Fort Lauderdale, Florida--(Newsfile Corp. - August 12, 2024) - Flora Growth Corp. (NASDAQ: FLGC) (FSE: 7301) ("Flora" or the "Company") reported today its financial and operating results for the three and six months ended June 30, 2024.

"In the second quarter of 2024, we at Flora, demonstrated an aptitude to make accretive acquisitions and form strategic partnerships to capitalize on the most robust market trends. In Germany, we acquired TruHC Pharma GmbH in response to the de-scheduling of cannabis, the reforms surrounding cultivation for personal use, the establishment of cannabis social clubs, and the removal of cannabis from the list of prohibited substances in the Narcotics Act. In the United States, we entered a joint venture with Althea Group Holdings to capitalize on the rapid growth in the beverages market. In Australia, we acquired Australian Vaporizers to expand our e-commerce foothold and Vessel's reach," said Clifford Starke, Chief Executive Officer.

“Our operating expenses and cash flows used in operating activities have decreased notably across the board compared to the prior period. We ended the quarter with cash of $6.1 million and set the stage for a wide array of financing alternatives to further fuel our business plan,” added Mr. Starke.

"Finally, we commend the U.S. for moving to reschedule cannabis U.S. federal law. We believe it is the beginning of a wave of favorable legislative reforms with both major party presidential candidates expressing support," concluded Mr. Starke.

TruHC Acquisition

Flora acquired TruHC in an all-share deal valued at $6.4 million based on the closing price of Flora on March 28, 2024, of $2.31 per share. The first closing occurred on April 22, 2024, in which 2,135,199 Flora shares were issued in exchange for 77% of TruHC. The second closing involving the issuance of 635,363 Flora shares for the remaining 23% of TruHC will occur upon shareholder approval. TruHC is expected to contribute the following to Flora:

• A GDP wholesale license 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 new 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 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. TruHC also holds a narcotic license with EU-GMP certified storage.
• TruHC's licenses allow TruHC to apply for new medical cannabis and cultivation licenses and become an official cannabis test lab for upcoming cannabis social clubs. It also enables international import of seeds and flowers for future distribution.

Australian Vaporizers Acquisition

Flora acquired Australian Vaporizers in an all-share deal valued at $0.7 million based on the closing price of Flora's common shares on June 3, 2024. The transaction closed on June 4, 2024.

• Australian Vaporizers 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 vapes, accessories and knowledge to enthusiasts and newcomers alike through its website www.australianvaporizers.com.au.
• Australian Vaporizers sold over 92,000 units to over 30,000 active customers through business to business and direct to consumer channels. Australian Vaporizers has the potential to drive synergies with Flora's existing portfolio of brands, including selling Vessel Brand products in Australia, which is Flora's fastest growing segment.

Joint Venture with Althea Group Holdings

Flora and Althea Group Holdings ("Althea") established Peak USA JV LLC ("Peak USA") - a 50/50 joint venture aiming to capitalize on the beverages market in the United States.

• Peak USA will link Flora's U.S. - based CPG team with Althea's Peak Processing Solutions ("Peak"), which is a recognized market leader in cannabis-infused beverages. Peak has a 40% market share in Canada.
• Peak USA will combine Flora's brand-launching expertise with Althea's processing experience to produce the next generation of beverages for the U.S. market. Peak contributes production know-how, including its world-class emulsion technology, while Flora brings a wealth of brand launching, sales and marketing expertise within the dynamic landscape of lifestyle brands in the U.S.
• The partnership is strategically positioned to establish cannabis beverage distribution in the U.S. by adeptly handling regulations and facilitating market access via CPG channels like wine and liquor stores.
• According to Headset Data, the beverage market segment currently represents only 1% to 3% of the U.S. cannabis market. First-time daily cannabis use overtook alcohol, with roughly 17.7 million users compared to 14.7 million for alcohol.

Financing Activities

• The Company filed the required forms to initiative a Regulation A Offering at a maximum capacity of $75.0 million with Aegis Capital Corp. ("Aegis") being the sole bookrunner on the Offering.
• The Company entered an At-The-Market ("ATM") Issuances Sales Agreement with Aegis with aggregate offering price of up to $3.8 million. The Company has not yet sold any shares as part of the ATM.
• Flora closed an underwritten offering of 1.7 million common shares for aggregate gross proceeds of approximately $3.23 million, prior to deducting underwriting discounts and other offering expenses. The Company's Chief Executive Officer, Clifford Starke, purchased shares in this offering.

Regulatory Developments

In April 2024, Germany embarked on a historic cannabis legalization.

• Adults over the age of 18 in Germany are allowed to possess up to 50 grams of cannabis for private consumption and grow up to three plants. Adults are allowed to join nonprofit social clubs with a maximum of 500 members. Individuals are allowed to buy up to 25 grams per day, or a maximum of 50 grams per month.
• With the largest population and the greatest purchasing power in Europe, Germany boasts Europe's fastest growing cannabis market. With the following 2 phases of German legalization expected in the coming 12-18 months, Germany is expected to become the largest federally legal adult use cannabis country.
• With approximately 230,000 medical cannabis patients, Germany continues to lead the way in European medical cannabis as well. Following Germany are Italy, the Netherlands, Poland, Denmark and the Czech Republic, with the total number of cannabis patients in Europe is estimated to be 500,000 in 2023, and growth of around 500% is expected over the next five years.

In May 2024, the U.S. announced that his administration was moving to reschedule cannabis under U.S. federal law.

• The Justice Department is expected to post its proposed rule to reclassify cannabis from Schedule I to Schedule III under the Controlled Substances Act in the Federal Register.
• A 60-day public comment period is expected before the rule is potentially finalized. The White House announcement came shortly after reports emerged that the Drug Enforcement Administration was about to reclassify cannabis as a Schedule III drug.

New Product Launches and Partnerships

• Vessel unveiled the second-generation Compass Rise - the next evolution in functionality and elegance. Built for the discerning connoisseur, Compass Rise embodies sophistication while delivering what consumers have come to expect from Vessel's products. From its sleek design, cutting-edge technology, and the ability to stay upright, every aspect of Compass Rise reflects Vessel's dedication to meeting changing market trends. Compass Rise features a nearly indestructible metal frame, enhanced heat settings, and first-in-class ergonomics. Compass Rise is now available for purchase on the Vessel Brand website, through Multi-State Operators ("MSOs") and select retailers nationwide.
• JustCBD introduced new products to its line of offerings - JustCBD+ Calm Gaba & L-Theanine Mixed Berry Gummies and JustCBD+ Sleep Magnesium and Melatonin Raspberry Gummies. These innovative gummies are designed to support stress management and promote relaxation, as well as enhance sleep quality. The JustCBD+ Calm Gaba & L-Theanine Mixed Berry Gummies are formulated with an optimal blend of Gaba and L-Theanine, renowned for their calming properties. These ingredients are combined to assist users in managing stress and attaining a state of relaxation. The mixed berry flavor enhances the experience, making stress relief both effective and amiable. Melatonin gummies are one of the Company's best sellers.
• The Company entered partnerships for the distribution of Vessel Brands in the United Kingdom, and in Israel with Althea Group Holdings Limited and IM Cannabis Corp., respectively.
• Flora entered an exclusive distribution agreement with Me Raw Trade Ltd. to distribute both JustCBD and Vessel branded products in Poland.

Frankfurt Stock Exchange Listing

The Company's common shares now trade on the Frankfurt Stock Exchange ("FSE") under the symbol "7301".

• The FSE is one of the world's largest (behind only the Nasdaq and NYSE) organized exchange-trading market in terms of turnover and dealings with securities. The electronic trading platform of the FSE, XETRA, has made it the world's second largest fully electronic cash market with direct linkage to all other major European financial hubs.
• This listing will help increase the Company's trading liquidity and facilitate investment in Flora by European investors through the FSE listing as major financial hubs can be reached more easily.

U.S. Hemp Beverage Alliance

The Company has joined the U.S. Hemp Beverage Alliance.

• Beverages represent only a marginal component of the industry with tremendous potential for growth. According to Whitney Economics, the total demand for hemp-derived cannabinoids in the U.S. is valued at more than $28 billion with the total economic impact of the industry on the U.S. economy being more than $79 billion.
• Data Bridge Market Research estimates that the U.S. infused beverages market is expected to reach half a billion by 2030, with a CAGR of 14.7% during the forecast period.

Financial Highlights - Three Months Ended June 30, 2024

During the three months ended June 30, 2024, the Company reported:

• Net loss of $2.7 million compared to a net loss of $44.6 million in the comparable quarter, an improvement of 94% quarter-over-quarter.
• Cash used in operating activities of $0.3 million compared to cash used in operating activities of $3.5 million in the comparable quarter, an improvement of 91% quarter-over-quarter.
• Total operating expenses of $6.7 million, compared to $44.0 million in the comparable quarter.
• Adjusted EBITDA loss of $2.8 million compared to an Adjusted EBITDA loss of $3.9 million in the comparable quarter.

JustCBD Highlights

• Loss from continuing operations of $1.4 million and Adjusted EBITDA loss of $1.3 million in the quarter.
• Maintained a gross profit margin of 34% on sales of $4.4 million. Just International contributed $0.2 million to sales across 11 countries.
• The top selling products in the quarter included the Bear, Nighttime Bear and Peach Gummies.
• Approximately 41% of revenues stemmed from our direct-to-consumer model, while approximately 59% was generated through business-to-business sales.
• Over 120 new wholesale customers were added to our network in the quarter.

Vessel Highlights

• Loss from continuing operations of $0.2 million and Adjusted EBITDA loss of $0.2 million in the quarter.
• Maintained a gross profit margin of 53% on sales of $1.4 million.
• Core products represented 35% of sales and Compass products contributed 41% to sales; the largest individual item sold was Wood Slate/Walnut, adding 11% to sales.
• Approximately 59% of revenues stemmed from our direct-to-consumer model, while approximately 41% was generated through business-to-business sales.
• Finalized new product developments in the vaporizer and dry herb categories set to launch in the coming quarters.
• Over 60 new wholesale customers were added to our network in the quarter, including several Multi-State Operators.

Phatebo Highlights

• Income from continuing operations of $0.2 million and Adjusted EBITDA of $0.3 million in the quarter.
• Earned $9.6 million in revenue with gross margins of 8.4%.
• Branded pharmaceuticals were the largest contributors to sales, including medications from Merck, Vertex, Novartis, MSD, Novo Nordisk, AstraZeneca, Janssen, and Gilead Sciences.
• All sales were business-to-business sales.

Financial Highlights - Six Months Ended June 30, 2024

During the six months ended June 30, 2024, the Company reported:

• Net loss of $6.0 million compared to a net loss of $48.5 million in the comparable period, an improvement of 88% period over period.
• Cash used in operating activities of $1.6 million compared to cash used in operating activities of $7.8 million in the comparable period, an improvement of 79% period-over-period.
• Total operating expenses of $13.0 million, compared to $51.7 million in the comparable period.
• Adjusted EBITDA loss of $4.3 million compared to an Adjusted EBITDA loss of $4.7 million in the comparable period.

JustCBD Highlights

• Loss from continuing operations of $1.3 million and Adjusted EBITDA loss of $1.2 million in the period.
• Maintained a gross profit margin of 43% on sales of $9.8 million. Just International contributed $0.4 million to sales across 11 countries.
• The top selling products in the quarter included the Nighttime Bear, Bear, Peach and CBD+ Calming Gummies.
• Approximately 37% of revenues stemmed from our direct-to-consumer model, while approximately 63% was generated through business-to-business sales.
• Over 260 new wholesale customers were added to our network in the period.

Vessel Highlights

• Loss from continuing operations of $1.3 million and Adjusted EBITDA loss of $0.4 million in the period.
• Maintained a gross profit margin of 46% on sales of $2.7 million.
• Compass products represented 36% of sales and Core products contributed 31% to sales; the largest individual item sold was Core Black, adding 8% to sales.
• Approximately 56% of revenues stemmed from our direct-to-consumer model, while approximately 44% was generated through business-to-business sales.
• Finalized new product developments in the vaporizer and dry herb categories set to launch in the coming quarters.
• Over 95 new wholesale customers were added to our network in the period, including several Multi-State Operators.

Phatebo Highlights

• Close to breakeven on income from continuing operations and Adjusted EBITDA of $0.4 million in the period.
• Earned $18.8 million in revenue with gross margins of 6.8%.
• All sales were business-to-business sales.

EBITDA and Adjusted EBITDA are non-U.S. GAAP measures. A reconciliation of U.S. GAAP to non-U.S. GAAP financial measures has been provided in the section titled "About Non-GAAP Financial Measures". Important disclosures regarding the use of non-U.S. GAAP supplemental financial measures are also included below.

Board Appointment

• The Company appointed Brendan Cahill as an independent director and member of each of the Company's audit committee, compensation committee and nominating and corporate governance committee, effective May 2, 2024.
• Mr. Cahill was President and Chief Executive Officer of Excellon Resources Inc. from 2012 to 2022. Previously, he was Vice President Corporate Development and Corporate Secretary of the Pelangio group of companies. He is currently a Director of the Group Elevan Resourecs Corp. and former director of KORE Mining Ltd. And Cryptostar Corp. He is a member of the Transplant Cabinet at the University Health Network and a member of the Law Society of Ontario.

Conference Call

A conference call hosted by senior management will be held on Tuesday, August 13, 2024, at 9:00 AM EST. Please join the conference call approximately ten minutes prior to the scheduled start time.

Please pre-register by conference call: https://dpregister.com/sreg/10191119/fd2218a3d7

Upon registering, you will be emailed a dial-in number and PIN. This process will bypass the operator and avoid the queue.

About Non-U.S. GAAP Measures

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.

Management believes that this non-U.S. GAAP financial information is useful as a supplement to comparable U.S. GAAP financial information. Management reviews these non-U.S. GAAP financial measures on a regular basis and uses them, together with financial measures included in the Company's financial statements, to evaluate and manage the performance of the Company's operations. These measures should be evaluated in conjunction with the comparable U.S. GAAP financial numbers reported by the Company.

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

The reconciliation of the Company's Adjusted EBITDA, a non-U.S. GAAP financial measure, to net (loss) income from continuing operations, the most directly comparable U.S. GAAP financial measure, for the six months ended June 30, 2023 is presented in the table below:

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

The reconciliation of the Company's Adjusted EBITDA, a non-U.S. GAAP financial measure, to net income (loss) from continuing operations, the most directly comparable U.S. GAAP financial measure, for the three months ended June 30, 2023 is presented in the table below:

About Flora Growth Corp.

Flora Growth Corp. is a consumer-packaged goods leader and pharmaceutical distributor serving all 50 states and 28 countries with 20,000+ points of distribution around the world. For more information on Flora, visit www.floragrowth.com.

https://justcbdstore.com/

https://www.vesselbrand.com/

https://justcbdstore.uk/

https://www.phatebo.de/home-en

https://www.australianvaporizers.com.au/

Cautionary Statement Concerning Forward-Looking Statements

This press release contains "forward-looking statements," as defined by U.S. federal securities laws. Forward-looking statements reflect Flora's current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words "believe," "expect," "anticipate," "will," "could," "would," "should," "may," "plan," "estimate," "intend," "predict," "potential," "continue," and the negatives of these words and other similar expressions generally identify forward-looking statements. These forward-looking statements include, but are not limited to, statements about: legislative developments in the United States and Germany and the potential impacts thereof, the efficacy and impact of the TruHC acquisition, the efficacy and impact of the Australian Vaporizers acquisition, the efficacy and impact of the joint venture with Althea Group Holdings, obtaining shareholder approval for the second closing of the TruHC acquisition, the contributions TruHC may make to Flora, the use of the Regulation A Offering, ATM and the efficacy and impact of new product launches and partnerships. Such forward-looking statements are subject to various and risks and uncertainties, including those described under section entitled "Risk Factors" in Flora's Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the "SEC") on March 28, 2024, as such factors may be updated from time to time in Flora's periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov/edgar. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in Flora's filings with the SEC. While forward-looking statements reflect Flora's good faith beliefs, they are not guarantees of future performance. Flora disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this press release, except as required by applicable law. You should not place undue reliance on any forward-looking statements, which are based on information currently available to Flora (or to third parties making the forward-looking statements).