Filing Overview
This Form 6-K is filed by Flora Growth Corp., not Zerostack Corp. It covers December 2022 and reports a registered direct offering announced on December 9, 2022, with closing on December 13, 2022.
Transaction and Key Financial Terms
- Flora issued 12,500,000 common shares at a combined purchase price of $0.40 per share and accompanying warrant.
- Investors received warrants to purchase up to 12,500,000 additional common shares at an exercise price of $0.40 per share. The warrants are immediately exercisable and expire five years after issuance.
- The placement agent, A.G.P./Alliance Global Partners, received warrants to purchase up to 500,000 common shares at $0.44 per share. These warrants become exercisable 181 days after issuance and expire five years after issuance.
- Flora agreed to pay A.G.P. a cash fee equal to 7.0% of gross offering proceeds, reimburse $50,000 of legal and other documented expenses, and pay $15,000 for non-accountable expenses.
- Net proceeds were approximately $4.5 million after placement-agent fees and estimated offering expenses.
- Proceeds are intended for capital expenditures, increased operating capacity, working capital, and general corporate purposes.
Material Changes and Dilution
- The transaction increases shares outstanding by 12,500,000 common shares and creates potential additional dilution from 13,000,000 warrants issued in the offering.
- Flora also amended warrants issued in its November 2021 public underwritten offering by reducing their exercise price to $0.40. The filing text does not provide the number of amended warrants or the resulting potential dilution.
- No revenue, profit, cash-flow, margin, debt, liquidity, or balance-sheet figures are provided in this filing.
Outlook, Risks, and Unusual Items
- Management’s stated use of proceeds indicates an intention to fund capital investment, operating expansion, working capital, and corporate needs; specific operating or financial guidance was not provided.
- The transaction includes customary representations, warranties, covenants, and investor indemnification provisions, including for certain Securities Act liabilities.
- The offering is subject to dilution risk from the issued shares, investor warrants, placement-agent warrants, and repriced previously issued warrants.
- The filing incorporates the securities purchase agreement and warrant forms, which contain the detailed contractual terms. Certain schedules and exhibits were omitted and may be furnished to the SEC upon request.
Investor Verification Items
- Confirm that the filing issuer is Flora Growth Corp. rather than Zerostack Corp.
- Verify the final number of shares outstanding after the December 13, 2022 closing and the aggregate potential dilution from all outstanding warrants.
- Review the amended November 2021 warrants and determine the financial impact of the reduced $0.40 exercise price.
- Assess whether the approximately $4.5 million of net proceeds is sufficient for the stated capital, operating, and working-capital needs.
- Review subsequent filings for use of proceeds, liquidity, operating performance, and any additional equity financing.