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Published: 2023-05-15


UNAUDITED CONDENSED INTERIM CONSOLIDATION FINANCIAL STATEMENTS
	FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

		Expressed in United States Dollars

The accompanying unaudited condensed interim consolidated financial statements of the
Company have been prepared by and are the responsibility of the Company’s management.

These financial statements for Flora Growth Corp. are also included in the Form 10-Q for the
			quarter ended March 31, 2023 filed on SEDAR on May 15, 2023 in its entirety.

Table of Contents
	PART I
Item 1. Financial Statements
	Flora Growth Corp.
	Table of Contents
Unaudited Condensed Consolidated Financial Statements:		Page
Unaudited Condensed Consolidated Statements of Financial Position as of March 31, 2023 and December 31, 2022			5
Unaudited Condensed Consolidated Statements of Loss and Comprehensive Loss for the Three Months Ended March 31, 2023 and 2022			6
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2023 and 2022			7
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022			8
Notes to Unaudited Condensed Consolidated Financial Statements			9
	4

Table of Contents Flora Growth Corp.

Condensed Interim Consolidated Statements of Financial Position(in thousands of United States dollars, except share amounts which are in thousands of shares)
	March 31,	December 31,

As at:				2023	2022

ASSETS
Current
Cash	$	5,259 $	9,537
Trade and amounts receivable, net of $3,024 allowance ($2,988 at December 31, 2022)		6,729	6,851
Loans receivable and advances		273	271
Prepaid expenses and other current assets		1,875	978
Indemnification receivables		3,432	3,429
Inventory				10,311	10,089
Total current assets				27,879	31,155
Non-current
Property, plant and equipment		4,968	4,810
Operating lease right of use assets		2,345	2,537
Intangible assets				17,470	18,096
Goodwill				23,372	23,372
Investments		730	730
Other assets		276	287
Total assets	$			77,040 $	80,987
LIABILITIES
Current
Trade payables	$	6,322 $	7,748
Contingencies		4,998	5,044
Current portion of debt		1,086	1,086
Current portion of operating lease liability		1,241	1,188
Other accrued liabilities		1,852	2,381
Total current liabilities				15,499	17,447
Non-current
Non-current operating lease liability		1,614	1,869
Deferred tax		1,616	1,712
Contingent purchase considerations		4,699	3,547
Total liabilities				23,428	24,575
SHAREHOLDERS’ EQUITY
Share capital, no par value, unlimited authorized, 136,938 issued and outstanding (135,573 at December 31, 2022)		-	-
Additional paid-in capital				150,403	150,420
Accumulated other comprehensive loss				(2,375)	(2,732)
Deficit				(93,976)	(90,865)
Total Flora Growth Corp. shareholders’ equity				54,052	56,823
Non-controlling interest in subsidiaries		(440)	(411)
Total shareholders’ equity				53,612	56,412
Total liabilities and shareholders’ equity	$			77,040 $	80,987

The accompanying notes are an integral part of these condensed interim consolidated financial statements. Commitments and contingencies – see Note 14.


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Table of Contents Flora Growth Corp.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(in thousands of United States dollars, except per share amounts which are in thousands of shares)
	For the three	For the three
		months ended		months ended
	March 31, 2023	March 31, 2022
Revenue	$	20,107 $	4,946
Cost of sales		14,630	2,276
Gross profit		5,477	2,670
Operating expenses
Consulting and management fees		4,040	2,444
Professional fees		33	1,249
General and administrative		528	922
Promotion and communication		1,314	2,549
Travel expenses		139	242
Share based compensation		654	1,526
Research and development		16	210
Operating lease expense		366	207
Depreciation and amortization		942	454
Bad debt expense		29	1
Other expenses (income), net		493	528
Total operating expenses		8,554	10,332
Operating loss		(3,077)	(7,662)
Interest expense (income)		23	(21)
Foreign exchange (gain) loss		(12)	(11)
Unrealized loss from changes in fair value		883	-
Net loss before income taxes		(3,971)	(7,630)
Income tax recovery		(66)	-
Net loss for the period	$	(3,905) $	(7,630)
Other comprehensive gain (loss)
Exchange differences on foreign operations, net of income taxes of $nil ($nil in 2021)	$	357 $	(577)
Total comprehensive loss for the period	$	(3,548) $	(8,207)

Net loss attributable to:
Flora Growth Corp.	$	(3,876) $	(7,566)
Non-controlling interests in subsidiaries		(29)	(64)
Comprehensive loss attributable to:
Flora Growth Corp.	$	(3,519) $	(8,143)
Non-controlling interests in subsidiaries		(29)	(64)
Basic and diluted loss per share attributable to Flora Growth Corp.	$	(0.03) $	(0.11)
Weighted average number of common shares outstanding - basic and diluted				132,868	69,604

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

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Table of Contents Flora Growth Corp.Condensed Interim Consolidated Statement of Shareholders’ Equity (Deficiency)(in thousands of United States dollars, except for share amounts which are in thousands of shares)
								Non-
			Accumulated				controlling
		Additional		other				interests in		Shareholders’
		paid-in	comprehensive		Accumulated		subsidiaries			equity
	Common shares	capital	(loss) income			deficit	(deficiency)		(deficiency
	#
Balance, December 31, 2021											65,517 $	- $										116,810 $	(1,108) $	(38,536) $	(225) $	76,941

Common shares issued for business combinations											9,500	-	14,697		-		-		-	14,697
Common shares issued for other agreements											111	-	272		-		-		-		272
Acquisition of noncontrolling interest											131	-	283		-	(365)			28		(54)
Options issued											-	-	1,443		-		-		-	1,443
Options exercised											333	-	50		-		-		-		50
Warrants exercised											51	-	28		-		-		-		28
Share issuance costs											-	-	(79)		-		-		-		(79)
Other comprehensive loss –exchange differences on foreign operations (net ofincome taxes of $nil)

											-	-	-	(577)			-		-	(577)
Net loss											-	-	-		-	(7,566)		(64)		(7,630)
Balance, March 31, 2022											75,643 $	- $										133,504 $	(1,685) $	(46,467) $	(261) $	85,091

Balance, December 31, 2022		135,573 $	- $										150,420 $	(2,732) $		(90,865) $		(411) $		56,412

Equity issued for other agreements											325	-	95		-		-		-		95
Options issued											-	-	119		-		-		-		119
Options cancelled											-	-	(765)		-		765		-		-
Restricted units granted											1,040	-	534		-		-		-		534
Other comprehensive loss –exchange differences on foreign operations (net ofincome taxes of $nil)

											-	-	-		357		-		-		357
Net loss											-	-	-		-	(3,876)		(29)		(3,905)
Balance, March 31, 2023		136,938 $	- $										150,403 $	(2,375) $		(93,976) $		(440) $		53,612

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

		7

Table of Contents Flora Growth Corp.Condensed Interim Consolidated Statement of Cash Flows(in thousands of United States dollars)
	For the three	For the three
		months ended		months ended
	March 31, 2023	March 31, 2022
Cash flows from operating activities:
Net loss	$	(3,905) $	(7,630)
Adjustments to net loss:
Depreciation and amortization		942	454
Share based compensation		654	1,715
Changes in fair value of investments and liabilities		883	-
Bad debt expense		29	1
Interest expense (income)		23	(21)
Interest paid		(23)	(17)
Income tax recovery		(66)	-
		(1,463)	(5,498)
Net change in non-cash working capital:
Trade and other receivables		91	707
Inventory		(113)	192
Prepaid expenses and other assets		(920)	58
Trade payables and accrued liabilities		(1,919)	(2,020)
Net cash used in operating activities				(4,324)	(6,561)

Cash flows from financing activities:
Equity issue costs		-	(79)
Exercise of warrants and options		-	78
Loan borrowings		-	212
Loan repayments		(19)	(18)
Net cash (used) provided by financing activities		(19)	193

Cash flows from investing activities:
Purchases of property, plant and equipment and intangible assets		(102)	(187)
Business and asset acquisitions, net of cash acquired		-			(15,457)
Net cash used in investing activities		(102)			(15,644)

Effect of exchange rate on changes on cash		167	(359)

Change in cash during the period				(4,278)	(22,371)
Cash and restricted cash at beginning of period		9,537	37,616
Cash and restricted cash at end of period	$	5,259 $	15,245
Supplemental disclosure of non-cash investing and financing activities
Common shares issued for business combinations	$	- $	14,917
Assets acquired for contingent consideration		303	-
Common shares issued for other agreements		95	272
Operating lease additions to right of use assets		97	-

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

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Table of Contents Flora Growth Corp.Notes to the condensed interim consolidated financial statementsFor the three months ended March 31, 2023 and 2022(In thousands of United States dollars, except shares and per share amounts) 1. NATURE OF OPERATIONS Flora Growth Corp. (the “Company” or “Flora”) was incorporated under the laws of the Province of Ontario, Canada on March 13, 2019. The Company ismanufacturer, distributor and an all-outdoor cultivator of global cannabis and pharmaceutical products and brands, building a connected, design-led collective ofplant-based wellness and lifestyle brands. The Company’s registered office is located at 365 Bay Street, Suite 800, Toronto, Ontario, M5H 2V1, Canada and itsprincipal place of business in the United States is located at 3406 SW 26th Terrace, Suite C-1, Fort Lauderdale, Florida 3312. 2. BASIS OF PRESENTATION These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United Statesof America ( "U.S. GAAP") for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interimfinancial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP. The Company believes that the disclosures made areadequate to make the information presented not misleading. These financial statements should be read in conjunction with the consolidated financial statements andthe notes thereto included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2022. These unaudited condensed interimconsolidated financial statements reflect all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the interimperiods presented. Interim results are not necessarily indicative of results for a full year. These interim condensed consolidated financial statements have been prepared on a going concern basis, meaning that the Company will continue in operation forthe foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Prior to January 1, 2023, Flora was a foreign private issuer reporting its financial statements under International Financial Reporting Standards (“IFRS”) as issued bythe International Accounting Standard Boards. These consolidated financial statements, for all periods, are presented in accordance with U.S. GAAP. Going concern The accompanying interim condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The goingconcern basis of presentation assumes that the Company will continue one year after the date these condensed interim consolidated financial statements are issuedand will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The Company had cash of $5.3 million at March 31, 2023, net loss of $3.9 million for the three months ended March 31, 2023, and an accumulated deficit of $94.0million at March 31, 2023. Current economic and market conditions have put pressure on the Company’s growth plans. The Company’s ability to continue as a goingconcern is dependent on its ability to obtain additional capital. The Company believes that its current level of cash is not sufficient to continue investing in growth,while at the same time meeting its obligations as they become due. These conditions raise substantial doubt regarding the Company’s ability to continue as a goingconcern for a period of at least one year from the date of issuance of these interim condensed consolidated financial statements. To alleviate these conditions,management is currently evaluating various cost reductions and other alternatives and may seek to raise additional funds through the issuance of equity, debtsecurities, through arrangements with strategic partners, through obtaining credit from financial institutions or otherwise. The actual amount that the Company maybe able to raise under these alternatives will depend on market conditions and other factors. As it seeks additional sources of financing, there can be no assurancethat such financing would be available to the Company on favorable terms or at all. The Company’s ability to obtain additional financing in the debt and equitycapital markets is subject to several factors, including market and economic conditions, the Company’s performance and investor sentiment with respect to it and itsindustry. The condensed interim consolidated financial statements do not include any adjustments for the recovery and classification of assets or the amounts andclassification of liabilities that might be necessary should the Company be unable to continue as a going concern. Basis of consolidation These condensed interim consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactionswere eliminated on consolidation. Subsidiaries are entities the Company controls when it is exposed, or has rights, to variable returns from its involvement in theentity and can affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are included in the consolidated financial results of theCompany from the date of acquisition up to the date of disposition or loss of control. The Company’s subsidiaries and respective ownership percentage have notchanged from the year ended December 31, 2022.

Table of Contents Flora Growth Corp.Notes to the condensed interim consolidated financial statementsFor the three months ended March 31, 2023 and 2022(In thousands of United States dollars, except shares and per share amounts) 3. TRADE AND AMOUNTS RECEIVABLE The Company’s trade and amounts receivable are recorded at amortized cost. The trade and other receivables balance as at March 31, 2023 and December 31, 2022consists of trade accounts receivable, amounts recoverable from the Government of Canada for Harmonized Sales Taxes (“HST”), as well as Value Added Tax(“VAT”) from various jurisdictions, and other receivables.
		March 31,	December 31,

		2023		2022
	Trade accounts receivable	$	7,235 $	6,767
	Allowance for expected credit losses					(3,024)	(2,988)
	HST/VAT receivable		1,697	2,294
	Other receivables		821	778
	Total	$	6,729 $	6,851
Changes in the trade accounts receivable allowance in the three months ended March 31, 2023 relate to establishing an allowance for expected credit losses. Therewere no write-offs of trade receivables during the three months ended March 31, 2023. The Company has no amounts written-off that are still subject to collectionenforcement activity as at March 31, 2023. The Company’s aging of trade accounts receivable is as follows:
			March 31,

				2023
	Current		$	2,069
	1-30 Days			1,031
	31-60 Days			343
	61-90 Days			522
	91-180 Days			439
	180+ Days			2,831
	Total trade receivables		$	7,235
4. INVENTORY Inventory is comprised of the following as at March 31, 2023 and 2022:
		March 31,	December 31,

		2023		2022
	Raw materials and supplies	$	2,799 $	3,153
	Harvested cannabis		131	120
	Work in progress		6		6
	Finished goods		7,375	6,810
	Total	$				10,311 $	10,089
5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following:
		March 31,	December 31,

		2023		2022
	Land	$	657 $	637
	Buildings		1,965	1,875
	Machinery and office equipment		3,044	2,853
	Vehicles		73		71
	Construction in progress		-		-
	Total		5,739	5,436
	Less: accumulated depreciation		(771)	(626)
	Property, plant and equipment, net	$	4,968 $	4,810
Depreciation expense for the three months ended March 31, 2023 was $0.1 million (March 31, 2022 – less than $0.1 million) and was recorded in depreciation andamortization in the condensed interim consolidated statements of loss and comprehensive loss.
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Table of Contents Flora Growth Corp.Notes to the condensed interim consolidated financial statementsFor the three months ended March 31, 2023 and 2022(In thousands of United States dollars, except shares and per share amounts) 6. INVESTMENTS As at March 31, 2023, the Company’s investments consisted of common shares in an early-stage European cannabis company. The Company purchased commonshares from the investee for Euro 2.0 million ($2.4 million), purchased its first tranche of warrants from existing investors in exchange for 225,000 common shares of theCompany, and obtained a second tranche of warrants from the investee as an inducement to exercise some of the first tranche of warrants. As at March 31, 2023, theCompany owned approximately 9.6% of the investee, or approximately 9% on a diluted basis including exercisable warrants of other investors. The warrants allowed the holder to purchase one common share of the investee for CAD 0.30 ($0.22) for the first tranche, and CAD 1.00 ($0.74) for the secondtranche. The Company did not exercise the warrants and they expired on February 1, 2023. The Company recorded the remaining value of the warrants as a loss onchanges in fair value of the investment during the three months ended March 31, 2023. The Company’s cost of the investments was recorded based on the fair value of the consideration exchanged as at the respective transaction dates. The investee isnot a publicly listed entity and has no active quoted prices for its common shares or warrants. The Company has elected the measurement alternative to record thecommon share investment at cost and test for impairment. The Company determined that no impairment indicators were present as at March 31, 2023. The Companyalso considers observable transactions of the common shares for indicators of fair value but there have been none. A schedule of the Company’s investments activity is as follows:
		Investee	WarrantsCAD 0.30	Warrants CAD
			common			1.00 exercise
		shares	exercise price		price		Total
	Financial asset hierarchy level		Level 3						Level 3	Level 3
	Balance at December 31, 2022	$	730 $	34 $		- $	764
	Loss on changes in fair value		-	(34)		-		(34)
	Balance at March 31, 2023	$	730 $	- $		- $	730
The loss on changes in fair value appears in the unrealized loss on changes in fair value caption in the condensed interim consolidated statements of loss andcomprehensive loss. The value of the investee common shares appears in the investment line on the condensed interim consolidated statement of financial position. 7. ASSET ACQUISITIONS AND BUSINESS COMBINATIONS Original Hemp asset acquisitionOn March 1, 2023, the Company completed its acquisition of all the assets operating under the brand “Original Hemp”. The Company analyzed the acquisition underASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, determining Original Hemp did not meet the definition of a business as itdid not have inputs, processes, and outputs in place that constituted a business under Topic 805. As a result, the transaction has been accounted for as an assetacquisition whereby all of the assets acquired and liabilities assumed are assigned a carrying amount based on relative fair values. Total purchase consideration was$0.3 million. As consideration for the purchased assets of Original Hemp, the Company will pay an amount equal to 50% of the net profits received in connection with the sale ofOriginal Hemp products until such a time that the Company will have paid a total of $0.2 million. Once the Company has paid $0.2 million, the Company will pay anamount equal to 10% of the net profits received in connection with the sale of Original Hemp products until such a time that the Company will have paid an additionalamount of $0.4 million. As these entire amounts are considered contingent consideration, it was valued using discounted cash flow models utilizing two differentrates, high and low. The significant inputs to the valuation include the estimated seven-year time period to accumulate the $0.6 million maximum payment anddiscount rates of 31.5%, high, and 17.0%, low, to estimate the present value of the future cash outflows. The resulting acquisition date fair value of $0.3 millioncontingent purchase consideration is classified within the contingent purchase considerations line on the statement of financial position. At March 31, 2023, theremaining balance outstanding was $0.3 million. The purchase is accounted for as an asset acquisition with amounts allocated as at the acquisition date to each major class of assets as follows: Inventory
							$		109
Intangible asset									194
Total net assets acquired							$		303

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Table of Contents Flora Growth Corp.Notes to the condensed interim consolidated financial statementsFor the three months ended March 31, 2023 and 2022(In thousands of United States dollars, except shares and per share amounts) Franchise Global Health Inc. (“FGH”) business combinationOn December 23, 2022, the Company completed its acquisition of all the issued and outstanding common shares (the “Franchise Common Shares”) of FGH, acorporation existing under the laws of the Province of British Columbia, by way of a statutory plan of arrangement (the “Arrangement”) under the BusinessCorporations Act (British Columbia). FGH, through its wholly owned subsidiaries, is a multi-national operator in the medical cannabis and pharmaceutical industrywith principal operations in Germany. The Company acquired FGH to expand its product offerings, accelerate its revenue growth, expand its customer anddistribution capabilities in Germany and to improve synergies and cost savings. The purchase consideration was comprised of 43,525,951 of Flora’s common shares (the “Flora Shares”), valued at $9.8 million, inclusive of a 7.5% fair value discountfor the required ninety (90) day restrictive legend on the Flora Shares delivered to the former shareholders of FGH. The purchase is accounted for as a business combination with amounts recognized as at the acquisition date for each major class of assets acquired and liabilitiesassumed are as follows: Current assets

Cash	$	730
Trade receivables		2,271
Inventory		2,019
Indemnity receivables		3,415
Prepaid assets		139

Non-current assets
Property, plant, and equipment		452
Right of use assets		115
Intangible asset		6,102
Goodwill		3,716
Total assets	$	18,959

Current liabilities
Trade payables and accrued liabilities	$	(6,245)
Current lease liabilities		(98)
Current portion of debt		(1,062)

Long term lease liability		(21)
Deferred tax		(1,717)
Total liabilities	$	(9,143)
Total net assets acquired	$	9,816
The amounts shown are provisional. The Company has a measurement period of one year following the acquisition date on December 23, 2022 to adjust theprovisional amounts recognized for any new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would haveresulted in the recognition of additional assets or liabilities, or affected the measurement of the amounts recognized as of that date. As part of the acquisition terms, Clifford Starke, our current President and a Director and the former Chief Executive Officer of FGH, together with certain affiliatedentities under his control, entered into an agreement pursuant to which they agreed to indemnify the Company for certain potential liabilities of FGH and itssubsidiaries, up to a maximum of $5.0 million. A total of $3.4 million of liabilities were recognized in the trade payables and accrued liabilities of FGH on the date ofacquisition that were subject to this indemnification obligation. The Company believes it will be fully indemnified by the former CEO of FGH, and, as such, hasrecorded $3.4 million of indemnification receivables. The indemnified losses include:
			1.	any losses that are related to the ownership or the operation of FGH and its Canadian subsidiaries, in each case prior to the closing of the Arrangement,that are unknown to the Company and that: (i) have not been disclosed or accounted for in FGH filings; or (ii) have not been disclosed in the FGHDisclosure Letter, in each case as at the date of the Arrangement Agreement;


			2.	any losses that may arise from amounts owed or that may become owed to certain persons or in respect of certain matters identified in the indemnityagreement, as amended; and


			3.	any fraud, intentional misrepresentation, willful breach, or willful misconduct on the part of FGH or any other entity identified in the indemnity agreementof any of the foregoing in connection with the indemnity agreement or the Arrangement Agreement


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Table of Contents Flora Growth Corp.Notes to the condensed interim consolidated financial statementsFor the three months ended March 31, 2023 and 2022(In thousands of United States dollars, except shares and per share amounts) The intangible assets of $6.1 million are comprised of the following categories and estimated useful lives: supplier relationships of $2.4 million for five years, customerrelationships of $2.3 million for five years, and licenses of $1.4 million for five years. The Company does not expect the goodwill and intangible asset values to bedeductible for Canadian income tax purposes. The goodwill is assigned to the commercial and wholesale segment. Just Brands LLC and High Roller Private Label LLC (collectively “JustCBD”) business combinationOn February 24, 2022, Flora Growth U.S. Holdings Corp., a wholly owned subsidiary of the Company, completed the acquisition of 100% of the outstanding equityinterests in each of (i) Just Brands LLC and (ii) High Roller Private Label LLC for total purchase consideration of $37.0 million. JustCBD is a manufacturer anddistributor of consumable cannabinoid products, including gummies, tinctures, vape cartridges, and creams. JustCBD is based in Florida in the United States and wasformed in 2017. The Company acquired JustCBD to expand its product offerings, accelerate its revenue growth, expand its customer and distribution capabilities inthe United States and for the acquisition of human capital through JustCBD’s management team. The purchase consideration was comprised of (i) $16.0 million of cash, less $0.2 million returned to the Company in August 2022 due to final calculated closingworking capital falling short of the target working capital, (ii) 9.5 million common shares of the Company valued at $14.7 million, inclusive of a 15% fair value discountfor the required six-month holding period of the shares, and (iii) $4.0 million of contingent purchase consideration. The contingent purchase consideration is basedon a clause in the purchase agreement that provides that if at any time during the 24 months following the acquisition date, the five-day volume weighted averageprice (“VWAP”) per share of the Company’s common shares as quoted on the Nasdaq Capital Market fails to equal or exceed $ 5.00, then the Company shall issue anumber of additional common shares to the sellers equal to the difference between (x) a fraction, the numerator of which is $47.5 million and the denominator of whichis the highest five day VWAP at any point during the 24 months following the closing and (y) the 9.5 million common shares delivered to the sellers at the closing. Inno event shall the Company be required to issue more than 3.65 million common shares unless, if required by applicable law, it shall have obtained the consent of theCompany’s shareholders to do so. In the event the Company is required to deliver in excess of 3.65 million shares to the sellers (“Excess Shares”) and the Companyshall not have obtained shareholder consent, if required, the Company may deliver cash to the sellers in lieu of such Excess Shares determined by a formula set forthin the purchase agreement. The contingent purchase consideration is classified as a financial liability within the contingent purchase considerations line on thestatement of financial position as the Company may be required to settle any amounts due in cash instead of common shares if the Company’s common shareholdersdo not provide requisite shareholder approval to issue additional common shares. The fair value of the contingent purchase consideration at February 24, 2022 was determined using a Monte Carlo simulation incorporating Brownian motion with100,000 trials through a binomial model. The significant inputs to the valuation included the two-year time period, the Company’s closing share price at February 24,2022 ($1.82), estimated Company common share volatility (100%), and risk-free rate of 1.5% to discount the ending result to present value. The fair value of the contingent purchase consideration at March 31, 2023 was determined using a Monte Carlo simulation incorporating Brownian motion with100,000 trials through a binomial model. The significant inputs to the valuation include the remaining time period, the Company’s closing share price at March 31,2023 ($0.29), estimated Company common share volatility (110%), and risk-free rate of 4.7% to discount the ending result to present value. The Company determinedthat the balance of this contingent consideration at March 31, 2023 was $3.5 million, with the $0.9 million increase in the balance from December 31, 2022 recorded inthe unrealized loss from changes in fair value caption in the condensed interim consolidated statements of loss and comprehensive loss. The purchase is accounted for as a business combination with amounts recognized as at the acquisition date for each major class of assets acquired and liabilitiesassumed are as follows: Current assets

Cash	$	535
Trade receivables		975
Inventory		5,534
Other current assets		540

Non-current assets
Property, plant, and equipment		536
Right of use assets		772
Other non-current assets		127
Intangible asset		4,533
Goodwill		24,898
Total assets	$	38,450

Current liabilities
Trade payables and accrued liabilities	$	(2,273)
Current lease liabilities		(644)
Provision for sales tax		(982)
Deferred tax		(24)
Other current liabilities		(99)
Total liabilities	$	(4,022)
Total net assets acquired	$	34,428

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Table of Contents Flora Growth Corp.Notes to the condensed interim consolidated financial statementsFor the three months ended March 31, 2023 and 2022(In thousands of United States dollars, except shares and per share amounts) The fair value of the trade receivables reflects a $0.3 million discount to the gross contractual amounts as allowance for potentially uncollectible amounts. Theacquired provision for sales tax is discussed at Note 14 below. The intangible assets of $4.5 million are comprised of the following categories and estimated useful lives: tradenames of $3.1 million for eight to nine years, customerrelationships of $1.2 million for five to seven years, and know-how of $0.2 million for three years. The Company expects the goodwill and intangible asset values to bedeductible for Unites States income tax purposes. The goodwill is assigned to the house of brands segment. No Cap Hemp Co. business combinationOn July 20, 2022, Just Brands LLC., a wholly owned subsidiary of the Company, acquired certain assets, assumed certain liabilities, retained certain employees andprocesses (together the “purchased assets”) of No Cap Hemp Co. (“No Cap”) for total purchase consideration of $0.9 million. No Cap is a manufacturer anddistributor of high quality and affordable CBD products. No Cap is based in Florida in the United States and was formed in 2017. Just Brands LLC acquired No Cap toexpand its product offerings and accelerate its revenue growth. As consideration for the purchased assets of No Cap, Just Brands LLC will pay an amount equal to 10% of the sales of No Cap until such a time that Just Brands LLCwill have paid a total of $2.0 million. Also on July 20, 2022, Just Brands LLC advanced $0.2 million to the former owners of No Cap. This $0.2 million will be settledprior to and in the same manner as the consideration for the purchased assets. As these entire amounts are considered contingent consideration, it was valued usingdiscounted cash flow models utilizing two different rates, high and low. The significant inputs to the valuation include the estimated nine-year time period toaccumulate the $2.0 million maximum payment and discount rates of 23.5%, high, and 14.3%, low, to estimate the present value of the future cash outflows. Theresulting acquisition date fair value of $0.9 million contingent purchase consideration is classified within the contingent purchase considerations line on thestatement of financial position. At March 31, 2023, the remaining balance outstanding was $0.9 million. The purchase is accounted for as a business combination with amounts recognized as at the acquisition date for each major class of assets acquired and liabilitiesassumed are as follows: Current assets

Trade receivables	$	31
Inventory		725

Non-current assets
Goodwill		417
Total assets	$	1,173

Current liabilities
Trade payables and accrued liabilities		(272)
Total liabilities	$	(272)
Total net assets acquired	$	901
The fair value of the trade receivables reflects a $0.2 million discount to the gross contractual amounts as allowance for potentially uncollectible amounts. The Company expects the goodwill to be deductible for United States income tax purposes. The goodwill is assigned to the house of brands segment.
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Table of Contents Flora Growth Corp.Notes to the condensed interim consolidated financial statementsFor the three months ended March 31, 2023 and 2022(In thousands of United States dollars, except shares and per share amounts) 8. INTANGIBLE ASSETS AND GOODWILL A continuity of intangible assets for the three months ended March 31, 20223 is as follows:
						Non-
		Customer/Supplier	Trademarks			Compete
	License	Relationships	and Brands	Patents	Agreements		Goodwill	Total
Cost
At December 31, 2022	$	1,879 $	7,703 $	5,243 $	4,530 $	1,190 $		23,633 $	44,178
Additions		-	194	-	-		-	-	194
At March 31, 2023	$	1,879 $	7,897 $	5,243 $	4,530 $	1,190 $		23,633 $	44,372

Accumulated Amortization
At December 31, 2022	$	273 $	386 $	658 $	621 $	463 $		- $	2,401
Additions		85	333	162	139		99	-	818
At March 31, 2023	$	358 $	719 $	820 $	760 $	562 $		- $	3,219

Foreign Currency translation		(53)	18	(15)	-		-	(261)	(311)
Net book value at March 31, 2023	$	1,468 $	7,196 $	4,408 $	3,770 $	628 $					23,372 $	40,842
Amortization expense for the three months ended March 31, 2023 was $0.8 million (March 31, 2022 - $0.4 million) and was recorded in depreciation and amortization inthe condensed interim consolidated statements of loss and comprehensive loss. At March 31, 2023, the weighted average amortization period remaining for intangible assets was 5.9 years. At March 31, 2023, the estimated future amortization expense related to intangible assets is as follows:
													2023	$	2,472
													2024		3,190
													2025		2,794
													2026		2,781
													2027		2,707
													Thereafter		3,526
													Total	$	17,470
The Company’s goodwill is assigned to the following reporting units:
			Food and

										Pharmaceuticals	beverage	Vessel	JustCBD		Franchise	Total
Gross goodwill recorded prior to December 31, 2022		$	1,413 $	834 $	19,675 $	25,038 $		3,732 $	50,692
Impairment recorded prior to December 31, 2022			(1,413)	(834)	(19,675)	(5,398)		-				(27,320)
Net book value as at December 31, 2022			-	-	-	19,640		3,732	23,372
Net book value as at March 31, 2023		$	- $	- $	- $	19,640 $		3,732 $				23,372
9. DEBT Euro credit facility The Company, through FGH, has a credit facility for 1.0 million Euro with Hypoverinsbank, secured by the trade and other receivables of one of the subsidiaries ofFGH. As of March 31, 2023, the outstanding amount was 1.0 million Euros ($1.1 million USD). The credit facility has a rate of Euro Interbank Offer Rate (“Euribor”)plus 2.95% per year and was originally due January 10, 2023. The Company and the bank agreed to renew the credit facility on January 10, 2023, under the same terms.The interest on the credit facility resets every two months and the interest on the outstanding balance is paid monthly. There arrangement is open ended without apredetermined maturity date.
														15

Table of Contents Flora Growth Corp.Notes to the condensed interim consolidated financial statementsFor the three months ended March 31, 2023 and 2022(In thousands of United States dollars, except shares and per share amounts) 10. LEASES The Company’s leases primarily consist of administrative real estate leases in Colombia, Germany and the United States, and the Company’s cultivation property inSantander, Colombia. Management has determined all the Company’s leases are operating leases through March 31, 2023. Information regarding the Company’sleases is as follows:
		Three
		months ended	Three months

		March 31,	ended March
		2023		31, 2022
	Components of lease expense
	Operating lease expense	$	366 $		207
	Short-term lease expense		73		206
	Total lease expense	$	439 $		413

	Other Information
	Operating cash flows from operating leases	$	364 $		273
	ROU assets obtained in exchange for new operating lease liabilities		97		728
	Weighted-average remaining lease term in years for operating leases		3.4		3.8
	Weighted-average discount rate for operating leases		7.7%		8.5%
Maturities of operating lease liabilities as of March 31, 2023 are as follows:
				Operating

	Thousands of United States dollars			Leases
	2023		$		1,411
	2024				661
	2025				448
	2026				394
	2027				167
	Thereafter				186
	Total future lease payments				3,267
	Less: imputed interest				(412)
	Total lease liabilities				2,855
	Less: current lease liabilities			(1,241)
	Total non-current lease liabilities		$		1,614
Most of the Company’s leases contain renewal options to continue the leases for another term equivalent to the original term, which are generally up to two years.The lease liabilities above include renewal terms that management has executed or is reasonably certain of renewing, which only included leases that would haveexpired in 2023. 11. SHARE CAPITAL Authorized and issued The Company is authorized to issue an unlimited number of common shares, no par value. The Company had the following significant common share transactions: Three months ended March 31, 2023 OTHER ISSUANCES On January 31, 2023, the Company entered into a settlement agreement with a third party pursuant to which the Company issued 325,000 common shares of theCompany, valued at $0.1 million, to a third party to settle a legal dispute that arose in April 2019. See Note 14. See Note 18 for subsequent issuance of shares.
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Table of Contents Flora Growth Corp.Notes to the condensed interim consolidated financial statementsFor the three months ended March 31, 2023 and 2022(In thousands of United States dollars, except shares and per share amounts) 12. SHARE BASED COMPENSATION The Company’s 2022 Incentive Compensation Plan (the “2022 Plan”) and its previous “‘rolling” stock option plan (the “Prior Plan”) are described in the Company’s2022 Form 10-K. OPTIONS Stock options granted under the Prior Plan are non-transferable and non-assignable and may be granted for a term not exceeding five years. Under the 2022 Plan,stock options may be granted with a term of up to ten years and in the case of all stock options, the exercise price may not be less than 100% of the fair market valueof a Common Share on the date the award is granted. Stock option vesting terms are subject to the discretion of the Compensation Committee of the Company’sBoard of Directors. Common shares are newly issued from available authorized shares upon exercise of awards. The Company no longer makes new grants of stockoptions under the Prior Plan. Information relating to share options outstanding and exercisable as at March 31, 2023 and December 31, 2021 is as follows:
	Options Outstanding
					Weighted
			Number ofoptions (in	Weighted	average

				average	remaining	Aggregate
			thousands)	exercise price	life (years)	intrinsic value
		Outstanding balance, December 31, 2022		5,805 $	1.71	4.2 $	64
		Granted		100 $	0.35	10.0	-
		Cancelled		(407) $	2.60	3.0	-
		Outstanding balance, March 31, 2023		5,498 $	1.62	4.1 $	108
		Exercisable balance, March 31, 2023		4,013 $	1.95	2.8 $	108
The total expense related to the options granted in the three months ended March 31, 2023 was $0.1 million (2022 - $1.5 million). This expense is included in the sharebased compensation line on the condensed interim consolidated statements of loss and comprehensive loss. Generally, the options granted in 2023 and 2022 vest oneto two years following the date of grant provided that the recipient is still employed or engaged by the Company. At March 31, 2023 the total remaining stock option cost for nonvested awards is expected to be $0.3 million over a weighted average future period of 1.3 years untilthe awards vest. See Note 18 for subsequent forfeiture of options. RESTRICTED STOCK AWARDS Information relating to restricted stock awards outstanding as at March 31, 2023 and December 31, 2022:
					Number of	Weighted
						restricted		average grant
					stock awards	date fair value
					Thousands
		Balance, December 31, 2022				2,918 $	0.68
		Granted				1,040	0.35
		Balance, March 31, 2023				3,958 $	0.59
The total expense related to the restricted stock awards in the three months ended March 31, 2023 was $0.5 million (2022 - nil). This expense is included in the sharebased compensation line on the condensed interim consolidated statements of loss and comprehensive loss. The outstanding restricted stock awards vest over the next three years provided the award holder is still employed or engaged by the Company. As of March 31,2023, the Company had $1.4 million of unrecognized compensation expense related to restricted stock awards which will be recognized over the next three years. See Note 18 for subsequent forfeiture of restricted share awards.
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Table of Contents Flora Growth Corp.Notes to the condensed interim consolidated financial statementsFor the three months ended March 31, 2023 and 2022(In thousands of United States dollars, except shares and per share amounts) 13. WARRANTS The following summarizes the number of warrants outstanding as of March 31, 2023:
			Weighted
		Number of		average
		warrants	exercise price
		Thousands
	Balance, December 31, 2022		19,210 $	1.24
	Exercised		0	0.40
	Balance, March 31, 2023				19,210 $	1.24

							Warrants	Exercise	Grant date	Remaining

						Date of expiry	outstanding		price	fair value	life in years
							Thousands
	November 18, 2026							4,425 $	3.75 $	6,700	3.64
	November 18, 2026							1,325	0.40	422	3.64
	November 18, 2027							460	3.30	1,055	4.64
	December 8, 2027							12,500	0.40	2,033	4.69
	December 8, 2027							500	0.44	149	4.69
								19,210 $	1.24 $	10,359	4.38
14. COMMITMENTS AND CONTINGENCIES Provisions The Company’s current known provisions and contingent liabilities consist of the following as of March 31, 2023.
							Termination

										benefits	Legal disputes	Sales tax	Total
Balance as at December 31, 2022							$	183 $	3,030 $	1,831 $					5,044
Payments/Settlements								(183)	(98)					-	(281)
Additional provisions								-	-					193	193
Foreign currency translation								-	42					-	42
Balance as at December 31, 2022							$	- $	2,974 $	2,024 $					4,998
The legal disputes balance as of March 31, 2023 involves a former shareholder of ACA Muller, an entity that was part of the Company’s acquisition of FGH inDecember 2022, who filed a statement of claim against a wholly owned subsidiary of the Company in the Constance Regional Court in Germany. While the Companybelieves that this claim is without merit, at this time the Company believes it is probable that a liability has been incurred and the Company is able to reasonablyestimate the loss of $2.9 million. As a result, without acknowledgement (explicitly or implicitly) of any amount of liability arising from this claim, the Companyrecognized a provision of $2.9 million to reflect the value of the claim. This dispute is covered under the indemnification agreement between the Company and theformer Chief Executive Officer and shareholder of FGH as discussed in Note 7. The Company intends to vigorously defend itself through appropriate legalproceedings. The $2.9 million is recorded within contingencies and within indemnification receivables on the condensed consolidated statements of financial. The Sales tax relates to estimated amounts owed to certain jurisdictions in the Unites States for sales from the Company’s JustCBD operations. The ending balance isrecorded within contingencies on the condensed consolidated statement of financial position, and additions to the provision as a reduction of revenue on thecondensed consolidated statements of loss and comprehensive loss. Legal proceedings The Company records liabilities for legal proceedings in those instances where it can reasonably estimate the amount of the loss and where liability is probable. TheCompany is engaged from time-to-time in various legal proceedings and claims that have arisen in the ordinary course of business. The outcome of all theproceedings and claims against the Company is subject to future resolution, including the uncertainties of litigation. Based on information currently known to theCompany and after consultation with outside legal counsel, management believes that the probable ultimate resolution of any such proceedings and claims,individually or in the aggregate, will not have a material adverse effect on the financial condition of the Company, taken as a whole as at March 31, 2023.
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Table of Contents Flora Growth Corp.Notes to the condensed interim consolidated financial statementsFor the three months ended March 31, 2023 and 2022(In thousands of United States dollars, except shares and per share amounts) On June 21, 2022, an action was brought against the Company in the Ontario Superior Court of Justice by Gerardo Andres Garcia Mendez claiming that the Companyis obligated to issue 3.0 million (pre-one-for three reverse stock split) common shares to him for a purchase price of $0.05 per share. Mr. Mendez claims he is entitledto such shares as a result of alleged consulting services he performed in 2019. The Company disputes his claims and intends to vigorously defend against this action.The Company believes that an unfavorable settlement in this matter is remote, and, as such, has not accrued a liability as of March 31, 2023. In connection with the Company’s acquisition of FGH, the former Chief Executive Officer of FGH, together with certain affiliated entities under his control, enteredinto an agreement pursuant to which they agreed to indemnify the Company for certain potential liabilities of FGH and its subsidiaries, up to a maximum of $5.0million. In addition to the matter regarding the former shareholder of ACA Mueller, discussed above, the following actions are pending as of the date hereof: On February 3, 2023, an action was brought in the Ontario Superior Court of Justice by Nathan Shantz and Liberacion e Inversiones S.A. against various partiesincluding Clifford Starke, FGH’s former Chief Executive Officer, and FGH. The statement of claim alleges that, prior to the closing of the Arrangement, 8,831,109 FGHshares purportedly owned by the plaintiffs were wrongfully transferred to third parties by Mr. Starke. FGH has been named as a defendant by virtue of the allegedwrongful conduct by Mr. Starke. The plaintiffs are seeking damages of $3.9 million. The defendants have all brought motions to stay the proceedings on the groundsthat the Ontario court lacks jurisdiction over the claim. In the event FGH should incur any losses in connection with this matter, such losses are to be indemnified byMr. Starke subject to the maximum threshold of the indemnity agreement. The total amount claimed against the former entities of FGH currently exceeds the maximum $5.0 million of the indemnification agreement. However, the Company isestimating the likelihood of loss in these cases will not exceed $5.0 million. 15. LOSS PER SHARE The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive as the Company has a net lossfor each period presented:
		March 31,	December

		2023	31, 2022
	Stock options		5,498	5,805
	Warrants				19,210	19,210
	Restricted stock awards		3,958	2,917
	JustCBD potential additional shares to settle contingent consideration				13,141	13,141
	Total anti-dilutive				41,807	41,073
16. FINANCIAL INSTRUMENTS Fair value The Company’s financial instruments measured at amortized cost as at March 31, 2023 and December 31, 2022 consist of cash, trade and amounts receivable, loansreceivable, trade payables, contingencies, accrued liabilities, contingent purchase consideration liabilities, lease liabilities, and debt and loans payable. The amountsreflected in the condensed interim consolidated statements of financial position approximate fair value due to the short-term maturity of these instruments. Financial instruments recorded at the reporting date at fair value are classified into one of three levels based upon the fair value hierarchy. Items are categorizedbased on inputs used to derive fair value based on: Level 1 - quoted prices that are unadjusted in active markets for identical assets or liabilitiesLevel 2 - inputs other than quoted prices included in level 1 that are observable for the asset/liability either directly or indirectly; andLevel 3 - inputs for the instruments are not based on any observable market data. The Company’s long-term investments require significant unobservable inputs and as discussed at Note 6, are measured at FVPL and as a Level 3 fair value financialinstrument within the fair value hierarchy as at March 31, 2023. As discussed in Note 7, the Company’s contingent purchase considerations consist of the estimatedfair value of contingent purchase consideration from the acquisition of JustCBD in February 2022. The amount is measured at FVPL as a Level 2 fair value financialinstrument within the fair value hierarchy as at March 31, 2023. As valuations of investments for which market quotations are not readily available are inherentlyuncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would haveresulted if a ready market existed for the investments. Such changes may have a significant impact on the Company’s financial condition or operating results.
						19

Table of Contents Flora Growth Corp.Notes to the condensed interim consolidated financial statementsFor the three months ended March 31, 2023 and 2022(In thousands of United States dollars, except shares and per share amounts) The following tables present information about the Company’s financial instruments and their classifications as at March 31, 2023 and December 31, 2022 and indicatethe fair value hierarchy of the valuation inputs utilized to determine such fair value. Fair value measurements at March 31, 2023 using:

						Level 1				Level 2		Level 3	Total
Financial assets:
Investments (Note 6)	$	- $	- $	730 $	730

Financial liabilities:
Contingent purchase consideration from business combinations (Note 7)	$	- $	3,495 $	- $	3,495
Fair value measurements at December 31, 2022 using:

						Level 1				Level 2		Level 3	Total
Financial assets:
Investments (Note 6)	$	- $	- $	734 $	734

Financial liabilities:
Contingent purchase consideration from business combinations (Note 7)	$	- $	2,645 $	- $	2,645
17. SEGMENTED INFORMATION The Company reports its financial results for the following three operating segments, which are also its reportable segments: commercial and wholesale (primarilyFGH and Cosechemos subsidiaries), house of brands (primarily JustCBD, Vessel and Kasa Wholefoods Company subsidiaries), and pharmaceuticals (primarily GrupoFarmaceutico Cronomed and Breeze Laboratory subsidiaries). These segments reflect how the Company’s operations are managed, how the Company Chief ExecutiveOfficer, who is the chief operating decision maker, allocates resources and evaluates performance, and how the Company’s internal management financial reporting isstructured. The Company’s operates its manufacturing and distribution business its United States, Germany, and Colombia subsidiaries. The Company also is engaged in thegrowth, cultivation, and development of medicinal cannabis and medicinal cannabis derivative products through its Colombia Cosechemos subsidiary. Managementhas defined the reportable segments of the Company based on this internal business unit reporting, which is by major product line, and aggregates similar businessesinto the house of brands segment below. The Corporate segment reflects balances and expenses that do not directly influence business unit operations. Information regarding the Company’s segments is summarized as follows:
			For the three				For the three

			months ended				months ended
			March 31,	March 31,

			2023	2022
								Net Sales
								Commercial & Wholesale	$	7,956 $	4
								House of Brands		14,199	5,063
								Pharmaceuticals		356	661
								Eliminations		(2,404)	(782)
									$	20,107 $	4,946

								Net Loss
								Commercial & Wholesale	$	(389) $	(369)
								House of Brands		(347)	(1,110)
								Pharmaceuticals		(248)	(28)
								Corp & Eliminations		(2,921)	(6,123)
									$	(3,905) $	(7,630)

			March 31,				December 31,

								As at	2023	2022
								Assets
								Commercial & Wholesale	$	21,876 $	22,225
								House of Brands		48,827	48,950
								Pharmaceuticals		3,380	3,313
								Corp & Eliminations		2,957	6,499
									$	77,040 $	80,987

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Table of Contents Flora Growth Corp.Notes to the condensed interim consolidated financial statementsFor the three months ended March 31, 2023 and 2022(In thousands of United States dollars, except shares and per share amounts) Disaggregation of net sales by geographic area:
		For the three	For the three

		months ended	months ended
		March 31,	March 31,

		2023			2022
	Net Sales
	United States	$				11,014 $	4,168
	Germany		7,958	-
	Colombia		773	643
	United Kingdom		362	135
		$				20,107 $	4,946
18. SUBSEQUENT EVENTS CHANGE IN MANAGEMENT AND DIRECTORS On April 12, 2023, Luis Merchan tendered his resignation as both Chairman of the Board of Directors (the “Board”) of the Company and as the Company’s ChiefExecutive Officer, with such resignation becoming effective on such date (the “Merchan Separation Date”). Mr. Merchan’s resignation from the Board was not due toany disagreement with the Company on any matter relating to the Company’s operations, policies or practices. In connection with Mr. Merchan’s resignation, on theMerchan Separation Date, the Company entered into a Separation Agreement and Release with Mr. Merchan, pursuant to which Mr. Merchan will be entitled to thefollowing benefits:
	·	a cash severance payment in the amount of $0.4 million, representing one years’ base salary, paid in eight equal monthly instalments commencing May1, 2023;

	·	a cash payment of less than $0.1 million to cover health insurance premiums for a period of twelve months, payable on December 1, 2023; and
	·	1,600,000 newly privately issued shares of the Company’s common shares, no par value, issued on April 26, 2023.
On April 16, 2023, the Board appointed Hussein Rakine, the current President of the Company’s subsidiary, JustCBD, as the Company’s Chief Executive Officer(principal executive officer) and as a Director, in each case effective on April 16, 2023. The Board appointed Dr. Rakine as a Director to fill the vacancy created by Mr.Merchan’s resignation, as described above, and Dr. Rakine will serve as a Director until the next election of directors at the Company’s 2023 annual meeting ofshareholders and until his successor shall be elected and qualified, or until his earlier death, resignation, retirement, disqualification or removal. As part of theemployment agreement between the Company and Dr. Rakine, 1,200,000 restricted stock awards were granted to Dr. Rakine on April 16, 2023 under the Company’s2022 Plan. These restricted stock awards will vest on June 7, 2023. GOVERNMENT ASSESSMENT IN COLOMBIA In April of 2023, the National Directorate of Taxes and Customs of Colombia (“DIAN”) initiated an inquiry for potential non-compliance of local customs andexchange regulations at one of the Company’s Colombian entities. The transactions in question mainly occurred prior to the Company’s acquisition of this entity inDecember 2020. The Company is currently working to obtain supporting documentation for this matter and the Company will continue to cooperate with DIAN toresolve this issue. However, the Company believes a loss is reasonably possible and cannot currently estimate the amount of the loss. OTHER Subsequent to March 31, 2023, a total of 898,483 restricted shares were forfeited and a total of 367,347 options were forfeited.
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