ended March 31, 2024 compared to $4.0 million in the three months ended March 31, 2023. The remaining fluctuation is due to decreased gross margins at Vessel with $0.5 million in the three months ended March 31, 2024 compared to $0.7 million in the three months ended March 31, 2023. As a percentage of net sales, or gross margin, the Company reported 21% and 28% for the three months ended March 31, 2024 and 2024, respectively. The decrease is primarily due to unfavorable mix, with increased Sales at FGH which distributes relatively lower margin pharmaceuticals.

Current wording

Gross profit totaled $7.0 million and $9.3 million for the six months ended June 30, 2024 and 2023, respectively. The decrease was primarily driven by the decreased sales at JustCBD, which contributed $4.2 million in the six months ended June 30, 2024 compared to $7.0 million in the six months ended June 30, 2023. In addition, $0.7 million of inventory impairment was recorded at JustCBD in the six months ended June 30, 2024 related to inventory theft and recoveries of stolen inventory that is no longer saleable. The remaining fluctuation is due to increased gross margins at FGH with $1.4 million in the six months ended June 30, 2024 compared to $1.3 million in the six months ended June 30, 2023. AV was acquired in June 2024 and contributed $0.1 million during the six months ended June 30, 2024. As a percentage of net sales, or gross margin, the Company reported 21% and 23% for the six months ended June 30, 2024 and 2024, respectively. The decrease is primarily due to unfavorable mix, with increased sales at FGH which distributes relatively lower margin pharmaceuticals.

Previous wording

Operating expenses totaled $6.3 million and $7.7 million for the three months ended March 31, 2024 and March 31, 2023, respectively. The decrease is seen across multiple expense categories and is due to management’s cost-cutting initiatives implemented during the second half of 2023.

Current wording

Operating expenses totaled $13.0 million and $51.7 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The decrease is seen across multiple expense categories and is due to management's cost-cutting initiatives implemented during the second half of 2023 as well as asset impairments recorded during the period ending June 30, 2023.

Previous wording

General and administrative expenses totaled $0.4 million for both the three months ended March 31, 2024 and the three months ended March 31, 2023. The primary expenses included in both periods were filing services and shareholder communications, as well as professional dues and subscriptions.

Current wording

General and administrative expenses totaled $1.0 million for both the six months ended June 30, 2024 and the six months ended June 30, 2023. The primary expenses included in both periods were filing services and shareholder communications, as well as professional dues and subscriptions.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

(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 and Original Hemp.

Previous wording

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. 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. We expect to continue to incur operating losses and negative cash flows in the foreseeable future. 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 $4.2 million and $4.4 million as of March 31, 2024, and December 31, 2023, respectively. As of March 31, 2024, the Company's current working capital, anticipated operating expenses and net losses, and the uncertainties surrounding its ability to raise additional capital as needed, raise substantial doubt as to whether existing cash and cash equivalents will be sufficient to meet its obligations as they come due within twelve months from the date the unaudited condensed interim consolidated financial statements were issued. The unaudited condensed interim consolidated financial statements do not include any adjustments for the recovery and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Current wording

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. 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. We expect to continue to incur operating losses and negative cash flows in the foreseeable future. Our current principal sources of liquidity are cash and cash equivalents provided by our operations and prior equity offerings. Cash and cash equivalents consist primarily of cash on deposit with banks. Cash and cash equivalents were $6.1 million and $4.4 million as of June 30, 2024, and December 31, 2023, respectively. As of June 30, 2024, the Company's current working capital, anticipated operating expenses and net losses, and the uncertainties surrounding its ability to raise additional capital as needed, raise substantial doubt as to whether existing cash and cash equivalents will be sufficient to meet its obligations as they come due within twelve months from the date the unaudited condensed interim consolidated financial statements were issued. The unaudited condensed interim consolidated financial statements do not include any adjustments for the recovery and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Previous wording

Net cash used in operating activities in the three months ended March 31, 2024 was $1.3 million compared to net cash used in operating activities of $4.3 million for the three months ended March 31, 2023. Cash flows used in operating activities for the periods ended March 31, 2024 and 2023 were due primarily to operating expenses exceeding the gross profit for the periods.

Current wording

Net cash used in operating activities in the six months ended June 30, 2024 was $1.6 million compared to net cash used in operating activities of $7.8 million for the six months ended June 30, 2023. Cash flows used in operating activities for the periods ended June 30, 2024 and 2023 were due primarily to operating expenses exceeding the gross profit for the periods.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2024 totaled $1.2 million compared to net cash used in financing activities of less than $0.1 million for the three months ended March 31, 2023. Cash flows provided from financing activities for the period ending March 31, 2024 were due to net borrowings on the credit facilities in Germany through the Company's Phatebo subsidiary. Cash flows used in financing activities for the period ended March 31, 2023 were related to loan repayments through the Company's JustCBD subsidiary.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2024 totaled $3.4 million compared to net cash provided in financing activities of $0.1 million for the six months ended June 30, 2023. Cash flows provided from financing activities for the period ending June 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. Cash flows provided in financing activities for the period ended June 30, 2023 were related to loan borrowings.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2024 and 2023 totaled $0.1 million for both periods. Cash flows used in investing activities for the period ended March 31, 2024 were primarily related to the purchases of property, plant and equipment. Cash flows used in investing activities for the period ended March 31, 2023 were primarily related to the purchases of property, plant and equipment, and intangible assets.

Current wording

Net cash used in investing activities for the six months ended June 30, 2024 totaled less than $0.1 million compared to net cash used in investing activities for the six months ended June 30, 2023 of $0.2 million. Cash flows used in investing activities for the period ended June 30, 2024 were primarily related to the purchases of property, plant and equipment. Cash flows used in investing activities for the period ended June 30, 2023 were primarily related to the purchases of property, plant and equipment, and intangible assets.

Previous wording

As of March 31, 2024, we had working capital of $2.4 million, including $4.2 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.

Current wording

As of June 30, 2024, we had working capital of $3.0 million, including $6.1 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.

Previous wording

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. There were no equity offerings in the periods ended March 31, 2024 and March 31, 2023. 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 $2.8 million. On April 26, 2024, the Company entered into an At-The-Market Issuance 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, common shares with an aggregate value of up to $3.8 million.

Current wording

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 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 net proceeds of $2.8 million. On April 26, 2024, the Company entered into an At-The-Market Issuance 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, common shares with an aggregate value of up to $3.8 million. There were no other equity offerings in the periods ended June 30, 2024 and June 30, 2023.

Previous wording

In addition to the equity offerings described above, the Company also has access to credit facilities through its FGH subsidiary. The credit facilities total 4.3 million Euros with three different German banks and are secured by either joint and several guarantees or default guarantees. On March 31, 2024, the outstanding amount was 2.9 million Euros ($3.1 million USD) and was due within the next twelve months. The credit facilities have interest rates ranging from 5.45% to 6.44% per year and does not have a set maturity date. The interest rate is reset every time a new amount is drawn.

Current wording

In addition to the equity offerings described above, the Company also has access to credit facilities through its FGH subsidiary. The credit facilities total 4.1 million Euros with three different German banks and are secured by default guarantees. On June 30, 2024, the outstanding amount was 2.3 million Euros ($2.4 million USD) and was due within the next twelve months. The credit facilities have interest rates ranging from 5.45% to 6.33% per year and does not have a set maturity date. The interest rate is reset every time a new amount is drawn.