UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.
)
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12 |
Flora Growth Corp. |
(Name of Registrant as Specified In Its Charter) |
(Name of Person(s) Filing Proxy Statement,
if Other Than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
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No fee required |
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Fee paid previously with preliminary materials |
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
Preliminary Proxy Statement
– Subject to Completion, dated May 1, 2023
Flora Growth Corp.
3406 SW 26th Terrace, Suite C-1
Fort Lauderdale, Florida 33312
To the Shareholders of Flora Growth Corp.
You are cordially invited to attend the 2023 Annual and Special Meeting
of Shareholders (the “Annual Meeting”) of Flora Growth Corp., a corporation organized under the laws of the Province of Ontario
(the “Company”) to be held on June 6, 2023, at 9:00 a.m. Eastern Time. The Annual Meeting will be held at the Company’s
offices located 3406 SW 26th Terrace, Suite C-1, Fort Lauderdale, FL 33312.
The matters expected to be acted upon at the Annual Meeting are described
in detail in the accompanying Notice of Annual Meeting of Shareholders and proxy statement.
We urge you to fill out and submit the enclosed proxy card today or
follow the specific instructions on how to vote your shares by telephone or through the Internet.
You may cast your vote over the Internet, by telephone, or by completing
and mailing a proxy card to ensure that your shares will be represented. Your vote by proxy will ensure your representation at the Annual
Meeting regardless of whether or not you attend. Returning the proxy does not deprive you of your right to attend and vote your shares
electronically at the Annual Meeting.
Thank you for your continued investment in Flora Growth Corp.
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Hussein Rakine |
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Chief Executive Officer |
Flora Growth Corp.
3406 SW 26th Terrace, Suite C-1,
Fort Lauderdale, Florida 33312
NOTICE OF THE 2023 ANNUAL AND SPECIAL MEETING
OF SHAREHOLDERS
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the 2023 Annual and Special Meeting of
Shareholders (including any adjournments or postponements thereof, the “Annual Meeting”) of Flora Growth Corp., a corporation
organized under the laws of the Province of Ontario (the “Company” or “Flora”) is to be held on June 6, 2023,
at 9:00 a.m. Eastern Time. The Annual Meeting will be held at the Company’s offices located 3406 SW 26th Terrace,
Suite C-1, Fort Lauderdale, FL 33312.
We are holding the Annual Meeting for the following purposes, which
are more fully described in the attached proxy statement (the “Proxy Statement”) accompanying this Notice:
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Receive and consider the audited consolidated financial statements as at and for the fiscal year ended December 31, 2022, together with the report of the auditors thereon. |
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Consider, and if deemed advisable, elect as directors the eight nominees named in the Proxy Statement for a term of office expiring at the 2024 Annual Meeting of Shareholders or until their respective successors are duly elected and qualified. |
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To consider, and if deemed advisable, re-appoint Davidson & Company LLP, an independent registered public accounting firm, as auditors of the Company for the fiscal year ending December 31, 2023 and authorize the directors to fix their remuneration. |
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To consider and, if deemed advisable, approve, with or without variation, a special resolution authorizing an amendment to the articles of the Company, as amended from time to time (the “Articles”), to consolidate the issued and outstanding common shares, no par value, of the Company (the “Common Shares”) on the basis of a consolidation ratio (the “Consolidation Ratio”) to be selected by the board of directors of the Company (the “Board of Directors”) within a range between 5 pre-consolidation shares for 1 post-consolidation share and 25 pre-consolidation shares for 1 post-consolidation share (the “Share Consolidation Proposal”). |
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To consider and, if deemed advisable, approve, with or without variation, a special resolution authorizing an amendment to the Articles to create a new class of preferred shares, issuable in series, and to provide for the rights, privileges, restrictions and conditions attaching to the Common Shares and the preferred shares, as a class (the “Preferred Shares Proposal”). |
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To consider and, if deemed advisable, approve, with or without variation, a special resolution authorizing the Board of Directors, in its sole discretion, to amend the Articles to change the name of the Company to “Just Brands Corp.” or to such other name as the Board of Directors, in its sole discretion, determines to be appropriate and which the Director under the Business Corporations Act (Ontario) may accept (the “Name Change Proposal”). |
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To consider and, if deemed advisable, approve, an amendment to the Company’s 2022 Incentive Compensation Plan (the “2022 Plan”) to increase the number of shares issuable thereunder from 6 million to 19 million shares (the “2022 Plan Amendment Proposal”). |
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To consider any other business that is properly presented at the meeting and any adjournment or postponement thereof. |
Only holders of our Common Shares at the close of business on April
25, 2023 are entitled to notice of and to attend and vote at the Annual Meeting and any adjournments thereof. Each of the voting matters
set forth in Items 2-7 above are deemed to be a “Proposal” and collectively, the “Proposals.” The vote required
to approve the resolutions to be presented is set forth in each proposal brought for shareholders’ approval in the accompanying
Proxy Statement.
This Notice of the Annual Meeting, this Proxy Statement, including
the form of proxy and our 2022 Annual Report (as defined in the proxy statement) are first being mailed to shareholders on or about _____,
2023.
Your vote is very important. Shareholders may vote their shares (1)
at the Annual Meeting, (2) by telephone, (3) through the Internet in advance, or (4) by completing and mailing a proxy card if you receive
your proxy materials by mail. Specific instructions for voting by telephone at 1-800-690-6903 or through the Internet (including voting
deadlines) are included in the Proxy Statement and in the proxy card. For specific instructions on how to vote your shares, please refer
to the instructions in this Notice, in the section titled “INFORMATION ABOUT OUR ANNUAL MEETING” of the Proxy Statement or
on the proxy card. Whether or not you expect to attend the Annual Meeting, please vote at your earliest convenience by following the
instructions in the Proxy Statement or the proxy card you received in the mail.
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By order of the Board of Directors, |
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Hussein Rakine |
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Chief Executive Officer |
Fort Lauderdale, Florida
, 2023
Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting to Be Held on June 6, 2023. The Company’s Proxy Statement and Annual Report, provided to Shareholders on or about
, 2023 are available at proxyvote.com
TABLE OF CONTENTS
| * | To be voted on at the meeting |
Flora Growth Corp.
3406 SW 26th Terrace, Suite C-1,
Fort Lauderdale, Florida 33312
PROXY STATEMENT
You are receiving this proxy statement (this “Proxy Statement”)
because you owned common shares, no par value (“Common Shares”), of Flora Growth Corp., a corporation organized under the
laws of the Province of Ontario, as of April 25, 2023 (the “Record Date”), which entitles you to vote those shares at our
2023 Annual and Special Meeting of shareholders (including any adjournments of or postponements thereof, the “Annual Meeting”).
Our Board of Directors (the “Board”) is soliciting proxies from shareholders who wish to vote their shares at the Annual Meeting.
By using a proxy, you can vote even if you do not attend the Annual Meeting. This Proxy Statement describes and provides information about
the matters on which you are being asked to vote so that you can make an informed decision. Flora Growth Corp. is referred to in this
document as Flora, we, us, our and the Company.
The Notice of Annual and Special Meeting (the “Notice”),
this Proxy Statement, including the form of proxy and our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the
“2022 Annual Report”) are first being mailed to shareholders on or about _______, 2023. Shareholders should review the information
contained in this Proxy Statement together with our 2022 Annual Report, which accompanies this Proxy Statement.
Our Internet website and the information contained therein or linked
thereto are not incorporated by reference or otherwise made a part of this Proxy Statement.
INFORMATION ABOUT OUR ANNUAL MEETING
When and where is the Annual Meeting?
The Annual Meeting will be held on June 6, 2023, at 9:00 a.m. Eastern
Time. The Annual Meeting will be held at the Company’s offices located 3406 SW 26th Terrace, Suite C-1, Fort Lauderdale,
FL 33312.
Who may attend the Annual Meeting?
Shareholders of record as of April 25, 2023 (which we refer to as the
Record Date), or their duly appointed proxies, and our invited guests are permitted to attend the Annual Meeting.
AS DETAILED FURTHER BELOW, REGISTERED SHAREHOLDERS HAVE THE RIGHT
TO APPOINT A PERSON TO REPRESENT HIM, HER OR IT AT THE MEETING OTHER THAN THE PERSON(S) DESIGNATED IN THE PROXY CARD either by striking
out the names of the persons designated in the proxy card and by inserting the name of the person or company to be appointed in the space
provided in the proxy card or by completing another proper form of proxy and, in either case, delivering the completed proxy card to Broadridge
by mail using the enclosed return envelope to Broadridge Financial Solutions, Inc., 51 Mercedes Way, Englewood, NY 11717. Alternatively,
you may vote by Internet at www.proxyvote.com or by calling (800) 690-6903.
What is the difference between holding shares as a shareholder
of record and as a beneficial owner?
Most of our shareholders hold their shares through an intermediary
such as a bank, broker or other nominee rather than having the shares registered directly in their own name. Summarized below are some
distinctions between shares held of record and those owned beneficially.
Shareholder of Record (“Registered Shareholder”)
If your shares are registered directly in your name with our transfer
agent, Continental Stock Transfer & Trust Company (“Continental”), you are the shareholder of the Company of record of
the shares. As the shareholder of record, you have the right to grant a proxy to vote your shares to representatives from the Company
or to another person, or to vote your shares at the Annual Meeting. Shareholders of record will receive paper copies of the Notice and
this Proxy Statement containing instructions on how to access and review proxy materials as well as directions on how to vote by proxy.
Beneficial Owner (“Non-registered Shareholder”)
If your shares are held through a bank, broker or other nominee, it
is likely that they are registered in the name of the nominee and you are the beneficial owner of shares held in street name.
As the beneficial owner of shares held for your account, you have the
right to direct the registered holder to vote your shares as you instruct, and you also are invited to attend the Annual Meeting. Your
bank, broker, plan trustee or other nominee has provided a voting instruction card, or otherwise provided voting instructions, for you
to use in directing how your shares are to be voted.
How can I attend and participate in the Annual Meeting?
To gain admittance, you must bring a form of personal identification
to the Annual Meeting, where your name will be verified against our shareholder list. If a broker or other nominee holds your Common Shares
and you plan to attend the Annual Meeting, you should bring a recent brokerage statement showing your ownership of the Common Shares as
of the Record Date, a letter from the broker confirming such ownership, and a form of personal identification.
We will hold our question and answer session with management immediately
following the conclusion of the business to be conducted at the Annual Meeting.
The Chairman of the meeting has broad authority to conduct the Annual
Meeting in an orderly manner, including establishing rules of conduct. A replay of the Annual Meeting will be available on our website
at https://www.floragrowth.com after the meeting.
What is the purpose of the Annual Meeting?
The Annual Meeting will be held for the following purposes:
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Receive and consider the audited consolidated financial statements as at and for the fiscal year ended December 31, 2022, together with the report of the auditors thereon. |
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To consider, and if deemed advisable, elect as directors the eight nominees named in the Proxy Statement for a term of office expiring at the 2024 Annual Meeting of Shareholders or until their respective successors are duly elected and qualified. |
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To consider, and if deemed advisable, re-appoint Davidson & Company LLP, an independent registered public accounting firm, as auditors of the Company for the fiscal year ending December 31, 2023 and authorize the directors to fix their remuneration. |
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To consider and, if deemed advisable, approve, with or without variation, a special resolution authorizing an amendment to the articles of the Company (the “Articles”) to consolidate the issued and outstanding Common Shares on the basis of a consolidation ratio (the “Consolidation Ratio”) to be selected by the Board within a range between 5 pre-consolidation shares for 1 post-consolidation share and 25 pre-consolidation shares for 1 post-consolidation share (the “Share Consolidation Proposal”). |
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To consider and, if deemed advisable, approve, with or without variation, a special resolution authorizing an amendment to the Articles to create a new class of Preferred Shares, issuable in series, and to provide for the rights, privileges, restrictions and conditions attaching to the Common Shares and the preferred shares, as a class (the “Preferred Shares Proposal”). |
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To consider and, if deemed advisable, approve, with or without variation, a special resolution authorizing the Board of Directors, in its sole discretion, to amend the Articles to change the name of the Company to “Just Brands Corp.” or to such other name as the Board of Directors, in its sole discretion, determines to be appropriate and which the Director under the Business Corporations Act (Ontario) may accept (the “Name Change Proposal). |
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to consider and, if deemed advisable, approve, an amendment to the Company's 2022 Incentive Compensation Plan (the “2022 Plan”) to increase the number of shares issuable thereunder from 6 million to 19 million shares (the “2022 Plan Amendment Proposal”). |
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To vote on such other business, if any, as may properly come before the meeting and any adjournment or postponement thereof. |
Can I vote at the Annual Meeting?
You may vote your shares electronically at the Annual Meeting by using
the control number on your Notice, proxy card, or voting instruction form and following the instructions at www.proxyvote.com. If you
have already voted previously by telephone or Internet, there is no need to vote again at the Annual Meeting unless you wish to revoke
and change your vote.
A shareholder of the Company has the right to appoint a person or
company (who need not be a shareholder) other than the persons whose names appear in such form of proxy, to attend and act for and on
behalf of such shareholder at the Annual Meeting and any adjournment(s) or postponement(s) thereof. Such right may be exercised either
by striking out the names of the persons specified in the form of proxy and inserting the name of the person or company to be appointed
in the blank space provided in the form of proxy, or by completing another proper form of proxy and, in either case, delivering the completed
and executed proxy to Broadridge, no later than 9:00 a.m. (Eastern Time) on June 2, 2023 or, if the Annual Meeting is adjourned, at least
48 hours (excluding Saturdays, Sundays and statutory holidays in the Province of Ontario) before the beginning of any adjournment(s) to
the Annual Meeting.
The proxyholder does not need to be a shareholder of the Company, but
the proxyholder does need to understand that the Registered Shareholder’s vote will not be counted unless the proxyholder attends
the Annual Meeting and votes the Registered Shareholder’s shares.
If you are a Non-registered Shareholder and wish to appoint someone
else as your proxyholder, including yourself, to participate in the Annual Meeting, including asking questions and voting, please follow
the instructions in the voting instruction form or contact your intermediary for instructions.
Can I vote by telephone or Internet?
For beneficial shareholders with shares registered in the name of a
brokerage firm or bank, a number of brokerage firms and banks are participating in a program that offers telephone and Internet voting
options. Shareholders should refer to the voting instruction form provided by their brokerage firm or bank for instructions on the voting
methods they offer. Registered shareholders with shares registered directly in their names with Continental will also be able to vote
by telephone and Internet. If your shares are held in an account at a brokerage firm or bank participating in this program or registered
directly in your name with Continental you may vote those shares by calling the telephone number specified on your proxy card or accessing
the Internet website address specified on your proxy card instead of completing and signing the proxy itself. Submitting a telephonic
or Internet proxy will not affect your right to vote electronically at the Annual Meeting should you decide to attend the Annual Meeting.
The telephone and Internet voting procedures are designed to authenticate shareholders’ identities, to allow shareholders to give
their voting instructions, and to confirm that shareholders’ instructions have been recorded properly.
The accompanying proxy card provides instructions on how to vote via
the Internet or by telephone.
Who may vote?
The Board set April 25, 2023 as the Record Date for the Annual Meeting.
Holders of Common Shares at the close of business on the Record Date are entitled to vote their shares at the Annual Meeting, and any
further postponements or adjournments of the Annual Meeting.
There were 137,239,644 Common Shares issued and outstanding as of the
Record Date, all of which are entitled to be voted at the Annual Meeting. See “—What are the voting rights of Flora shareholders?”
How can I access the proxy materials over the Internet?
The Notice and proxy card or voting instruction form included with
the proxy materials will contain instructions on how to view the proxy materials on the Internet. Electronic copies of this Proxy Statement
and the 2022 Annual Report are available at www.proxyvote.com.
How can I sign up for the electronic proxy delivery service?
The Notice and proxy card or voting instruction form included with
the proxy materials will contain instructions on how to request electronic delivery of future proxy materials. Choosing to receive your
future proxy materials by email will eliminate the cost of printing and mailing documents and will reduce the associated environmental
impact. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link
to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until
you terminate it.
What are the voting rights of Flora shareholders?
Holders of our Common Shares are entitled to one (1) vote per share
on each matter that is submitted to shareholders for approval.
How do I revoke my proxy and change my vote?
You may change your vote or revoke your proxy at any time before the
vote at the Annual Meeting. You may change your vote prior to the Annual Meeting by executing a valid proxy card bearing a later date
and delivering it to us prior to the Annual Meeting at Flora Growth Corp. Attention: General Counsel, 3406 SW 26th Terrace,
Suite C-1, Fort Lauderdale, Florida 33312. Only your latest dated proxy we receive at or prior to the Annual Meeting will be counted.
You may also revoke your proxy and change your vote at any time before the final vote at the Annual Meeting by voting again via the Internet
or by telephone. Attendance at the Annual Meeting will not by itself revoke a previously granted proxy. If you hold shares in street name
and wish to change your vote, you must follow the directions provided by your brokerage or other financial intermediary.
What are the voting recommendations of the Board?
The Board
recommends that you vote:
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FOR the election of each
of the director nominees named in this Proxy Statement; |
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FOR
re-appointment of Davidson & Company LLP as the Company’s independent registered public accounting firm for the
2023 fiscal year; |
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FOR approval of the Share Consolidation Proposal; |
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FOR approval of the Preferred Shares Proposal; |
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FOR approval of the Name Change Proposal; and |
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FOR approval of the 2022 Plan Amendment Proposal. |
What happens if I submit or return my proxy card without voting?
When you properly submit your proxy, the shares it represents will
be voted at the Annual Meeting in accordance with your directions. Unless otherwise specified in the proxy, shares of our Common
Shares represented by proxies will be voted:
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FOR the election of each of the director nominees named in this Proxy Statement; |
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FOR re-appointment of Davidson & Company LLP as the Company’s independent registered public accounting firm for the 2023 fiscal year; |
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FOR approval of the Share Consolidation Proposal; |
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FOR approval of the Preferred Shares Proposal; |
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FOR approval of the Name Change Proposal; |
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FOR approval of the 2022 Plan Amendment Proposal; and |
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In accordance with the recommendation of our Board of Directors “FOR” or “AGAINST” all other business as may properly be brought before the Annual Meeting and at any adjournments or postponements of the Annual Meeting. |
What constitutes a quorum?
The bylaws of the Company (the “Bylaws”) provide that at
each meeting of shareholders, holders of not less than 35% of shares entitled to vote at a meeting of shareholders, present in person
or represented by proxy, shall constitute a quorum.
How many votes are needed for the proposals to pass?
Election of Directors
Under our Bylaws, if a quorum is present, the director nominees will
be elected if a majority of the votes cast at the Annual Meeting are cast “FOR” each director nominee.
Shareholders entitled to vote may vote in favor of all of the nominees
or any individual nominee or withhold their votes as to all the nominees or any individual nominee.
Re-Appointment of Davidson & Company LLP as our Independent
Registered Public Accounting Firm
If a quorum is present, approval of the re-appointment of our independent
registered public accounting firm requires that a majority of the votes cast at the Annual Meeting are cast “FOR” re-appointment.
Approval of the Amendment to the Articles to effect the Share Consolidation
at the Consolidation Ratio
If a quorum is present, approval of the amendment to the Articles to
effect the Share Consolidation requires that two-thirds (2/3) of the votes cast with respect to the Share Consolidation Proposal by the
shareholders of the Company present at the Annual Meeting in person or by proxy are cast “FOR” approval.
Approval of the Preferred Shares Proposal
If a quorum is present, approval of the amendment to the Articles to
effect the creation of the Preferred Shares and the provision of the rights, privileges, restrictions and conditions attaching to the
Common Shares and the preferred shares, as a class, requires that two-thirds (2/3) of the votes cast with respect to the Preferred Shares
Proposal by the shareholders of the Company present at the Annual Meeting in person or by proxy are cast “FOR” approval.
Approval of the Name Change Proposal
If a quorum is present, approval of the amendment to the Articles to
effect the name change requires that two-thirds (2/3) of the votes cast with respect to the Name Change Proposal by the shareholders of
the Company present at the Annual Meeting in person or by proxy are cast “FOR” approval.
Approval of the 2022 Plan Amendment Proposal
If a quorum is present, approval of the amendment to the 2022 Plan
to increase the number of Common Shares issuable thereunder from 6 million to 19 million requires that a majority of the votes cast at
the Annual Meeting with respect to the 2022 Plan Amendment Proposal are cast “FOR” approval.
What is the effect of abstentions?
Proxies received but marked “ABSTAIN” will be included
in the calculation of the number of Common Shares considered to be present at the Annual Meeting for purposes of determining a quorum,
but abstentions will not have an effect on the outcome of any proposal.
What are “broker non-votes” and what effect do they
have on the proposals?
Broker non-votes occur when a broker, bank, or other nominee holds
shares in “street name” for a beneficial owner and that nominee does not vote the shares because it (i) has not received voting
instructions from the beneficial owner and (ii) lacks discretionary voting power to vote those shares with respect to a particular proposal.
Broker non-votes are counted for purposes of determining the existence of a quorum at the Annual Meeting, but they will have no effect
on the outcome of any proposal on which we receive a broker non-vote.
A broker is entitled to vote shares held for a beneficial owner on
“routine” matters without instructions from the beneficial owner of those shares, which include the proposal to re-appointment
Davidson & Company LLP as our independent public accounting firm for the 2023 fiscal year (Proposal No. 2) and the Share Consolidation
Proposal (Proposal No. 3). On the other hand, absent instructions from the beneficial owner of such shares, a broker is not entitled to
vote shares held for a beneficial owner on “non-routine” matters, which includes Proposal 1 and Proposals 4, 5 and 6 described
in this Proxy Statement.
If you hold your shares in street name, it is critical that you provide
your broker, bank, or other nominee with instructions on how to cast your vote if you want it to count in the election of directors (Proposal
No. 1), the Preferred Shares Proposal (Proposal No. 4), the Name Change Proposal (Proposal No. 5) and the 2022 Plan Amendment Proposal
(Proposal No. 6) described in this Proxy Statement. If you hold your shares in street name, and you do not instruct your broker, bank,
or other nominee how to vote, then it will not be voted for the election of directors.
If any other routine matters are properly brought before the Annual
Meeting in addition to Proposals 2 and 3, then brokers holding shares in street name may vote those shares in their discretion for any
such routine matters.
What is “householding” and how does it work?
The U.S. Securities and Exchange Commission (the “SEC”)
rules permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports
with respect to two or more shareholders sharing the same address by delivering only one (1) copy of our annual report and this Proxy
Statement or the Notice addressed to those shareholders, if consented to by the shareholders. This delivery method, called “householding,”
reduces our printing and mailing costs and provides extra convenience for shareholders. Shareholders who participate in householding and
who request to receive printed proxy materials will continue to receive separate proxy cards.
Once a shareholder has received notification from its broker that it
will be “householding” communications to such shareholder’s address, “householding” will continue until
such shareholder is notified otherwise or until such shareholder notifies its broker or us that it no longer wishes to participate in
“householding.” A shareholder may revoke such shareholder’s consent by notifying its broker or delivering written notice
of such revocation to the Company at Flora Growth Corp., Attention: General Counsel, 3406 SW 26th Terrace, Suite C-1, Fort
Lauderdale, Florida 33312. Upon written or oral request of a shareholder at a shared address to which a single copy of this Proxy Statement
and 2022 Annual Report or Notice was delivered, we will deliver promptly separate copies of these documents or do so in the future if
requested.
How to Submit Shareholder Proposals for Next Year’s Annual
Meeting
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), our shareholders may present proper proposals for inclusion in our proxy statement and form
of proxy and for consideration at the next annual meeting by submitting their proposals to us in a timely manner. Any shareholder of the
Company who wishes to present a proposal for inclusion in the proxy statement and form of proxy for action at the 2024 annual meeting
of shareholders (the “2024 Annual Meeting”) must comply with our Bylaws and the rules and regulations of the SEC, each as
then in effect. Such proposals must be mailed to us at our offices at Flora Growth Corp., Attention: General Counsel, 3406 SW 26th
Terrace, Suite C-1, Fort Lauderdale, Florida 33312. Under the rules of the SEC and the Business Corporations Act (Ontario) (the
“OBCA”), any shareholder proposal intended to be presented at the 2024 Annual Meeting must be received no later than 60 days
prior to the one-year anniversary of the Annual Meeting in order to be considered for inclusion in our proxy statement and form of proxy
relating to such meeting. Pursuant to the OBCA and the rules of the SEC, a shareholder must follow certain procedures to nominate persons
for election as directors or to introduce an item of business at an annual meeting of shareholders. In order to be timely, we must receive
notice of your intention to introduce a nomination or propose an item of business at our 2024 Annual Meeting between the close of business
on December 31, 2023 and close of business on April 6, 2024. If we change the date of our 2024 Annual Meeting by more than thirty days
before, or more than thirty days after, the one-year anniversary of the Annual Meeting, then the written notice of a shareholder proposal
that is not intended to be included in our proxy statement must be delivered, or mailed and received, not later than the ninetieth day
prior to our 2024 Annual Meeting or, if later, the tenth day following the day on which public announcement of the date of such meeting
is first made. You are advised to review our Bylaws, the OBCA and the applicable securities laws, which contain additional requirements
with respect to director nominees.
If a shareholder notifies us of an intent to present a proposal at
the 2024 Annual Meeting at any time after April 6, 2024 (and for any reason the proposal is voted on at that meeting), it may be considered
untimely and our proxy holders will have the right to exercise discretionary voting authority with respect to the proposal, if presented
at the meeting, without including information regarding the proposal in our proxy materials. Under the rules of the SEC, in the event
we change the date of our 2024 Annual Meeting by more than thirty days after the one-year anniversary of the Annual Meeting, the deadline
for a shareholder to submit a proposal for the 2024 Annual Meeting is a reasonable time before we begin to print and send our proxy materials.
Who tabulates the votes?
Prior to the Annual Meeting, we will select an inspector of election
for the meeting. Such inspector will determine the number of Common Shares represented at the meeting, the existence of a quorum and the
validity and effect of proxies, and shall receive, count and tabulate ballots and votes and determine the results thereof.
Who pays the cost of this proxy solicitation?
The Company is making this solicitation. We pay the cost of soliciting
your proxy, and we reimburse brokerage firms and others for forwarding proxy materials to you. Our directors, officers and employees may
participate in the solicitation of proxies without additional consideration. We may engage the services of a professional proxy solicitation
firm to aid in the solicitation of proxies from certain brokers, bank nominees, and other institutional owners. Our costs for such services,
if retained, will not be significant.
Will a list of shareholders entitled to vote at the Annual Meeting
be available?
In accordance with the Company’s Bylaws, a list of shareholders
entitled to vote at the Annual Meeting will be available at our executive office in Fort Lauderdale, Florida and will be accessible prior
to the Annual Meeting between the hours of 9:00 a.m. and 5:00 p.m. The list of shareholders will also be available in person at the Annual
Meeting.
Where can I find voting results of the Annual Meeting?
We will announce the results for the proposals voted upon at the Annual
Meeting and publish final detailed voting results in a Form 8-K filed within four business days following the Annual Meeting.
What are the implications of the Company being an emerging growth
company and a smaller reporting company?
We are an “emerging growth company,” as defined in the
Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and a “smaller reporting company,” as defined in
Rule 12b-2 under the Exchange Act. As an emerging growth company and a smaller reporting company, we provide in this Proxy Statement the
scaled disclosure permitted under the JOBS Act and otherwise as applicable to smaller reporting companies. In addition, as an emerging
growth company, we are not required to conduct votes seeking shareholder approval on an advisory basis of (1) the compensation of our
“named executive officers” or the frequency with which such votes must be conducted or (2) compensation arrangements and understandings
in connection with merger transactions, known as “golden parachute” arrangements.
DIRECTORS & EXECUTIVE OFFICERS
Directors, Director Nominees & Executive Officers
The Articles provide our Board of Directors consists of a minimum of
one and a maximum of ten directors. The number of directors to be elected at the Annual Meeting has been fixed at eight (8) and there
are presently nine (9) directors of the Company, each of whose term of office expires at the Meeting. In connection with this Annual Meeting,
the Board has reduced the size of the Board from nine to eight. All eight director nominees are to be elected at the Annual Meeting, each
to hold office until the 2024 annual meeting of shareholders or until his or her successor is duly elected and qualified. Each shareholder
of record on April 25, 2023 is entitled to cast one vote for each of our Common Shares either in favor of or against the election of each
nominee, or to abstain from voting on any or all nominees. Although management does not anticipate that any nominee will be unable or
unwilling to serve as a director, in the event of such an occurrence, proxies may be voted in the discretion of the persons named in the
proxy for a substitute designated by the Board, unless the Board decides to reduce the number of directors constituting the Board. The
election of each director requires the affirmative vote of the majority of votes present in person or represented by proxy at the Annual
Meeting. Shareholders will vote for the election of each individual director separately.
The names of our current directors, director nominees, and executive
officers and their respective ages, positions, biographies and, in the case of director nominees, their qualifications to serve as directors,
are set forth below.
Name and Place of Residence |
|
Position |
|
Age |
Executive Officers: |
|
|
|
|
Hussein Rakine
Florida, United States |
|
Chief Executive Officer and Director(1) |
|
27 |
Clifford Starke
Panama |
|
President and Director(1) |
|
39 |
Elshad Garayev
Illinois, United States |
|
Chief Financial Officer |
|
52 |
Matthew Cohen
Florida, United States |
|
General Counsel |
|
57 |
Jason Warnock
Alberta, Canada |
|
Chief Commercial Officer |
|
50 |
Jessie Casner
California, United States |
|
Chief Marketing Officer |
|
35 |
Dany Vaiman
Ontario, Canada |
|
Senior VP Finance |
|
37 |
|
|
|
|
|
Non-Employee Directors: |
|
|
|
|
John Timothy Leslie
Washington, United States |
|
Director(1) |
|
55 |
Dr. Beverley Richardson
British Columbia, Canada |
|
Director(1) |
|
62 |
Juan Carlos Gomez Roa
Colombia |
|
Director(1) |
|
59 |
Dr. Annabelle Manalo-Morgan
Texas, United States |
|
Director |
|
38 |
Marc Mastronardi
New York, United States |
|
Director |
|
45 |
Edward Woo
British Columbia, Canada |
|
Director(1) |
|
44 |
Brandon Konigsberg
New York, United States |
|
Director |
|
52
|
Kevin Taylor
Florida, United States |
|
Director Nominee(1) |
|
54 |
Thomas Solomon
Switzerland |
|
Director Nominee(1) |
|
36 |
| (1) | Each nominee for director has been reviewed and recommended
for nomination by our Nominating and Corporate Governance Committee and has consented to serve as a director if elected. |
Non-Director Executive Officers
Elshad Garayev, Chief Financial Officer: Mr. Garayev
has served as the Company’s Chief Financial Officer since July 2022. Mr. Garayev has over 25 years of experience in financial matters
and has held leadership roles in a variety of companies operating in diverse industries. Prior to joining the Company, he served as Principal
NAC (North America Consumer) ACES Finance at Amazon since January 2022, where he led operational initiatives aimed at enhancing controllership
and improving vendor management processes. From 2015 through December 2022, Mr. Garayev served as the CFO of RPK Capital, an aviation
focused investment firm. From 2006 through 2015, he served in a number of roles for the Boeing Company, including as CFO of its Boeing
Saudi Arabia (f/f/a Boeing International Support Systems) subsidiary from 2010 through June 2015. Mr. Garayev is a Certified Public Accountant
and earned a degree in Mathematics (with honors) from Baku State University in Azerbaijan in 1993 and his MBA in Finance (with honors)
from the University of Houston in 2002.
Matthew Cohen, General Counsel: Mr. Cohen
joined Flora in August 2021 as our VP of Legal and was appointed as our General Counsel in March 2022. He is a corporate and securities
lawyer with 30 years’ experience representing both public and private companies throughout all phases of their corporate life cycle.
From October 2018 to January 2020, Mr. Cohen served as General Counsel, and from March 2018 to October 2018 he served as Corporate
Counsel to Playa Hotels & Resorts, NV (Nasdaq: PLYA), the owner and operator of all-inclusive hotels throughout Mexico and the Caribbean.
Between August 2014 and August 2017, he served as General Counsel for companies engaged in the healthcare, technology and energy industries.
From 2001 through 2014, Mr. Cohen served as a Partner/Shareholder in the following law firms: Buchanan Ingersoll & Rooney PC.,
(2012 to 2014), Thompson & Knight LLP (2008 to 2012) and Eaton & Van Winkle, LLP (2001 to 2008). Mr. Cohen graduated from
Emory University with a Bachelor of Arts in Biology and earned his Juris Doctor from Brooklyn Law School.
Jason Warnock, Chief Commercial Officer: Mr. Warnock
joined Flora in June 2021 as our Chief Revenue Officer and was appointed our Chief Commercial Officer in March 2022. He is an accomplished
global sales leader and executive, bringing more than 20 years of experience driving revenue growth and go-to-market strategy for high-profile,
Fortune 500 brands. Mr. Warnock has spent the last 15 years in the cannabis, competitive advertising, communications, and emerging
technology fields where his work focused on building companies and brands from the ground up, working on strategic mergers and acquisitions,
and creating sustainable, resonant financing and marketing campaigns. Prior to joining Flora, From March 2017 to September 2019, Mr. Warnock
served as the Chief Executive Officer of TheraCann International Benchmark Corporation, a global logistics, technology and cannabis management
software company. From June 2007 to December 2016, he served as the Chief Executive Officer of Post+Beam, an international communications,
innovation and marketing firm. Mr. Warnock has been a leader in sustainable practices and design from his earlier work as a Director
with the architectural division of Hunter Douglas (January 2002 – June 2007) where he also chaired the Education and Events committee,
Special Programs working group and Education Steering committee for the United States Green Building Council (USGBC).
Jessie Casner, Chief Marketing Officer: Ms. Casner
joined the Company in November 2021 following our acquisition of VBI, where she led marketing and sales from September 2019 until the
acquisition. Ms. Casner was appointed our Chief Marketing Officer in March 2022 and brings over a decade of proven experience in
omnichannel marketing and storytelling. Prior to VBI, Ms. Casner operated her own marketing agency which developed and executed bespoke
go-to-market plans and built over 300 marketing strategies for businesses in diverse sectors. As an early team member of The Active
Network during its rapid growth phase (pre-IPO and acquisition), MOGL (now Figg, during series A + B funding), 2XU, and Total Gym, Ms.
Casner brings a strong knowledge and background in the CPG, wellness and tech industries.
Dany Vaiman, Senior VP Finance: Mr. Vaiman
has served as the Company’s Senior VP Finance since December 2022. From February 2022 through the closing of the Company’s
arrangement with Franchise Global Health Inc. (“Franchise”) on December 23, 2022 (the “Arrangement”), he served
as the Chief Financial Officer of Franchise. Prior to that, Mr. Vaiman served as Corporate Controller (from July 2018 to July 2021) and
as Assistant Controller (from June 2016 to June 2018) of Torex Gold Resources Inc.- a leading intermediate gold producer listed on the
TSX. For seven years, Mr. Vaiman was with Ernst & Young’s Toronto Audit Group, specializing in publicly listed TSX and SEC clients.
Mr. Vaiman is a Chartered Professional Accountant (CPA) and Chartered Accountant (CA) in Ontario, a Certified Public Accountant (CPA)
in Illinois, and holds a Bachelor of Business Administration (Honours) from the Schulich School of Business.
Director Nominees
Hussein Rakine, Chief Executive Officer and Director:
Dr. Rakine was appointed Chief Executive Officer and as a Director in April 2023. Prior to his appointment, Dr. Rakine led JustCBD’s
operations for the Company since its acquisition by the Company in February 2022. Mr. Rakine founded JustCBD in 2017 and was its Chief
Executive Officer until the acquisition. Dr. Rakine also previously founded various companies in the cannabis industry in the South
Florida region, including a distribution business and retail business. Dr. Rakine is a founding member of the Florida Hemp Council, a
member of the Young Presidents Organization (YPO) and was awarded the Forbes 30 under 30 class of 2022. Dr. Rakine received his BA and
MBA from Nova Southeastern University, and received his Doctorates in Strategic Leadership from Liberty University. Dr. Rakine’s
qualifications to serve on our Board include his immense understanding of the Company’s business as well as his substantial understanding
and experience of the cannabis industry.
Clifford Starke, President and Director: Mr. Starke was
appointed as President and a Director in December 2022. Prior to his appointment, from February 2022 through the closing of the Company’s
acquisition of the business, Mr. Starke served as the Executive Chairman and Chief Executive Officer of Franchise Global Health Inc. Since
May 2018, Mr. Starke has served as the Chairman of Hampstead Private Capital Ltd., a Bermuda based merchant bank investing in small to
mid-cap, high growth companies in various sectors and primarily focused in the medical cannabis industry. Mr. Starke has over 15 years
of investing and public markets experience and, over the last seven years, has acted as a financier, investor and operator of cannabis
companies. Mr. Starke holds a Bachelor of Arts degree in History from Queen's University. Mr. Starke’s qualifications to serve on
our Board include his M&A, public market investment and capital raising experience and knowledge of the cannabis industry.
John Timothy (Tim) Leslie, Director: Mr. Leslie
joined our Board of Directors in March 2022. He currently serves as an Executive in Residence at Beloit College as well as an independent
management consultant to large technology and retail firms in Latin America and Europe. Previously, Mr. Leslie served as Chief Executive
Officer of Leafly Inc., a cannabis information resource and technology company, from February 2019 to September 2020. Mr. Leslie
also served as Leafly’s Chairman of the Board from February 2019 to August 2019. Prior to his time at Leafly, Mr. Leslie held
various roles at Amazon.com for over 20 years, most recently as Vice President, Prime Video International from August 2013 to January
2019. Mr. Leslie also currently serves on the Board of Directors of Endocanna Health, Inc., a cannabis health care company,
and New Frontier Data, a cannabis business intelligence company. Mr. Leslie received a Bachelor of Arts in Economics from
Beloit College in 1989 and a Juris Doctor from Yale Law School in 1992. Mr. Leslie’s qualifications to serve on our Board include
his broad knowledge of the cannabis industry and his experience serving on other board of directors.
Dr. Beverley Richardson, Director: Dr. Richardson
joined our Board of Directors in March 2021 and is a renowned psychotherapeutic practitioner whose collaborative efforts and clinical
influence are reflected in some of the most compelling and effective addiction and behavioral health programs in North America, which
include: Sierra Tucson (Arizona), the Meadows (Arizona) and Betty Ford Center (California). She has a Doctorate Degree in Psychology
and is a B.C. Registered Clinical Counselor, Internationally Certified Eating Disorders Specialist, and EMDR Level II Trauma Therapist.
Dr. Richardson has integrated her extensive experience in health and wellness with her entrepreneurial spirit to form her nutraceutical
and bioscience research and development enterprises. From each of September 2020, March 2013, and October 2009 to the date hereof, Dr. Richardson
respectively served as: (i) the Vice President of International Business at Phytorigins Botanicals Ltd., a Canadian biotech company,
(ii) the Vice President of Science (Research and Development) at Phytology Nutraceuticals Ltd., a Canadian company focused on the
manufacturing and sales of plant based medicines and psychoactive therapeutics, (iii) the managing director of Peyto Enterprises
Ltd., a British Columbia company that Dr. Richardson founded operating in the lifestyle industry, and (iv) the managing director
of Legacies Advisory Group Inc., a British Columbia consultant agency that Dr. Richardson founded which provides expertise in the
planning, development and execution of addiction, behavioral health and wellness programs. Dr. Richardson obtained her Bachelor of
Science from the University of Toronto, Master of Science from the University of Pennsylvania, and Doctor of Psychology from California
Southern University, graduating magna cum laude. Ms. Richardson’s qualifications to serve on our Board include her broad medical
background, including her experience in plant based medicine and lifestyle industries.
Juan Carlos Gomez Roa, Director: Mr. Gomez
joined our Board of Directors in March 2021 and has more than 20 years of experience working in Latin America in the gaming and entertainment
industry. Mr. Gomez has been the Chief Executive Officer of Winner Group CIRSA since January 2000 and participated in the acquisition
of Winner Group CIRSA by the Blackstone Group in April 2018. He earned his Bachelor’s Degree in Psychology from St. Thomas
University in Colombia. Mr. Gomez is a director of several private companies in Colombia. Mr. Gomez’ qualifications to
serve on our Board include his vast knowledge of the Colombian business landscape and regulatory regime.
Edward Woo, Director: Mr. Woo joined our Board of Directors
in December 2022. From August 2021 through the closing of the Arrangement, he served as the President and Chief Operating Officer of Franchise.
Mr. Woo is a seasoned business executive with extensive experience in the consumer-packaged goods industry. Over the past 20 years, Mr.
Woo focused his efforts on the tobacco industry in the areas of sales, trade marketing, business strategy, political mobilization and
government affairs. As a former executive at Rothmans Benson & Hedges Inc. and Philip Morris International, Mr. Woo held several leadership
roles which included serving as Head of Regulatory & External Affairs at the Global Headquarters in Lausanne, Switzerland (2016 through
2021) and as Regional Communications Director Latin America and Canada (from 2013 through 2016). Mr. Woo has extensive global experience
and strong ties to the European markets and worked closely with over 30 markets in Europe, Middle East, Asia and Latin America on the
rollout of Philip Morris’ revolutionary IQOS product, with a particular focus on execution, supply chain, regulation and stakeholder
engagement. Mr. Woo holds a BA in Economics from the University of Western Ontario. Mr. Woo’s qualifications to serve on our Board
include his extensive experience in the consumer-packaged goods industry, his regulatory knowledge and experience and his ties to the
European markets.
Kevin Taylor, Director Nominee: Mr. Taylor is a nominee
to serve on our Board of Directors. Mr. Taylor is a distinguished executive with over 30 years of experience in various senior leadership
positions. Since June 2014, he has served as the President and CEO of Terei International Limited, a company providing merchant
banking services in the small to midcap markets. Since April 2022, Mr. Taylor has served as Chairman and CEO of House of Lithium, a Canadian
private equity firm, and from April 2022 until March 2023, he served as CEO and Chairman of SOL Global Investments Corp., a Canadian private
equity firm. Since March 2022, Mr. Taylor has served as the Chairman of NetraMark Holdings Inc., a Canadian publicly traded AI health
technology company trading under the symbol “AIAI.” Previously, , Mr. Taylor served as Vice President and General Manager
for Nortel Networks Carrier business in the Caribbean and Latin America, where he played a critical role in the expansion of the company's
telecommunications infrastructure and service offerings throughout the region. Mr. Taylor completed the Harvard Business School
TGMP program, a program designed for experienced executives seeking to enhance their leadership skills. Additionally, he holds a Bachelor
of Engineering - Science from the University of Western Ontario. Mr. Taylor’s qualifications to serve on our board include
his extensive investment and private equity experience and prior board memberships.
Thomas Solomon, Director Nominee: Mr. Solomon is a nominee
to serve on our Board of Directors. Mr. Solomon brings over a decade of capital markets experience, with a strong background in
natural resources and the cannabis industry. Since February 2018, Mr. Solomon has served as a Portfolio Manager at Pala Investments, a
Swiss-based investment firm, where he manages the equity portfolio within the Liquid Investment Strategy. This absolute return fund invests
globally across natural resources and related industries through equities and derivatives. Prior to joining Pala, from January 2011 through
February 2018, Mr. Solomon worked as an investment analyst in the Natural Resources team at Investec Asset Management in London. He provided
fundamental equity research across the Metals & Mining and Agricultural sectors, and was responsible for investments in several strategies,
including the highly-rated Global Gold Fund. Mr. Solomon earned both his Bachelor of Commerce – Finance & Accounting and his
Bachelor of Laws degrees, from the University of Sydney. Mr. Solomon’s qualifications to serve on our Board include his strong
capital markets and financial structuring experience.
Existing Directors not Standing for Re-Election
Dr. Annabelle Manalo-Morgan, Director: Dr. Manalo-Morgan
joined our Board of Directors in June 2021 and is a scientist, educator, author, mother of five, and a respected key opinion leader. She
is a cell and developmental biologist from Vanderbilt University in Nashville, Tennessee, with a background in neuroscience from Georgetown
University. She earned her PhD in Cell and Developmental Biology with a focus in Cardio-Oncology and has since become a philanthropist
and entrepreneur focused on pharmaceutical innovation and clinical trial research in medical cannabis. Currently, Dr. Manalo-Morgan
has been the founder and Chief Scientific Officer at Masaya Medical, Inc. since 2019 and has served as the lead scientist at Medolife
Rx since 2018. Dr. Manalo-Morgan’s term as a director will expire upon the conclusion of the Annual Meeting.
Brandon Konigsberg, Director: Mr. Konigsberg joined our
Board of Directors in July 2022. Mr. Konigsberg is a seasoned finance leader and a former executive of JPMorgan Chase. From 1996 through
2020, Mr. Konigsberg held leadership roles in Finance and Treasury and served as a CFO and COO for various growing and turnaround business
units at JPMC. He also managed the company’s global balance sheet, liquidity and interest rate risks. After 24-years at JPMC, Mr.
Konigsberg retired to focus on consulting, advisory and entrepreneurial ventures. He is currently the President and CFO of TradeUp, an
educational finance company which he joined as a consultant in 2021. Since 2019, Mr. Konigsberg has served as a Director and member of
the Audit Committee of GTJ REIT, Inc., a public industrial REIT. Since November 2021, he has also served as a Director, Chair of the Compensation
Committee and member of the Audit Committee of Chicago Atlantic Real Estate Finance, Inc., a specialty mortgage REIT. Mr. Konigsberg’s
term as a director will expire upon the conclusion of the Annual Meeting.
Marc Mastronardi, Director: Mr. Mastronardi
joined our Board of Directors in May 2021. He has been the Chief Stores Officer of Macy’s Inc. (NYSE: M) since February 2020. Prior
to his current role, Mr. Mastronardi held multiple roles at Macy’s since June 1997, including Macy’s Senior Vice President
of Store Operations and Customer Experience, where he was responsible for enterprise-wide store operations, sales and customer service.
Mr. Mastronardi has also led multiple functions within the organization responsible for the creation and expansion of new business
concepts, leased partnerships and diverse, owner-led businesses. He currently serves on the board of Delivering Good, NYC, the executive
committee of the Fashion Scholarship Fund, and is the executive sponsor of the Macy’s Working Families Employee Resource Group.
Mr. Mastronardi is a graduate of Boston College where he earned a Bachelor’s of Science in Finance and Accounting. Mr.
Mastronardi’s term as a director will expire upon the conclusion of the Annual Meeting.
Family Relationships
There are no family relationships between any of our officers, directors
or director nominees.
Involvement in Certain Legal Proceedings
Corporate Cease Trade Orders
To the knowledge of the Company, no proposed director of the Company
is, as at the date of the Proxy Statement, or has been, within 10 years before the date of this Proxy Statement, a director, chief executive
officer or chief financial officer of any company (including the Company) that,
(a) |
was subject to an order that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer; or |
|
|
(b) |
was subject to an order that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer. |
Bankruptcy and Insolvency
To the knowledge of the Company, no proposed director of the Company:
(a) |
is, as at the date of this Proxy Statement, or has been within 10 years before the date of this Proxy Statement, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or |
|
|
(b) |
has, within the 10 years before the date of this Proxy Statement, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director. |
Penalties and Sanctions
To the knowledge of the Company, no proposed director of the Company
has been subject to:
(a) |
any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or |
|
|
(b) |
any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed director. |
CORPORATE GOVERNANCE
Overall Role of the Board
Our Common Shares are listed on the Nasdaq Capital Market under the
symbol “FLGC.” Pursuant to our Bylaws and applicable Canadian law, our business and affairs are managed under the direction
of our Board. Directors are kept informed of the Company’s business through discussions with management, by reviewing materials
provided to them and by participating in meetings of the Board and its committees.
Board Leadership Structure
The Company is led by Mr. Rakine, who has served as Chief Executive
Officer since April 2023. The Board currently has not appointed a new Chairman of the Board.
Although the Board does not have a formal policy on whether the roles
of Chief Executive Officer and Chairman of the Board should be separated, we believe that our current Board leadership structure is suitable
for us. The Chief Executive Officer is the individual selected by the Board to manage our Company on a day to day basis, and his direct
involvement in our business operations makes him best positioned to lead productive Board strategic planning sessions and determine the
time allocated to each agenda item in discussions of our Company’s short- and long-term objectives. The Company has not developed
a written position description for the Chairman of the Board, the Chief Executive Officer or the chair of any board committee. The Company
has not adopted a specific maximum term limit for its Directors as it feels the shareholders of the Company should have the power to elect
directors who they feel are appropriate regardless of how long such directors have served on the Board.
Risk Oversight. One of the key functions
of our Board is informed oversight of our risk management process. Our Board administers this oversight function directly through our
Board as a whole, as well as through various standing committees of our Board that address risks inherent in their respective areas of
oversight. In particular, our Board is responsible for monitoring and assessing strategic risk exposure, and our Audit Committee has the
responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control
these exposures. The Audit Committee also has the responsibility to review with management the process by which risk assessment and management
is undertaken, monitor compliance with legal and regulatory requirements, and review the adequacy and effectiveness of our internal controls
over financial reporting. Our Nominating and Corporate Governance Committee is responsible for periodically evaluating our company’s
corporate governance policies and systems.
Diversity and Inclusion. Although we do not have a formal
diversity policy, the Nominating and Corporate Governance Committee, in accordance with its policies and procedures for director candidates,
seeks to identify candidates who will enhance the Board’s overall diversity. Our Board Diversity Matrix as of March 31, 2023 is
available at: www.floragrowth.com under Governance.
Policies Regarding the Representation of Women. The Nominating
and Corporate Governance Committee currently does not consider the level of representation of women on the Board or in executive officer
positions in identifying and nominating candidates for election or re-election to the Board or as executive officers of the Company. However,
informally, in identifying and selecting director or executive officer nominees, the Company values diversity, including, without limitation,
diversity of experience, perspective, education, race, gender and national origin, as one among the many factors taken into consideration
during the search process. The Company also considers, among other things, the qualifications, personal qualities, business background
and relevant experience of individual candidates as well as the overall composition of the Board or executive officers with a view to
identifying and selecting the most ideal and complementary candidates. The Nominating and Corporate Governance Committee and the Board
intend to consider on an ongoing basis whether the Company should adopt specific policies and practices regarding the representation of
women on the Board and in executive officer positions, including the setting of targets for such representation.
Currently there are two women directors, Dr. Annabelle Manalo-Morgan
and Dr. Beverley Richardson, representing approximately 22% of the Board, and one woman executive, Jessie Casner, Chief Marketing
Officer, representing approximately 14% of the total number of executives of the Company.
Director Independence. Our Board undertook a review of
the independence of each director. Based on information provided by each director concerning his or her background, employment, and affiliations,
our Board has determined that the Board meets independence standards under the applicable rules and regulations of the SEC, the listing
standards of Nasdaq and National Instrument 52-110 – Audit Committees (“NI 52-110”). The Board of Directors has
affirmatively determined that the following Directors and Director Nominees are “independent” as defined in the listing standards
of Nasdaq and under National Instrument 58-101 – Disclosure of Corporate Governance Practices (“NI 58-101”):
John Timothy Leslie, Dr. Beverley Richardson, Juan Carlos Gomez Roa, Marc Mastronardi, Edward Woo, Brandon Konigsberg, Kevin Taylor and
Tom Solomon. The Board of Directors has also determined that Hussein Rakine, Annabelle Manalo-Morgan and Clifford Starke are not “independent”
as defined in the listing standards of Nasdaq and under NI 52-110. In making these determinations, our Board considered the current and
prior relationships that each director has with our Company and all other facts and circumstances our Board deemed relevant in determining
their independence, including the beneficial ownership of our Common Shares by each director, and the transactions involving them described
in the section titled “Certain Relationships and Related Party Transactions.” While our Board has not appointed a lead Director,
the breadth and depth of experience of the independent Directors as a whole provides the Board with important leadership qualities. All
Directors, including independent Directors, are invited to openly provide their thoughts and opinions. The Board does not take any specific
steps to provide leadership for its independent Directors.
Code of Ethics. Our Board has adopted a Code of Conduct
and Ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer
and other executive and senior financial officers. The full text of our Code of Conduct and Ethics is available on our website. We intend
to disclose future amendments to certain provisions of our Code of Business Conduct and Ethics, or waivers of certain provisions as they
relate to our directors and executive officers, at the same location on our website or in our public filings. The information on our website
is not intended to form a part of or be incorporated by reference into this Proxy Statement. The Board monitors compliance
with the Code of Conduct and Ethics by requiring all action prohibited by the Code of Conduct and Ethics to be reported to
the Audit Committee, if involving a director or officer, and to the Chief Compliance Officer,
if involving anyone else.
Orientation and Continuing Education. The Nominating
and Corporate Governance Committee is responsible for the onboarding of new directors and the continuing education of existing directors.
Pursuant to its charter, the Nominating and Corporate Governance Committee develops and annually reviews orientation and education programs
for new directors and provides ongoing education for all directors. Upon joining the Board, each director is provided with an orientation
package regarding the role of the Board, its committees and its directors, and the nature and operation of the Company’s current
and past business. They are also provided with a copy of the Code of Ethics, the Audit Committee Charter and the Nominating and Corporate
Governance Charter The Board encourages directors to participate in continuing education opportunities in order to ensure that the directors
maintain or enhance their skills and abilities as directors, and maintain a current and thorough understanding of the Company’s
business.
Board Meetings. The Board meets regularly during
the year and holds special meetings and acts by unanimous written consent whenever circumstances require. Independent directors meet at
regularly scheduled executive sessions without management present. All of our directors are encouraged to attend our Annual Meeting.
The following table sets forth the number of Board and committee meetings
held and attendance by Directors for the fiscal year 2022. As provided below, except for Mr. Gomez Roa, each director attended at least
75 percent of the aggregate of the total number of Board meetings and the total number of meetings held by all committees of the Board
on which he or she served during 2022.
Attendance of Directors(in person or by telephone)
Director | |
Board
Meetings Attended | |
Audit
Committee Meetings
Attended | |
Compensation
Committee
Meetings
Attended | |
Nominating and
Corporate
Governance
Committee
Meetings
Attended |
Luis Merchan(1) | |
13 of 13 | |
N/A | |
N/A | |
N/A |
Clifford Starke(2) | |
N/A | |
N/A | |
N/A | |
N/A |
John Timothy Leslie | |
9 of 9 | |
6 of 6 | |
N/A | |
2 of 2 |
Dr. Beverley Richardson | |
12 of 13 | |
N/A | |
11 of 11 | |
N/A |
Juan Carlos Gomez Roa | |
11 of 13 | |
3 of 6 | |
N/A | |
1 of 3 |
Dr. Annabelle Manalo-Morgan | |
12 of 13 | |
N/A | |
N/A | |
1 of 1 |
Marc Mastronardi | |
12 of 13 | |
N/A | |
6 of 6 | |
3 of 3 |
Edward Woo (2) | |
N/A | |
N/A | |
N/A | |
N/A |
Brandon Konigsberg (3) | |
6 of 6 | |
2 of 2 | |
3 of 3 | |
N/A |
(1) |
Luis Merchan served as a Director during the fiscal year 2022. However, he resigned as a Director, effective April 12, 2023. |
|
|
(2) |
Mr. Starke and Mr. Woo each joined the Board as Directors on December 23, 2022. There were no Board or committee meetings in 2022 after their respective appointments. |
|
|
(3) |
Mr. Konigsberg joined the Board in July 2022. |
Board Committees.
Our Board has three standing committees: an Audit Committee; a Compensation
Committee; and a Nominating and Corporate Governance Committee. Each of the committees reports to the Board as it deems appropriate and
as the Board may request. The composition, duties and responsibilities of these committees are set forth below. In the future, our Board
may establish other committees, as it deems appropriate, to assist it with its responsibilities.
The table below provides current committee membership information:
Name |
|
Audit Committee |
|
Compensation
Committee |
|
Nominating and Corporate
Governance Committee |
John Timothy Leslie |
|
☒ |
|
|
|
☒ |
Juan Carlos Gomez Roa |
|
☒ |
|
|
|
|
Dr. Beverley Richardson |
|
|
|
Chair |
|
|
Marc Mastronardi |
|
|
|
☒ |
|
Chair |
Brandon Konigsberg |
|
Chair |
|
☒ |
|
|
Edward Woo |
|
|
|
|
|
☒ |
Committee Meetings. During 2022, our Audit Committee
held six meetings; our Compensation Committee held 11 meetings; and our Nominating and Corporate Governance Committee held three meeting.
Audit Committee. We have a standing audit committee
established in accordance with Section 3(a)(58)(A) of the Exchange Act. Our Audit Committee is responsible for, among other things:
|
● |
appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm; |
|
|
|
|
● |
discussing with our independent registered public accounting firm their independence from management; |
|
|
|
|
● |
reviewing, with our independent registered public accounting firm, the scope and results of their audit; |
|
|
|
|
● |
approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; |
|
|
|
|
● |
overseeing the financial reporting process and discussing with management and our independent registered public accounting firm any financial statements that we file with the SEC; |
|
|
|
|
● |
overseeing our financial and accounting controls and compliance with legal and regulatory requirements; |
|
|
|
|
● |
reviewing our policies on risk assessment and risk management; |
|
|
|
|
● |
reviewing related person transactions; and |
|
|
|
|
● |
establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters. |
The Audit Committee is composed of Messrs. Tim Leslie, Brandon
Konigsberg and Juan Carlos Gomez Roa, with Mr. Konigsberg serving as chair. Assuming all the directors included in Proposal 1 are
elected, the Audit Committee is expected to be composed of Messrs. Tim Leslie, Thomas Solomon and Kevin Taylor, with Mr. Taylor serving
as interim chair. Mr. Konigsberg and Mr. Solomon each qualify as an “audit committee financial expert” as such term has been
defined in Item 407(d)(5) of Regulation S-K. All Audit Committee members, as well new expected members, are “financially literate”
as defined in NI 110. Our Board of Directors has affirmatively determined that Messrs. Leslie, Solomon, Konigsberg, Woo and Gomez each
meet the definition of “independent director” for purposes of serving on the Audit Committee under the Nasdaq rules, the independence
standards under Rule 10A-3 of the Exchange Act and under NI 52-110. Both our independent registered public accounting firm and management
personnel periodically meet privately with our Audit Committee.
Our Board has adopted a written charter for the Audit Committee, which
is attached as Exhibit “A” to this Proxy Statement and is available on our website at: www.floragrowth.com under Governance.
The information on our website is not intended to form a part of or be incorporated by reference into this Proxy Statement.
The Report of the Audit Committee, which is set forth in this Proxy
Statement, further describes the Audit Committee’s responsibilities and its recommendation with respect to our audited consolidated
financial statements for the year ended December 31, 2022.
Compensation Committee. Our Compensation Committee is
responsible for, among other things:
|
● |
reviewing and approving the corporate goals and objectives, evaluating the performance and reviewing and approving the compensation of our executive officers; |
|
|
|
|
● |
reviewing and approving or making recommendations to our Board of Directors regarding our incentive compensation and equity-based plans, policies and programs; |
|
|
|
|
● |
reviewing and approving all employment agreement and severance arrangements for our executive officers; |
|
|
|
|
● |
making recommendations to our Board of Directors regarding the compensation of our directors; and |
|
|
|
|
● |
retaining and overseeing any compensation consultants. |
The Compensation Committee is composed of Dr. Beverley Richardson,
Brandon Konigsberg and Marc Mastronardi, with Dr. Richardson serving as chair. Assuming all the directors included in Proposal 1
are elected, the Compensation Committee is expected to be composed Dr. Beverly Richardson, Edward Woo and Juan Carlos Gomez Roa, with
Mr. Woo serving as chair. Our Board of Directors has affirmatively determined that Dr. Richardson and Messrs. Konigsberg, Mastronardi,
Woo and Gomez Roa each meet the definition of “independent director” for purposes of serving on the Compensation Committee
under the Nasdaq rules, the independence standards under Rule 10A-3 of the Exchange Act and under NI 58-101. Each member of our Compensation
Committee is a non-employee director (within the meaning of Rule 16b-3 under the Exchange Act).
The Compensation Committee may establish and delegate authority to
one or more subcommittees consisting of one or more of its members, when the Compensation Committee deems it appropriate to do so in order
to carry out its responsibilities. In carrying out its responsibilities, the Compensation Committee shall be entitled to rely upon the
advice and information that it receives in its discussions and communications with management and such experts, advisors and professionals
with whom the Compensation Committee may consult.
The Board is of the view that the members of the Compensation Committee
collectively have the knowledge, skills, experience and background to make decisions on the suitability of the Company’s compensation
policies and practices. A description of such skills and experience for the committee members is set out in this Proxy Statement under
the heading “Directors, Director Nominees & Executive Officers.”
Our Board has adopted a written charter for the Compensation Committee,
which is available on our website at: www.floragrowth.com under Governance. The information on our website is not intended to form
a part of or be incorporated by reference into this Proxy Statement.
Nominating and Corporate Governance Committee. Our Nominating
and Corporate Governance Committee is responsible for, among other things:
|
● |
identifying individuals qualified to become members of our Board of Directors, consistent with criteria approved by our Board of Directors; |
|
|
|
|
● |
overseeing succession planning for our executive officers; |
|
|
|
|
● |
periodically reviewing our Board of Directors’ leadership structure and recommending any proposed changes to our Board of Directors; |
|
|
|
|
● |
overseeing an annual evaluation of the effectiveness of our Board of Directors and its committees, including distributing annual written self and Board-assessments; and |
|
|
|
|
● |
developing and recommending to our Board of Directors a set of corporate governance guidelines. |
The Nominating and Corporate Governance Committee is composed of Mr.
Leslie, Mr. Woo and Mr. Mastronardi, with Mr. Mastronardi serving as chair. Assuming all the directors included in Proposal
1 are elected, the Nominating and Corporate Governance Committee is expected to be composed Dr. Richardson, Mr. Woo and Mr. Leslie, with
Mr. Leslie serving as chair. Our Board of Directors has affirmatively determined that Dr. Richardson and Messrs. Mastronardi, Woo
and Leslie each meet the definition of “independent director” for purposes of serving on the Nominating and Corporate Governance
Committee under the Nasdaq rules, the independence standards under Rule 10A-3 of the Exchange Act and under NI 58-101.
Our Board has adopted a written charter for the Nominating and Corporate
Governance Committee, which is available on our website at: www.floragrowth.com under Governance. The information on our website is not
intended to form a part of or be incorporated by reference into this Proxy Statement.
Director Nominations. The Nominating and Corporate Governance
Committee may solicit recommendations for the Board from any or all of the following sources: non-management directors, the Chief Executive
Officer, other executive officers, third-party search firms, or any other source it deems appropriate, including shareholders. The Committee
will evaluate all such proposed director candidates in the same manner, with no regard to the source of the initial recommendation of
such proposed director candidate. In identifying and evaluating proposed director candidates, the Nominating and Corporate Governance
Committee considers, in addition to the minimum qualifications and other criteria for Board membership, all facts and circumstances that
it deems appropriate or advisable, including, among other things:
|
1. |
The skills of the proposed director candidate. |
|
|
|
|
2. |
His or her depth and breadth of business experience. |
|
|
|
|
3. |
Whether the nominee would help achieve a mix that represents a diversity of background and experience, inclusive of gender, race, ethnicity, age, gender identity, gender expression, persons with disabilities and sexual orientation or other background characteristics. |
|
|
|
|
4. |
His or her independence. |
|
|
|
|
5. |
The needs of the Board. |
The Nominating and Corporate Governance Committee will consider candidates
recommended by the Company’s shareholders who are eligible to serve as directors in accordance with the Company’s Bylaws and
the OBCA.
Although we have not adopted a formal policy regarding the consideration
of Board candidates recommended by our shareholders, the Board believes that the procedures set forth in our Bylaws are currently sufficient
and that the establishment of a formal policy is not necessary. Without limiting the requirements contained in our Bylaws, the recommendation
must set forth (i) as to each person whom the shareholder proposes to nominate for election as a director (A) the name, age, business
address and residence address of the person, (B) the principal occupation or employment of the person, (C) the class and number of shares
of capital stock of the Company that are owned beneficially or of record by the person, (D) a description of all arrangements or
understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) and (E) any other
information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder; and (ii) as to the shareholder giving the notice (A) the name and record address of such shareholder as they appear
on the Company’s books, (B) the class and number of shares of capital stock of the Company that are owned beneficially and of record
by such shareholder and the beneficial owner, if any, on whose behalf the nomination is made and (C) any material interest of the shareholder
in such nomination. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve
as a director if elected.
While we do not have a formal diversity policy with respect to Board
composition, the Board believes it is important for the Board to have diversity of knowledge base, professional experience and skills,
and the Corporate Governance and Nominating Committee takes these qualities into account when considering director nominees for recommendation
to the Board. We believe diversity of perspectives and experience enhances our effectiveness. Given our commitment to diversity
and related considerations in our appointment, hiring, and promotion practices, we have not adopted a formal diversity policy or
specific diversity targets for determining Board membership or executive appointments. However, the Board remains committed to monitoring
best practices and corporate governance developments in this area.
Director Election – Majority Vote. The election
of each director requires the affirmative vote of the majority of votes present in person or represented by proxy at the Annual Meeting.
Shareholders will vote for the election of each individual director separately. “Withhold” votes and broker-non votes are
considered votes cast for the foregoing purpose, and will have no effect on the election of the director nominees.
Communications with the Company and the Board.
All interested parties, including shareholders, may communicate with the Company or our Board by letter addressed to Flora Growth Corp.
Attention: General Counsel, 3406 SW 26th Terrace, Suite C-1, Fort Lauderdale, Florida 33312.
Certain Relationships and Related Party Transactions
Except as set forth below, since January 1, 2021, there has not been
nor are there currently proposed any transactions or series of similar transactions to which we were or are to be a party in which the
amount involved exceeds the lesser of $120,000 or one percent (1%) of the average of our total assets at year-end for the last two completed
fiscal years and in which any director, executive officer, holder of more than 5% of the Common Shares or any member of the immediate
family of any of the foregoing persons had or will have a direct or indirect material interest.
Transactions with Related Parties
In connection with the Arrangement, on October 21, 2022, the Company
entered into a voting support agreement (the “Voting Support Agreement”) with Clifford Starke pursuant to which the Company
agreed to increase the size of the Board and appoint two nominees specified in writing by Mr. Starke who are qualified pursuant to the
OBCA and who consented in writing to act as directors of the Company (the “Starke Nominees”), subject to the terms and conditions
of the Voting Support Agreement. Upon appointment, the Company agreed that the Starke Nominees would comprise not less than 2/9ths
of the total size of the Board, and the Company agreed to nominate the Starke Nominees for election as directors of the Flora Board
at the Annual Meeting (and that such Starke Nominees were to comprise not less than 2/7 ths of the total number of directors
nominated by management of the Company for election to the Board at the Annual Meeting) and the Company is to use commercially reasonable
efforts (subject to fiduciary obligations) to ensure that the Starke Nominees are elected as directors. On December 23, 2022, Mr.
Starke was appointed as President and a director of the Company, along with Edward Woo as the second Stark Nominee. Both Mr. Starke and
Mr. Woo are standing for re-election at the Annual Meeting.
On December 16, 2020, the Company entered into amended consulting agreements
with each of Forbes & Manhattan, Inc. (“F&M”) and 2051580 Ontario Corp. (“2051580 Corp.”), entities controlled
by Mr. Bharti, our former Executive Chairman and Director. Pursuant to the terms of these agreements, each of F&M and 2051580
Corp. provided consulting services to the Company on an as needed basis and each received base compensation in the amount of CAD$12,500
per month. On December 29, 2021, we terminated both of these agreements and delivered a lump sum severance payment of 12 months’
base compensation in January 2022, as called for by the agreements.
On March 14, 2019, the Company entered into an agreement with 2227929
Ontario Corp., an entity controlled by Mr. Bharti, pursuant to which the Company utilized office space and shared services in exchange
for consideration of CAD$15,000 per month. This term of this agreement expired by its terms on March 14, 2022.
Indemnification Agreements and Directors’ and Officers’
Liability Insurance
We have entered into indemnification agreements with each of our executive
officers and directors. We also maintain an insurance policy that covers liabilities of our directors and officers arising out of claims
based on acts or omissions in their capacities as directors or officers.
Related Party Transaction Policy
Our Audit Committee is responsible for the review, approval, or ratification
of any potential conflict of interest transaction involving any of our directors or executive officers, director nominees, any person
known by us to be the beneficial owner of more than 5% of our outstanding capital stock, or any family member of or related party to such
persons, including any transaction required to be reported under Item 404(a) of Regulation S-K promulgated by the SEC.
In reviewing any such proposed transaction, our Audit Committee is
tasked with considering all relevant facts and circumstances, including the commercial reasonableness of the terms, the benefit or perceived
benefit, or lack thereof, to us, opportunity costs of alternate transactions, the materiality and character of the related person’s
direct or indirect interest and the actual or apparent conflict of interest of the related person.
Under our policy, employees are required to report any material transaction
or relationship that could result in a conflict of interest to our compliance officer.
Interest of Certain Persons in Matters to be Acted Upon
Other than as set forth in this Proxy Statement, the management of
the Company is not aware of any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, of any
person who has been a director or executive officer at any time since the beginning of the fiscal year ended December 31, 2022, or any
proposed nominee for election as a director, or any associate or affiliate of any of the foregoing persons, in any matter to be acted
upon at the Meeting other than the election of directors or the re-appointment of auditors. All of the directors and officers are entitled
to receive Stock Options pursuant to the Company’s Stock Option Plan and Awards pursuant to the 2022 Plan. See “Executive
Compensation” for further details.
SHARE OWNERSHIP
The following table sets forth information known to us regarding beneficial
ownership of Common Shares as of April 25, 2023 by:
|
● |
each person known by us to be the beneficial owner of more than 5% of outstanding Common Shares; |
|
|
|
|
● |
each of our executive officers, directors and director nominees; and |
|
|
|
|
● |
all of our executive officers, directors and director nominees as a group. |
Beneficial ownership is determined according to the rules of the SEC,
which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment
power over that security, including options and warrants that are currently exercisable or exercisable within 60 days of April 25, 2023.
In computing the number of shares beneficially owned by a person or entity and the percentage ownership of that person or entity in the
table below, all shares subject to options, warrants and restricted stock units held by such person or entity were deemed outstanding
if such securities are currently exercisable, or exercisable or would vest based on service-based vesting conditions within 60 days of
April 25, 2023. These shares were not deemed outstanding, however, for the purpose of computing the percentage ownership of any other
person or entity.
The beneficial ownership of our common stock is based on 137,239,644
Common Shares outstanding as of April 25, 2023.
Unless otherwise indicated, we believe that each person named in the
table below has sole voting and investment power with respect to all Common Shares beneficially owned by him.
Unless otherwise noted, the business address of each of these shareholders
is c/o Flora Growth Corp. 3406 SW 26th Terrace, Suite C-1, Fort Lauderdale, Florida 33312.
Beneficial Owner | |
Number of Common Shares Beneficially Owned(1) |
| |
Percentage of Common Shares Beneficially Owned(1) | |
Executive Officers | |
|
| |
| |
Hussein Rakine | |
| 8,617,019 |
(2) | |
| 6.3 | % |
Clifford Starke | |
| 9,717,813 |
(3)(12) | |
| 7.1 | % |
Elshad Garayev | |
| – |
| |
| – | |
Matthew Cohen | |
| 624,756 |
(4) | |
| * | |
Jason Warnock | |
| 427,468 |
(5) | |
| * | |
Jessie Casner | |
| 294,693 |
(6) | |
| * | |
Dany Vaiman(12) | |
| 436,529 |
| |
| * | |
Non-Employee Directors and Director Nominees | |
| |
| |
| | |
John Timothy Leslie | |
| 138,574 |
| |
| * | |
Dr. Beverley Richardson | |
| 366,666 |
(7) | |
| * | |
Juan Carlos Gomez Roa | |
| 2,259,175 |
(8) | |
| 1.6 | % |
Dr. Annabelle Manalo-Morgan | |
| 200,000 |
(9) | |
| | |
Marc Mastronardi | |
| 660,000 |
(10) | |
| | |
Edward Woo(12) | |
| 244,132 |
| |
| * | |
Brandon Konigsberg | |
| 100,000 |
| |
| * | |
Kevin Taylor | |
| 291,019 |
| |
| * | |
Thomas Solomon | |
| - |
| |
| - | |
5% or greater shareholders | |
| |
| |
| | |
ASH Group of Florida LLC(11) | |
| 6,925,000 |
| |
| 5.0 | % |
All directors and executive officers as a group of 14 persons | |
| 24,377,844 |
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10) | |
| 17.6 | % |
* |
Less than 1% |
(1) |
Percentages are based on 137,239,644 Common Shares issued and outstanding as of April 25, 2023. Information as to the number of Common Shares beneficially owned, or over which control or direction is exercised, directly or indirectly, not being within the direct knowledge of the Company, has been furnished by the respective directors individually or obtained from the System for Electronic Disclosure by Insiders and may include Common Shares owned or controlled by spouses and/or children of such individuals and/or companies controlled by such individuals or their spouses and/or children. |
(2) |
Includes 1,692,019 shares held directly by Mr. Rakine and 6,925,000 shares held by ASH Group of Florida LLC (“ASH Group”). Voting and dispositive power over the shares held by ASH Group is held by Ash Group’s board of directors, which is comprised of Ali Rakine, Hussein Rakine, our Chief Executive Officer and Director, Hassan Rakine and Solhail Mitha. Mr. Hussein Rakine disclaims beneficial ownership of all shares owned by Ash Group, except to the extent of his pecuniary interest therein. |
|
|
(3) |
Includes (i) 2,922,889 shares held directly by Mr. Starke, (ii) 671,583 shares held by BTF Investments, Inc, (iii) 6,006,934 shares held by Hampstead Private Capital Limited and (iv) 116,407 shares held by YT Research, Inc. Mr. Clarke is the sole director and equity owner of BTF Investments, Inc., Hampstead Private Capital Limited and YT Research, Inc. and thus may be deemed the beneficial owner of such shares. |
|
|
(4) |
Includes (i) 419,756 shares held directly by Mr. Cohen, (ii) 50,000 Common Shares underlying options that are exercisable until September 25, 2026, at an exercise price of $6.90 per share, (iii) 105,000 Common Shares underlying options that are exercisable until December 16, 2026, at an exercise price of $2.04 per share and (iv) 50,000 Common Shares underlying options that are exercisable until January 26, 2027, at an exercise price of $1.48 per share. |
|
|
(5) |
Includes (i) 335,801 shares held directly by Mr. Warnock, (ii) 16,667 Common Shares underlying options that are exercisable until September 20, 2026, at an exercise price of $5.20 per share and (iii) 75,000 Common Shares underlying options that are exercisable until December 16, 2026, at an exercise price of $2.04 per share. |
|
|
(6) |
Includes (i) 219,693 shares held directly by Ms. Casner and (ii) 75,000 Common Shares underlying options that are exercisable until January 26, 2027, at an exercise price of $1.48 per share. |
|
|
(7) |
Includes (i) 150,000 shares held directly by Dr. Richardson, (ii) 166,666 Common Shares underlying options that are exercisable until December 23, 2025, at an exercise price of $2.25 per share and (iii) 50,000 Common Shares underlying options that are exercisable until December 16, 2026, at an exercise price of $2.04 per share. |
|
|
(8) |
Includes (i) 2,042,509 shares held directly by Mr. Gomez, (ii) 166,666 Common Shares underlying options that are exercisable until December 23, 2025, at an exercise price of $2.25 per share and (iii) 50,000 Common Shares underlying options that are exercisable until December 16, 2026, at an exercise price of $2.04 per share. |
|
|
(9) |
Includes 200,000 Common Shares underlying options that are exercisable until December 16, 2026, at an exercise price of $2.04 per share. |
|
|
(10) |
Includes (i) 160,000 shares held directly by Mr. Mastronardi, (ii) 182,783 Common Shares underlying options that are exercisable until June 3, 2026, at an exercise price of $3.87 per share, (iii) 150,000 Common Shares underlying options that are exercisable until December 16, 2026, at an exercise price of $2.04 per share and (iv) 167,217 Common Shares underlying options that are exercisable until January 26, 2027, at an exercise price of $1.48 per share. |
|
|
(11) |
Represents 6,925,000 shares held by ASH Group. Voting and dispositive power over the shares held by ASH Group is held by Ash Group’s board of directors, which is comprised of Ali Rakine, Hussein Rakine, our Chief Executive Officer and Director, Hassan Rakine and Solhail Mitha. Mr. Hussein Rakine disclaims beneficial ownership of all shares owned by Ash Group, except to the extent of his pecuniary interest therein. |
|
|
(12) |
Messrs. Starke, Vaiman and Woo have reported as a group pursuant to the Amendment No. 1 on Form 13D filed by Mr. Starke with the SEC on April 21, 2023. The number of shares disclosed in the above table only reflect the shares held or controlled directly by each director or officer and each such person specifically disclaims beneficial ownership of the securities that he does not directly own or control. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Exchange Act and the rules thereunder require
our directors and executive officers and persons who beneficially own more than 10% of a registered class of our equity securities, to
file reports with the SEC relating to their share ownership and changes in such ownership. As a former foreign private issuer, our executive
officers, directors and greater than 10% shareholders were not subject to the Section 16(a) filing requirements during the fiscal
year ended December 31, 2022.
Securities Authorized for Issuance Under Equity
Compensation Plans
The following table provides information as of December 31, 2022 with
respect to our Common Shares that may be issued under the Company Stock Option Plan and 2022 Incentive Compensation Plan.
Plan Category | |
Number of
Securities
To Be Issued
Upon
Exercise Of
Outstanding
Options,
Warrants
and Rights | | |
Weighted
Average
Exercise
Price Of
Outstanding
Options,
Warrants
And Rights | | |
Number Of
Securities
Remaining
Available For
Future
Issuance
Under Equity
Compensation
Plans
(Excluding
Securities
Reflected in
the first
column) | |
Equity Compensation Plans Approved by Shareholders(1) | |
| | |
| | |
| |
Stock Option Plan | |
| 4,469,882 | | |
$ | 2.00 | | |
| 0 | |
2022 Incentive Compensation Plan | |
| 4,272,880 | (2) | |
$ | 0.72 | (3) | |
| 1,727,120 | |
Equity Compensation Plans Not Approved by Shareholders | |
| N/A | | |
| N/A | | |
| N/A | |
Total | |
| 8,742,762 | | |
| N/A | | |
| 1,727,120 | |
(1) |
Includes the Company’s Stock Option Plan and its 2022 Incentive Compensation Plan, which was approved by our shareholders in July 2022, and authorizes the granting of awards in any of the following forms: options, stock appreciation rights, restricted stock, restricted stock units, other equity-based awards and cash incentive awards. |
|
|
(2) |
Represents 1,335,203 Common Shares underlying options and 2,937,677 issued restricted Common Shares as of December 31, 2022. |
|
|
(3) |
The weighted exercise price represents the weighted exercise price of the 1,335,203 options outstanding under the 2022 Plan as of December 31, 2022. |
EXECUTIVE COMPENSATION
Overview
This section discusses the material components of our executive compensation
program for our named executive officers (“Named Executive Officers”) during our fiscal years ended December 31, 2022 and
December 31, 2021. As a “smaller reporting company,” we are required to provide executive compensation information for the
following individuals: (i) all individuals who served as the Company’s principal executive officer (“PEO”), during the
last completed fiscal year, regardless of compensation; (ii) the two most highly compensated executive officers (other than the PEO) who
were serving as executive officers of the Company at the end of the last completed fiscal year and whose total compensation was greater
than $100,000; and (iii) up to two additional persons who served as executive officers (other than as the PEO) during the last completed
fiscal year but were not serving in that capacity at the end of the fiscal year if their total compensation is higher than any of the
other two Named Executive Officers in the preceding group.
In 2022, our Named Executive Officers and their positions were as follows:
|
● |
Luis Merchan, our former Chief Executive Officer; |
|
|
|
|
● |
James Choe, our former Chief Strategy Officer; |
|
|
|
|
● |
Jessie Casner, our Chief Marketing Officer; and |
|
|
|
|
● |
Matthew Cohen, our General Counsel. |
This discussion may contain forward-looking statements that are based
on the Company’s current plans, considerations, expectations and determinations regarding future compensation programs. The actual
compensation programs that the Company adopts following the filing of this Annual Report may differ materially from the currently planned
programs summarized in this discussion.
Summary Compensation Table
The following table sets out the compensation for the Named Executive
Officers for the years ended December 31, 2022 and 2021:
Name and Principal Position |
|
Fiscal
Year |
|
|
Salary (US$)(1) |
|
|
Bonus (US$)(2) |
|
|
Common Shares Awards (US$)(3) |
|
|
Option
Awards (US$)(4) |
|
|
All Other
Compensation
(US$)(5) |
|
|
Total
Compensation
(US$) |
|
Luis Merchan, |
|
|
2022 |
|
|
|
378,310 |
|
|
|
- |
|
|
|
540,000 |
|
|
|
101,145 |
|
|
|
48,120 |
|
|
|
1,067,575 |
|
former Chief Executive Officer |
|
|
2021 |
|
|
|
326,250 |
|
|
|
419,000 |
|
|
|
1,529,998 |
|
|
|
189,777 |
|
|
|
- |
|
|
|
2,465,025 |
|
James Choe, |
|
|
2022 |
|
|
|
265,769 |
|
|
|
22,500 |
|
|
|
230,000 |
|
|
|
- |
|
|
|
- |
|
|
|
518,269 |
|
former Chief Strategy Officer |
|
|
2021 |
|
|
|
11,037 |
|
|
|
- |
|
|
|
- |
|
|
|
113,866 |
|
|
|
- |
|
|
|
124,903 |
|
Jessie Casner, |
|
|
2022 |
|
|
|
181,667 |
|
|
|
40,000 |
|
|
|
150,000 |
|
|
|
28,096 |
|
|
|
- |
|
|
|
399,763 |
|
Chief Marketing Officer |
|
|
2021 |
|
|
|
15,000 |
|
|
|
- |
|
|
|
- |
|
|
|
113,866 |
|
|
|
- |
|
|
|
128,866 |
|
Matthew Cohen, |
|
|
2022 |
|
|
|
245,833 |
|
|
|
60,000 |
|
|
|
270,000 |
|
|
|
109,388 |
|
|
|
31,250 |
|
|
|
716,471 |
|
General Counsel |
|
|
2021 |
|
|
|
75,000 |
|
|
|
60,000 |
|
|
|
- |
|
|
|
415,878 |
|
|
|
- |
|
|
|
550,878 |
|
(1) |
Salary amounts represent actual amount of base salary paid to each Named Executive Officer in the applicable year. |
|
|
(2) |
Bonus amounts for 2021 and 2022 represent the actual amount of cash bonuses earned during 2021 and 2022, respectively, under the Company’s annual bonus program. All such bonuses have been paid. |
|
|
(3) |
Value based on trading price of the Common Shares on the date of the respective grants. These grants include grants of restricted Common Shares. See “Narrative to the Summary Compensation Table—Equity-Based Compensation—Equity Awards to Named Executive Officers during 2021 and 2022.” for information regarding these grants. |
|
|
(4) |
Represents the aggregate grant date fair value of options granted to each Named Executive Officer, calculated in accordance with the Black Scholes method. |
|
|
(5) |
Represents $48,120 and $31,250 paid to Messrs. Merchan and Cohen, respectively, in the form of a monthly stipend pursuant to the terms of their respective employment agreements, which included reimbursement payments in connection with health insurance premiums paid during fiscal year 2022. |
Narrative to the Summary Compensation Table
Base Salaries
We use base salaries to recognize the experience, skills, knowledge,
and responsibilities required of all our employees, including our Named Executive Officers. Base salaries are reviewed annually, typically
in connection with our annual performance review process, and adjusted from time to time to realign salaries with market levels after
taking into account individual responsibilities, performance, and experience. For 2021 and the first two months of 2022, the annual base
salaries of our Named Executive Officers were $345,000 for Mr. Merchan, $200,000 for Mr. Choe, $120,000 for Ms. Casner and $225,000 for
Mr. Cohen. For the remainder of 2022, the annual base salaries of our Named Executive Officers were: $385,000 for Mr. Merchan, $290,000
for Mr. Choe, $200,000 for Ms. Casner and $250,000 for Mr. Cohen.
Annual Bonus/Non-Equity Incentive Plan Compensation
During fiscal year 2021, our Named Executive Officers were eligible
to earn a cash bonus at the full discretion of the Board. Any bonuses paid in 2021 were thus paid on a discretionary basis. For 2022,
our Named Executive Officers were eligible to earn a cash bonus under the Company’s annual bonus program based upon achievement
of both corporate and individual goals determined by the Board of Directors based on a target percentage of annual base salary. For
2022, the bonus targets as a percentage of base salaries were 100% for Mr. Merchan, 80% for Mr. Choe, 50% for Ms. Casner and 50% for Mr.
Cohen. The actual amounts of cash bonuses earned under the Company’s annual bonus program for 2022 were 0% of Messrs. Merchan and
Choes’s bonus targets, 24% of Mr. Cohen’s bonus target and 20% of Ms. Casner’s bonus target.
Equity-Based Compensation
The Company’s Named Executive Officers received grants of restricted
common shares and options under the Company’s option plan and 2022 Plan during 2021 and 2022. See below for details regarding such
grants.
As of December 31, 2022, under the stock option plan, 1,795,720
Common Shares had been issued pursuant to previous exercised options and 4,469,882 Common Shares were issuable under outstanding options.
Of such outstanding options, options to purchase 4,392,382 Common Shares had vested and were exercisable as of that date, with a weighted
average exercise price of $2.04 per Common Share. The Company no longer makes any new grants under the stock option plan.
As of December 31, 2022, under the 2022 Plan, 2,937,677 Restricted
Common Shares were issued and 1,335,203 Common Shares were issuable under outstanding options. Of such outstanding options, options to
purchase none had vested and were exercisable as of that date.
Company Stock Option Plan
The Company has a stock option plan whereby it may grant options for
the purchase of Common Shares to any director, consultant, employee or officer of the Company or its subsidiaries. The aggregate
number of shares that may be issuable pursuant to options granted under the Company’s stock option plan will not exceed 10% of the
issued Common Shares of the Company. The options are non-transferable and non-assignable and may be granted for a term not exceeding
five-years. The exercise price of the options will be determined by the Board at the time of grant, but in the event that such shares
are traded on any stock exchange, may not be less than the closing price of such shares on such exchange on the trading date immediately
precedent the date of grant, subject to all applicable regulatory requirements. The Company no longer makes any new grants under the stock
option plan.
2022 Plan
The 2022 Plan was adopted by the Company following shareholder approval
at the Company’s 2022 annual meeting (the “Shareholder Approval Date”).
The purpose of the 2022 Plan is to assist the Company and its subsidiaries
and other designated affiliates, which we refer to herein as “Related Entities”, in attracting, motivating, retaining and
rewarding high-quality executives and other employees, officers, directors consultants and other persons who provide services to the Company
or its Related Entities, by enabling such persons to acquire or increase a proprietary interest in the Company in order to strengthen
the mutuality of interests between such persons and the Company’s shareholders, and providing such persons with performance incentives
to expend their maximum efforts in the creation of shareholder value.
Shares Available for Awards
Under the 2022 Plan, the total number of Common Shares reserved and
available for delivery under the 2022 Plan (“Awards”) at any time during the term of the Plan shall be equal to 6,000,000
Common Shares. Awards issued in substitution for awards previously granted by a company acquired by the Company or a Related Entity, or
with which the Company or any Related Entity combines, do not reduce the limit on grants of Awards under the 2022 Plan. The maximum aggregate
number of shares that may be delivered under the 2022 Plan as a result of the exercise of stock options shall be 4,000,000 Common Shares.
If Proposal No. 6 included in this Proxy Statement is approved, the
total number of Common Shares reserved and available for delivery under the 2022 Plan will be increased to 19 million Common Shares and
the maximum aggregate number of shares that may be delivered under the 2022 Plan as a result of the exercise of stock options shall be
17 million Common Shares.
Subject to adjustment as provided in the 2022 Plan, in any fiscal year
of the Company during any part of which the 2022 Plan is in effect, no participant who is a member of the Board but is not also an employee
or consultant to the Company or Related Entity may be granted any Awards that have a “fair value” as of the date of grant,
as determined in accordance with FASB ASC Topic 718 (or any other applicable accounting guidance) that exceeds $250,000 in the aggregate.
The
committee designated and empowered by the Board to administer the 2022 Plan (“Committee”) is authorized to adjust
the limitations described in the preceding paragraph and is authorized to adjust outstanding Awards (including adjustments to exercise
prices of stock options and other affected terms of Awards) in the event that a dividend or other distribution (whether in cash, Common
Share or other property), recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase,
share exchange or other similar corporate transaction or event affects the Common Shares so that an adjustment is appropriate. The Committee
is also authorized to adjust performance conditions and other terms of Awards in response to these kinds of events or in response to
changes in applicable laws, regulations or accounting principles.
Eligibility
The
persons eligible to receive Awards under the 2022 Plan are the officers, directors, employees, consultants and other persons who provide
services to the Company or any Related Entity. The foregoing notwithstanding, only employees of the Company, or any parent corporation
or subsidiary company of the Company (as those terms are defined in Sections 424(e) and (f) of the Code, respectively), are eligible
for purposes of receiving any incentive stock options (“ISOs”). An employee on leave of absence may be considered as still
in the employ of the Company or a Related Entity for purposes of eligibility for participation in the 2022 Plan.
Administration
The
2022 Plan is to be administered by the Committee; provided, however, that except as otherwise expressly provided in the 2022 Plan, the
Board may exercise any power or authority granted to the Committee under the 2022 Plan. Subject to the terms of the 2022 Plan, the Committee
is authorized to select eligible persons to receive Awards, determine the type, number and other terms and conditions of, and all other
matters relating to, Awards, prescribe Award agreements (which need not be identical for each person who has been granted an Award under
the 2022 Plan which remains outstanding (a “Participant”)), and the rules and regulations for the administration of the 2022
Plan, construe and interpret the 2022 Plan and Award agreements, correct defects, supply omissions or reconcile inconsistencies therein,
and make all other decisions and determinations as the Committee may deem necessary or advisable for the administration of the 2022 Plan.
Stock
Options and Stock Appreciation Rights
The
Committee is authorized to grant stock options, including both ISOs, which can result in potentially favorable tax treatment to the participant,
and non-qualified stock options, and stock appreciation rights entitling the participant to receive the amount by which the fair market
value of a Common Share on the date of exercise exceeds the grant price of the stock appreciation right. The exercise price per share
subject to an option and the grant price of a stock appreciation right are determined by the Committee but may not be less than 100%
of the fair market value of a Common Share on the date the award is granted. An option granted to a person who owns or is deemed to own
stock representing 10% or more of the voting power of all classes of stock of the Company or any parent company (sometimes referred to
as a “10% owner”) will not qualify as an ISO unless the exercise price for the option is not less than 110% of the fair market
value of a Common Share on the date such ISO is granted.
For
purposes of the 2022 Plan, the term “fair market value” means the fair market value of Common Shares, Awards or other property
as determined by the Committee or under procedures established by the Committee. Unless otherwise determined by the Committee, the fair
market value of a Common Share as of any given date shall be the closing price of a Common Share on the business day that immediately
precedes the date as of which the value is being determined as quoted on the NASDAQ Stock Market or such other national or regional securities
exchange or market system constituting the primary market on which a Common Share is traded, as reported in The Wall Street Journal or
such other source as the Company deems reliable or, if there is no sale on that date, then on the last previous day on which a sale was
reported. The maximum term of each option or stock appreciation right, the times at which each option or stock appreciation right will
be exercisable, and provisions requiring forfeiture of unexercised options or stock appreciation rights at or following termination of
employment, generally are fixed by the Committee, except that no option or stock appreciation right may have a term exceeding ten years,
and no ISO granted to a 10% shareholder (as described above) may have a term exceeding five years (to the extent required by the Code
at the time of grant). Methods of exercise and settlement and other terms of options and stock appreciation rights are determined by
the Committee. The Committee thus may permit the exercise price of options awarded under the 2022 Plan to be paid in cash, shares, other
Awards or other property (including loans to participants).
Restricted
Stock and Restricted Stock Units
The
Committee is authorized to grant restricted stock and restricted stock units. Restricted stock is a grant of Common Shares which may
not be sold or disposed of, and which is subject to such risks of forfeiture and other restrictions as the Committee may impose. A participant
granted restricted stock generally has all of the rights of a shareholder of the Company, unless otherwise determined by the Committee.
An Award of restricted stock units confers upon a participant the right to receive Common Shares at the end of a specified deferral period,
subject to such risks of forfeiture and other restrictions as the Committee may impose. Prior to settlement, an Award of restricted stock
units carries no voting or dividend rights, or other rights associated with share ownership, although dividend equivalents may be granted,
as discussed below.
Dividend
Equivalents
The
Committee is authorized to grant dividend equivalents conferring on participants the right to receive, currently or on a deferred basis,
cash, Common Shares, other Awards or other property equal in value to dividends paid on a specific number of Common Shares or other periodic
payments. Dividend equivalents may be granted alone or in connection with another Award, may be paid currently or on a deferred basis
and, if deferred, may be deemed to have been reinvested in additional Common Shares, Awards or otherwise as specified by the Committee.
Bonus
Stock and Awards in Lieu of Cash Obligations
The
Committee is authorized to grant Common Shares as a bonus free of restrictions, or to grant Common Shares or other Awards in lieu of
Company obligations to pay cash under the 2022 Plan or other plans or compensatory arrangements, subject to such terms as the Committee
may specify.
Other
Stock-Based Awards
The
Committee or the Board is authorized to grant Awards that are denominated or payable in, valued by reference to, or otherwise based on
or related to Common Shares. The Committee determines the terms and conditions of such Awards.
Performance
Awards
The
Committee is authorized to grant performance awards to participants on terms and conditions established by the Committee. The performance
criteria to be achieved during any performance period and the length of the performance period is determined by the Committee upon the
grant of the performance award. Performance awards may be valued by reference to a designated number of Common Shares or by reference
to a designated amount of property including cash. Performance awards may be settled by delivery of cash, Common Shares or other property,
or any combination thereof, as determined by the Committee.
Other
Terms of Awards
Awards
may be settled in the form of cash, Common Shares, other Awards or other property, in the discretion of the Committee. The Committee
may require or permit participants to defer the settlement of all or part of an Award in accordance with such terms and conditions as
the Committee may establish, including payment or crediting of interest or dividend equivalents on deferred amounts, and the crediting
of earnings, gains and losses based on deemed investment of deferred amounts in specified investment vehicles. The Committee is authorized
to place cash, Common Shares or other property in trusts or make other arrangements to provide for payment of the Company’s obligations
under the 2022 Plan. The Committee may condition any payment relating to an Award on the withholding of taxes and may provide that a
portion of any Common Shares or other property to be distributed will be withheld (or previously acquired Common Shares or other property
be surrendered by the participant) to satisfy withholding and other tax obligations. Awards granted under the 2022 Plan generally may
not be pledged or otherwise encumbered and are not transferable except by will or by the laws of descent and distribution, or to a designated
beneficiary upon the participant’s death, except that the Committee may, in its discretion, permit transfers subject to any terms
and conditions the Committee may impose thereon.
Awards
under the 2022 Plan are generally granted without a requirement that the participant pay consideration in the form of cash or property
for the grant (as distinguished from the exercise), except to the extent required by law. The Committee may, however, grant Awards in
exchange for other Awards under the 2022 Plan, awards under other Company plans, or other rights to payment from the Company, and may
grant Awards in addition to and in tandem with such other Awards, rights or other awards.
Acceleration
of Vesting; Change in Control
The
Committee may, in its discretion, accelerate the exercisability, the lapsing of restrictions or the expiration of deferral or vesting
periods of any Award, and such accelerated exercisability, lapse, expiration and if so provided in the Award agreement or otherwise determined
by the Committee, vesting shall occur automatically in the case of a “change in control” of the Company, as defined in the
2022 Plan (including the cash settlement of stock appreciation rights which may be exercisable in the event of a change in control).
In addition, the Committee may provide in an Award agreement that the performance goals relating to any performance award will be deemed
to have been met upon the occurrence of any “change in control.”
Amendment
and Termination
The
Board may amend, alter, suspend, discontinue or terminate the 2022 Plan or the Committee’s authority to grant Awards without further
shareholder approval, except that shareholder approval must be obtained for any amendment or alteration if such approval is required
by law or regulation or under the rules of any stock exchange or quotation system on which Common Shares are then listed or quoted. Thus,
shareholder approval may not necessarily be required for every amendment to the 2022 Plan which might increase the cost of the 2022 Plan
or alter the eligibility of persons to receive Awards. Shareholder approval will not be deemed to be required under laws or regulations,
such as those relating to ISOs, that condition favorable treatment of participants on such approval, although the Board may, in its discretion,
seek shareholder approval in any circumstance in which it deems such approval advisable. Unless earlier terminated by the Board, the
2022 Plan will terminate at the earliest of (a) such time as no Common Shares remain available for issuance under the 2022 Plan, (b)
termination of the 2022 Plan by the Board, or (c) the tenth anniversary of the Shareholder Approval Date. Awards outstanding upon expiration
of the 2022 Plan shall remain in effect until they have been exercised or terminated or have expired.
Equity
Awards to Named Executive Officers during 2021 and 2022
Luis
Merchan
On
December 16, 2021, Mr. Merchan was granted 125,000 options to purchase Common Shares at an exercise price of $2.04. All of these options
vested on the grant’s first anniversary date, December 16, 2022.
During
2022, Mr. Merchan was granted the following restricted Common Share grants:
|
● |
On
August 23, 2022, Mr. Merchan was granted 102,040 restricted Common Shares which were set to vest on July 5, 2023. |
|
|
|
|
● |
On
October 5, 2022, Mr. Merchan was granted 328,358 restricted Common Shares which were set to vest on July 5, 2024. |
|
|
|
|
● |
On
December 5, 2022, Mr. Merchan was granted 468,085 restricted Common Shares which were set to vest on July 5, 2025. |
On
October 5, 2022, Mr. Merchan also was granted 367,347 options to purchase Common Shares at an exercise price of $0.67. These options
were subject to a vesting schedule that was based on the performance of the Company’s Common Share price relative to a designated
Cannabis ETF.
As
a result of his resignation in April 2023, Mr. Merchan forfeited all of these unvested restricted Common Shares as well the unvested
October 5, 2022 options.
James
Choe
On
December 16, 2021, Mr. Choe was granted 75,000 options to purchase Common Shares at an exercise price of $2.04. All of these options
vested on the grant’s first anniversary date, December 16, 2022. However, Mr. Choe forfeited these options due to the fact that
they remained unexercised following his resignation.
During
2022, Mr. Choe was granted the following restricted Common Shares grants:
|
● |
On
August 23, 2022, Mr. Choe was granted 102,040 restricted Common Shares which were set to vest on July 5, 2023. |
|
|
|
|
● |
On
October 5, 2022, Mr. Choe was granted 194,029 restricted Common Shares which were set to vest on July 5, 2024. |
Jessie
Casner
On
December 16, 2021, Ms. Casner was granted 75,000 options to purchase Common Shares at an exercise price of $2.04. All of these options
vested on the grant’s first anniversary date, December 16, 2022.
During
2022, Ms. Casner was granted the following restricted Common Shares grants:
|
● |
On August 23, 2022, Ms.
Casner was granted 102,040 restricted Common Shares which vest on July 5, 2023. |
|
|
|
|
● |
On October 5, 2022, Ms.
Casner was granted 37,313 restricted Common Shares which vest on July 5, 2024. |
|
|
|
|
● |
On December 5, 2022, Ms.
Casner was granted 53,191 restricted Common Shares which vest on July 5, 2025. |
On
October 5, 2022, Ms. Casner also was granted 102,041 options to purchase Common Shares at an exercise price of $0.67. These options vest
based on a vesting schedule that is based on the performance of the Company’s Common Share price relative to a designated Cannabis
ETF.
Matthew
Cohen
During
2021, Mr. Cohen was granted the following option grants:
|
● |
On
September 25, 2021, Mr. Cohen was granted 50,000 options to purchase Common Shares at an exercise price of $6.90. All of these options
vested on the grant’s first anniversary date, September 25, 2022. |
|
|
|
|
● |
On
December 16, 2021, Mr. Cohen was granted 30,000 options to purchase Common Shares at an exercise price of $2.04. All of these options
vested on August 30, 2022. |
|
|
|
|
● |
On
December 16, 2021, Mr. Cohen was granted 75,000 options to purchase Common Shares at an exercise price of $2.04. All of these options
vested on November 30, 2022. |
During
2022, Mr. Cohen was granted the following restricted Common Shares grants:
|
● |
On
August 23, 2022, Mr. Cohen was granted 102,040 restricted Common Shares which vest on July 5, 2023. |
|
|
|
|
● |
On
October 5, 2022, Mr. Cohen was granted 126,865 restricted Common Shares which vest on July 5, 2024. |
|
|
|
|
● |
On
December 5, 2022, Mr. Cohen was granted 180,851 restricted Common Shares which vest on July 5, 2025. |
On
October 5, 2022, Mr. Cohen also was granted 183,673 options to purchase Common Shares at an exercise price of $0.67.
These options vest
based on a vesting schedule that is based on the performance of the Company’s Common Share price relative to a designated Cannabis
ETF.
On
January 26, 2022, Mr. Cohen was granted 50,000 options to purchase Common Shares at an exercise price of $1.48. These options vested
on February 26, 2022.
Employee
Benefits
For
2021 and 2022, the Named Executive Officers were eligible to participate in such employee benefit plans and programs to the same extent
as the Company’s other full-time employees, subject to the terms and eligibility requirements of those plans.
Hedging
and Pledging Company Securities
Our
Insider Trading Policy prohibits our directors, officers, employees, family members of such persons and entities controlled by such persons
from engaging in hedging, short sales, or trading in publicly traded put or call options with respect to our securities. Additionally,
such policy prohibits the same persons from purchasing our securities on margin, borrowing against any account in which our securities
are held, or pledging our securities as collateral for a loan.
Compensation-Related
Risk Assessment
Our
Compensation Committee assesses and monitors whether any of our compensation policies and programs is reasonably likely to have a material
adverse effect on our Company. The Compensation Committee and management do not believe that the Company presently maintains compensation
policies or practices that are reasonably likely to have a material adverse effect on the Company’s risk management or create incentives
that could lead to excessive or inappropriate risk taking by employees. In reaching this conclusion, the Compensation Committee considered
all components of our compensation program and assessed any associated risks. The Compensation Committee also considered the various
strategies and measures employed by the Company that mitigate such risk, including: (i) the overall balance achieved through our use
of a mix of cash and equity, annual and long-term incentives and time-and performance-based compensation; (ii) our use of multi-year
vesting periods for equity grants; and (ii) the oversight exercised by the Compensation Committee over the performance metrics and results
under the Stock Option Plan and the 2022 Plan.
Outstanding
Equity Awards at 2022 Fiscal Year-End
The
following table summarizes the number of outstanding restricted shares and options in the Company held by our Named Executive Officers
as of December 31, 2022.
Option Award |
|
Share Award |
|
Name |
|
Grant Date |
|
|
Number of Securities Underlying Unexercised
Options (#) Exercisable |
|
|
Number
of Securities Underlying Unexercised Options (#) Unexercisable (2) |
|
|
Option
Exercise Price ($) |
|
|
Option
Expiration Date |
|
|
Number
of Shares or
Units of
Shares That
Have Not
Vested (#) |
|
|
Market
Value of
Shares or
Units of
Shares That
Have Not
Vested ($) (1) (2) |
|
Luis Merchan |
|
|
11/4/2020 |
|
|
|
666,666 |
|
|
|
- |
|
|
$ |
2.25 |
|
|
|
11/4/2025 |
|
|
|
- |
|
|
|
- |
|
|
|
|
12/16/2021 |
|
|
|
125,000 |
|
|
|
- |
|
|
$ |
2.04 |
|
|
|
12/16/2026 |
|
|
|
- |
|
|
|
- |
|
|
|
|
10/05/2022 |
|
|
|
- |
|
|
|
367,347 |
|
|
$ |
0.67 |
|
|
|
12/31/2029 |
|
|
|
- |
|
|
|
- |
|
|
|
|
8/23/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,040 |
|
|
|
23,265 |
|
|
|
|
10/05/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
328,358 |
|
|
|
74,866 |
|
|
|
|
12/05/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
468,085 |
|
|
|
106,723 |
|
James Choe |
|
|
12/16/2021 |
|
|
|
75,000 |
|
|
|
- |
|
|
$ |
2.04 |
|
|
|
12/16/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
8/23/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,040 |
|
|
|
23,265 |
|
|
|
|
10/05/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
194,029 |
|
|
|
44,239 |
|
Jessie Casner |
|
|
12/16/2021 |
|
|
|
75,000 |
|
|
|
- |
|
|
$ |
2.04 |
|
|
|
12/16/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
10/05/2022 |
|
|
|
0 |
|
|
|
102,041 |
|
|
$ |
0.67 |
|
|
|
12/31/2029 |
|
|
|
|
|
|
|
|
|
|
|
|
8/23/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,040 |
|
|
|
23,265 |
|
|
|
|
10/05/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,313 |
|
|
|
8,507 |
|
|
|
|
12/05/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,191 |
|
|
|
12,128 |
|
Matthew Cohen |
|
|
9/25/2021 |
|
|
|
50,000 |
|
|
|
- |
|
|
$ |
6.90 |
|
|
|
9/25/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
12/16/2021 |
|
|
|
30,000 |
|
|
|
|
|
|
$ |
2.04 |
|
|
|
12/16/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
12/16/2021 |
|
|
|
75,000 |
|
|
|
|
|
|
$ |
2.04 |
|
|
|
12/16/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2022 |
|
|
|
50,000 |
|
|
|
|
|
|
$ |
1.48 |
|
|
|
1/26/2027 |
|
|
|
|
|
|
|
|
|
|
|
|
10/05/2022 |
|
|
|
|
|
|
|
183,673 |
|
|
$ |
0.67 |
|
|
|
12/31/2029 |
|
|
|
|
|
|
|
|
|
|
|
|
8/23/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,040 |
|
|
|
23,265 |
|
|
|
|
10/05/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
126,865 |
|
|
|
28,925 |
|
|
|
|
12/05/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,851 |
|
|
|
41,234 |
|
(1) |
The market value of unvested
stock awards is based on the closing market price of our Common Shares on December 30, 2022 of $0.228. |
|
|
(2) |
See “Narrative
to the Summary Compensation Table—Equity-Based Compensation—Equity Awards to Named Executive Officers during 2021 and
2022.” for details regarding the vesting schedules of certain NEO options and restricted Common Share awards. |
Director
Compensation
As
a Named Executive Officer of the Company, information regarding the compensation for Mr. Merchan for his services as an executive officer
in 2022 is set forth in the section titled “Summary Compensation Table” above. Mr. Merchan did not receive additional compensation
for his service as a director.
The
following table provides summary information concerning compensation paid or accrued by us to or on behalf of our directors for services
rendered to us during the last fiscal year.
Name | |
Fees Earned or Paid in Cash ($) | | |
Shares Awards ($)(1) | | |
Option Awards ($) | | |
Total ($) | |
Luis Merchan(2) | |
| — | | |
| — | | |
| — | | |
| — | |
Clifford Starke(3) | |
| — | | |
| — | | |
| — | | |
| — | |
John Timothy Leslie | |
| 58,000 | | |
| 43,750 | | |
| 84,290 | | |
| 186,040 | |
Dr. Beverley Richardson | |
| 63,000 | | |
| 52,500 | | |
| | | |
| 115,500 | |
Juan Carlos Gomez Roa | |
| 56,000 | | |
| 52,500 | | |
| — | | |
| 108,500 | |
Dr. Annabelle Manalo-Morgan(4) | |
| — | | |
| — | | |
| — | | |
| — | |
Marc Mastonardi | |
| 63,000 | | |
| 52,500 | | |
| — | | |
| 115,500 | |
Edward Woo (5) | |
| — | | |
| — | | |
| 31,068 | | |
| 31,068 | |
Brandon Konigsberg | |
| 34,000 | | |
| 35,000 | | |
| 84,290 | | |
| 153,290 | |
(1) |
Represents
restricted common shares awarded in March 2023 in consideration for services rendered in 2022. |
|
|
(2) |
Mr.
Merchan is a Named Executive Officer of the Company for 2022. The table does not include compensation paid to him in connection with
his service as director. Mr. Merchan did not receive additional compensation for his service as director in 2022. As a Named Executive
Officer of the Company, information regarding compensation for Mr. Merchan for his services as an executive officer in 2022 is set
forth in the section titled “Summary Compensation Table” above. |
|
|
(3) |
Mr.
Starke is the Company’s President and his compensation reflected above represents compensation for his services as President
of the Company. He did not receive additional compensation for his services as director in 2022. Mr. Starke’s appointment as
President was effective December 23, 2022, and as a result, did not receive any compensation for 2022. |
|
|
(4) |
During
the fourth fiscal quarter of 2021, the Company entered into an agreement with Dr. Manalo-Morgan, a member of our board of directors,
to serve in the additional capacity as Medical Advisor to the Company. In connection with this agreement, Dr. Manalo-Morgan is responsible
for developing and identifying medical applications of cannabinoids for the Company for the treatment of various ailments and (ii)
supporting the Company’s public relations efforts and assisting the Company with its media engagements. For these services,
the Company pays her $15,000 per month for so long as the agreement remains in place. As a result, Dr. Manalo-Morgan does not receive
any compensation in consideration for her service as a director. |
|
|
(5) |
Represents
an option awarded in March 2023 in consideration for joining the Company’s Board in 2022. |
The
table below sets forth the aggregate number of share options of each non-employee director outstanding as of December 31, 2022. The below
does not include any grants of restricted Common Shares granted in 2023 in consideration for services rendered in fiscal year 2022.
Name | |
Share
Options | |
John Timothy Leslie | |
| 100,000 | |
Dr. Beverley Richardson | |
| 216,666 | |
Juan Carlos Gomez Roa | |
| 216,666 | |
Marc Mastonardi | |
| 500,000 | |
Edward Woo | |
| 0 | |
Dr. Annabelle Manalo-Morgan | |
| 200,000 | |
Brandon Konigsberg | |
| 100,000 | |
Director
Compensation Narrative
During
2022, each independent board member received $10,000 per quarter for their services as board members . In addition, the chairperson of
the Company’s Audit Committee received $5,000 per quarter and the chairpersons of the Compensation and Nominating and Corporate
Governance committees each received $3,750 per quarter. In addition, non-Chair committee members received $2,000 per quarter for each
committee served upon.
Employment
and Consulting Agreements, Arrangements or Plans
The
following describes the respective employment or consulting agreements entered into by the Company and its Named Executive Officers that
are in effect as of the date hereof.
Luis
Merchan
Employment
Agreement
Effective
March 1, 2022, Mr. Merchan and our subsidiary, Flora Growth Management Corp. (“Flora Management”), entered into
an employment agreement, pursuant to which Mr. Merchan served as the President of Flora Management and as the Company’s Chief
Executive Officer until his resignation on April 12, 2023.
Mr. Merchan’s
employment agreement provided for a base salary of $385,000, an annual discretionary bonus opportunity targeted at 100% of base salary
and the opportunity to participate in any equity compensation plan, other incentive compensation programs and other health, benefit and
incentive plans offered to other senior executives of the Company. Mr. Merchan is also entitled to paid time off and holiday pay
in accordance with Flora Management’s policies.
Mr. Merchan’s
employment agreement provides that during the term of his employment and for a period of 12 months following the expiration, resignation
or termination of his employment, Mr. Merchan agrees not to (i) engage in any competing business in certain geographic regions,
provided, however, that Mr. Merchan may own five percent or less of the outstanding stock of any publicly traded corporation or
other entity that engages in a competing business, (ii) solicit for the purpose of conducting a competing business any customer or prospective
customer of Flora Management, us or any of our affiliates in a line of business that we, Flora Management, or any of our affiliates conducts
or plans to conduct as of the date of Mr. Merchan’s termination or (iii) solicit or employ any person who is, or was at any
time during the two-year period prior to Mr. Merchan’s termination, an employee with a senior management position at Flora
Management, us or any of our affiliates.
The
foregoing description of the employment agreement is only a summary and is qualified in its entirety by reference to the full text of
the employment agreement, which is filed as Exhibit 10.4 to the Annual Report.
Separation
Agreement
On April
12, 2023, Luis Merchan tendered his resignation as both Chairman of the Board and as the Company’s Chief Executive Officer, with
such resignation becoming effective on such date (the “Merchan Separation Date”). In connection with Mr. Merchan’s
resignation, on the Merchan Separation Date, the Company entered into a Separation Agreement and Release with Mr. Merchan (the “Merchan
Separation Agreement”), pursuant to which Mr. Merchan will be entitled to the following benefits:
|
● |
a
cash severance payment in the amount of $385,000 (the “Cash Payment”), representing one years’ base salary, paid
in eight equal monthly instalments commencing May 1, 2023; |
|
|
|
|
● |
a
cash payment in the amount of $24,000 to cover health insurance premiums for a period of twelve months (“Health Insurance Payment”),
payable on December 1, 2023; and |
|
|
|
|
● |
1,600,000
newly privately issued Common Shares. |
In
the event the Company closes a debt financing in which it receives gross proceeds of $5 million or more (a “Debt Financing”),
the Health Insurance Payment, if unpaid, and any remaining instalments of the Cash Payment shall be accelerated and payable within three
business days of the closing of the Debt Financing.
The
Merchan Separation Agreement additionally includes a customary general release of claims by Mr. Merchan in favor of the Company and certain
related persons and parties.
The
foregoing description of the Merchan Separation Agreement is only a summary and is qualified in its entirety by reference to the full
text of the Merchan Separation Agreement, which is filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on April
18, 2023.
Jessie
Casner
Effective
March 1, 2022, Ms. Casner and our subsidiary, Flora Management, entered into an employment agreement, pursuant to which Ms. Casner serves
as the Company’s Chief Marketing Officer.
Ms.
Casner’s employment agreement provides for an annual base salary of $200,000 (as may be increased by our Board), an annual discretionary
bonus opportunity targeted at 50% of her base salary and the opportunity to participate in any equity compensation plan, other incentive
compensation programs and other health, benefit and incentive plans offered to other senior executives of the Company. Ms. Casner is
also entitled to paid time off and holiday pay in accordance with Flora Management’s policies. In addition, upon termination of
Ms. Casner’s employment agreement without “Cause” or resignation by Ms. Casner for “Good Reason,” as those
terms are defined in the employment agreement, Ms. Casner will, conditioned upon her execution of a separation and release agreement,
be eligible to receive the following payments:
|
● |
an
aggregate amount equal to one half (0.5X) her base salary at the rate in effect on her last day of engagement (the “Casner
Severance Payment”) which shall be paid in a lump sum on the third business day following the Release Effective Date (the “Payment
Date”); |
|
|
|
|
● |
a
$2,000 monthly cash payment to cover health insurance premiums for a period of up to twelve months; and |
|
|
|
|
● |
a
pro rata share of her discretionary annual bonus relating to the year in which her employment ceases. |
In
the event Ms. Casner is terminated without “Cause” or Ms. Casner resigns for “Good Reason” following a “Change
in Control,” as those terms are defined in her employment agreement (a “Casner Change in Control Termination”), Ms.
Casner will be eligible to receive the payments set forth above, provided however that the Casner Severance Payment shall be increased
to Ms. Casner’s base salary, payable as set forth above.
In
the event that Ms. Casner’s employment terminates as a result of “Disability,” as such term is defined in the employment
agreement, or death, Ms. Casner or her estate, as applicable, conditioned upon her or its execution of a separation and release agreement,
will be eligible to receive her pro rata share of her discretionary annual incentive bonus (at no less than target in the event of death).
In addition, in the event of Ms. Casner’s death, Ms. Casner’s estate shall be entitled to the fully vested but unpaid rights
as required by the terms of any bonus or other incentive pay plan or any other employee benefit plan.
Ms.
Casner’s employment agreement provides that during the term of her engagement and for a period of 12 months following the expiration,
resignation or termination of her employment, Ms. Casner agrees not to (i) engage in any competing business in certain geographic
regions, provided, however, that Ms. Casner may own five percent or less of the outstanding stock of any publicly traded corporation
or other entity that engages in a competing business, (ii) solicit for the purpose of conducting a competing business any customer
or prospective customer of Flora Management, us or any of our affiliates in a line of business that we, Flora Management, or any
of our affiliates conducts or plans to conduct as of the date of Ms. Casner’s termination or (iii) solicit or employ any person
who is, or was at any time during the two-year period prior to Ms. Casner’s termination, an employee with a
senior management position at Flora Management, us or any of our affiliates
The
foregoing description of the employment agreement is only a summary and is qualified in its entirety by reference to the full text of
the employment agreement, which is filed as Exhibit 10.7 to the Annual Report.
Matthew
Cohen
Effective
March 1, 2022, Mr. Cohen and our subsidiary, Flora Management, entered into an employment agreement, pursuant to which Mr. Cohen serves
as the Company’s General Counsel.
Mr.
Cohen’s employment agreement provides for an annual base salary of $250,000 (as may be increased by our Board), an annual discretionary
bonus opportunity targeted at 50% of his base salary and the opportunity to participate in any equity compensation plan, other incentive
compensation programs and other health, benefit and incentive plans offered to other senior executives of the Company. Mr. Cohen is also
entitled to paid time off and holiday pay in accordance with Flora Management’s policies. In addition, upon termination of Mr.
Cohen’s employment agreement without “Cause” or resignation by Mr. Cohen for “Good Reason,” as those terms
are defined in the employment agreement, Mr. Cohen will, conditioned upon his execution of a separation and release agreement, be eligible
to receive the following payments:
|
● |
an
aggregate amount equal to his base salary at the rate in effect on his last day of engagement (the “Cohen Severance Payment”)
which half of such Cohen Severance Payment shall be paid in a lump sum on the third business day following the Release Effective
Date (the “Initial Payment Date”) with the remaining half of the Cohen Severance Payment to be paid ratably over the
12 months following the Release Effective Date; |
|
|
|
|
● |
a $2,000 monthly cash payment
to cover health insurance premiums for a period of up to twelve months; and |
|
|
|
|
● |
a pro rata share of her
discretionary annual bonus relating to the year in which his employment ceases. |
In
the event Mr. Cohen is terminated without “Cause” or Mr. Cohen resigns for “Good Reason” following a “Change
in Control,” as those terms are defined in her employment agreement (a “Cohen Change in Control Termination”), Mr.
Cohen will be eligible to receive the payments set forth above, provided however that the Cohen Severance Payment shall be increased
to 1.5x Mr. Cohen’s base salary, payable as set forth above.
In
the event that Mr. Cohen’s employment terminates as a result of “Disability,” as such term is defined in the employment
agreement, or death, Mr. Cohen or his estate, as applicable, conditioned upon his or its execution of a separation and release agreement,
will be eligible to receive his pro rata share of his discretionary annual incentive bonus (at no less than target in the event of death).
In addition, in the event of Mr. Cohen’s death, Mr. Cohen’s estate shall be entitled to the fully vested but unpaid rights
as required by the terms of any bonus or other incentive pay plan or any other employee benefit plan.
Mr.
Cohen’s employment agreement provides that during the term of his engagement and for a period of 12 months following the expiration,
resignation or termination of his employment, Mr. Cohen agrees not to (i) engage in any competing business in certain geographic
regions, provided, however, that Mr. Cohen may own five percent or less of the outstanding stock of any publicly traded corporation or
other entity that engages in a competing business, (ii) solicit for the purpose of conducting a competing business any customer
or prospective customer of Flora Management, us or any of our affiliates in a line of business that we, Flora Management, or any
of our affiliates conducts or plans to conduct as of the date of Mr. Cohen’s termination or (iii) solicit or employ any person
who is, or was at any time during the two-year period prior to Mr. Cohen’s termination, an employee with a
senior management position at Flora Management, us or any of our affiliates.
The
foregoing description of the employment agreement is only a summary and is qualified in its entirety by reference to the full text of
the employment agreement, which is filed as Exhibit 10.6 to the Annual Report.
James
Choe
Effective
March 1, 2022, Mr. Choe and our subsidiary, Flora Management”, entered into an employment agreement, pursuant to which Mr.
Choe served as the Company’s Chief Strategy Officer until his resignation on December 16, 2022.
Mr. Choe’s
employment agreement provided for a base salary of $290,000, an annual discretionary bonus opportunity targeted at 80% of base salary
and the opportunity to participate in any equity compensation plan, other incentive compensation programs and other health, benefit and
incentive plans offered to other senior executives of the Company. Mr. Choe was also entitled to paid time off and holiday pay in accordance
with Flora Management’s policies.
BUSINESS
OF THE MEETING
Financial
Statements
The
audited consolidated financial statements for the fiscal year ended December 31, 2022, together with the auditor’s report thereon,
will be presented to the Company’s shareholders for review at the Annual Meeting and were mailed to the Company’s shareholders
with the Notice of Meeting and this Circular. No vote by the shareholders is required with respect to this matter.
PROPOSAL
NO. 1 – ELECTION OF DIRECTORS
The
Nominating and Corporate Governance Committee recommended for nomination, and the Board of Directors nominated the following persons
for election as members of our Board of Directors at the Annual Meeting of shareholders, who will hold office until the next annual meeting
of the Company or until his or her successor is elected or appointed.
|
● |
Hussein Rakine |
|
|
|
|
● |
Clifford Starke |
|
|
|
|
● |
John Timothy Leslie |
|
|
|
|
● |
Beverly Richardson |
|
|
|
|
● |
Edward Woo |
|
|
|
|
● |
Juan Carlos Gomez Roa |
|
|
|
|
● |
Kevin Taylor |
|
|
|
|
● |
Thomas Solomon |
The
section titled “Directors, Director Nominees & Executive Officers” included in this Proxy Statement contains more information
about the leadership skills and other experience that caused the Nominating and Corporate Governance Committee and the Board of Directors
to determine that these nominees should serve as directors of the Company.
We
believe that each of these director nominees possess the experience, skills, and qualities to fully perform his or her duties as a director
and contribute to our success. Our director nominees have been nominated because they possess the highest standards of personal integrity,
interpersonal and communication skills, are highly accomplished in their fields, understand the interests and issues that are important
to our shareholders, and are able to dedicate sufficient time to fulfilling their obligations as directors. Our director nominees as
a group complement each other with their respective experiences, skills, and qualities. While our director nominees make up a diverse
group in terms of age, gender and professional experience, together they comprise a cohesive body in terms of Board process and collaboration.
Vote
Required. The process for voting for election of each director will be by individual voting and not by slate. The Shareholders can
vote for or withhold from voting on the election of each director on an individual basis. The election of each director requires the
affirmative vote of the majority of votes present in person or represented by proxy at the Annual Meeting.
THE
BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” EACH OF THE NOMINEES DISCUSSED ABOVE AND PROXIES RECEIVED
WILL BE SO VOTED UNLESS A SHAREHOLDER HAS SPECIFIED CONTRARY INSTRUCTIONS IN THE PROXY.
PROPOSAL
NO. 2 - RE-APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our
Audit Committee and Board has recommended that shareholders re-appoint Davidson & Company LLP (“Davidson”) as our independent
registered public accounting firm for the 2023 fiscal year. Davidson & Company LLP has served as the Company’s independent
registered public accounting firm since its appointment on October 30, 2020. In recommending Davidson as the Company’s independent
registered public accounting firm for 2023, the Audit Committee and Board considered several factors, including:
|
(1) |
The
professional qualifications of Davidson, the lead audit partner, and other key engagement personnel. |
|
|
|
|
(2) |
Davidson’s
independence and its processes for maintaining its independence. |
|
|
|
|
(3) |
The
appropriateness of Davidson’s fees for audit and non-audit services. |
|
|
|
|
(4) |
The
results of management’s and the Audit Committee’s annual evaluations of the qualifications, performance and independence
of Davidson. |
The
Board is soliciting proxies from Shareholders in favor of the re-appointment of Davidson & Company LLP as the Company’s auditors,
to hold office for the fiscal year ending December 31, 2022, and to authorize the Board to determine their remuneration for the 2023
fiscal year.
A
representative from Davidson is not expected to attend the Annual Meeting of shareholders.
Vote
Required. The affirmative vote of a simple majority of the valid votes cast at the Annual Meeting is required to re-appoint Davidson
& Company as the Company’s auditors for the fiscal year ending December 31, 2022 and to authorize the Board to fix their remuneration.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RE-APPOINTMENT OF DAVIDSON & COMPANY LLP AS THE COMPANY’S AUDITORS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023 AND AUTHORIZING THE BOARD TO FIX THEIR REMUNERATION, AND PROXIES EXECUTED AND RETURNED WILL
BE SO VOTED UNLESS A SHAREHOLDER HAS SPECIFIED CONTRARY INSTRUCTIONS IN THE PROXY.
Fees
and Services of Independent Registered Public Accounting Firm
The
table below summarizes the fees and expenses billed to us by Davidson for the years ended December 31, 2022 and 2021.
Year | |
Audit Fees | | |
Audit-Related Fees | | |
Tax Fees | | |
All Other
Fees | | |
Total | |
2022 | |
$ | 336,000 | | |
$ | 349,500 | | |
$ | -- | | |
$ | -- | | |
$ | 685,500 | |
2021 | |
$ | 200,000 | | |
$ | 123,500 | | |
$ | -- | | |
$ | -- | | |
$ | 323,500 | |
Audit
Fees. Audit fees consist of services rendered by an independent registered public accounting firm for the audit
of our consolidated financial statements (including tax services performed to fulfill the auditor’s responsibility under generally
accepted auditing standards) and our internal control over financial reporting, reviews of the interim financial statements.
Audit-Related
Fees. Audit-related fees relate to assurance and associated services that traditionally are performed by the independence auditor
including SEC filings, comfort letter, consents and comment letters in connection with regulatory filings.
Tax
Fees. Tax fees consist of services rendered by an external auditor for tax compliance, tax consulting and tax planning.
All
Other Fees. All other fees are for any other permissible work that is not an Audit, Audit-Related or Tax Fee.
Policy
for Approval of Audit and Permitted Non-Audit Services
Our
Audit Committee reviews and pre-approves the scope and the cost of audit services related to us and permissible non-audit services performed
by the independent auditors, other than those for de minimis services which are approved by the Audit Committee prior to the completion
of the audit. All of the services related to our Company provided by Davidson listed above have been pre-approved by the Audit
Committee.
AUDIT
COMMITTEE REPORT
The
following report of the Audit Committee does not constitute soliciting material and should not be deemed filed with the SEC nor shall
this information be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that
the Company specifically incorporates it by reference into a filing.
Our
Audit Committee consists of Chair, Brandon Konigsberg, and members, John Timothy Leslie and Juan Carlos Gomez Roa. The Board has determined
that each Audit Committee member is “independent,” as independence for Audit Committee members is defined in the applicable
Nasdaq listing standards and rules of the SEC and by NI 52-110. The Board also determined that all members of the Audit Committee are
financially literate as such term is defined by NI 52-110, and Mr. Konigsberg qualifies as an Audit Committee financial expert,
as such term is defined in Item 407 of Regulation S-K. Although designated as Audit Committee financial experts, the Audit Committee
Chair and members are not accountants for the Company nor, under SEC rules, an “expert” for purposes of the liability provisions
of the Securities Act or for any other purpose.
The
role of the Audit Committee is to (a) oversee the accounting and financial reporting processes of the Company and the audits of the
Company’s financial statements; (b) take, or recommend that the Board of the Company take, appropriate action to oversee the
qualifications, independence and performance of the Company’s independent auditors; and (c) prepare the report required by the
rules of the SEC to be included in the Company’s annual proxy statement.
The
Audit Committee influences the overall tone for quality financial reporting, sound internal controls, and ethical behavior. Management
is responsible for the preparation, presentation and integrity of the Company’s financial statements, for the appropriateness of
the accounting and reporting policies that are used by the Company, and for the establishment and effectiveness of internal controls
and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. The independent auditors
are responsible for auditing the Company’s consolidated financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (“PCAOB”), expressing an opinion as to the conformity of such financial statements with generally
accepted accounting principles, expressing an opinion on the effectiveness of internal control over financial reporting (when required),
and for reviewing the Company’s interim consolidated financial statements.
The
independent auditors report directly to the Audit Committee. The Audit Committee has the sole authority and responsibility to recommend
to the Board the nomination of the independent auditors for approval by the shareholders on an annual basis. The Audit Committee is directly
responsible for the appointment, retention, termination, compensation, retention, evaluation and oversight of the work of the independent
auditors for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company.
In
2022, the Audit Committee met and held discussions with management and Davidson, the Company’s independent registered public accounting
firm. The Audit Committee discussed with management and Davidson the Company’s audited consolidated financial statements and policies
and procedures designed to reduce the likelihood of events of non-compliance with rules and regulations, including discussions of the
quality, not just the acceptability, of accounting policies and principles, significant judgments and estimates, system of internal control
over financial reporting, and clarity of disclosures, including items reported as Critical Auditing Matters in the report of the independent
auditor. The Audit Committee reviewed the annual plan and scope of work to be performed by Davidson, and met outside of the presence
of management with Davidson to discuss their respective audit results, evaluations of the Company’s internal controls, and the
overall quality of the Company’s financial reporting. Consistent with the requirements of the Sarbanes-Oxley Act of 2002 and the
rules promulgated thereunder, the Audit Committee discussed with Davidson those matters required to be discussed pursuant to PCAOB Auditing
Standard 1301, “Communications with Audit Committees,” and the rules of the SEC, and reviewed a letter from Davidson disclosing
such matters.
The
Audit Committee also discussed with Davidson the firm’s independence from the Company and its management team and reviewed the
written disclosures and letter from Davidson pursuant to applicable requirements of the PCAOB regarding the independent registered public
accounting firm’s communications with the Audit Committee concerning independence, and considered the compatibility of non-audit
services, if any, with Davidson’s independence.
Based
upon the reports and discussions described above, the Audit Committee, in accordance with its responsibilities, recommended to the Board
that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December
31, 2022.
AUDIT
COMMITTEE
Brandon
Konigsberg (Chair)
John
Timothy Leslie
Juan
Carlos Gomez Roa
PROPOSAL
NO. 3 – APPROVAL OF SHARE CONSOLIDATION
The
Company proposes to effect a share consolidation, also commonly referred to as a ‘reverse stock split’ (the “Share
Consolidation”), of the issued and outstanding Common Shares on the basis of a consolidation ratio to be selected by the Board
within a range between 5 pre-consolidation shares for 1 post-consolidation share and 25 pre-consolidation shares for 1 post-consolidation
share (the “Range”). The Board will have the discretion to select any ratio for the Share Consolidation falling within the
Range upon receipt of shareholder approval and prior to the filing of an amendment (the “Consolidation Amendment”) to the
Company’s Articles.
Background
If
the Share Consolidation Resolution (as hereinafter defined) is approved by shareholders at the Annual Meeting and implemented by the
Board, the Common Shares will be consolidated into a lesser number of Common Shares, at the ratio selected by the Board, which shall
apply uniformly to the Common Shares. If the Share Consolidation Resolution is approved by shareholders at the Annual Meeting, the Board
will have the sole discretion to implement the Share Consolidation at any time prior to the next annual meeting of shareholders of the
Company and at such ratio (within the Range) as they may determine in accordance with the Share Consolidation Resolution. The Board believes
that the Range of Share Consolidation ratios (rather than a single ratio) will provide it with the flexibility to implement the Share
Consolidation in a manner designed to maximize the anticipated benefits to the Company as it is not possible to predict market conditions
at the time the Share Consolidation would be implemented.
Even
with shareholder approval of the Share Consolidation, the Board may determine, in its sole discretion, not to proceed with the Share
Consolidation. No further action on the part of the shareholders will be required to either implement or abandon the Share Consolidation.
If the Consolidation Amendment effecting the Share Consolidation has not been filed prior to the next annual meeting of shareholders
of the Company, the Board will abandon the Share Consolidation. For the reasons described below, however, the Board currently intends
to effect the Share Consolidation if approved by shareholders at the Annual Meeting.
Purpose
of Share Consolidation
Meet
certain continued listing requirements of the Nasdaq Stock Market LLC
To
continue our listing on the Nasdaq Stock Market LLC (“Nasdaq”), the Company must comply with Nasdaq listing rules, which
include a minimum bid price requirement of $1.00 per share (the “Bid Price Requirement”). As previously disclosed, on July
8, 2022, the Company received a deficiency letter from The Nasdaq Capital Market Listing Qualifications Department advising that, based
on the Company’s closing bid price for the preceding 30 consecutive business days, the Company does not comply with the Bid Price
Requirement as set forth in Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company received
a grace period of 180 calendar days, until January 4, 2023, to regain compliance with the Bid Price Requirement. On January 5, 2023,
the Company received an extension of 180 calendar days from Nasdaq following the expiration of the initial 180 calendar day prior to
regain compliance at any time before July 3, 2023. The Nasdaq determination was based on the Company meeting the continued listing requirement
for market value of publicly-held shares and all other applicable requirements for initial listing on the Nasdaq Capital Market with
the exception of the Bid Price Requirement, and the Company’s written notice of its intention to cure the deficiency during the
second compliance period by effecting a share consolidation, if necessary.
If
at any time before July 3, 2023, the bid price of the Common Shares closes at or above $1.00 per share for a minimum of ten consecutive
business days, Nasdaq will provide written notification to the Company that it has achieved compliance with the Bid Price Requirement.
Nasdaq, in its sole discretion, may extend ten day period if necessary. If the Company does not regain compliance with the Bid Price
Requirement by July 3, 2023, Nasdaq will provide written notification to the Company that the Common Shares will be subject to delisting.
At such time, the Company may appeal the delisting determination to a Nasdaq Hearings Panel. The Company would remain listed pending
the Nasdaq Hearings Panel’s decision. There can be no assurance that, if the Company does appeal a subsequent delisting determination,
such appeal would be successful.
Delisting
would adversely affect the liquidity of Common Shares because alternatives to Nasdaq, such as the OTC Bulletin Board and pink sheets,
are generally considered less efficient markets. An investor would likely find it less convenient to sell or to obtain accurate quotations
in seeking to buy the Common Shares on an over-the-counter market. Many investors would likely refrain from buying or selling the Common
Shares due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national
exchange or for other reasons. The Board believes that the Share Consolidation is a potentially effective means for the Company to maintain
compliance with the Bid Price Requirement and to avoid, or mitigate, the likely adverse consequences of the Common Shares being delisted
from Nasdaq by producing the immediate effect of increasing the bid price of the Common Shares.
If
shareholders approve the Share Consolidation at the Annual Meeting and if the Board determines to effect the Share Consolidation and
Consolidation Amendment, it must be completed no later than June 16, 2023 in order to allow for sufficient time to timely regain compliance
with the Bid Price Requirement.
Potentially
improve the marketability and liquidity of the Common Shares
Our
Board believes that the increased market price of the Common Shares expected as a result of implementing the Share Consolidation could
improve the marketability and liquidity of the Common Shares and encourage trading in the Common Shares.
Appeal
to a broader range of investors to generate greater investor interest in the Company
We
believe that the Share Consolidation and the corresponding increase in our stock price may make the Common Shares more attractive to
a broader range of institutional and other investors. Many brokerage firms and institutional investors have internal policies and practices
that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks
to their customers, which reduces the number of potential purchasers of the Common Shares. In addition, some of those policies and practices
may function to make the processing of trades in low-priced stocks economically less attractive to brokers. Investors may also be dissuaded
from purchasing lower-priced stocks because the brokerage commissions, as a percentage of the total transaction, tend to be higher for
such stocks. Moreover, the Company believes the analysts at many brokerage firms do not monitor the trading activity or otherwise provide
coverage of lower-priced stocks. Further, lower-priced stocks have a perception in the investment community as being riskier and more
speculative, which may negatively impact not only the price of the Common Shares, but also the Company’s market liquidity.
Certain
Risks Associated with the Share Consolidation
There
are certain risks associated with the Share Consolidation and we cannot accurately predict or assure you that the Share Consolidation
will produce or maintain its desired results. However, the Board believes that the benefits to the Company and the shareholders outweigh
the risks and recommends that you vote in favor of the Share Consolidation.
We
cannot assure you that the proposed Share Consolidation, if effected, will increase our stock price
On
April 28, 2023, the closing sale price of the Common Shares was $0.21 per share. We expect that the Share Consolidation, if effected,
will increase the per share trading price of the Common Shares. However, we cannot assure you that the market price per share of the
Common Shares after the Share Consolidation will rise or remain constant in proportion to the reduction in the number of Common Shares
outstanding before the Share Consolidation. The effect of the Share Consolidation on the per share trading price of the Common Shares
cannot be predicted with any certainty and the history of share consolidations for other companies is varied, particularly since some
investors may view a share consolidation negatively. In many cases, the market price of a company’s shares declines after a share
consolidation, or the market price of a company’s shares immediately after a share consolidation does not reflect a proportionate
or mathematical adjustment to the market price based on the ratio of the share consolidation. In addition, the per share trading price
of the Common Shares may decrease due to factors unrelated to the Share Consolidation. Other factors, such as our financial results,
market conditions and the market perception of our business, may adversely affect the per share trading price of the Common Shares. Accordingly,
there can be no assurance that the total market capitalization of the Common Shares after the implementation of the Share Consolidation
will be equal to or greater than the total market capitalization before the Share Consolidation or that the per share market price of
the Common Shares following the Share Consolidation will increase in proportion to the reduction in the number of Common Shares outstanding
in connection with the Share Consolidation.
Although
there can be no assurance concerning the trading price of the Common Shares if the Share Consolidation is effected, or concerning future
fluctuations in the market price of the Common Shares after the Share Consolidation, when determining the Ratio, the Board will consider
external factors to minimize the risk of future share price fluctuations and maintaining the Bid Price Requirement.
The
proposed Share Consolidation may decrease the liquidity of the Common Shares and result in higher transaction costs
The
liquidity of the Common Shares may be negatively impacted by the Share Consolidation, given the reduced number of shares that would be
outstanding after the Share Consolidation, particularly if the per share trading price does not increase proportionately as a result
of the Share Consolidation. In addition, if the Share Consolidation is implemented, it will increase the number of shareholders who own
“odd lots” of fewer than 100 Common Shares on a post-consolidation basis. Brokerage commission and other costs of transactions
in odd lots are generally higher than the costs of transactions of shares in “round lots” of even multiples of 100 shares.
In addition, although we believe the Share Consolidation may enhance the marketability of the Common Shares to certain potential investors,
the Company cannot assure you that, if implemented, the Common Shares will be more attractive to investors. While our Board believes
that a higher stock price may help generate the interest of new investors, the Share Consolidation may not result in a per-share price
that will attract certain types of investors, such as institutional investors or investment funds, and such share price may not satisfy
the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of the Common Shares may
not improve as a result of a Share Consolidation and could be adversely affected by a higher per share price.
Procedure
for Effecting the Share Consolidation
If
the Share Consolidation Resolution is approved by shareholders at the Annual Meeting and the Board determines to implement the Share
Consolidation, the Company will effect the Share Consolidation (subject to receipt of all necessary regulatory approvals) through the
filing of the Amendment with the Director under the OBCA. The Share Consolidation will become effective on the date shown in the certificate
of amendment issued pursuant to the OBCA.
If,
at any time prior to the filing of the Amendment, notwithstanding shareholder approval, and without further action by the shareholders,
the Board, in its sole discretion, determines that it is in the Company’s best interests and the best interests of the shareholders
to delay the filing of the Amendment or abandon the Share Consolidation, the Share Consolidation may be delayed or abandoned. By voting
in favor of the Share Consolidation Proposal, you are expressly also authorizing the Board to delay, not to proceed with, and abandon,
the Share Consolidation if it should so determine, in its sole discretion, that such action is in the best interests of the Company and
its shareholders.
If
a Share Consolidation is effected, the Common Shares will have a new Committee on Uniform Securities Identification Procedures (CUSIP)
number, which is a number used to identify our equity securities, and stock certificates, if any, with the older CUSIP number will need
to be exchanged for stock certificates with the new CUSIP number by following the procedures described below. The Common Shares will
continue to be listed on Nasdaq under the symbol “FLGC” subject to any future change of listing of our securities, although
it will be considered a new listing with a new CUSIP number. The Share Consolidation is not intended to be, and will not have the effect
of, a “going private transaction” covered by Rule 13e-3 under the Exchange Act.
Effect
of the Share Consolidation
If
approved and implemented, the Share Consolidation will occur simultaneously for all of the Common Shares at the ratio selected by the
Board (within the Range) in accordance with the Share Consolidation Resolution and will affect all Common Shares uniformly. Except for
any variances attributable to fractional shares, the change in the number of issued and outstanding Common Shares that will result from
the Share Consolidation will cause no change in the capital attributable to the Common Shares and will not materially affect any shareholder’s
percentage ownership in the Company, even though such ownership will be represented by a smaller number of Common Shares. No fractional
post-consolidation Common Shares will be issued and no cash will be paid in lieu of fractional interests in post-consolidation Common
Shares. Any fractional interest in Common Shares resulting from the Share Consolidation will be rounded down to the nearest whole number.
In addition, the Share Consolidation will not materially affect any shareholder’s proportionate voting rights. The holder of each
Common Share outstanding after the Share Consolidation will be entitled to one vote in respect of all matters on which holders of Common
Shares are entitled to vote and each Common Share will be fully paid and non-assessable.
As
of the April 25, 2023, the Company has 137,239,644 Common Shares issued and outstanding. Following the completion of the proposed Share
Consolidation, the number of Common Shares issued and outstanding will depend on the ratio selected by the Board (within the Range) in
accordance with the Share Consolidation Resolution. The following table sets out the approximate number of Common Shares that would be
outstanding as a result of the Share Consolidation at the ratios indicated below:
Proposed
Common Share
Consolidation
Ratio(1) |
|
Approximate
Number of Outstanding Common Shares
(Post
Consolidation)(2) |
1
for 5 |
|
27,447,928 |
1
for 10 |
|
13,723,964 |
1
for 15 |
|
9,149,309 |
1
for 20 |
|
6,861,982 |
1
for 25 |
|
5,489,585 |
Notes:
(1) |
The ratios above are for
information purposes only and are not indicative of the actual ratio that may be adopted by the Board to effect the Share Consolidation. |
|
|
(2) |
Based on the number of
outstanding Common Shares as of April 25, 2023. |
The
implementation of the Share Consolidation alone would not affect the total shareholders’ equity of the Company or any components
of shareholders’ equity as reflected on the Company’s financial statements except: (i) to change the number of issued and
outstanding Common Shares; and (ii) to change the stated capital of the Common Shares to reflect the Share Consolidation.
The
Company is authorized to issue an unlimited number of Common Shares and the Share Consolidation will not have any effect on the number
of Common Shares that remain available for future issuance. The exercise or conversion price and the number of Common Shares issuable
under any convertible securities of the Company, including stock options or restricted share awards of the Company, will be proportionately
adjusted upon the Share Consolidation becoming effective.
Effect
on Beneficial Holders of Common Shares
If
a shareholder holds its Common Shares through an intermediary such as a bank, broker or other nominee, such nominee will be instructed
to effect the Share Consolidation on behalf of their beneficial holders holding the Common Shares. However, these banks, brokers or other
nominees may have different procedures than registered shareholders for processing the Share Consolidation. If you beneficially hold
your Common Shares through an intermediary, you are encouraged to contact your intermediary with any questions in this regard.
Effect
on Registered Holders of Common Shares
If
the Share Consolidation Resolution is approved at the Annual Meeting and the Board determines to implement the Share Consolidation, the
Company will send a letter of transmittal to registered shareholders which will provide instructions on how registered shareholders may
obtain new certificates representing the number of post-consolidation Common Shares to which they are entitled as a result of the Share
Consolidation. Upon receipt of a properly completed and signed letter of transmittal and the share certificate(s) referred to in such
letter of transmittal, the Company will arrange to have a new share certificate representing the appropriate number of post-consolidation
Common Shares delivered in accordance with the instructions provided by the holder in their letter of transmittal. No delivery of a new
certificate to a shareholder will be made until the shareholder has surrendered his, her or its current issued share certificates. Until
surrendered, each share certificate representing pre-consolidation Common Shares shall be deemed for all purposes to represent the number
of post-consolidation Common Shares to which the holder is entitled as a result of the Share Consolidation.
Certain
of our registered holders of Common Shares may hold some or all of their shares in book-entry form directly with the Company’s
transfer agent, Continental Stock Transfer & Trust Company. These shareholders do not have share certificates evidencing their ownership
of Common Shares. They are, however, provided with a statement reflecting the number of shares registered in their accounts. If a shareholder
holds registered shares in book-entry form with the transfer agent, no action needs to be taken to receive post-Share Consolidation shares.
If a shareholder is entitled to post-Share Consolidation shares, a transaction statement will automatically be sent to the shareholder’s
address of record indicating the number of Common Shares held following the Share Consolidation.
SHAREHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATE(S) UNLESS AND UNTIL REQUESTED TO DO SO FOLLOWING
THE ANNOUNCEMENT OF THE COMPLETION OF THE SHARE CONSOLIDATION.
Accounting
Matters
At
the effective time of the Share Consolidation, the stated capital attributable to the Common Shares on our balance sheet will be reduced
proportionately based on the Share Consolidation ratio (including a retroactive adjustment of prior periods), and the additional paid-in
capital account will be credited with the amount by which the stated capital is reduced. Reported per share net income or loss will be
higher because there will be fewer Common Shares outstanding. Our shareholders’ equity, in the aggregate, will remain unchanged.
The Company does not anticipate that any other accounting consequences, including changes to the amount of share-based compensation expense
to be recognized in any period, will arise as a result of the Share Consolidation.
Material
United States Federal Income Tax Considerations
The
following discussion is a summary of the material U.S. federal income tax consequences of the proposed Share Consolidation to us and
to U.S. Holders (as defined below) that hold shares of the Common Shares as capital assets for U.S. federal income tax purposes. This
discussion is based upon current provisions of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), existing
and proposed Treasury Regulations promulgated thereunder, current judicial decisions and administrative rulings, as of the date hereof,
all of which are subject to change or to differing interpretation, possibly with retroactive effect. Any such change may cause the U.S.
federal income tax consequences of the proposed Share Consolidation to vary substantially from the consequences summarized below. We
have not sought and will not seek any rulings from the Internal Revenue Service (the “IRS”) regarding the matters discussed
below and there can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences
of the proposed Share Consolidation.
This
summary does not address all aspects of U.S. federal income taxation that may be relevant to U.S. Holders (as defined below) in
light of their particular circumstances or to Shareholders who may be subject to special tax treatment under the Code, including, without
limitation, dealers in securities, commodities or foreign currency, holders who are treated as non-U.S. persons for U.S. federal income
tax purposes, certain former citizens or long-term residents of the United States, insurance companies, tax-exempt organizations, banks,
financial institutions, small business investment companies, regulated investment companies, holders who are S Corporations or other
pass through entities, real estate investment trusts, retirement plans, holders whose functional currency is not the U.S. dollar,
accrual method taxpayers subject to special tax accounting rules as a result of their use of financial statements, traders that mark-to-market
their securities or persons who hold their shares of the Common Shares as part of a hedge, straddle, conversion or other risk reduction
transaction. If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is the beneficial owner
of the Common Shares, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the
partner and the activities of the partnership. Accordingly, partnerships (and other entities treated as partnerships for U.S. federal
income tax purposes) holding the Common Shares and the partners in such entities should consult their own tax advisors regarding the
U.S. federal income tax consequences of the proposed Share Consolidation to them.
This
summary does not address any tax consequences other than certain U.S. federal income tax consequences of the Share Consolidation. The
state and local tax consequences, alternative minimum tax consequences, non-U.S. tax consequences and U.S. estate and gift tax consequences
of the proposed Share Consolidation are not discussed herein and may vary as to each U.S. Holder (as defined below). Furthermore, the
following discussion does not address any tax consequences of transactions effectuated before, after or at the same time as the proposed
Share Consolidation, whether or not they are in connection with the proposed Share Consolidation. This discussion should not be considered
as tax or investment advice, and the tax consequences of the Share Consolidation may not be the same for all Shareholders. U.S. Holders
(as defined below) should consult their own tax advisors to understand their individual federal, state, local and foreign tax consequences.
For
purposes of this discussion, a “U.S. Holder” is a beneficial owner of the Common Shares that, for U.S. federal income tax
purposes, is or is treated as (i) an individual who is a citizen or resident of the United States; (ii) a corporation (or any
other entity or arrangement taxable as a corporation) created or organized under the laws of the United States or any subdivision thereof;
(iii) an estate, the income of which is subject to U.S. federal income tax regardless of its source; or (iv) a trust if (1)
its administration is subject to the primary supervision of a court within the United States and all of its substantial decisions are
subject to the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code or (2)
it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person.
THIS
SUMMARY OF CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED SHARE CONSOLIDATION IS FOR GENERAL INFORMATION ONLY
AND IS NOT TAX ADVICE. EACH SHAREHOLDER IS URGED TO CONSULT WITH SUCH SHAREHOLDER’S OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES
OF THE PROPOSED SHARE CONSOLIDATION.
Tax
Consequences to the Company
We
believe that the proposed Share Consolidation will constitute a reorganization under Section 368(a)(1)(E) of the Code. Accordingly, we
should not recognize taxable income, gain or loss in connection with the proposed Share Consolidation.
Tax
Consequences to U.S. Holders
A
U.S. Holder generally should not recognize gain or loss upon the proposed Share Consolidation for U.S. federal income tax purposes, except
with respect to cash received in lieu of a fractional share of the Common Shares, as discussed below. A U.S. Holder’s aggregate
adjusted tax basis in the shares of the Common Shares received pursuant to the proposed Share Consolidation should equal the aggregate
adjusted tax basis of the shares of the Common Shares exchanged therefor (reduced by the amount of such basis that is allocated to any
fractional share of the Common Shares that is surrendered in exchange for cash in lieu of such fraction share). The U.S. Holder’s
holding period in the shares of the Common Shares received pursuant to the proposed Share Consolidation should include the holding period
in the shares of the Common Shares exchanged therefor. U.S. Treasury Regulations provide detailed rules for allocating the tax basis
and holding period of shares of Common Share surrendered in a recapitalization to shares received in the recapitalization. U.S. Holders
of shares of the Common Shares acquired on different dates and at different prices should consult their tax advisors regarding the allocation
of the tax basis and holding period of such shares.
A
U.S. Holder that, pursuant to the proposed Share Consolidation, receives cash in lieu of a fractional share of the Common Shares should
generally recognize capital gain or loss in an amount equal to the difference, if any, between the amount of cash received and the portion
of the U.S. Holder’s aggregate adjusted tax basis in the shares of the Common Shares surrendered that is allocated to such fractional
share. Such capital gain or loss will be short term if the pre-Share Consolidation shares were held for one year or less at the effective
time of the Share Consolidation and long term if held for more than one year. Long-term capital gains of individuals are subject to tax
at reduced rates.
A
U.S. Holder of the Common Shares may be subject to information reporting and backup withholding on cash paid in lieu of a fractional
share in connection with the proposed Share Consolidation. A U.S. Holder of the Common Shares will be subject to backup withholding if
such U.S. Holder is not otherwise exempt and such U.S. Holder does not provide its taxpayer identification number in the manner required
or otherwise fails to comply with applicable backup withholding tax rules. Backup withholding is not an additional tax. Any amounts withheld
under the backup withholding rules may be refunded or allowed as a credit against a U.S. Holder’s federal income tax liability,
if any, provided the required information is timely furnished to the IRS. U.S. Holders of the Common Shares should consult their own
tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption.
The
U.S. federal income tax discussion set forth above does not discuss all aspects of U.S. federal income taxation that may be relevant
to a particular Shareholder in light of such Shareholder’s circumstances and income tax situation. Accordingly, we urge you to
consult with your own tax advisor with respect to all of the potential U.S. federal, state, local and foreign tax consequences to you
of the Share Consolidation.
Material
Canadian Federal Income Tax Considerations
The
following summary describes the principal Canadian federal income tax considerations under the Income Tax Act (Canada) and the
regulations thereunder (collectively, the “Tax Act”) generally applicable to a holder of the Common Shares whose shares are
consolidated pursuant to the Share Consolidation and who, for purposes of the Tax Act and any applicable income tax treaty or convention,
and at all relevant times, is or is deemed to be a resident of Canada, holds its shares as capital property and deals at arm’s
length and is not affiliated with the Company (a “Canadian Holder”). Certain Canadian Holders that might not otherwise be
considered to hold the Company’s Common Shares as capital property may, in certain circumstances, be entitled to make the irrevocable
election permitted by subsection 39(4) of the Tax Act to have such Common Shares and all other “Canadian securities” (as
defined in the Tax Act) owned in the taxation year of the election and all subsequent taxation years deemed to be capital property. Canadian
Holders should consult their own tax advisors regarding this election.
This
summary is not applicable to: (i) a Canadian Holder that is a “financial institution” as defined in the Tax Act for the purposes
of the mark-to-market rules; (ii) a Canadian Holder for whom an interest in which would be a “tax shelter investment” as
defined in the Tax Act; (iii) a Canadian Holder that is a “specified financial institution” as defined in the Tax Act; (iv)
a Canadian Holder that is a corporation that has elected in the prescribed form and manner and has otherwise met the requirements to
use functional currency tax reporting as set out in the Tax Act; (v) a Canadian Holder that is exempt from income tax under the Tax Act;
or (vi) a Canadian Holder that has or will enter in a “derivative forward arrangement”, “synthetic disposition arrangement”,
or that receives dividends on the Common Shares under or as part of a “dividend rental arrangement”, as those terms are defined
in the Tax Act. Any such Canadian Holder to which this summary does not apply should consult its own tax advisor.
This
summary is based on the current provisions of the Tax Act, and Canadian counsel’s understanding of the current published administrative
and assessing policies and practices of the Canada Revenue Agency and takes into account all specific proposals to amend the Tax Act
that have been publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”),
and assumes that all such Tax Proposals will be enacted in the form proposed. No assurance can be given that the Tax Proposals will be
enacted in the form proposed or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative
or assessing practices of the CRA, whether by judicial, governmental, administrative or legislative action or interpretation, nor does
it take into account provincial, territorial or foreign income tax legislation or considerations.
This
summary is of a general nature only and is not intended to be, and should not be construed to be, legal or tax advice to any particular
holder. holders should consult their own tax advisors as to the tax consequences in their particular circumstances.
In
general, a Canadian Holder will not realize a capital gain or a capital loss as a result of the Share Consolidation, and in general the
aggregate adjusted cost base to a Canadian Holder of all its common shares will be the same after the Share Consolidation as it was before
the Share Consolidation.
Share
Consolidation Resolution
At
the Annual Meeting, shareholders will be asked to consider and, if thought appropriate, pass, with or without variation, the following
special resolution to approve the Share Consolidation (the “Share Consolidation Resolution”):
“BE
IT RESOLVED AS A SPECIAL RESOLUTION THAT:
|
(a) |
the
articles of Flora Growth Corp. (the “Company”) be amended to provide that the issued and outstanding common shares of
the Company (the “Common Shares”) be consolidated within a range between 5 pre-consolidation shares for 1 post-consolidation
share and 25 pre-consolidation shares for 1 post-consolidation share (the “Share Consolidation”), provided that any holders
of Common Shares on the date that the articles of amendment to give effect to such Share Consolidation become effective shall not
be entitled to receive any fractional Common Shares following the Share Consolidation and any fractional interest in Common Shares
will be rounded down to the nearest whole number; |
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(b) |
the
board of directors of the Company is hereby authorized to determine the ratio for the Share Consolidation within a range between
5 pre-consolidation shares for 1 post-consolidation share and 25 pre-consolidation shares for 1 post-consolidation share; |
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(c) |
any
one director or officer of the Company is authorized to make all such arrangements, to do all acts and things and to sign and execute
all documents and instruments in writing, whether under the corporate seal of the Company or otherwise, as may be considered necessary
or advisable to give full force and effect to the foregoing, the execution of any such document or the doing of any such other act
or thing being conclusive evidence of such determination; and |
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(d) |
notwithstanding
the approval of the shareholders of the Company as herein provided, the Share Consolidation must be implemented prior to the next
annual general meeting of shareholders of the Company and the directors of the Company be and are hereby authorized and empowered
to revoke or not act upon the above resolutions without further approval, ratification or confirmation of the shareholders of the
Company at any time before it is acted on.” |
Vote
Required. For the Share Consolidation to be approved and confirmed, the Share Consolidation Resolution must be passed by at least
two-thirds (2/3) of the votes cast with respect to the Share Consolidation Resolution by the shareholders of the Company present at the
Annual Meeting in person or by proxy.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE SHARE CONSOLIDATION RESOLUTION AND PROXIES EXECUTED AND RETURNED WILL BE SO
VOTED UNLESS A SHAREHOLDER HAS SPECIFIED CONTRARY INSTRUCTIONS IN THE PROXY.
PROPOSAL
NO. 4 – APPROVAL OF PREFERRED SHARES PROPOSAL
Background
The
Company is currently authorized to issue an unlimited number of Common Shares. The Company is proposing an amendment to the Articles
authorizing the issuance of an unlimited number of preferred shares, no par value per share, issuable in series, with such preferences,
powers and rights as shall be set forth in any resolution providing for the issuance thereof adopted by the Board, and to provide for
the rights, privileges, restrictions and conditions attaching to the Common Shares and the preferred shares, as a class. If shareholder
approval for the Preferred Shares Proposal is received, this amendment to the Articles will be implemented regardless of whether the
Share Consolidation is implemented. The full text of the proposed amendment is included in Exhibit “B” to this Proxy Statement.
This
proposed amendment authorizes the Company to issue up to an unlimited number of preferred shares, in such series, and containing such
preferences, powers and rights, as shall be determined by the Board, without further shareholder approval.
Reasons
for the Preferred Shares Proposal
The
Board believes that it is in the best interests of the Company to have the flexibility to issue preferred shares on such terms and conditions
determined to be prudent at a future date if such issuance is determined to be appropriate by the Board. Opportunities may arise in the
future, such as development opportunities or businesses becoming available for acquisition or favorable market conditions existing for
the sale of a particular type of preferred shares, that would require prompt action. Having preferred shares available for issuance by
the Company eliminates the delay and expense of seeking shareholder approval at the time of the issuance of such shares. Preferred shares
would also provide the Company with the flexibility necessary for possible future financing transactions, acquisitions, employee benefit
plans, and other corporate purposes. Preferred shares are particularly useful since the Board will be able to choose the exact terms
of the series of preferred shares at the time of issuance to respond to investor preferences, developments in types of preferred shares,
market conditions, as well as the nature of the specific transaction, without requiring additional shareholder approval. Preferred shares
would also allow the Company to offer equity that is potentially far less dilutive of the relative equity value of the holders of Common
Shares than would be the case if additional Common Shares were issued, and preferred shares can be subject to redemption, which also
limits dilution.
The
Company has no present plan or intention to issue any preferred shares. If the Board determines to issue preferred shares in the future,
no further action or authorization by shareholders would be necessary prior to the issuance of such preferred shares, unless such authorization
is otherwise required by applicable law or regulations.
Effect
of Preferred Shares on Current Shareholders
The
existence of the Company’s preferred shares would not, by itself, have any effect on the rights of holders of the Common Shares.
However, the issuance of one or more series of preferred shares in the future could affect the holders of the Common Shares in a number
of respects, including the following: (i) the issuance of preferred shares may subordinate the Common Shares to the preferred shares
in terms of dividend and liquidation rights, since preferred shares typically entitle the holder to satisfaction in full of specified
dividend and liquidation rights before any payment of dividends or distribution of assets on liquidation is made on Common Shares; (ii)
if voting or conversion rights are granted to the holders of preferred shares, the voting power of the Common Shares will be diluted;
and (iii) the issuance of preferred shares may result in a dilution of earnings per share of the present Common Shares.
Anti-Takeover
Effects
The
issuance of preferred shares may have the effect of discouraging or thwarting persons seeking to take control of the Company through
a tender offer, proxy fight or otherwise or seeking to bring about removal of incumbent management or a corporate transaction such as
a merger. For example, the issuance of preferred shares in a public or private sale, merger or in a similar transaction may, depending
on the terms of the series of preferred shares, dilute the interest of a party seeking to take over the Company. Further, the authorized
preferred shares could be used by the Board for adoption of a stockholder rights plan or “poison pill.”
The
Preferred Shares Proposal was not proposed in response to, or for the purpose of deterring, any current effort by a hostile bidder to
obtain control of the Company or as an anti-takeover measure. It should be noted that any action taken by the Company to discourage an
attempt to acquire control of the Company might result in shareholders not being able to participate in any possible premiums which might
be obtained in the absence of anti-takeover provisions. Any transaction which may be so discouraged or avoided could be a transaction
that the Company’s shareholders might consider to be in their best interests. However, the Board has a fiduciary duty to act in
the best interests of the Company at all times.
Preferred
Shares Resolution
At
the Annual Meeting, shareholders will be asked to consider and, if thought appropriate, pass, with or without variation, the following
special resolution to approve the amendment to the Articles to create a class of preferred shares, issuable in series, and to provide
for the rights, privileges, restrictions and conditions attaching to the Common Shares and the preferred shares, as a class (the “Preferred
Shares Resolution”):
“BE
IT RESOLVED AS A SPECIAL RESOLUTION THAT:
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(a) |
Flora Growth Corp. (the “Company”) be and
is hereby authorized to amend the articles of the Company to: |
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(i) |
increase
the authorized capital of the Company by creating an unlimited number of preferred shares, issuable in series; |
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(ii) |
confirm
that, after giving effect to the foregoing, the authorized capital of the Company shall consist of an unlimited number of common
shares and an unlimited number of preferred shares, issuable in series; |
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(iii) |
provide
that the rights, privileges, restrictions and conditions attaching to the common shares, and the preferred shares, as a class, are
as follows: |
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“A.
Common Shares
The
common shares shall have attached thereto the following rights, privileges, restrictions and conditions:
1.
Voting
Each
holder of common shares shall be entitled to receive notice of and to attend all meetings of shareholders of the Company, except
meetings at which only holders of other classes or series of shares are entitled to attend, and at all such meetings shall be entitled
to one vote in respect of each common share held by such holder. |
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2.
Dividends
Subject
to the rights of the holders of the preferred shares and the rights of the holders of any other class or series of shares ranking
senior to the common shares, the holders of common shares shall be entitled to receive dividends if and when declared by the board
of directors.
3.
Liquidation
In
the event of any liquidation, dissolution or winding-up of the Company or other distribution of the assets of the Company among its
shareholders for the purpose of winding-up its affairs, the holders of common shares shall be entitled, subject to the rights of
the holders of the preferred shares and the rights of the holders of any other class or series of shares ranking senior to the common
shares, to receive the remaining property or assets of the Company. |
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B.
Preferred Shares
The
preferred shares shall have attached thereto the following rights, privileges, restrictions and conditions:
1.
Preferred Shares, Issuable in Series
The
board of directors of the Company is authorized to fix the number of shares constituting each series of preferred shares, and to
determine the designation and any rights, privileges, restrictions and conditions attaching to the shares of each such series. Before
the issue of the first preferred shares of a series, the board of directors shall send to the Director (as defined in the Business
Corporations Act (Ontario)) articles of amendment containing a description of such series, including the designation and any
rights, privileges, restrictions and conditions attached to the shares of such series.
2.
No Class Priority
No
rights, privileges, restrictions or conditions attached to any series of preferred shares shall confer on the shares of such series
a priority in respect of dividends, distribution of assets or return of capital in the event of the liquidation, dissolution or winding-up
of the Company over any other series of shares of the same class.
3.
Series Differences
Subject
to section 2, the rights, privileges, restrictions and conditions of each series of preferred shares may differ from those of any
other series of preferred shares at any time outstanding.
4.
Ranking as to Dividends and Return of Capital
The
preferred shares of each series shall be entitled to a preference and priority over the common shares with respect to the payment
of dividends and the distribution of assets or return of capital if there is a voluntary or involuntary liquidation, dissolution
or winding-up of the Company.” |
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(b) |
any
one director or officer of the Company is authorized to make all such arrangements, to do all acts and things and to sign and execute
all documents and instruments in writing, whether under the corporate seal of the Company or otherwise, as may be considered necessary
or advisable to give full force and effect to the foregoing, the execution of any such document or the doing of any such other act
or thing being conclusive evidence of such determination; and |
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(c) |
notwithstanding
the approval of the shareholders of the Company as herein provided, the amendment to the articles contemplated by the foregoing resolutions
must be implemented prior to the next annual general meeting of shareholders of the Company and the directors of the Company be and
are hereby authorized and empowered to revoke or not act upon the above resolutions without further approval, ratification or confirmation
of the shareholders of the Company at any time before it is acted on.” |
Vote
Required. For the Preferred Shares Proposal to be approved and confirmed, the Preferred Shares Resolution must be passed by at least
two-thirds (2/3) of the votes cast with respect to the Preferred Shares Resolution by the shareholders of the Company present at the
Annual Meeting in person or by proxy.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE PREFERRED SHARES RESOLUTION AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS A SHAREHOLDER HAS SPECIFIED CONTRARY INSTRUCTIONS IN THE PROXY.
PROPOSAL
NO. 5 – APPROVAL OF NAME CHANGE PROPOSAL
Background
The
Company is contemplating a potential name change from “Flora Growth Corp.” to “Just Brands Corp.” or to such
other name as the Board of Directors, in its sole discretion, determines to be appropriate and which the Director under the OBCA may
accept. Any such name change would require an amendment to the Articles. If shareholder approval is received, the Board would have
the discretion to amend the Articles in the future to effectuate the name change, without further action or authorization by shareholders
prior to such name change.
Notwithstanding
approval of the Name Change Proposal by shareholders, the Board, in its discretion, may determine not to act upon the Name Change Proposal
and not to file articles of amendment giving effect to the name change, without further approval of shareholders.
Reasons
for the Name Change Proposal
The
Board believes that it may be beneficial to change its name from “Flora Growth Corp.” to “Just Brands Corp.”
due to the diversification of our businesses lines that have developed since our initial public offering and the ability to have our
name aligned with one of our most widely recognized brands.
Procedure
for Effecting the Name Change
Following
a determination by the Board to implement the name change, the Company will file articles of amendment with the Director under the OBCA
to amend the Company’s articles. The name change will become effective on the date shown in the certificate of amendment issued
by the Director under the OBCA or such other date indicated in the articles of amendment, provided that, in any event, such date will
be prior to the next annual meeting of shareholders.
Name
Change Resolution
At
the Annual Meeting, shareholders will be asked to consider and, if thought appropriate, pass, with or without variation, the following
special resolution to approve the name change (the “Name Change Resolution”):
“BE
IT RESOLVED AS A SPECIAL RESOLUTION THAT:
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(a) |
the
articles of Flora Growth Corp. (the “Company”) be amended pursuant to Section 168(1)(a) of the Business Corporations
Act (Ontario) (the “Act”) to change the name of the Company to “Just Brands Corp.” or to such other name
as the Board of Directors, in its sole discretion, determines to be appropriate and which the Director under the Act may accept (the
“Name Change”); |
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(b) |
the
effective date of such Name Change shall be the date shown in the certificate of amendment issued by the Director appointed under
the Act or such other date indicated in the articles of amendment provided that, in any event, such date shall be prior to the next
annual meeting of shareholders of the Company; |
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(c) |
any
one director or officer of the Company is authorized to make all such arrangements, to do all acts and things and to sign and execute
all documents and instruments in writing, whether under the corporate seal of the Company or otherwise, as may be considered necessary
or advisable to give full force and effect to the foregoing, the execution of any such document or the doing of any such other act
or thing being conclusive evidence of such determination; and |
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(d) |
notwithstanding
the approval of the shareholders of the Company as herein provided, the name change must be implemented prior to the next annual
general meeting of shareholders of the Company and the directors of the Company be and are hereby authorized and empowered to revoke
or not act upon the above resolutions without further approval, ratification or confirmation of the shareholders of the Company at
any time before it is acted on.” |
Vote
Required. For the Name Change Proposal to be approved and confirmed, the Name Change Resolution must be passed by at least two-thirds
(2/3) of the votes cast with respect to the Name Change Resolution by the shareholders of the Company present at the Annual Meeting in
person or by proxy.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE NAME CHANGE RESOLUTION AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS A SHAREHOLDER HAS SPECIFIED CONTRARY INSTRUCTIONS IN THE PROXY.
PROPOSAL
NO. 6 – APPROVAL OF AMENDMENT TO THE 2022 PLAN
Background
On
July 5, 2022, in connection with the Company’s 2022 annual and special meeting of shareholders, our shareholders approved our 2022
Plan, with the purpose of advancing the interests of our shareholders by enhancing our ability to attract, retain and motivate individuals
to perform at the highest level. The maximum number of Common Shares available for issuance under equity incentive awards granted pursuant
to the 2022 Plan currently cannot exceed 6,000,000 Common Shares. In addition, the maximum aggregate number of Common Shares that may
be delivered under the 2022 Plan as a result of the exercise of stock options currently cannot exceed 4,000,000 Common Shares.
As
of April 25, 2023, 653,200 Common Shares remain available for issuance under the 2022 Plan and 5,346,800 Common Shares were subject to
outstanding awards under the 2022 Plan, including 1,067,856 Common Shares subject to outstanding options to purchase Common Shares.
On
April 17, 2023, the Board approved, and recommended that it be submitted to the Company’s shareholders for their approval, to amend
the 2022 Plan to (i) increase the number of Common Shares issuable under the 2022 Plan from 6,000,000 to 19,000,000 Common Shares and
(ii) to increase the maximum aggregate number of Common Shares that may be delivered under the 2022 Plan as a result of the exercise
of stock options from 4,000,000 to 17,000,000 (the “2022 Plan Amendment”). The Board believes that the 2022 Plan Amendment
is necessary to continue to enable the Company to attract and retain qualified directors, officers, employees and consultants for the
Company and its subsidiaries.
Reasons
for the Proposed 2022 Plan Amendment
As
described above, we are seeking shareholder approval of an amendment to (i) increase the number of Common Shares issuable under the 2022
Plan from 6,000,000 to 19,000,000 Common Shares and (ii) to increase the maximum aggregate number of Common Shares that may be delivered
under the 2022 Plan as a result of the exercise of stock options from 4,000,000 to 17,000,000 shares. For the avoidance of doubt, the
17,000,000 shares underlying options constitutes a portion of the proposed 19,000,000 2022 Plan pool. In determining the amount of the
increases contemplated by the 2022 Plan Amendment, the Compensation Committee and the Board considered, among other factors, the historical
number of equity awards granted by the Company and potential future grants in the future. In addition, the Compensation Committee and
the Board considered both (i) the fact that the number of outstanding Common Shares has materially increased as a result of the Franchise
acquisition, and as a result, the proposed increase in the number of shares issuable under the 2022 Plan is reasonable in relation to
the current number of outstanding Common Shares and (ii) that due to general market volatility, the Company’s share price has decreased
as compared to its price at the time the 2022 Plan was adopted, and as a result, the original 6,000,000 shares were utilized at rate
quicker than management originally expected. If approved, the 19,000,000 Common Shares issuable under the 2022 Plan would represent 13.8%
of the outstanding Common Shares as of April 25, 2023.
Since
approval of the 2022 Plan, the Company has been able to incentivize its workforce and attract qualified employees, directors, officers
and consultants. Because of the amount of Common Shares that remain available for issuance under the Company’s 2022 Plan, the Company’s
ability to use long-term equity-based compensation as a significant component of its overall compensation would be quite limited going
forward if the shareholders do not approve the 2022 Plan Amendment.
The
purpose of this increase is to continue to be able to attract, retain and motivate executive officers and other employees, non-employee
directors and certain advisors and consultants. Upon shareholder approval of the 2022 Plan Amendment, additional Common Shares will be
reserved for issuance under the 2022 Plan, which will enable us to continue to grant equity awards to our officers, employees, consultants,
advisors and nonemployee directors at levels determined by the Compensation Committee and the Board to be necessary to attract, retain
and motivate the individuals who will be critical to our success in achieving our business objectives and thereby creating greater value
for all our shareholders. Furthermore, we believe that equity compensation aligns the interests of our management and other employees
with the interests of our other shareholders. Equity awards are a key component of our incentive compensation program. We believe that
option grants and restricted stock grants have been critical in attracting and retaining talented employees and officers, aligning their
interests with those of shareholders, and focusing key employees on our long-term growth. Approval of the 2022 Plan Amendment will permit
us to continue to use share-based compensation to align shareholder and employee interests and to motivate employees and others providing
services to us.
We
Manage Our Equity Award Use Carefully
Our
Compensation Committee carefully monitors our total dilution and equity expense to ensure that we maximize shareholder value by granting
only the appropriate number of equity awards necessary to attract, retain and motivate employees and other service providers.
Based
on historical usage and our internal growth plans, we expect that the proposed increase of Common Shares to be reserved for issuance
under the 2022 Plan to 19 million Common Shares would be sufficient for grants of awards until approximately 2026, assuming we continue
to grant awards in a manner consistent with our historical usage and current practices and noting that future circumstances may require
us to change our current equity grant practices. If the adoption of the 2022 Plan Amendment is approved, the share reserve under the
2022 Plan could last for a longer or shorter period of time, depending on our future equity grant practices, which we cannot predict
with any degree of certainty at this time.
In
light of the factors described above, and the fact that the ability to continue to grant equity compensation is vital to our ability
to continue to attract and retain employees in the competitive labor markets in which we compete, the Board has determined that the proposed
adoption of the 2022 Plan Amendment is reasonable and appropriate at this time.
Summary
of the 2022 Plan
A
summary of the material provisions of the 2022 Plan, as amended by the 2022 Plan Amendment, is included in this Proxy Statement under
the section “Executive Compensation—Narrative to Summary Compensation Table—Equity Based Compensation—2022 Plan.”
The summary therein does not purport to be a complete description of all the provisions of the 2022 Plan and the 2022 Plan Amendment
and is qualified in its entirety by reference to the complete text of the 2022 Plan, which we filed as Exhibit 10.3 to our 2022 Annual
Report, and the 2022 Plan Amendment, a form of which is set forth in Exhibit “C” to this Proxy Statement.
2022
Plan Amendment Resolution
At
the Annual Meeting, shareholders will be asked to consider and, if thought appropriate, pass, with or without variation, the following
ordinary resolution to approve the 2022 Plan Amendment (the “2022 Plan Amendment Resolution”):
“BE
IT RESOLVED AS AN ORDINARY RESOLUTION THAT: the 2022 Plan Amendment, as described in Proposal No. 4 and attached as Annex A of the
Company’s Proxy Statement for the Company’s 2022 annual and special meeting of shareholders, be, and it hereby is, approved.”
Vote
Required. For the 2022 Plan Amendment to be approved and confirmed, the 2022 Plan Amendment Resolution must be passed by at a least
a simple majority of the votes cast with respect to the 2022 Plan Amendment Resolution by the shareholders of the Company present at
the Annual Meeting in person or by proxy.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE 2022 PLAN AMENDMENT RESOLUTION AND PROXIES EXECUTED AND RETURNED WILL BE SO
VOTED UNLESS A SHAREHOLDER HAS SPECIFIED CONTRARY INSTRUCTIONS IN THE PROXY.
WHERE
TO GET ADDITIONAL INFORMATION
As
a reporting company, we are subject to the informational requirements of the Exchange Act and Canadian securities laws and accordingly
file our annual report on Form 10-K (including audited consolidated financial statements), quarterly reports on Form 10-Q (management’s
discussion and analysis (“MD&A”)), current reports on Form 8-K, proxy statements, and other information with the SEC
and on the System for Electronic Document Analysis and Retrieval (“SEDAR”). As an electronic filer, our public filings are
maintained on the SEC’s website at http://www.sec.gov and on SEDAR www.sedar.com which contains reports, proxy and information
statements, and other information regarding issuers that file electronically with the SEC or on SEDAR, as applicable. In addition, our
annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Exchange Act may be accessed free of charge through our website as soon as reasonably
practicable after we have electronically filed such material with, or furnished it to, the SEC. The address of that website is https://www.floragrowth.com/resources/.
Shareholders
may contact the Company to request copies of the Company’s financial statements and MD&A at Flora Growth Corp. Attention: General
Counsel, 3406 SW 26th Terrace, Suite C-1, Fort Lauderdale, Florida 33312.
COST
OF PROXY STATEMENT
We
will bear the cost of the solicitation of proxies on behalf of the Board. In addition to the use of the mail, proxies may be solicited
by us personally, by telephone, or by similar means. None of our directors, officers, or employees will be specifically compensated for
those activities. We do not expect to pay any compensation for the solicitation of proxies. However, we will reimburse brokerage firms,
custodians, nominees, fiduciaries, and other persons holding our shares in their names, or in the names of nominees, at approved rates
for their reasonable expenses in forwarding proxy materials to beneficial owners of securities held of record by them and obtaining their
proxies.
SHAREHOLDER
COMMUNICATIONS
General.
All interested parties, including shareholders, may communicate with the Company or our Board by letter addressed to Flora Growth
Corp. Attention: General Counsel, 3406 SW 26th Terrace, Suite C-1, Fort Lauderdale, Florida 33312. This centralized
process assists our Board in reviewing and responding to communications in an appropriate manner. If an interested party would like
the letter to be forwarded directly to the Chairman, or if no Chairman is listed, the members of the standing committees of the
Board, he or she should so indicate. If no specific direction is indicated, the General Counsel of the Company will review the
letter and forward it to the appropriate Board member(s).
Submission
of Shareholder Proposals and Director Nominations for 2024 Annual Meeting. Pursuant to Rule 14a-8 under the Exchange Act, our
shareholders may present proper proposals for inclusion in our proxy statement and form of proxy and for consideration at the next annual
meeting by submitting their proposals to us in a timely manner. Any shareholder of the Company who wishes to present a proposal for inclusion
in the proxy statement and form of proxy for action at the 2024 annual and special meeting of shareholders (the “2024 Annual Meeting”)
must comply with our Bylaws and the rules and regulations of the SEC and the OBCA, each as then in effect. Such proposals must be mailed
to us at our offices at Flora Growth Corp. Attention: General Counsel, 3406 SW 26th Terrace, Suite C-1, Fort Lauderdale, Florida
33312 Under the rules of the SEC, any shareholder proposal intended to be presented at the 2024 Annual Meeting must be received
no later than 60 days prior to the one-year anniversary of the Annual Meeting in order to be considered for inclusion in our proxy statement
and form of proxy relating to such meeting. Pursuant to the OBCA and the rules of the SEC, a shareholder must follow certain procedures
to nominate persons for election as directors or to introduce an item of business at an annual meeting of shareholders. In order to be
timely, we must receive notice of your intention to introduce a nomination or propose an item of business at our 2024 Annual Meeting
between the close of business on December 31, 2023 and close of business on April 6, 2024 . If we change the date of our 2024 Annual
Meeting by more than thirty days before, or more than thirty days after, the one-year anniversary of the Annual Meeting, then the written
notice of a shareholder proposal that is not intended to be included in our proxy statement must be delivered, or mailed and received,
not later than the ninetieth day prior to our 2024 Annual Meeting or, if later, the tenth day following the day on which public announcement
of the date of such meeting is first made. You are advised to review our Bylaws, the OBCA and the applicable securities laws which contain
additional requirements with respect to director nominees.
If
a shareholder notifies us of an intent to present a proposal at the 2024 Annual Meeting at any time after April 6, 2024 (and for any
reason the proposal is voted on at that meeting), it may be considered untimely and our proxy holders will have the right to exercise
discretionary voting authority with respect to the proposal, if presented at the meeting, without including information regarding the
proposal in our proxy materials. Under the rules of the SEC, in the event we change the date of our 2024 Annual Meeting by more than
thirty days after the one-year anniversary of the Annual Meeting, the deadline for a shareholder to submit a proposal for the 2024 Annual
Meeting is a reasonable time before we begin to print and send our proxy materials.
OTHER
BUSINESS
The
Board knows of no other business to be brought before the Annual Meeting. If, however, any other business should properly come before
the Annual Meeting, the persons named as proxies will vote in their discretion as they may deem appropriate.
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By order of the Board of Directors,
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Hussein Rakine |
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Chief Executive Officer |
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, 2023 |
EXHIBIT
A
FLORA
GROWTH CORP.
AUDIT
COMMITTEE CHARTER
1.
Purpose
1.1
The purpose of the Audit Committee (the “Audit Committee”) of the Board of Directors (the “Board”)
of Flora Growth Corp. (the “Company”) is to oversee the accounting and financial reporting processes of the Company
and the audits of the financial statements of the Company.
1.2
The Audit Committee’s responsibilities are limited to oversight. The Company’s management is responsible for establishing
and maintaining accounting policies and procedures in accordance with generally accepted accounting principles in Canada for publicly
accountable enterprises, as set out in the International Financial Reporting Standards and other applicable reporting and disclosure
standards, and for preparing the Company’s financial statements. The Company’s independent auditors are responsible for auditing
and reviewing those financial statements. The Audit Committee is responsible for the approval of the financial statements for issuance.
Each member of the Audit Committee is entitled to rely on the integrity of those persons within the Company and from the professionals
and experts from which the Audit Committee receives information and, absent actual knowledge to the contrary, the accuracy of the financial
and other information provided to the Audit Committee by such persons, professionals, or experts.
2.
Composition
2.1
The Audit Committee must consist of at least three (3) directors. Each Audit Committee member must be an Independent Director, as defined
under Rule 5605(a)(2) of the Nasdaq Listing Rules, and must satisfy the more rigorous independence rules for members of the Audit Committee
issued by the Securities and Exchange Commission (the “SEC”) in Rule 10A-3(b)(1) promulgated under the Exchange Act,
subject to any available exception. Each Audit Committee member must be able to read and understand fundamental financial statements,
including a company’s balance sheet, income statement, cash flow statement and the related footnote disclosures. In addition, each
Audit Committee member must not have participated in the preparation of the financial statements of the Company or any current subsidiary
of the Company at any time during the past three years. At least one member of the Audit Committee must have past employment experience
in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which
results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial
officer or other senior officer with financial oversight responsibilities. In addition, either at least one member of the Audit Committee
must be a financial expert, as defined under SEC rules, or the Company must disclose in its annual report the reasons for not having
such an expert on the Audit Committee.
2.2
Audit Committee members may be removed from the Audit Committee, with or without cause, by the Board. Unless a Chairperson is designated
by the Board, the Audit Committee may designate a Chairperson by majority vote of the full Audit Committee membership.
3.
Meetings, Procedures and Authority
3.1
The Audit Committee has the authority to establish its own rules and procedures for notice and conduct of its meetings, so long as they
are not inconsistent with any provisions of the Company’s bylaws that are applicable to the Audit Committee.
3.2
The Audit Committee may, in accordance with Nasdaq Listing Rule 5605(c)(3) and Exchange Act Rule 10A-3(b) retain any independent counsel,
experts or advisors that the Audit Committee believes to be necessary or appropriate in carrying out its duties. The Company must provide
for appropriate funding, as determined by the Audit Committee, for payment of compensation to the independent auditor or any other registered
public accounting firm engaged by the Audit Committee for the purpose of preparing or issuing an audit report or performing other audit,
review or attest services for the Company, for payment of compensation to any advisors engaged by the Audit Committee, and for payment
of ordinary administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its duties.
3.3
The Audit Committee may conduct or authorize investigations into any matters within the scope of the duties and responsibilities delegated
to the Audit Committee.
4.
Duties and Responsibilities
Interaction
with the Independent Auditor
4.1
Appointment and Oversight. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight
of the work of the independent auditor (including resolution of any disagreements between the Company’s management and the independent
auditor regarding financial reporting) and any other registered public accounting firm engaged for the purpose of preparing or issuing
an audit report or related work or performing other audit, review or attest services for the Company, and the independent auditor and
each such other registered public accounting firm must report directly to the Audit Committee. The Audit Committee, or the Chairperson
of the Audit Committee, must pre-approve any audit and non-audit service provided to the Company by the independent auditor, unless the
engagement is entered into pursuant to appropriate preapproval policies established by the Audit Committee or if such service falls within
available exceptions under SEC rules.
4.2
Annual Report on Independence. The Audit Committee must ensure that the independent auditor prepares and delivers, at least annually,
a formal written statement delineating all relationships between the independent auditor and the Company, must actively engage in a dialogue
with the independent auditor with respect to any disclosed relationships or services that, in the view of the Audit Committee, may impact
the objectivity and independence of the independent auditor, and, if the Audit Committee determines that further inquiry is advisable,
must take appropriate action, or recommend that the Board take appropriate action, in response to the independent auditor’s report
to satisfy itself of the outside auditor’s independence.
Other
Duties and Responsibilities
4.3
Complaint Procedures. The Audit Committee must establish procedures for the receipt, retention and treatment of complaints received
by the Company regarding accounting, internal accounting controls or auditing matters, and for the confidential and anonymous submission
by Company employees of concerns regarding questionable accounting or auditing matters.
4.4
Review of Code of Ethics. The Audit Committee must, at least annually, consider and discuss with management and the independent
auditor the Company’s Code of Ethics and the procedures in place to enforce the Code of Ethics. The Audit Committee must also consider
and discuss and, as appropriate, grant requested waivers from the Code of Business Conduct and Ethics brought to the attention of the
Audit Committee, though the Audit Committee may defer any decision with respect to any waiver to the Board.
4.5
Review of Related Person Transactions. The Audit Committee must review all related person transactions, as defined by Item 404
of Regulation S-K, on an ongoing basis, and all such transactions must be approved by the Audit Committee.
4.6
Review of this Charter. The Audit Committee must annually review and reassess the adequacy of this Charter and submit any recommended
changes to the Board for its consideration.
4.7 Reporting
to the Board. The Audit Committee is responsible for reporting to the Board of Directors on matters required by this Charter or
requested by the Board.
4.8
Communication with Legal Counsel. The Audit Committee will discuss with the Company’s legal department or outside legal
counsel any matters that may have a material impact on the financial statements or the Company’s compliance policies and internal
controls, including corporate securities trading policies.
4.9
Proxy Report. The Audit Committee will prepare the report required by the SEC rules to be included in the Company’s annual
proxy statement, if applicable.
5.
Delegation of Duties
5.1
In fulfilling its responsibilities, the Audit Committee is entitled to delegate any or all of its responsibilities to a subcommittee
of the Audit Committee.
EXHIBIT
B
Form
of Articles of Amendment for Preferred Shares Proposal
FLORA
GROWTH CORP.
Schedule
to Articles of Amendment
The
Corporation amends the Description of Class of Shares as follows:
1. |
The authorized share capital
of the Corporation shall be increased by creating an unlimited number of Preferred Shares, issuable in series; and |
|
|
2. |
After giving effect to
the foregoing, the authorized share capital of the Corporation shall consist of: |
|
a. |
an unlimited number of
Common shares; and |
|
|
|
|
b. |
an unlimited number of
Preferred Shares, Issuable in Series. |
The
Corporation amends the Rights, Privileges, Restrictions and Conditions as follows:
A. |
The current rights,
privileges, restrictions and conditions attaching to the Common Shares shall be deleted and replaced by the following: |
|
|
1. |
Voting |
Each
holder of common shares shall be entitled to receive notice of and to attend all meetings of shareholders of the Corporation, except
meetings at which only holders of other classes or series of shares are entitled to attend, and at all such meetings shall be entitled
to one vote in respect of each common share held by such holder.
Subject
to the rights of the holders of the preferred shares and the rights of the holders of any other class or series of shares ranking senior
to the common shares, the holders of common shares shall be entitled to receive dividends if and when declared by the board of directors.
In
the event of any liquidation, dissolution or winding-up of the Corporation or other distribution of the assets of the Corporation among
its shareholders for the purpose of winding-up its affairs, the holders of common shares shall be entitled, subject to the rights of
the holders of the preferred shares and the rights of the holders of any other class or series of shares ranking senior to the common
shares, to receive the remaining property or assets of the Corporation.
B. |
The following shall
be added as the rights, privileges, restrictions and conditions attaching to the Preferred Shares, Issuable in Series: |
|
|
1. |
Preferred Shares, Issuable
in Series |
The
board of directors of the Corporation is authorized to fix the number of shares constituting each series of preferred shares, and to
determine the designation and any rights, privileges, restrictions and conditions attaching to the shares of each such series. Before
the issue of the first preferred shares of a series, the board of directors shall send to the Director (as defined in the Business
Corporations Act (Ontario)) articles of amendment containing a description of such series, including the designation and any rights,
privileges, restrictions and conditions attached to the shares of such series.
No
rights, privileges, restrictions or conditions attached to any series of preferred shares shall confer on the shares of such series a
priority in respect of dividends, distribution of assets or return of capital in the event of the liquidation, dissolution or winding-up
of the Corporation over any other series of shares of the same class.
Subject
to section 2, the rights, privileges, restrictions and conditions of each series of preferred shares may differ from those of any other
series of preferred shares at any time outstanding.
4. |
Ranking as to Dividends
and Return of Capital |
The
preferred shares of each series shall be entitled to a preference and priority over the common shares with respect to the payment of
dividends and the distribution of assets or return of capital if there is a voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation.
Exhibit
C
Form
of 2022 Plan Amendment
AMENDMENT
NO. 1 TO THE
FLORA
GROWTH CORP.
2022
INCENTIVE COMPENSATION PLAN
WHEREAS,
Flora Growth Corp. (the “Company”) previously adopted the Flora Growth Corp. 2022 Incentive Compensation Plan (the “Plan”);
and
WHEREAS,
the Company now wishes to amend the Plan to increase the number of shares of Company stock available for issuance in connection with
awards made under the Plan;
NOW,
THEREFORE, BE IT RESOLVED THAT pursuant to Section 9(f) of the Plan, the Plan is hereby amended, effective [___________________],
2023, and subject to the approval of the Company’s shareholders, in the following respects:
1.
Section 4(a) of the Plan is hereby amended to read in its entirety as follows:
“(a)
Limitation on Overall Number of Shares Available for Delivery Under Plan. Subject to adjustment as provided in Section 9(c)
hereof, the total number of Shares reserved and available for delivery under the Plan shall be 19,000,000. Any Shares delivered under
the Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares.”
2.
Section 4(c)(v) of the Plan is hereby amended to read in its entirety as follows:
“(v)
Notwithstanding anything in this Section 4(c) to the contrary but subject to adjustment as provided in Section 9(c) hereof, the maximum
aggregate number of Shares that may be delivered under the Plan as a result of the exercise of Incentive Stock Options shall be 17,000,000
In no event shall any Incentive Stock Options be granted under the Plan after the tenth anniversary of the date on which the Board adopts
the Plan.”
In
all other respects, the Plan shall remain in full force and effect.
|
Adopted
this ____ day of _____________, 2023.
|
|
|
|
FLORA GROWTH CORP. |
|
|
66
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