ZeroStack Corp.
For the period ended Mar 31, 2025. Filed May 13, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 13, 2025
ZSTK$2.52-1.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0001062993-24-019023
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-13.
0001062993-25-009247
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 196 previous paragraphs and 154 current paragraphs.
90 unchanged; 34 reworded; 29 added; 65 removed; 7 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
Our brand portfolio consists of a mix of products across multiple categories, including food and beverage, nutraceuticals, cannabis accessories and technology, personal care, and wellness. Flora's consumer packaged goods brands allow Flora to move assertively into nascent markets, develop customer bases and distribution channels, and gather consumer insights that would not be possible with traditional cannabis sales alone. Through this channel we seek to build loyalty, credibility and enjoy healthy margins that help to support the rapid growth of our business.
Current report
House of Brands
Current report
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.
Current report
Commercial & Wholesale
Current report
Minimum Bid Price Requirement
Current report
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.
Current report
Revenue
Current report
Operating Expenses
Current report
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.
Current report
Income Tax
Current report
Insolvency of Certain Canadian and German Subsidiaries
Current report
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 $0.3 million in the three months ended March 31, 2025 and 2024, respectively.
Current report
Revenue
Current report
Revenue totaled $11.8 million and $18.0 million for the three months ended March 31, 2025 and 2024, respectively. The decrease was primarily driven by the following:
Current report
Phatebo contributed $6.9 million in the three months ended March 31, 2025 compared to $11.3 million in the three months ended March 31, 2024.
Current report
JustCBD contributed $3.5 million in the three months ended March 31, 2025 compared to $5.4 million in the three months ended March 31, 2024.
Current report
Vessel contributed $1.2 million in the three months ended March 31, 2025, compared to $1.3 million in the three months ended March 31, 2024.
Current report
These decreases were partially offset by the acquisitions of AV and United, which contributed $0.2 million and $0.1 million, respectively, in the three months ended March 31, 2025, compared to $nil in the three months ended March 31, 2024.
Current report
Operating Expenses
Current report
Operating expenses totaled $3.9 million and $6.3 million for the three months ended March 31, 2025 and March 31, 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.
Current report
Asset impairment totaled less than $0.1 million for the three months ended March 31, 2025 compared to $0.9 million for the three months ended March 31, 2024. The amount in 2025 represents impairment of an operating lease right of use asset in Florida. The amount in 2024 represents impairment of operating lease right of use assets and property, plant and equipment at Vessel.
Current report
Gain on Disposal of Insolvent Subsidiaries
Current report
Gain on disposal of insolvent subsidiaries totaled $1.2 million for the three months ended March 31, 2025 compared to $nil for the three months ended March 31, 2024. The gain was the result of certain subsidiaries of the Company filing for bankruptcy during the three months ended March 31, 2025. The Company deconsolidated these subsidiaries when it lost control upon each subsidiaries’ filing for bankruptcy.
Current report
Other (Income) Expenses
Current report
Non-operating (Income) Expenses
Current report
Income Tax
Current report
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 three months ended March 31, 2025 is presented in the table below:
Current report
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 three months ended March 31, 2024 is presented in the table below:
Current report
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 March 31, 2025, the total outstanding amount of these promissory notes was $2.2 million, $0.1 million of which is due within the next 12 months as of the date hereof. Of the total amount outstanding at March 31, 2025, $1.3 million was owed to the Related Parties. These promissory notes were secured by payments guarantees and a default interest rate of 11% upon default.
Removed paragraphs (65)
Previous report
JustCBD
Previous report
Vessel
Previous report
Phatebo
Previous report
TruHC
Previous report
Australian Vaporizers Pty Ltd ("AV")
Previous report
Colombian Related Subsidiaries
Previous report
On July 5, 2023, the Company entered into a share purchase agreement with Lisan, a Delaware limited liability company, to sell all its shares in certain of its Colombian subsidiaries and its Colombian assets for a purchase price of CAD $0.8 million (USD $0.6 million). The sale relates to Flora's operations in Colombia, including its interest in (i) its 361-acre Cosechemos farm located in Giron, Colombia and its related processing facilities and inventory and (ii) all other assets relating to Flora Lab 2, Flora Lab 4 and Flora's Colombian food and beverage and consumer products business (collectively "Colombia Assets"). The sale enables the Company to concentrate on its core business divisions, which are lifestyle brands in the United States and international pharmaceutical distribution. The sale was part of several strategic changes to cut costs and streamline operations. The Company received proceeds of CAD $0.5 million during the quarter ended September 30, 2023. The Company and Lisan completed the sale of Cosechemos Ya S.A.S on November 1, 2023.
Previous report
Audit Committee Requirement
Previous report
On December 6, 2023, the Company received a notification from Nasdaq, confirming that, due to having less than three independent audit committee members, the Company no longer complies with Nasdaq's audit committee requirements contained in Nasdaq Listing Rule 5605(c)(2)(A). As set forth in such notification, Nasdaq advised the Company that, under Nasdaq Rule 5605(c)(4), the Company was afforded a cure period in order to regain compliance (i) until the earlier of the Company's next annual shareholders' meeting or November 30, 2024, or (ii) if the next annual shareholders' meeting is held before May 28, 2024, then the Company must evidence compliance no later than May 28, 2024.
Previous report
On May 2, 2024, the Board appointed Mr. Brendan Cahill as a director and member of each of the Company's audit committee, compensation committee and nominating and corporate governance committee.
Previous report
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 regained compliance with the audit committee composition requirements of Nasdaq Listing Rule 5605(c)(2)(A).
Previous report
On August 26, 2024, Mr. Kevin Taylor resigned as director of the Company. After giving effect to Mr. Taylor's resignation, the audit committee no longer had three independent members as required by Nasdaq Listing Rule 5605(c)(2)(A). The Company informed Nasdaq of the foregoing on August 27, 2024.
Previous report
On August 29, 2024, the Board appointed Mr. Harold Wolkin as an independent director and member of each of the Company's audit committee, compensation committee and nominating and corporate governance committee.
Previous report
After giving effect to Mr. Wolkin'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 regained compliance with the audit committee composition requirements of Nasdaq Listing Rule 5605(c)(2)(A).
Previous report
Income (Loss) from Discontinued Operations
Previous report
Income (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 report
Revenue totaled $12.5 million and $17.3 million for the three months ended September 30, 2024 and 2023, respectively. The decrease was primarily driven by the following:
Previous report
JustCBD contributed $4.2 million in the three months ended September 30, 2024 compared to $6.5 million in the three months ended September 30, 2023. The decrease was driven by the Company's decision to discontinue several unprofitable product lines during 2023, increased competition and market saturation.
Previous report
Vessel contributed $1.1 million in the three months ended September 30, 2024, compared to $1.7 million in the three months ended September 30, 2023.
Previous report
FGH contributed $7.0 million in the three months ended September 30, 2024, compared to $9.1 million in the three months ended September 30, 2023.
Previous report
AV was acquired in June 2024 and contributed $0.2 million during the three months ended September 30, 2024.
Previous report
Operating expenses totaled $6.5 million and $5.5 million for the three months ended September 30, 2024 and September 30, 2023, respectively. The increase was primarily driven by increased stock based compensation and asset impairments recorded in the three months ended September 30, 2024.
Previous report
Operating lease expenses totaled $0.2 million for the three months ended September 30, 2024 compared to $0.3 million for three months ended September 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 report
Asset impairment totaled $0.4 million for the three months ended September 30, 2024 compared to $nil for the three months ended September 30, 2023. The amount for the three months ended September 30, 2024 represents impairment of the goodwill and brands at AV.
Previous report
Other Expenses
Previous report
Non-operating Loss (Income)
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Income from Discontinued Operations
Previous report
Income from discontinued operations totaled $nil in the three months ended September 30, 2024 compared to income from discontinued operations of $0.5 million in the three months ended September 30, 2023. The sale of the Colombian subsidiaries was completed during the third and fourth quarters of 2023.
Previous report
Net (Loss) Income
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For the Nine Months Ended September 30, 2024, and 2023
Previous report
Revenue totaled $46.2 million and $58.1 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease was primarily driven by the following:
Previous report
JustCBD contributed $14.0 million in the nine months ended September 30, 2024 compared to $25.3 million in the nine months ended September 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 report
Vessel contributed $3.6 million in the nine months ended September 30, 2024, compared to $5.0 million in the nine months ended September 30, 2023.
Previous report
This was partially offset by an increase at FGH, which contributed $28.2 million in the nine months ended September 30, 2024, compared to $27.8 million in the nine months ended September 30, 2023.
Previous report
AV was acquired in June 2024 and contributed $0.4 million during the nine months ended September 30, 2024.
Previous report
Gross Profit
Previous report
Gross profit totaled $9.9 million and $14.2 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease was primarily driven by the decreased sales at JustCBD, which contributed $6.0 million in the nine months ended September 30, 2024 compared to $10.4 million in the nine months ended September 30, 2023. In addition, $0.7 million of inventory impairment was recorded at JustCBD in the nine months ended September 30, 2024 related to inventory theft and recoveries of stolen inventory that is no longer saleable. Moreover, gross profit at Vessel decreased from $2.2 million in the nine months ended September 30, 2023 to $1.9 million in the nine months ended September 30, 2024. The remaining fluctuation is due to increased gross margins at FGH with $1.9 million in the nine months ended September 30, 2024 compared to $1.8 million in the nine months ended September 30, 2023. TruHC and AV were acquired in 2024 and contributed a total of $0.1 million during the nine months ended September 30, 2024. As a percentage of net sales, or gross margin, the Company reported 21% and 25% for the nine months ended September 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 report
Operating expenses totaled $19.6 million and $57.2 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. The decrease is seen across multiple expense categories and is due to management's cost-cutting initiatives implemented during the second half of 2023 as well as asset impairments recorded during the period ending September 30, 2023.
Previous report
Consulting and Management Fees
Previous report
Professional Fees
Showing the first 40 of 65 passages. Open the source sections for the rest.
Reworded paragraphs (34)
Previous wording
Amounts are expressed in United States dollars ("$" 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 September 30, 2024. Variance, ratio, and percentage changes in this section are based on unrounded numbers. This section reports the Company's activities through September 30, 2024, unless otherwise indicated.
Current wording
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 March 31, 2025. Variance, ratio, and percentage changes in this section are based on unrounded numbers. This section reports the Company's activities through March 31, 2025, 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. TruHC and Australian Vaporizers Pty Ltd were acquired in April 2024 and June 2024, respectively.
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 business strategy is built on two core pillars: House of Brands and Commercial & Wholesale. This strategy allows us to access to markets around the globe based on the legal standing of cannabis in the geographical locations in which we operate. Our approach to executing our strategy enables us to develop distribution networks, build customer bases, establish operations as regulatory frameworks evolve and allow for expanded access to cannabis and its derivatives.
Previous wording
JustCBD is Flora's leading consumer packaged goods brand. JustCBD was launched in 2017 with a mission to bring high-quality, trustworthy and budget-friendly CBD products to market. The JustCBD offering currently consists of over 350 products across 15 categories, including CBD gummies, topicals, tinctures, and vape products and ships to over 11,500 independent retailers worldwide. JustCBD also sells direct to consumers with a customer base of approximately 350,000 people. JustCBD products are available for purchase in smoke and vape shops, clinics, spas and pet stores, as well as other independent non-traditional retail channels. JustCBD's products are both internally and third-party lab-tested to ensure quality.
Current wording
JustCBD is Flora's leading consumer packaged goods brand. JustCBD was launched in 2017 with a mission to bring high-quality, trustworthy, and budget-friendly CBD products to market. JustCBD products are available for purchase in smoke and vape shops, clinics, spas and pet stores, as well as other independent non-traditional retail channels. JustCBD's products are both internally and third-party lab-tested to ensure quality.
Previous wording
Vessel is Flora's cannabis accessory and technology brand currently servicing the United States and Canada through direct-to-consumer and retail sales. Vessel's products include cannabis consumption accessories, personal storage and travel accessories for the vape and dry herb categories, which are sold to consumers, dispensaries, smoke shops and cannabis brands. Vessel has positioned itself as a lifestyle brand, developing products for consumers interested in "elevating" the consumption experience, focusing primarily on the direct-to-consumer business and have garnered a customer base of approximately 150,000 people. Since our acquisition of Vessel in November 2021, Vessel has been fully integrated into JustCBD and now benefits from operational, logistical and sales synergies with JustCBD.
Current wording
Vessel is Flora's cannabis accessory and technology brand currently servicing the United States and Canada through direct-to-consumer and retail sales. Vessel's products include cannabis consumption accessories, personal storage, and travel accessories for the vape and dry herb categories, which are sold to consumers, dispensaries, smoke shops and cannabis brands. Vessel has been fully integrated into JustCBD and now benefits from operational, logistical and sales synergies with JustCBD.
Previous wording
Based in Australia, AV was founded in 2010 and has become one of the largest online retailers of vaporizers, hardware, and accessories in Australia. It is an online expert for aromatherapy products, specializing in dry herb vaporizers. It has been providing vaporizers, accessories and knowledge to enthusiasts and newcomers alike through its website www.australianvaporizers.com. Due to new regulations by the Australian government, AV is in the process of modifying its business model to sell more products to pharmacies and wholesalers.
Current wording
Australian Vaporizers ("AV") was founded in 2010 and has become a prominent online retailer of vaporizers, hardware, and accessories in Australia. AV is one of the leading online authorities for aromatherapy products, specializing in dry herb vaporizers. It provides vapes, accessories and knowledge to enthusiasts and newcomers alike. Its website www.australianvaporizers.com.au is a popular destination in the country with a large database of satisfied customers.
Previous wording
Based 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 a variety of health indications, including drugs related to cancer therapies, multiple sclerosis and anti-depressants, among others. Phatebo holds aLicense for the Trade in Narcotic Drugs(including the cannabis sales license amendment) and aWholesale Trading License, both of which are issued by BfArM (the largest drug approval authority in Europe). Phatebo is focused on distributing pharmaceutical products within 28 countries globally, primarily in Europe, but also with sales to Asia, Latin America, and North America. In November 2018, Phatebo also received a medical cannabis import and distribution license. The Phatebo warehouse provides a logistics outpost for Flora's growing product portfolio and distribution network within the European Union.
Current wording
The Company's Commercial and Wholesale pillar encompasses the distribution of pharmaceutical products to international markets. This pillar is anchored by Flora's wholly owned subsidiary, Phatebo, a multi-national operator in pharmaceutical and medical cannabis distribution, with principal operations 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 a variety of health indications, including drugs related to cancer therapies, ADHD, multiple sclerosis and anti-depressants, among others. Phatebo holds a license for the Trade in Narcotic Drugs (including the cannabis sales license amendment) and a wholesale trading license, both of which are issued by BfArM (the largest drug approval authority in Europe). Phatebo is focused on distributing pharmaceutical products within 28 countries globally, primarily in Europe, but also with sales to Asia, Latin America, and North America. In November 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 warehouse provides a logistics outpost for Flora's growing product portfolio and distribution network within the European Union.
Previous wording
In April 2024, Flora acquired TruHC, an early-stage cannabis company based in Hamburg, Germany. TruHC holds a GDP wholesale and an EU-GMP processing and production license for medical cannabis. It also owns and operates an EU-GMP certified laboratory ready for instant cannabis analysis as required for the newly legalized cannabis social clubs. Moreover, the facility of TruHC is a flexible production space with EU-GMP certified modules that can be extended and customized for any production process from processing to extraction and enables a license extension for a future in country cultivation of medical cannabis and supply of cannabis dispensaries expected to be opened in 2025 during phase 3 of legalization in Germany. TruHC also holds a narcotic license with EU-GMP certified storage. These licenses allow TruHC to apply for new medical cannabis & cultivation licenses and become an official cannabis test lab for upcoming cannabis social clubs. It also enables extensive international import of seeds and flowers for future distribution in what is expected to become the largest federally legal recreational cannabis market in the world.
Current wording
During 2024, we acquired TruHC, an early-stage cannabis company based in Hamburg, Germany. TruHC holds a GDP wholesale, and an EU-GMP processing and production license for medical cannabis. It also owns and operates an EU-GMP certified laboratory ready for instant cannabis analysis as required for the newly legalized cannabis social clubs. The facility of TruHC is a flexible production space with EU-GMP certified modules that can be extended and customized for any production process from processing to extraction. TruHC also holds a narcotic license with EU-GMP certified storage.
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 and nine months ended September 30, 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 become cash flow positive. 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, 2025. For more information, see Item 1A "Risk Factors" in the Company's 2024 Annual Report.
Previous wording
*Integration of acquired companies.*Our growth has been fueled substantially by the acquisition of JustCBD, Vessel and FGH. Our continued ability to extract incremental synergies from a group of diversified entities is a key determinant of our ability to expand organically.
Current wording
*Integration of acquired companies.*Our growth has been fueled substantially by the acquisition 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.
Previous wording
The Company 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.
Current wording
The Company's operates its manufacturing and distribution business through its subsidiaries in the United States, Germany and Australia.
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 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 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 investments and liabilities.
Previous wording
The following tables provide sets forth the Company's consolidated results of operations for the three and nine months ended September 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 nine months ended September 30, 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 months ended March 31, 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 months ended March 31, 2025 and 2024 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 nine months ended September 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.
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 three months ended March 31, 2024.
Previous wording
Gross profit totaled $2.8 million and $4.9 million for the three months ended September 30, 2024 and 2023, respectively. The decrease was primarily driven by the decreased sales at JustCBD, which contributed $1.7 million in the three months ended September 30, 2024 compared to $3.4 million in the three months ended September 30, 2023, Vessel, which contributed $0.6 million in the three months ended September 30, 2024 compared to $1.0 million in the three months ended September 30, 2023, and FGH, which contributed $0.5 million in the three months ended September 30, 2024 compared to $0.5 million in the three months ended September 30, 2024. TruHC and AV were acquired in 2024 and contributed a total of less than $0.1 million during the three months ended September 30, 2024. As a percentage of net sales, or gross margin, the Company reported 23% and 29% for the three months ended September 30, 2024 and 2023, respectively. The decrease is primarily due to lower margins at JustCBD.
Current wording
Gross profit totaled $2.9 million and $3.9 million for the three months ended March 31, 2025 and 2024, respectively. The decrease was primarily driven by the decreased sales at JustCBD, which contributed $1.6 million in the three months ended March 31, 2025 compared to $2.7 million in the three months ended March 31, 2024. As a percentage of net sales, or gross margin, the Company reported 25% and 21% for the three months ended March 31, 2025 and 2024, respectively. The increase is primarily due to favorable mix, with decreased sales at Phatebo which distributes relatively lower margin pharmaceuticals.
Previous wording
Consulting and management fees were $7.1 million for the nine months ended September 30, 2024 compared to $9.7 million for the nine months ended September 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.
Current wording
Consulting and management fees were $1.9 million for the three months ended March 31, 2025 compared to $2.3 million for the three months ended March 31, 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.
Previous wording
Professional fees totaled $0.7 million for the three months ended September 30, 2024 compared to $0.4 million for the three months ended September 30, 2023. These expenses are associated with legal, accounting and audit services. The increase is due to increased legal and audit fees during the three months ended September 30, 2024.
Current wording
Professional fees totaled $0.6 million for the three months ended March 31, 2025 compared to less than $0.5 million for the three months ended March 31, 2024. These expenses are associated with legal, accounting and audit services.
Previous wording
General and administrative expenses totaled $0.4 million for the three months ended September 30, 2024 compared to $0.3 million for the three months ended September 30, 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 $0.5 million for the three months ended March 31, 2025 compared to $0.4 million for the three months ended March 31, 2024. The primary expenses included in both periods were filing services and shareholder communications, as well as professional dues and subscriptions.
Previous wording
Promotion and communication expenses totaled $3.4 million for the nine months ended September 30, 2024 compared to $3.7 million for the nine months ended September 30, 2023. The decrease is due to reduced sales. 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 $0.9 million for the three months ended March 31, 2025 compared to $1.1 million for the three months ended March 31, 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.
Previous wording
Share based compensation expenses totaled $0.4 million for the three months ended September 30, 2024 compared to less than $0.1 million for the three months ended September 30, 2023. These expenses represent the amortization of the fair value of share-based payments. The increase is primarily due to the granting of stock appreciation rights during the three months ended September 30, 2024.
Current wording
Share based compensation expenses totaled less than $0.2 million for the three months ended March 31, 2025 compared to less than $0.1 million for the three months ended March 31, 2024. These expenses represent the amortization of the fair value of share-based payments. The increase is due to the grant of stock appreciation rights to key employees during the year ended December 31, 2024.
Previous wording
Depreciation and amortization expenses totaled $0.2 million for the three months ended September 30, 2024 compared to $0.3 million for the three months ended September 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 2024.
Current wording
Depreciation and amortization expenses totaled $0.2 million for the three months ended March 31, 2025 compared to $0.1 million for the three months ended March 31, 2024. The increase is primarily due to the recent acquisitions of TruHC and United.
Previous wording
Bad debt expense totaled $0.3 million for the nine months ended September 30, 2024 compared to less than $0.1 million for the nine months ended September 30, 2023. The amounts reflect the Company's estimate of lifetime expected losses related to outstanding trade receivables.
Current wording
Bad debt expense totaled $0.1 million for the three months ended March 31, 2025 compared to less than $0.1 million for the three months ended March 31, 2024. The amounts reflect the Company's estimate of lifetime expected losses related to outstanding trade receivables.
Previous wording
Other expenses totaled $0.3 million for the three months ended September 30, 2024 compared to $0.6 million for the three months ended September 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 increased sublease income during the three months ended September 30, 2024.
Current wording
Other expense totaled $0.3 million for the three months ended March 31, 2025 compared to $0.7 million for the three months ended March 31, 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 March 31, 2025 was driven by reduced royalty fees.
Previous wording
Flora realized $0.3 million in non-operating loss for the three months ended September 30, 2024 compared to non-operating income of $1.1 million for the three months ended September 30, 2023. These amounts consist of unrealized (losses) gains from changes in fair value, interest (income) expense and foreign exchange loss (gain). The increase in loss is primarily due to a $0.3 million loss on the value of the contingent consideration related to the JustCBD acquisition during the three months ended September 30, 2024 compared to a $0.8 million gain during the three months ended September 30, 2023.
Current wording
Flora realized $0.3 million in non-operating income for the three months ended March 31, 2025 compared to non-operating expense of $0.8 million for the three months ended March 31, 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 $0.3 million gain on the value of the contingent consideration related to the JustCBD and Original Hemp acquisitions during the three months ended March 31, 2025 compared to a $0.6 million loss during the three months ended March 31, 2024.
Previous wording
The Company recognized $0.2 million and $0.1 million in income tax benefit for the three months ended September 30, 2024 and 2023, respectively. The Company's effective tax rate during the periods ended September 30, 2024 and 2023 was 4.0% and -8.8%, 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 September 30, 2024 and 2023. The income tax benefit in the three months ended September 30, 2024 is primarily related to the tax effect of the amortization on the intangible assets at TruHC and AV. The income tax benefit in the three months ended September 30, 2023 is primarily related to the tax effect of the amortization and impairment on the intangible assets at FGH.
Current wording
We recognized less than $0.1 million and $0.1 million in income tax expense for the three months ended March 31, 2025 and 2024, respectively. Our effective tax rate during the periods ended March 31, 2025 and 2024 was -5.3% and -3.9%, 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 March 31, 2025 and 2024.
Previous wording
Flora recorded a net loss of $3.8 million for the three months ended September 30, 2024 compared to a net income of $1.1 million for the three months ended September 30, 2023. This increase in net loss is driven by lower gross profit, increased operating expenses and non-operating losses, and the income reported from the disposed Colombia operations in 2023.
Current wording
Flora recorded a net loss of $0.8 million for the three months ended March 31, 2025 compared to a net loss of $3.4 million for the three months ended March 31, 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 $1.3 million.
Previous wording
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) from continuing operations, 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.
Current wording
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.
Previous wording
(2) Unrealized loss (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.
Current wording
(2) Unrealized (gain) loss from changes in fair value includes changes in the value of the Company's contingent consideration associated with its acquisition of JustCBD.
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 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 $4.2 million and $4.4 million as of September 30, 2024, and December 31, 2023, respectively. As of September 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.
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 consists primarily of cash on deposit with banks. Cash was $3.7 million and $6.1 million as of March 31, 2025, and December 31, 2024, respectively. As of March 31, 2025, 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 nine months ended September 30, 2024 was $3.7 million compared to net cash used in operating activities of $7.3 million for the nine months ended September 30, 2023. Cash flows used in operating activities for the periods ended September 30, 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 three months ended March 31, 2025 was $2.7 million compared to net cash used in operating activities of $1.3 million for the three months ended March 31, 2024. Cash flows used in operating activities for the periods ended March 31, 2025 and 2024 were due primarily to operating expenses exceeding the gross profit for the periods.
Previous wording
Net cash provided by financing activities for the nine months ended September 30, 2024 totaled $3.1 million compared to net cash provided in financing activities of $2.4 million for the nine months ended September 30, 2023. Cash flows provided from financing activities for the period ending 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. Cash flows provided in financing activities for the period ended September 30, 2023 were primarily due to the sales of equity securities in September 2023.
Current wording
Net cash provided by financing activities for the three months ended March 31, 2025 totaled $nil compared to $1.2 million for the three months ended March 31, 2024. During the three months ended March 31, 2025, net borrowings on the credit facilities in Germany through the Company's Phatebo subsidiary were $nil. 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.
Previous wording
Net cash provided by investing activities for the nine months ended September 30, 2024 totaled $0.2 million compared to net cash used in investing activities for the nine months ended September 30, 2023 of $0.3 million. Cash flows provided by investing activities for the period ended September 30, 2024 were primarily proceeds from the sale of property, plant and equipment. Cash flows used in investing activities for the period ended September 30, 2023 were primarily related to the purchases of property, plant and equipment, and intangible assets.
Current wording
Net cash provided by investing activities for the three months ended March 31, 2025 totaled $0.4 million compared to net cash used in investing activities during the three months ended March 31, 2024 of $0.1 million. Cash flows provided by investing activities for the period ended March 31, 2025 were primarily related to the acquisition of United. Cash flows used in investing activities for the period ended March 31, 2024 were primarily related to the purchases of property, plant and equipment.
Previous wording
As of September 30, 2024, we had working capital of $0.4 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 March 31, 2025, we had working capital of $0.6 million, including $3.7 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. On April 8, 2024, the Company closed a registered direct offering of 1,700,000 Common Shares 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, with an aggregate value of up to $3.8 million. On September 21, 2023, the Company closed a registered direct offering of 1,369,000 units of the Company at a price of $2.00 per unit for gross proceeds of $2.7 million. Each unit is comprised of one Common Share and one Common Share purchase warrant (1,369,000 total warrants) to purchase one additional Common Share at an exercise price of $2.50 per warrant share through March 21, 2029. There were no other equity offerings in the periods ended September 30, 2024 and September 30, 2023.
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. There were no equity offerings in the periods ended March 31, 2025 and March 31, 2024. On May 2, 2025, the Company closed a private placement offering of 3,133,011 units of the Company at a price of $0.30 per unit for gross proceeds of $1.2 million, of which the Company immediately invested $1.0 million in cryptocurrencies. 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.
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 4.1 million Euros with three different German banks and are secured by default guarantees. On September 30, 2024, the outstanding amount was 2.0 million Euros ($2.2 million USD) and was due within the next twelve months. The credit facilities have interest rates ranging from 4.95% to 5.59% 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 Phatebo subsidiary. The credit facilities total*€2.4 million with three different German banks and are secured by default guarantees. On March 31, 2025, the outstanding amount was€*2.0 million ($2.2 million USD) and was due within the next twelve months. The credit facilities have interest rates ranging from 5.15% to 5.19% per year and does not have a set maturity date. The interest rate is reset every time a new amount is drawn.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Operating lease expenses totaled $0.2 million for both the three months ended March 31, 2025 and March 31, 2024.
Rearranged previous paragraphs (7)
Previous report — wording carried elsewhere
Consulting and management fees were $2.5 million for the three months ended September 30, 2024 compared to $2.3 million for the three months ended September 30, 2023. These fees are related to employment and consulting contracts with most of the Company's management, as well as directors. The increase is primarily due to sales commissions paid at FGH during the three months ended September 30, 2024.
Previous report — wording carried elsewhere
Promotion and communication expenses totaled $1.2 million for the three months ended September 30, 2024 compared to $1.1 million for the three months ended September 30, 2023. 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 report — wording carried elsewhere
Bad debt expense totaled less than $0.1 million for both the three months ended September 30, 2024 and the three months ended September 30, 2023. The amounts reflect the Company's estimate of lifetime expected losses related to outstanding trade receivables.
Previous report — wording carried elsewhere
General and administrative expenses totaled $1.4 million for the nine months ended September 30, 2024 compared to $1.4 million for the nine months ended September 30, 2023. The primary expenses included in both periods were filing services and shareholder communications, as well as professional dues and subscriptions.
Previous report — wording carried elsewhere
Travel expenses totaled $0.3 million for both the nine months ended September 30, 2024 and the nine months ended September 30, 2023. These expenses were for various trips related to the subsidiaries and the Company's promotional activities.
Previous report — wording carried elsewhere
Research and development expenses totaled $0.2 million for the nine months ended September 30, 2024 compared to less than $0.1 million for the nine months ended September 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 report — wording carried elsewhere
The Company recognized $0.1 million benefit and $1.2 million in income tax benefit for the nine months ended September 30, 2024 and 2023, respectively. The Company's effective tax rate during the periods ended September 30, 2024 and 2023 was 0.7% and 3.1%, 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 September 30, 2024 and 2023. The income tax benefit in the nine months ended September 30, 2024 is primarily related to the tax effect of the amortization on the intangible assets at TruHC and AV. The income tax benefit in the nine months ended September 30, 2023 is primarily related to the tax effect of the amortization and impairment on the intangible assets at FGH.