Fiore Cannabis Ltd.

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(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended December 31, 2020 and the year ended March 31, 2020

(Expressed in thousands of Canadian Dollars)

Independent Auditor’s Report

To the Shareholders of:

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Opinion

We have audited the consolidated financial statements of Fiore Cannabis Ltd. (formerly Citation Growth Corporation and Liht Cannabis Corp.) (“the Company”), which comprise the consolidated statements of financial position as at December 31, 2020 and March 31, 2020 and the consolidated statements of comprehensive loss, changes in shareholders’ equity and cash flows for the nine-month period ended December 31, 2020 and for the year ended March 31, 2020, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020 and March 31, 2020, and its financial performance and its cash flows for the nine-month period ended December 31, 2020 and for the year ended March 31, 2020 then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company incurred a net loss of $16,751 during the nine-months ended December 31, 2020, and as of that date, had accumulated losses since inception of $114,618. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty regarding the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis. Our opinion on the consolidated financial statements does not cover the other information and will not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management's Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibility of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure, and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor's report is Mike Kao.

WDM

Chartered Professional Accountants

Vancouver, B.C., Canada April 29, 2021

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Consolidated Statements of Financial Position

(In thousands of Canadian dollars except for share data)

Consolidated Statements of Financial Position (In thousands of Canadian dollars except for share data)
Notes December 31, 2020	March 31,2020
$ Assets Current assets Cash 406 Accounts receivable 21(e) 496 Biological assets 5 359 Inventory 6 526 Prepaid expenses and deposits 596 Assetsheldforsale 10 7,710	$ 49 84 383 337 693 11,232
10,093 Property, plant and equipment 7 9,879 Intangible assets 9 2,994 Deferred tax assets 23 -	12,778 11,073 11,912 192
22,966	35,955
Liabilities Current liabilities Accounts payable and accrued liabilities 5,674 Income tax payable 356 Loans and borrowings 12 3,084 Convertible debentures 13 2,006 Current portion of lease liabilities 11 133 Derivative liabilities 13 1,565 Liabilities associated with assets held for sale 10 3,498	5,270 255 1,000 3,851 102 208 6,532
16,316 Lease liabilities 11 155 Convertible debentures 13 2,367 Loans and borrowings 12 1,080 Deferred tax liability 23 -	17,218 6 391 - 702
19,918	18,317
Shareholders’ equity Share Capital 14 108,730 Reserves 8,743 Accumulated other comprehensive loss 193 Deficit (114,618)	106,672 7,810 1,778 (98,622)
3,048	17,638
22,966	35,955

The accompanying notes are an integral part of the consolidated financial statements.

Nature of operations and ability to continue as a going concern (Note 1) Commitments and contingencies (Note 18) Segmented information (Note 19) Subsequent events (Note 24)

Approved on behalf of the Board:

“Erik Anderson” “Marcel LeBlanc”

Erik Anderson, Director

Marcel LeBlanc, Director

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Consolidated Statements of Comprehensive Loss

(In thousands of Canadian dollars except for share data)

Consolidated Statements of Comprehensive Loss (In thousands of Canadian dollars except for share data)
Notes For the Nine Months Ended December 31, 2020	For the Twelve Months EndedMarch31,2020
$ Revenues 1,666 Excise taxes (145)	$ 2,610 (342)
Net revenue 1,521 Cost of sales 1,000	2,268 1,671
Gross profit before fair value adjustments 521 Change in fair value of inventory sold (523) Unrealized gain on changes in fair value of biological assets 5 (62)	597 (592) 544
Gross profit (loss) (64) Expenses General and administrative expenses 15, 17(b) 3,915 Depreciation and amortization 7, 9 678 Share-based compensation 14(b),(e), (f) 1,257	549 6,421 733 4,285
5,850	11,439
Loss from operations (5,914) Other income (expenses) Finance and other costs 16 (1,883) Foreign exchange loss 156 Realized and unrealized losses on derivative asset - Impairment of intangible assets 9 (8,517) Impairment of assets held for sale 10(a) - Impairment on investment 8(d) - Unrealized gain (loss) on derivative liabilities 13 (765) Write off prepaid deposit (220) Loss on sale of property, plant and equipment 7 (4) Loss on deemed disposal of subsidiary 8(a) - Gain on settlement of debt 14(b)(iv) 4	(10,890) (2,309) (110) (1) (9,211) (3,510) (305) 1,671 - (537) (12,253) 14
(11,229)	(26,551)
Loss before income taxes (17,143) Current income tax expense 23 (118) Futureincome tax recovery (expense) 23 510	(37,441) (255) (510)
Net loss from continuing operations (16,751)	(38,206)
Net loss from discontinued operations 8(a) -	(1,753)
Net loss for the period (16,751)	(39,959)
Other comprehensive income (expense) Foreigncurrency translation (1,585)	945
Comprehensive loss (18,336)	(39,014)
Net loss per share, basic and diluted (0.12) Weighted average number of shares outstanding, basic and diluted 137,749,327	(0.41) 93,964,057
The accompanying notes are an integral part of the consolidated financial statements

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Consolidated Statements of Changes in Equity

(In thousands of Canadian dollars except for share data)

Note	Share Capital Reserves Common Shares Amount Treasury Reserve Share Subscriptions Stock Options Share Purchase Warrants Contributed Surplus Total Reserves Accumulated other comprehensive loss Deficit Total Equity
Balance, March 31, 2019 Adoption of IFRS 16 2(g) Balance, April 1, 2019 Share consolidation rounding Shares issued for cash 14(b)(i) Residual value of warrants 14(b)(i) Shares issued for acquisitions 14(b)(ii) Shares issued for debt 14(b)(iv) Shares issued for services 14(b)(iii) Performance and retention bonus shares 14(b)(vi) Conversion of debentures 14(b)(vii) Warrants issued for amended debentures 13(b) Redemption of restricted share units 14(b)(v) Shares returned to treasury 14(b)(i) Shares to be returned to treasury 8(a) Share-based compensation 14(e),14(f) Forfeited stock options and warrants Comprehensive loss for theyear	# $ $ $ $ $ $ $ $ $ $ 61,696,033 86,645 - - 3,205 5,787 - 8,992 833 (59,880) 36,590 - - - - - - - - - (43) (43)
	61,696,033 86,645 - - 3,205 5,787 - 8,992 833 (59,923) 36,547 33 - - - - - - - - - - 6,398,793 1,502 - - - - - - - - 1,502 - (56) - - - 56 - 56 - - - 38,346,250 12,957 - - - 592 - 592 - - 13,549 2,102,274 387 - - - - - - - - 387 6,850,000 1,482 - - - - - - - - 1,482 3,100,000 1,036 - - (1,036) - - (1,036) - - - 766,264 389 - - - - - - - - 389 - - - - - 283 - 283 - - 283 3,810,000 2,528 - - (2,528) - - (2,528) - - - (62,500) (198) - - - - - - - - (198) - - (1,574) - - - - (1,574) - - (1,574) - - - - 4,285 - - 4,285 - - 4,285 - - - - (1,228) (592) 560 (1,260) - 1,260 - - - - - - - - - 945 (39,959) (39,014)
Balance, March 31, 2020 Shares issued for cash 14(b)(i) Shares issued for services 14(b)(iii) Shares issued for debt 14(b)(iv) Redemption of restricted share units 14(b)(v) Shares returned to treasury 8(a) Warrants issued for debenture 12(d) Warrants issued for debt Share-based compensation 14(e),14(f) Forfeited stock options and warrants Comprehensive loss for theperiod	123,007,147 106,672 (1,574) - 2,698 6,126 560 7,810 1,778 (98,622) 17,638
	3,930,721 589 - - - - - - - - 589
	16,361,711 1,671 - - - - - - - - 1,671
	825,000 70 - - - - - - - - 70
	8,701,108 1,302 - - (1,302) - - (1,302) - - -
	(18,515,424) (1,574) 1,574 - - - - 1,574 - - -
	- - - - - 129 - 129 - - 129
	- - - - - 30 - 30 - - 30
	- - - - 1,257 - - 1,257 - - 1,257
	- - - - (755) (820) 820 (755) - 755 -
	- - - - - - - - (1,585) (16,751) (18,336)
Balance, December 31, 2020	134,310,263 108,730 - - 1,898 5,465 1,380 8,743 193 (114,618) 3,048

The accompanying notes are an integral part of the consolidated financial statements.

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Consolidated Statements of Cash Flows

(In thousands of Canadian dollars except for share data)

Consolidated Statements of Cash Flows (In thousands of Canadian dollars except for share data)
	Notes	For the Nine	For the Twelve
		Months Ended	Months Ended
		December 31, 2020	March 31,2020
		$	$
Operating activities
Net loss		(16,751)	(38,206)
Non-cash items
Unrealized gain on changes in fair value of biological assets	5	62	(544)
Change in fair value of inventory sold		523	592
Depreciation and amortization	7,9	9,328	14,937
Share-based compensation	14(e),14(f)	1,257	4,285
Accretion expense	16	701	1,223
Accrued interest expense		390	1,007
Future tax expense		(510)	510
Loss on sale of property, plant and equipment		4	537
Loss on deemed disposal of subsidiary		-	10,662
Realized and unrealized losses on derivative asset		-	1
Unrealized gain on derivative liabilities	13	765	(1,671)
Write off prepaid deposit		220	-
Gain on settlement of debt	14(b)(iv)	(4)	(14)
Warrants issued for amended debentures		-	64
Finder’s shares issued for business acquisition		-	1,219
Shares issued for debenture interest		-	4
Shares issued for services	14(b)(iii)	1,664	1,482
		(2,351)	(3,912)
Changes in non-cash working capital
Accounts receivable		(413)	(22)
Biological assets		(743)	(1,495)
Inventory		(49)	637
Prepaid expenses and deposits		(122)	(137)
Accounts payable and accrued liabilities		536	2,044
Income taxpayable		127	255
Net cash used in operatingactivities		(3,015)	(2,630)
Investing activities
Acquisition of property, plant and equipment	7	(206)	(862)
Proceeds from sale of property, plant and equipment, net	7	-	600
Acquisition of intangible assets	9	(57)	(253)
Net cash used in investingactivities		(263)	(515)
Financing activities
Loans and borrowings	12	3,263	1,193
Proceeds of convertible debentures, net of issuance costs	13(c)	-	488
Repayment of lease liabilities	11	(152)	(125)
Shares issued for cash,net of issuance costs	14(b)	590	1,502
Net cashprovided byfinancingactivities		3,701	3,058
Net cash provided by (used in) continuing operations		423	(87)
Net cash used in discontinued operations		-	(47)
Effect of foreign currencytranslation on cash		(66)	76
Increase (decrease) in cash		357	(58)
Cash,beginningof theperiod		49	107
Cash, end of the period		406	49
Supplemental cash flow information:
Addition to Property, plant and equipment included in accounts payable		206	1,338
Interest paid		525	123

The accompanying notes are an integral part of the consolidated financial statements.

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.) Notes to the Consolidated Financial Statements For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

1. Nature of operations and going concern

Fiore Cannabis Ltd. (formerly Citation Growth Corporation and Liht Cannabis Corp.) (the “Company”) is governed by the Business Corporations Act (British Columbia). The head office is located at Suite 102 – 1561 Sutherland Avenue, Kelowna, British Columbia, Canada V1Y 5Y7. The Company's common shares are traded on the Canadian Stock Exchange (“CSE”) under the trading symbol "FIOR" and OTCQX markets under the ticker symbol “FIORF”. On October 28, 2020, the Company changed its name from Citation Growth Corporation to Fiore Cannabis Ltd.

The Company was established to enter into the emerging market of regulated medical marijuana and has applied to Health Canada to become a licensed producer under the Cannabis Act (Canada) (“Cannabis Act”) which is still pending. The Company has operations in the United States, in the states of Nevada and California. The Company has six state approved licenses in Nevada which consist of medical and recreational marijuana cultivation, medical and recreational production licenses, medical cannabis licenses associated with lands owned in the state of Washington, and a distribution license with a dispensary in California.

These consolidated financial statements have been prepared on a going concern basis which assumes that the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

The Company has incurred losses and negative operating cash flows since inception. As at December 31, 2020, the Company had accumulated deficit of $114,618 (March 31, 2020 - $98,622), and working capital deficiency of $6,223 (March 31, 2020 - working capital deficiency of $4,440). The Company’s ability to continue as a going concern is dependent on obtaining continued financial support, securing debt and/or equity financing and generating profitable operations in the future. Management is committed to raising additional capital to meet its financial obligations and commitments, fund its growth initiatives, capital expenditures and sustain its operations in the normal course of business. Although the Company has raised funds in the past, there can be no assurance that the Company will be able to secure additional financing.

These factors indicate the existence of a material uncertainty regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not reflect the adjustments to the carrying values and classifications of assets and liabilities that would be necessary should the Company be unable to continue as a going concern.

On June 12, 2019, the Company completed a consolidation of its issued and outstanding shares on the basis of four (4) pre-consolidation common shares for one (1) post-consolidation common share (the "Share Consolidation"). As a result of the Share Consolidation, the 247,875,997 common shares issued and outstanding at June 12, 2019 were consolidated to 61,969,033 common shares. All information in these consolidated financial statements is presented on a post Share Consolidation basis.

2. Significant accounting policies

(a) Basis of presentation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the IFRS Interpretations Committee (“IFRIC”) in effect for the nine months ended December 31, 2020.

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

2. Significant accounting policies (continued)

(b) Basis of consolidation

On November 20, 2020, the Company’s Board of Directors approved a resolution to change the Company’s year end from March 31[st] to December 31[st] . Accordingly, these financial statements are prepared as at December 31, 2020 and March 31, 2020 and for the nine months ended December 31, 2020 and the twelve months ended March 31, 2020.

These consolidated financial statements were approved and authorized for issue by the Board of Directors on April 29, 2021.

These consolidated financial statements include the accounts of the Company and the following wholly owned subsidiaries (collectively, the “Company”). Intercompany balances and transactions are eliminated on consolidation.

	Country of		Functional
Entity	Incorporation	Ownership	Currency
Marapharm Inc.	Canada	100%	Canadian Dollar
Full Spectrum Medicinal Inc. (“Full
Spectrum”)	Canada	100%	Canadian Dollar
Marapharm Las Vegas LLC (“MLV”)	United States	100%	U.S. Dollar
Marapharm Washington LLC (“MWA”)	United States	100%	U.S. Dollar
EcoNevada LLC (“EcoNevada”)	United States	100%	U.S. Dollar
Phenofarm NV LLC (“Phenofarm”)	United States	100%	U.S. Dollar
Marapharm DHS California LLC (“MDHS”)	United States	100%	U.S. Dollar
420 Express Delivery Inc., dba, Green Leaf
Wellness LLC (“Green Leaf”)	United States	100%	U.S. Dollar

(c) Basis of measurement

These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments, biological assets and other investments which are measured at fair value.

(d) Foreign currency translation

These consolidated financial statements are presented in Canadian dollars, which is also the functional currency of the parent company. The functional currencies of the Company’s subsidiaries are outlined in Note 2(b).

Foreign currency transactions are translated into Canadian dollars using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the consolidated statement of financial position date are translated to Canadian dollars at the foreign exchange rate applicable at that date. Realized and unrealized exchange gains and losses are recognized in profit or loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

The assets and liabilities of foreign operations are translated into Canadian dollars at period end exchange rates. Income and expenses, and cash flows of foreign operations are translated into Canadian dollars using average exchange rates. Exchange differences arising on the translation of foreign operations are recognized in other comprehensive income and accumulated in equity.

FIORE CANNABIS LTD.

2. Significant accounting policies (continued)

(e) Biological assets

The Company measures biological assets consisting of cannabis plants at fair value less cost to sell up to the point of harvest, which becomes the initial basis for the cost of finished goods inventories after harvest. Seeds are measured at fair market value. Unrealized gains or losses arising from the changes in fair value less cost to sell during the period are included in the results of operations for the related period.

(f) Inventory

Inventories for finished goods, packaging and supplies are initially valued at cost and subsequently at the lower of cost and net realizable value. Inventories of harvested cannabis are transferred from biological assets into inventory at their fair value at harvest less costs to sell, which is deemed to be their cost. Any subsequent post-harvest costs are capitalized to inventory to the extent that cost is less than net realizable value. Net realizable value is determined as the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs to sell.

(g) Leases

The Company adopted all of the requirements of IFRS 16, effective January 1, 2019. IFRS 16 specifies how an IFRS reporter will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17.

(h) Business combinations and asset acquisitions

Acquisitions of businesses are accounted for using the acquisition method. The cost of a business combination is measured as the sum of the acquisition-date fair values of the assets transferred, liabilities incurred or assumed, and equity instruments issued in exchange for control of the acquiree. The Company recognizes identifiable assets acquired and liabilities assumed at their acquisition date fair values. Acquisition related costs are expensed to profit or loss.

Acquisitions that do not meet the definition of a business combination are accounted for as an asset acquisition. The cost of an asset acquisition is allocated to the individual identifiable assets acquired and liabilities assumed based on their relative fair values. Asset acquisitions do not give rise to goodwill.

(i) Property, plant and equipment

Property, plant and equipment are recorded at cost less accumulated depreciation and impairment losses. Depreciation is calculated on a straight-line basis over the following estimated useful lives:

Land	Not depreciated
Furniture and equipment	3 to 5 years
Buildings and leasehold improvements	5 - 30 years

Depreciation for property, plant and equipment commences when they become available for use. Expenditures for plant under construction are capitalized and will be depreciated over the life of the asset, commencing at the time the asset is ready for its intended use. The different components of property, plant and equipment are recognized separately when their useful lives are materially different and such components are depreciated separately in profit or loss.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

FIORE CANNABIS LTD.

Notes to the Consolidated Financial Statements For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

2. Significant accounting policies (continued)

Borrowing costs directly attributable to properties acquired and under construction are capitalized (Note 12). Upon the asset becoming available for use, capitalized borrowing costs, as a portion of the total cost of the asset, are depreciated over the estimated useful life of the related asset.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Gains and losses on disposal of property and equipment are determined by comparing the proceeds from disposal with the carrying amount and recognized in profit or loss.

(j) Intangible assets

Intangible assets are recorded at cost less accumulated amortization and impairment losses. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Amortization is provided on a straight-line basis over their estimated useful lives which do not exceed the contractual period, if any, as follows:

Marijuana licenses Useful life of the facility or term of lease Intellectual property Useful life of the facility Sublease rights and options Term of lease

Intangible assets that have indefinite useful lives are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. The estimated useful lives, residual values, and amortization methods are reviewed at each year end, and any changes in estimates are accounted for prospectively.

An intangible asset is derecognized on disposal or when no future economic benefits are expected from use or disposal. Any gain or loss arising from the de-recognition is measured as the difference between the net disposal proceeds and the carrying amount of the asset and is recognized in profit or loss.

(k) Impairment of property, plant and equipment and intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its property and equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. Individual assets are grouped together as a cash generating unit for impairment assessment purposes at the lowest level at which there are identifiable cash flows that are independent from other group assets

If any such indication of impairment exists, the Company makes an estimate of its recoverable amount. The recoverable amount is the higher of fair value less costs to sell and value in use. Where the carrying amount of a cash generating unit exceeds its recoverable amount, the cash generating unit is considered impaired and is written down to its recoverable amount. In assessing the value in use, the estimated future cash flows are adjusted for the risks specific to the cash generating unit and are discounted to their present value with a discount rate that reflects the current market indicators.

Where an impairment loss subsequently reverses, the carrying amount of the cash generating unit is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the cash generating unit in prior years. A reversal of an impairment loss is recognized as income immediately.

FIORE CANNABIS LTD.

2. Significant accounting policies (continued)

(l) Goodwill

Goodwill represents the excess of the purchase price paid for the acquisition of an entity over the fair value of the net identifiable tangible and intangible assets and liabilities acquired. Goodwill is allocated to the cash generating unit (“CGU”) or CGUs to which it relates. Currently, the Company has one reportable segment. The Company has determined that the goodwill associated with all acquisitions belongs to this segment as this is the lowest level at which management monitors goodwill. Goodwill is measured at historical cost and is evaluated for impairment annually in the fourth quarter or more often if events or circumstances indicate there may be an impairment. CGUs have been grouped for purposes of impairment testing. Impairment is determined for goodwill by assessing if the carrying value of CGUs, including goodwill, exceeds its recoverable amount determined as the greater of the estimated fair value less costs to sell and the value in use. Impairment losses recognized in respect of the CGUs are first allocated to the carrying value of goodwill and any excess is allocated to the carrying amount of assets in the CGUs. Any goodwill impairment is recorded in profit and loss in the period in which the impairment is identified. Impairment losses on goodwill are not subsequently reversed.

(m) Assets held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. The asset must be available for immediate sale in its present condition, its sale must be highly probable and expected to be completed within one year from the date of classification.

When there is a plan to sell involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Company will retain a non-controlling interest in its former subsidiary after the sale.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and their fair value less costs to sell. Any excess of the carrying amount over the fair value less costs to sell is recognized as an impairment loss. Depreciation of such assets is discontinued as from their classification as held for sale. Prior period consolidated statements of financial position are not restated to reflect the new classification of a non-current asset (or a disposal group) as held for sale.

(n) Share capital

Cash consideration received from the issuance of units, consisting of common shares and share purchase warrants, are first allocated to common shares based on the quoted market value of the common shares at the time the units are priced, and the balance, if any, is allocated to the attached warrants under the residual method. Share issue costs are netted against share capital. Proceeds received for shares that have not yet been issued as at the reporting date are recorded as share subscriptions.

Shares issued for non-monetary consideration are recorded at fair value of the goods or services received. When such fair value cannot be estimated reliably, fair value is measured based on the quoted market value of the Company’s shares on the date of share issuance.

FIORE CANNABIS LTD.

2. Significant accounting policies (continued)

(o) Loss per share

Loss per share is calculated using the weighted average number of common shares issued and outstanding during the reporting period. Diluted loss per share is the same as basic loss per share, as the issuance of shares on the exercise of stock options and share purchase warrants is anti-dilutive.

(p) Share-based compensation

The fair value method of accounting is used for share-based compensation transactions. Under this method, the cost of stock options and finders’ warrants is recorded based on the estimated fair value using the BlackScholes option-pricing model at the grant date and charged to profit over the vesting period. The amount recognized as an expense is adjusted to reflect the number of equity instruments expected to vest.

Upon the exercise of stock options and finders’ warrants, consideration received on the exercise of these equity instruments is recorded as share capital and the related share-based payment reserve is transferred to share capital.

Upon the expiry or cancellation of stock options and finders’ warrants, their fair value previously recorded in reserve is transferred to deficit.

(q) Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. As at December 31, 2020 and March 31, 2020, the Company has no material provisions.

(r) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue from the sale of goods is recognized when the Company has transferred the significant risks and rewards of ownership to the customer, the amount of revenue can be reliably measured and it is probable that the Company will receive the previously agreed upon payment. Significant risks and rewards are generally considered to be transferred when the Company has delivered the product to customers.

(s) Income taxes

Tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income or directly in equity.

(i) Current income tax

Current income tax assets and/or liabilities comprise those claims from, or obligations to, fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the consolidated financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

FIORE CANNABIS LTD.

2. Significant accounting policies (continued)

(ii) Deferred income tax

Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full.

Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income. Deferred tax assets and liabilities are offset only when the Company has a right and intention to offset current tax assets and liabilities from the same taxation authority.

Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.

3. Significant accounting judgments, estimates and assumptions

The preparation of the Company’s consolidated financial statements in conformity with IFRS requires management to exercise judgment and to make estimates and assumptions that affect the application of accounting policies and the reported amounts of revenues, expenses, assets, liabilities and disclosures. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Significant estimates and assumptions that have the most significant effect on the amounts recognized in the consolidated financial statements are described as follows.

(a) Biological assets and inventory

The Company measures biological assets consisting of cannabis on plants at fair value less cost to sell up to the point of harvest. Determining the fair value requires management to make a number of estimates, including costs incurred for each stage of growth of the plants up to the point of harvest, expected yield per plant, wastage of plants, selling prices per gram and post-harvest costs.

The Company measures inventory at the lower of cost and net realizable value and estimates the sales price, costs of completion and selling costs.

(b) Business combination

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. On initial recognition, the assets and liabilities of the acquired business and the consideration paid for them are included in the consolidated financial statements at their fair values. In measuring fair value, management uses estimates of future cash flows and discount rates. Any subsequent change in these estimates would affect the amount of goodwill if the change qualifies as a measurement period adjustment. Any other change would be recognized in the income statement in the subsequent period.

FIORE CANNABIS LTD.

3. Significant accounting judgments, estimates and assumptions (continued)

(c) Assets held for sale

Assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Among other conditions, management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. However, in some cases, an asset may remain classified as held for sale for a period exceeding one year if it remains unsold due to events or circumstances beyond the Company’s control. If the recognition criteria for assets held for sale are no longer met or if management’s plans change, the Company will cease to classify the assets as held for sale.

(d) Impairment of property, plant and equipment and intangible assets

An impairment loss is recognized for the amount by which the asset’s or CGU’s carrying amount exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each asset or cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows, management makes assumptions about future operating results. In addition, when determining the applicable discount rate, estimation is involved in determining the appropriate adjustments to market risk and asset-specific risk factors. These assumptions relate to future events and circumstances. Actual results may vary and may cause significant adjustments to the Company’s assets within the next financial year.

(e) Useful lives of property, plant and equipment and intangible assets

Depreciation and amortization are dependent upon estimates of useful lives and impairment is dependent upon estimates of recoverable amounts. Management reviews the useful lives of property, plant and equipment and intangible assets at each reporting date and makes assessments of any impairment considering factors such as economic and market conditions, anticipated changes in laws and technological improvements.

(f) Share-based compensation

The fair value of share-based compensation is subject to the limitations of the Black-Scholes option pricing model that incorporates market data and involves uncertainty in estimates used by management in the assumptions. Because the Black-Scholes option pricing model requires the input of highly subjective assumptions, including the volatility of share prices, changes in subjective input assumptions can materially affect the fair value estimate.

(g) Deferred tax assets

Deferred tax assets, including those arising from unutilized tax losses, require management to assess the likelihood that the Company will generate sufficient taxable earnings in future periods in order to utilize recognized deferred tax assets. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. In addition, future changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted. The Company has recorded a full valuation allowance against its deferred tax assets due to the uncertainty in the realization of these assets.

FIORE CANNABIS LTD.

4. Accounting standards adopted in the current year

IFRS 3 Business Combinations

In October 2018, the IASB issued amendments to the definition of a business in IFRS 3 – Business Combinations (“IFRS 3”). The amendments to IFRS 3 are effective for annual reporting periods beginning on or after January 2020. The modifications are intended to assist entities in determining whether a transaction should be accounted for as a business combination or as an asset acquisition.

Effective April 1, 2020, the Company adopted the new IFRS 3 accounting standard and will apply it prospectively. Under this approach, there is no impact on the Company’s consolidated financial statements, and the comparative figures remain as previously reported.

5. Biological assets

The Company’s biological assets consist of cannabis seeds and cannabis plants. The changes in the carrying value of biological assets are as follows:

	$
Carrying amount, March 31, 2019	-
Production costs capitalized	204
Genetics purchased	26
Production costs capitalized	1,495
Changes in fair value less cost to sell due to biological transformation	544
Transferred to inventory upon harvest	(1,907)
Foreign currency	21
Carrying amount, March 31, 2020	383
Production costs capitalized	717
Genetics purchased	25
Changes in fair value less cost to sell due to biological transformation	(62)
Transferred to inventory upon harvest	(664)
Foreigncurrency	(40)
Carrying amount, December 31, 2020	359

As at December 31, 2020, the fair value of biological assets included $359 in cannabis plants and the weighted average fair value less cost to complete and cost to sell was $3.71 per gram.

Biological assets are classified as level 3 on the fair value hierarchy. Significant unobservable inputs used to fair value biological assets include the Company’s selling price per gram of dried cannabis and yield of cannabis per plant. The Company expects that a $1.00 increase or decrease in the selling price per gram of dried cannabis would increase or decrease the fair value of biological assets by $122. A 10% increase or decrease in the estimated yield per cannabis plant would result in an increase or decrease in the fair value of biological assets by $36. Other unobservable inputs are less variable and will not result in significantly higher or lower fair value measurement.

During the nine months ended December 31, 2020, the Company produced approximately 148,083 grams of dried cannabis. As of December 31, 2020, the biological assets were on average 50% complete and it was expected that the Company’s biological assets would yield approximately 188,060 grams of cannabis when harvested. The Company’s estimates are, by their nature, subject to change. Changes in the anticipated yield will be reflected in future changes in the fair values of biological assets.

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

6. Inventory

December 31, 2020	March 31,2020
$ Harvested cannabis 385 Consumable inventory 30 Finishedgoods 111	$ 281 - 56
526	337

7. Property, plant and equipment

			Buildings	Buildings
		Furniture &	and leasehold	under	Right-of-use
	Land	equipment	improvements	construction	assets	Total
	$	$	$	$	$	$
Cost
Balance, March 31, 2019	1,985	3,933	8,540	3,773	384	18,615
Reclassified from (to) assets
held for sale (Note 10(a))	(315)	(2,094)	49	(3,423)	-	(5,783)
Additions	-	328	-	720	62	1,110
Disposition	(87)	-	(79)	(1,070)	-	(1,236)
Foreign currency	98	106	522	-	20	746
Balance, March 31, 2020	1,681	2,273	9,032	-	466	13,452
Additions	-	282	4	-	324	610
Foreign currency	(172)	(198)	(923)	-	(35)	(1,328)
Balance, December 31, 2020	1,509	2,357	8,113	-	755	12,734
Accumulated depreciation and	impairment losses
Balance March 31, 2019	746	484	60	-	271	1,561
Reclassified to assets held for
sale (Note 10(a))	-	12	23	-	-	35
Depreciation	-	206	374	-	95	675
Foreign currency	46	14	30	-	18	108
Balance March 31, 2020	792	716	487	-	384	2,379
Depreciation	-	272	279	-	138	689
Foreign currency	(81)	(38)	(62)	-	(32)	(213)
Balance, December 31, 2020	711	950	704	-	490	2,855
Carrying value
Balance, March 31, 2020	889	1,557	8,545	-	82	11,073
Balance, December 31, 2020	798	1,407	7,409	-	265	9,879

As at December 31, 2020, costs related to the construction of production facilities were capitalized and not amortized. Amortization will commence when construction is completed, and the facility is available for its intended use. During the year ended March 31, 2020, $261 in borrowing costs were capitalized to buildings under construction at a weighted average interest rate of 9%. No borrowing costs have been capitalized for the nine months ended December 31, 2020.

During the year ended March 31, 2020, the Company disposed of land and buildings located in Magna Bay, British Columbia, for gross proceeds of $600. The Company recorded a loss of $537 from the sale of the property.

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

8. Business combination and asset acquisitions

	Business
	Combination	Asset	acquisition
	ACC (a)	Full Spectrum (b)	Tonasket, WA (c)
	$	$	$
Consideration paid
Cash	-	-	-
Common shares	11,653	18,959	2,520
Warrants	592	860	-
Acquisition costs – common shares	1,219	617	-
Acquisition costs–cash	-	4	-
	13,464	20,440	2,520
Net identifiable assets acquired (liabilities assumed)
Cash	257	1,900	-
Accounts receivable	1,630	64	-
Due from a related party	1,951	-	-
Prepaid expenses	71	20	-
Biological assets	365	-	-
Inventory	197	-	-
Property, plant and equipment	5,345	2,168	-
Accounts payable and accrued liabilities	(2,824)	(254)	-
Due to related companies	(1,214)	-	-
Loans and borrowings	(7,114)	(475)	-
	(1,336)	3,423	-
Purchase price allocation
Net identifiable assets acquired	(1,336)	3,423	-
Intangible assets – intellectual property	-	17,017	-
Intangible assets – sublease rights and options	-	-	2,520
Goodwill	14,800	-	-
	13,464	20,440	2,520

(a) ACC

On August 2, 2019, the Company completed the acquisition of ACC, a licensed cannabis cultivator in Nevada. The Company acquired all of the issued and outstanding shares of ACC for a total consideration of $13,464 which comprised of 35,000,000 common shares at a fair value of $11,653, 11,500,000 warrants at a fair value of $592 and finders’ fees of 3,250,000 common shares at a fair value of $1,219.

The warrants are exercisable at $2.50 per share expiring August 2, 2021, subject to acceleration if the volume weighted average price (‘VWAP”) of the Company’s shares is greater than $3.50 for a period of 10 consecutive trading days. The fair value of the 11,500,000 warrants at the date of acquisition was estimated at $0.05 per warrant using the Black-Scholes option pricing model with the following assumptions: share price of $0.37; risk-free rate of 1.41%; stock price volatility of 101.98%; dividend yield of 0%; and expected life of warrants of 2 years.

The purchase price was allocated based on management’s preliminary assessment of the fair value of the identifiable assets acquired and liabilities assumed at the date of acquisition.

FIORE CANNABIS LTD.

8. Business combination and asset acquisitions (Continued)

(a) ACC (continued)

On January 13, 2020, Howard Misle resigned as CEO and director of the Company. On August 18, 2020, Howard Misle, the former CEO and director of the Company and the former controlling shareholder of ACC, entered into a settlement agreement with the Company to reacquire the legal title of ACC in return of 18,515,424 common shares of the Company. In addition, the Company agreed to pay (i) US$650 on or before August 18, 2020 and (ii) US$453 to be paid as follows: US$75 (minimum) by February 17, 2021 and the balance in six equal monthly payments from March 15, 2021 to August 15, 2021. A total amount of $1,456 (US$1,103) has been accrued for the settlement. Pursuant to the settlement agreement, on its closing, ACC was dissolved. As at March 31, 2020, an estimated fair value of $1,574 for the 18,515,424 common shares was included in treasury reserve account. On August 25, 2020, 18,515,424 common shares were returned to treasury for cancellation. There was no change in the original estimated fair value of the shares to be returned at March 31, 2020 compared to the fair value of the share returned on August 25, 2020. As such, thee was no subsequent adjustment of the loss on deemed disposition of ACC in the ninemonth period ended December 31, 2020. Subsequent to December 31, 2020, US$201 cash settlement was paid.

On January 1, 2020, the Company lost its de facto control of ACC shortly followed by the resignation of Howard Misle, the former controlling shareholder of ACC, on January 13, 2020. As a result, the Company deconsolidated ACC and recognized a loss on deemed disposition of subsidiary of $12,253 which consists of (i) $10,982 from the settlement based on the net liabilities of $3,023 of ACC as at January 1, 2020, (ii) $221 of accounts receivable write off, (iii) $901 of inventory write off, and (iv) $149 of legal fees incurred during the acquisition.

Revenues and expenses related to the discontinuation of ACC, due to the loss of control, were eliminated from profit or loss from the Company’s continuing operations and were shown as a single line item as follows:

follows:
	Twelve Months ended
	March 31, 2020
	$
Revenue, net of Excise taxes	604
Cost of sales	(1,378)
Gross loss before fair value adjustments	(774)
Change in fair value of inventory sold	(876)
Unrealized gain on changes in fair value of biological assets	1,157
Gross loss	(493)
General and administrative expenses	(1,260)
Net loss from discontinued operations	(1,753)

(b) Full Spectrum

For details of the acquisition of Full Spectrum and the Joint Venture Agreements, please refer to Note 8(b) of the audited Consolidated Financial Statements for the years ended March 31, 2020 and 2019.

On April 19, 2021, the Company entered into a Memorandum of Understanding to sell the Celista Project which the buyer will assume loans and liabilities of the Company in total of $4,520. As at December 31, 2020, the assets and liabilities of Celista Project, which includes land located in Celista, BC, and the latestage license application under the Cannabis Act, have been reclassified as held for sale. (Note 10)

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

FIORE CANNABIS LTD.

Notes to the Consolidated Financial Statements For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

8. Business combination and asset acquisitions (continued)

(c) Tonasket, Washington property

On May 29, 2018, the Company completed the acquisition of certain operational assets, leases, subleases and an option and right of first refusal (“ROFR’) to purchase Washington State Liquor Cannabis Board (“WSLCB”) Tier 2 and Tier 3 cultivation and processing licenses related to cannabis production and processing operations in Tonasket, Washington (the “Property”). In consideration for the acquisition, the Company issued 1,000,000 common shares of the Company at a fair value of $2,520. The full amount of the purchase consideration was allocated to intangible assets, sublease and option agreements.

In March 2019, the Company decided not to pursue cannabis production operations in Washington and is currently negotiating for an assignment of its ownership interest in the Property to Veritas in the amount of $900 in settlement of the Company’s loan (Note 18(b)(i)). As a result, the Company wrote-down the carrying amount of the intangible asset by $1,176 to its estimated fair value of $900. The Company further wrote down the intangible asset to $NIL as at December 31 and March 31, 2020.

(d) Buds for You Inc. (“Buds”)

The Company, through Full Spectrum, entered into a Share Exchange Agreement (the “Buds Agreement“) dated April 19, 2019 to acquire Buds, a late stage cannabis cultivation, processing and sales license applicant under the Cannabis Act (the “Buds License”). On the date of execution of the Agreement, the Company paid a non-refundable deposit of $250 and issued 62,500 common shares at a fair value of $55. The Company will acquire all of the issued and outstanding shares of Buds for an additional $750 and a 5% perpetual gross royalty on net sales and other income from cannabis derived by the Company from the property location where Bud’s license will be assigned to. The Company issued 33,750 common shares at a fair value of $30 as a finder’s fee for the transaction. The Company will transfer the Buds License to 1196788 BC Ltd. (“119”) on closing of the acquisition.

In consideration for the Amended Agreement, effective November 7, 2019, the Buds Agreement was assigned to 1186626 BC Ltd. (“118”). As a result, an impairment loss on investment of $305 was recorded during the year ended March 31, 2020.

For details of the transfer of the Buds License and the assignment of the Buds Agreement, please refer to Note 8(b) of the audited Consolidated Financial Statements for the years ended March 31, 2020 and 2019.

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

9. Intangible assets

	Intellectual	Marijuana	Sublease	Creation
	property	licenses	right	costs	Total
	$	$	$	$	$
Cost
Balance, March 31, 2019	17,017	2,154	3,094	4	22,269
Reclassified from held for sale (Note 10(a))	-	2,102	-	27	2,129
Reclassified to held for sale (Note 8(b))	-	(190)	-	-	(190)
Additions	-	253	-	-	253
Foreign exchange	-	330	-	2	332
Balance, March 31, 2020	17,017	4,649	3,094	33	24,793
Additions	-	57	-	-	57
Foreign exchange	-	(480)	-	(3)	(483)
Balance, December 31, 2020	17,017	4,226	3,094	30	24,367
Accumulated amortization and impairment	losses
Balance, March 31, 2019	-	35	2,194	4	2,233
Reclassified from held for sale (Note 10(a))	-	959	-	8	967
Amortization	-	145	189	2	336
Impairment	8,500	-	711	-	9,211
Foreign exchange	-	134	-	-	134
Balance, March 31, 2020	8,500	1,273	3,094	14	12,881
Amortization	-	111	-	1	112
Impairment	8,517	-	-	-	8,517
Foreign exchange	-	(136)	-	(1)	(137)
Balance, December 31, 2020	17,017	1,248	3,094	14	21,373
Net book value
Balance, March 31, 2020	8,517	3,376	-	19	11,912
Balance, December 31, 2020	-	2,978	-	16	2,994

During the nine months ended December 31, 2020, the Company recorded an impairment charges to intellectual property in the amount of $8,517 (March 31, 2020 - $8,500) relating to the acquisition of Full Spectrum (Note 8(b)). During the year ended March 31, 2020, the Company recorded an impairment charges to the sublease right in the amount of $711 relating to the Washington property held for sale. (Note 10(a))

10. Assets and liabilities held for sale

December 31, 2020	March31,2020
$ Lynden, Washington Property (a) - Land located at Desert Hot Springs, California (a) 1,656 Celista project (Note 8(b)) 6,054	$ 3,334 1,844 6,054
Assets held for sale 7,710	11,232
Mortgage loan 600 Loan payable (Note 8(b)) 2,898	3,192 3,340
Liabilities associated with assets held for sale 3,498	6,532

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

10. Assets and liabilities held for sale (continued)

(a) The assets classified as held for sale consist of certain lands and buildings located in the state of Washington and California which have been listed for sale. These assets are expected to be sold within a twelve-month period and are no longer productive assets as there is no interest to develop them for future use. During the year ended March 31, 2019, the Company wrote-down the carrying amount of these assets by $2,125 (US$1,590) to their aggregate estimated fair value of $8,402 (US$6,288) and transferred the balance from property, plant and equipment to assets held for sale. During the year ended March 31, 2020, the Company further wrote-down the carrying amount of these assets by $3,510 (US$2,638) to their aggregate estimated fair value of $5,178 (US$3,650).

The Company entered into a secured promissory note dated March 8, 2019 in the principal amount of $2,539 (US$1,900) (the “Debt”) which was used to purchase the Lynden property. The Debt bears interest at 15% per annum and repayable over a period of 12 months with a balloon payment at the end of twelve months. The principal amount may be extended for a period of 6 months for an extension fee of 2%. If the monthly payments are not paid within 5 days of the due date, a late fee of 10% will be charged to the Company. The Debt is secured by a Security Agreement, Assignment of Leases and Rents and a Fixture Financing Statement. The Debt proceeds were used to purchase the Lynden Property. The Debt is to be repaid as part of a sale transaction and has been included in liabilities associated with assets held for sale.

During the nine months ended December 31, 2020, the Company disposed the Lynden property for gross proceeds of US$2,500 and recorded a loss on sale of property, plant and equipment of $4. The Debt of US$1,900 was fully settled and the Company entered into a new unsecured promissory note of US$375 which bears interest of 12% per annum and is repayable upon the earlier of (i) the receipt by Company of the US$375 from the United States Internal Revenue Service after filing a successful application for a FIRPTA Withholding Certificate from the sale of the properties or (ii) nine months from the date of the promissory note.

11. Lease liabilities

	$
As at March 31, 2019	155
Lease liability recognized	59
Cash principal and interest payments	(125)
Accretion	15
Foreign exchange	4
As at March 31, 2020	108
Lease liability recognized	314
Cash principal and interest payments	(152)
Accretion	21
Foreign exchange	(3)
As at December 31, 2020	288
Less: current portion	(133)
	155

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

12. Loans and borrowings

Loans and borrowings
Note Interest per annum Maturity December 31, 2020	March 31, 2020
$ Loan from Veritas 8(c),18(b)(i) - - 1,000 Promissory Note 10(a) 12% March 31, 2021 506 Loans from Directors (a) 12% May 1, 2021 855 Canada Emergency Business Account (b) - - 30 Equipment loan (c) 29% August 21, 2021 81 Non-convertible debenture (d) 10% August 20, 2022 October 21, 2022 December 17, 2022 724 223 133 Revolving Credit Promissory Note (e) 10% December 22, 2021 612	$ 1,000 - - - - - - - -
4,164	1,000

(a) During the nine months ended December 31, 2020, the Company entered into short term loan agreements with the directors and an executive of the Company for an aggregated principal amount of $765. The loans are unsecured, mature on May 1, 2021 and bear an average interest rate of 12% per annum payable on maturity date. During the nine months ended December 31, 2020, the Company accrued $90 interest on these loans.
(b) During the nine months ended December 31, 2020, the Company received a “Canada Emergency Business Account” government assistance in the amount of $40 as a revolving line of credit. The line of credit was interest-free until January 1, 2023. After December 31, 2020, any outstanding balance on the revolving $40 line of credit will be converted into a non-revolving 5-year term loan maturing on December 31, 2025, at which time the balance must be paid in full. If payment can be made on or before December 31, 2022, $10 of the principal amount will be forgiven. Commencing on January 1, 2023, interest accrues on the balance of the term loan at the rate of 5% per annum.
(c) During the nine months ended December 31, 2020, the Company entered into an equipment loan agreement in the amount of $121 (US$96). The loans are secured by certain lighting equipment, mature on September 21, 2021 and bear interest at 29% per annum.
(d) During the nine months ended December 31, 2020, the Company closed a non-convertible debenture private placement of 1,207 units at $1 per unit for gross proceeds of $1,207. Each unit consisted of $1 principal amount of 10% unsecured subordinated debentures and 2,000 common share purchase warrants. Each whole warrant is exercisable into one common share of the Company at a price of $0.15 per share for a period of twenty-four months. The Company paid $52 in cash and issued 103,000 common share purchase warrants at a fair value of $4 as finder’s fee.
(e) During the nine months ended December 31, 2020, the Company entered into a secured revolving credit promissory note with a company controlled by a director of the Company for a principal amount US$2,000 with 10% interest per annum expiring December 22, 2021 with an option to extend for another year. This loan is secured by a deed of trust lien and assignment of rents and lease on the facility located in North Las Vegas, Nevada and unlimited corporate guarantee of MLV, EcoNevada, Phenofarm and Green Leaf. As consideration, the Company issued 825,000 common shares for a fair value of $70 and 550,000 warrants for a fair value of $30. The warrants expire on December 22, 2023 and have an exercise price of $0.15. As at December 31, 2020, the Company received a $704 (US$550) loan from the revolving credit and accrued $1 in interest.

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

13. Convertible debentures

			May 9, 2019,
	May 1, 2017	October 23, 2018	July 10, 2019
	(a)	(b)	(c)	Total
	$	$	$	$
Balance, March 31, 2019	1,314	2,189	-	3,503
Issued	-	-	500	500
Transaction costs	-	(219)	(13)	(232)
Conversion feature	-	(587)	(204)	(791)
Conversion of debentures	-	(84)	-	(84)
Accretion expense	232	936	67	1,235
Accrued interest	-	260	41	301
Interest paid	-	(286)	-	(286)
Foreign exchange	96	-	-	96
Balance, March 31, 2020	1,642	2,209	391	4,242
Conversion feature	-	(593)	-	(593)
Accretion expense	18	555	88	661
Accrued interest	-	196	37	233
Interest paid	-	-	-	-
Foreign exchange	(170)	-	-	(170)
Balance, December 31, 2020	1,490	2,367	516	4,373

(a) On May 1, 2017, the Company closed a private placement of 117 convertible bonds at an issue price of US$10,000 per bond for total gross proceeds of $1,556 (US$1,170) (the “Bonds”). The Bonds are convertible into common shares of the Company at a price of $4 per share in the first year, $8 per share in the second year and $12 per share in the third year. The Bonds mature on May 1, 2020 and bear compound interest at 8.5% per annum, payable monthly.

The Bonds consisted of a liability component (“financial liability”) and an embedded derivative conversion feature (“derivative liability”). During the nine months ended December 31, 2020, the Company recorded an unrealized gain on the derivative liability of $Nil (March 31, 2020 - $1), respectively. As of December 31, 2020, the Company is in default of the principal amount of US$1,170 and its interest payment obligation of US$149 under the Bonds.

(b) On October 23, 2018, the Company closed private placement of a one-year 10% unsecured convertible debentures for total gross proceeds of $3,293. The debentures matured on October 23, 2019, and were convertible into units of the Company at a price of $0.80 per unit. Each unit consisted of one common share and one share purchase warrant exercisable at $2.00 per share expiring October 23, 2019. The holders were entitled to convert all or any part of the debentures into units of the Company at a price equal to 10% less than the offering price of the Company’s short form prospectus offering carried out on or prior to the maturity date.

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

13. Convertible debentures (continued)

On October 23, 2019, the Company extended and amended the terms of the debentures (the “Amended Debentures”) as follows:

(i) All accrued and unpaid interest were paid in common shares of the Company at market price. As a result, the Company issued 635,642 common shares to the holders in settlement of accrued interests of $261;
(ii) The Amended Debentures mature on October 23, 2020;
(iii) The Amended Debentures are convertible into common shares of the Company at $0.70 per share subject to accelerated maturity if the VWAP of the Company’s common shares is equal to or above $1.05 for ten consecutive trading days; and
(iv) Interest shall be paid in cash at maturity, however, if the Amended Debentures are converted into common shares prior to the maturity date, interest shall be paid in shares on the conversion date at a price equal to the conversion price.

In consideration for the amendment, the Company issued 3,723,033 warrants to the holders at an exercise price of $1.25 per share for a period of eighteen months expiring April 23, 2021, subject to acceleration if the VWAP of the Company’s common shares is equal or above $1.88 for ten consecutive trading days. Additionally, the Company’s CEO agreed to personally pay the debenture holders an additional $261 or 10% of the principal amount outstanding in common shares upon receipt of his bonus shares on achievement of performance milestones. The Company’s CEO resigned on January 13, 2020.

The fair value of the 3,723,033 warrants of $283 was determined using the Black-Scholes option pricing model based on the following weighted average assumptions: share price of $0.35; risk-free rate of 1.65%; stock price volatility of 112%; dividend yield of 0%; and expected life of warrants of 1.50 years.

On October 23, 2020, the Company further extended and amended the terms of the debentures (the “Second Amended Debentures”) as follows:

(i) The Second Amended Debentures mature on October 23, 2022;
(ii) All accrued and unpaid interest from the period from October 24, 2019 to January 23, 2021 will be paid in cash or in common shares of the Company at $0.09, at the discretion of the Company, on January 23, 2021;
(iii) The Second Amended Debentures are convertible into common shares of the Company at $0.25 per share;
(iv) Two common share purchase warrants will be issued upon conversion. The warrant exercise price will be $0.15 per share expiring October 23, 2022; The estimated fair value as at December 31, 2020 of these potential issuances of warrants should the holder convert was $159. The estimate fair value is based on Black-Scholes option pricing model based on the following weighted average assumptions: probability of conversion at 5.8% based on known conversion and warrants issuance subsequent to December 31, 2020 in 2021; share price of $0.20; conversion price of $0.15; risk-free rate of 0.20%; stock price volatility of 125%; dividend yield of 0% and expected life of warrants of 1.81 years. The estimated fair value of $159 was recognized as derivative liability associated with these amended convertible debentures as the potential issuance of additional warrants fails the fixto-fix test for embedded derivatives.
(v) Interest will be paid in cash on the anniversary date and maturity date;

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

13. Convertible debentures (continued)

(vi) The Company, upon providing ten prior business days’ notice to the debenture holders in writing, may, at its option, on any one or more occasion, redeem and repay all or a part of the principal amount.

All other terms of the debentures remain the same.

The Amended Debentures consisted of a financial liability and a derivative liability. On amendment date, the debentures were recorded at its amortized cost of $2,014 which represented the remaining fair value from the debenture balance of $2,606 after the allocation of $593 from the conversion feature. The conversion feature was determined using the Black-Scholes option pricing model based on the following weighted average assumptions: share price of $0.09; risk-free rate of 0.21%; stock price volatility of 121.70%; dividend yield of 0%; and expected life of 2 years.

During the nine months ended December 31, 2020, the Company recorded an unrealized loss on the derivative liability of $743 (March 31, 2020 – unrealized gain of $1,498). As at December 31, 2020, the fair value of the conversion feature of $1,513 (March 31, 2020 - $176) was determined using the BlackScholes option pricing model based on the following weighted average assumptions: share price of $0.20; risk-free rate of 0.20%; stock price volatility of 125.23%; dividend yield of 0%; and expected life of warrants of 1.81 years.

(c) During the year ended March 31, 2020, the Company closed a private placement of two-year 10% unsecured convertible debentures for total gross proceeds of $500. The debentures are convertible into units of the Company at a price of $0.80 per unit. Each unit consists of one common share and one share purchase warrant exercisable at $1.40 per share for a period of eighteen months. In the event the Company issues shares (or securities convertible into shares) at a purchase price less than $0.80 per share, the conversion price shall be reduced to such lower price and the exercise price of the warrant shall be reduced on a commensurate basis.

The debentures consisted of a financial liability and a derivative liability. At inception, the debentures were recorded at its amortized cost of $283 which represented the remaining fair value from the net proceeds of $500 after the allocation of $204 from the conversion feature and transaction costs of $13. The conversion feature was determined using the Black-Scholes option pricing model based on the following weighted average assumptions: share price of $0.72; risk-free rate of 1.61%; stock price volatility of 108.12%; dividend yield of 0%; and expected life of warrants of 0.94 year.

During the nine months ended December 31, 2020, the Company recorded an unrealized loss on the derivative liability of $21 (March 31, 2020 – unrealized gain of $173) and as at December 31, 2020, the fair value of the conversion feature of $52 (March 31, 2020 - $32) was determined using the Black-Scholes option pricing model based on the following weighted average assumptions: share price of $0.20; risk-free rate of 0.20%; stock price volatility of 148.86%; dividend yield of 0%; and expected life of warrants of 0.44 years.

14. Share capital

(a) Authorized share capital

The Company is authorized to issue an unlimited number of common shares without par value.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

FIORE CANNABIS LTD.

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

14. Share capital (continued)

(b) Issued and outstanding

As at December 31, 2020, the Company had 134,310,263 common shares (March 31, 2020 – 123,007,147) issued and outstanding.

(i) Shares issued for cash

Nine months ended December 31, 2020

On June 24, 2020, the Company closed a non-brokered private placement of 3,930,721 units at $0.15 per unit for gross proceeds of $589. Each unit consists of one common share and one share purchase warrant. Each warrant is exercisable into one common share of the Company at a price of $0.22 per share for a period of 18 months expiring December 25, 2021, subject to an accelerated expiry if the VWAP of the Company’s common shares is equal to or above $0.50 for a period of ten consecutive trading days.

Year ended March 31, 2020

On March 30, 2020, the Company closed a non-brokered private placement of 2,783,793 units at $0.15 per unit for gross proceeds of $417. Each unit consisted of one common share and one share purchase warrant. Each whole warrant is exercisable into one common share of the Company at a price of $0.22 per share for a period of eighteen months expiring September 30, 2021, subject to an accelerated expiry if the VWAP of the Company’s common shares is equal to or above $0.50 for a period of ten consecutive trading days. A value of $56 has been attributed to the warrants using the residual value method.

On October 30, 2019, the Company closed a non-brokered private placement of 3,615,000 units at $0.30 per unit for gross proceeds of $1,085. Each unit consisted of one common share and one-half of one share purchase warrant. Each whole warrant is exercisable into one common share of the Company at a price of $0.60 per share for a period of two years expiring October 30, 2021, subject to an accelerated expiry if the VWAP of the Company’s common shares is equal to or above $1.00 for a period of ten consecutive trading days.

During the year ended March 31, 2019, the Company over issued 50,000 shares (2018 – 25,000 shares) to a former director of the Company. During the year ended March 31, 2020, a total of 62,500 common shares were returned to the Company and $198 in share subscriptions receivable were reversed. These shares were cancelled and returned to treasury. During the year ended March 31, 2020, the fair value of $36 for the remaining 12,500 shares not received was written off.

(ii) Shares issued for asset acquisitions

Year ended March 31, 2020

During the year ended March 31, 2020, the Company issued 62,500 common shares at a fair value of $55 as a deposit related to the proposed acquisition of Buds. The Company issued 33,750 common shares at a fair value of $30 as a finder’s fee. (Note 8(d))

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

14. Share capital (continued)

During the year ended March 31, 2020, the Company issued 35,000,000 common shares at a fair value of $11,653 related to the acquisition of ACC. The Company issued 3,250,000 common shares at a fair value of $1,219 as finders’ fees. (Note 8(a))

(iii) Shares issued for services

Nine months ended December 31, 2020

During the nine months ended December 31, 2020, the Company issued an aggregate of 16,361,711 common shares at a fair value of $1,670 to certain directors, officers and consultants of the Company.

Year ended March 31, 2020

During the year ended March 31, 2020, the Company issued an aggregate of 6,850,000 common shares at a fair value of $1,482 to certain consultants for services rendered in connection with the development of the Celista Project and the directors of the Company.

(iv) Shares issued for debt

Nine months ended December 31, 2020

During the nine months ended December 31, 2020, the Company issued an aggregate of 825,000 common shares at a fair value of $70 to a company controlled by a director as consideration for the US$550 loan received during the period. (Note 12(e))

Year ended March 31, 2020

During the year ended March 31, 2020, the Company issued an aggregate of 2,102,274 common shares at a fair value of $387 to settle outstanding debts of $376. The Company recorded a corresponding loss on the settlement of debt of $11.

(v) Shares issued under Restricted Share Unit (“RSU”) Plan

Nine months ended December 31, 2020

During the nine months ended December 31, 2020, 8,701,108 common shares were issued to employees, consultants and directors of the Company at a fair value of $1,302 on redemption of vested RSUs.

Year ended March 31, 2020

During the year ended March 31, 2020, 3,810,000 common shares were issued to employees, consultants and directors of the Company at a fair value of $2,528 on redemption of vested RSUs.

(vi) Performance and retention bonus shares

During the year ended March 31, 2020, an aggregate of 3,100,000 performance and bonus shares at a fair value of $1,036 were issued to certain directors, officers and employees of the Company.

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

14. Share capital (continued)

(vii) Shares issued on conversion of convertible debentures

Year ended March 31, 2020

During the year ended March 31, 2020, the Company issued a total of 766,264 common shares at a fair value of $389 on conversion of debentures.

(c) Share purchase warrants

The continuity of warrants for the nine months ended December 31, 2020 is as follows:

	Exercise	March 31,			Expired/	December 31,
Expiry Date	Price	2020	Issued	Exercised	Cancelled	2020
April 2, 2020	$3.48	61,701	-	-	61,701	-
May 19, 2020	$2.00	539,000	-	-	539,000	-
September 25, 2020	$0.80	2,311,250	-	-	2,311,250	-
September 25, 2020	$1.40	265,625	-	-	265,625	-
January 31, 2021	$11.60	10,937,263	-	-	-	10,937,263
April 23, 2021	$1.25	3,723,035	-	-	-	3,723,035
August 2, 2021	$2.50	11,500,000	-	-	-	11,500,000
September 30, 2021	$0.22	2,783,793	-	-	-	2,783,793
October 30, 2021	$0.60	1,807,500	-	-	1,307,500	500,000
December 25, 2021	$0.22	-	3,930,721	-	-	3,930,721
August 20, 2022	$0.15	-	1,560,000	-	-	1,560,000
October 21, 2022	$0.15	-	504,000	-	-	504,000
December 17, 2022	$0.15	-	350,000	-	-	350,000
December 23,2023	$0.15	-	550,000	-	-	550,000
		33,929,167	6,894,721	-	4,485,076	36,338,812

The continuity of warrants for the year ended March 31, 2020 is as follows:

	Exercise	March 31,			Expired/	March 31,
Expiry Date	Price	2019	Issued	Exercised	Cancelled	2020
		#	#	#	#	#
May 21,2019	$2.80	937,500	-	-	937,500	-
June 11, 2019	$2.80	1,168,750	-	-	1,168,750	-
October 23, 2019	$2.00	732,900	125,813	-	858,713	-
January 31, 2020	$5.00	860,975	-	-	860,975	-
March 16, 2020	$3.48	403,268	-	-	403,268	-
March 31, 2020	$3.48	433,526	-	-	433,526	-
April 2, 2020	$3.48	61,701	-	-	-	61,701
May 19, 2020	$2.00	539,000	-	-	-	539,000
September 25, 2020	$0.80	2,311,250	-	-	-	2,311,250
September 25, 2020	$1.40	265,625	-	-	-	265,625
January 31, 2021	$11.60	10,937,263	-	-	-	10,937,263
April 23, 2021	$1.25	-	3,723,035	-	-	3,723,035
August 2, 2021	$2.50	-	11,500,000	-	-	11,500,000
September 30, 2021	$0.22	-	2,783,793	-	-	2,783,793
October 30, 2021	$0.60	-	1,807,500	-	-	1,807,500
		18,651,758	19,940,141	-	4,662,732	33,929,167

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

14. Share capital (continued)

(d) Finders’ warrants

The continuity of finders’ warrants for the nine months ended December 31, 2020 is as follows:

	Exercise	March 31,			Expired/	December 31,
Expiry Date	Price	2020	Issued	Exercised	Cancelled	2020
		#	#	#	#	#
August 20, 2022	$0.15	-	78,000	-	-	78,000
October 21, 2022	$0.15	-	25,000	-	-	25,000
		-	103,000	-	-	103,000

The continuity of finders’ warrants for the year ended March 31, 2020 is as follows:

	Exercise	March 31,			Expired/	March 31,
ExpiryDate	Price	2019	Issued	Exercised	Cancelled	2020
		#	#	#	#	#
May 19, 2019	$3.48	24,382	-	-	24,382	-
June 2, 2019	$3.48	750	-	-	750	-
October 23, 2019	$2.00	60,270	-	-	60,270	-
		85,402	-	-	85,402	-

(e) Stock options

Under the Company’s Stock Option Plan, the maximum number of shares that may be reserved for issuance under the Company’s Fixed Share Option Plan as of December 31, 2020 was 12,011,108 common shares (March 31, 2020 – 5,707,300). Under the Plan, the exercise price of an option may not be less than the closing market price of the Company’s shares prevailing on the day that the option is granted. The options may be granted for up to a maximum term of 5 years and vested at the discretion of the board of directors.

As at December 31, 2020, 10,282,358 options, with an average exercise price of $0.35 per share and an average remaining life of 1.96 years, have vested.

	Exercise	March 31,			Expired/	December 31,
Expiry Date	Price	2020	Granted	Exercised	Cancelled	2020
		#	#	#	#	#
October 4, 2020	$1.04	1,196,250	-	-	1,196,250	-
October 30, 2020	$1.16	25,000	-	-	25,000	-
January 8, 2021	$0.98	300,000	-	-	-	300,000
March 3, 2021	$1.08	2,267,500	-	-	-	2,267,500
June 21, 2021	$0.80	300,000	-	-	300,000	-
April 1, 2024	$0.88	18,750	-	-	-	18,750
April 22, 2024	$0.88	60,000	-	-	-	60,000
April 22, 2022	$0.085	-	1,250,000	-	50,000	1,200,000
May 15, 2023	$0.10	-	2,400,000	-	-	2,400,000
May 19, 2023	$0.10	-	4,200,000	-	300,000	3,900,000
May 20, 2023	$0.105	-	136,108	-	-	136,108
		4,167,500	7,986,108	-	1,871,250	10,282,358

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

14. Share capital (continued)

(e) Stock options (continued)

As at March 31, 2020, 4,149,375 options, with an average exercise price of $1.04 per share and an average remaining life of 0.87 year, have vested.

	Exercise	March 31,			Expired/	March 31,
Expiry Date	Price	2019	Granted	Exercised	Cancelled	2020
		#	#	#	#	#
June 28, 2019	$4.08	50,000	-	-	50,000	-
March 6, 2019	$3.20	100,000	-	-	100,000	-
March 4, 2020	$2.84	150,000	-	-	150,000	-
October 4, 2020	$1.04	1,796,250	-	-	600,000	1,196,250
October 30, 2020	$1.16	25,000	-	-	-	25,000
January 8, 2021	$0.98	300,000	-	-	-	300,000
March 3, 2021	$1.08	3,169,800	-	-	902,300	2,267,500
June 21, 2021	$0.80	-	300,000	-	-	300,000
March 21, 2024	$0.96	62,500	-	-	62,500	-
April 1, 2024	$0.88	-	18,750	-	-	18,750
April 22, 2024	$0.88	-	247,500	-	187,500	60,000
		5,653,550	566,250	-	2,052,300	4,167,500

During the nine months ended December 31, 2020, the Company recognized share-based compensation of $505 (March 31, 2020 - $208) for stock options granted and vested during the period.

The fair value of stock options at the date of grant was estimated at $0.06 per option (March 31, 2020 - $0.41per option) using the Black-Scholes option pricing model with the following weighted average assumptions:

		December 31, 2020	March 31,2020
Risk-Free	Annual Interest Rate	0.26% - 0.34%	1.48% - 1.66%
Expected	Stock Price Volatility	104% - 116%	99% - 101%
Expected	Life of Options and Warrants	2.0 – 3.0 years	2.0 – 2.5 years
Expected	Annual Dividend Yield	0%	0%

(f) Restricted share units (“RSU”)

On October 10, 2017, the Company adopted an RSU Plan as approved by the shareholders of the Company. The RSU Plan is designed to provide the Company with an additional tool to compensate directors, officers, consultants and other key employees of the Company. As of December 31, 2020, the maximum number of shares that may be reserved for issuance under the RSU plan was 12,011,108 (March 31, 2020 – 5,707,300) common shares. Under the plan, each vested RSU gives the eligible person the right to receive one common share of the Company.

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

14. Share capital (continued)

(f) Restricted share units (“RSU”) (continued)

The continuity of RSUs for the nine months ended December 31, 2020 is as follows:

	March 31,				December 31,
Issuance date	2020	Issued	Redeemed	Cancelled	2020
April 22, 2019	1,006,250	-	850,000	156,250	-
May 19, 2020	-	5,650,554	5,650,554	-	-
May 20, 2020	-	2,300,554	2,300,554	-	-
	1,006,250	7,951,108	8,801,108	156,250	-

The continuity of RSUs for the year ended March 31, 2020 is as follows:

	March 31,
Issuance date	2019	Issued	Redeemed	Cancelled	March31,2020
April 22,2019	-	5,705,000	3,810,000	888,750	1,006,250

During the nine months ended December 31, 2020, the Company recognized share-based compensation of $752 (March 31, 2020 - $3,041), for 7,951,108 (2019 – 5,705,000) RSUs granted and vested during the period. The weighted average fair value of RSUs granted during the nine months ended December 31, 2020 was $0.10 (March 31, 2020 - $0.53) per share.

15. General and administrative expenses

Nine months ended December 31, 2020	Twelve months ended March 31, 2020
$ Consulting fees 280 Business acquisition costs - Shareholder and investor relations 617 Office and general 832 Professional fees 568 Management fees and wages 1,618	$ 1,790 1,248 738 984 574 1,087
3,915	6,421

16. Finance and other costs

Nine months ended December 31, 2020	Twelve months ended March 31, 2020
$ Accretion expenses 701 Loan interest 1,035 Financing fee 15 Bank charges 132	$ 1,251 890 74 94
1,883	2,309

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

17. Related party transactions

Details of transactions between the Company and related parties, in addition to those transactions disclosed elsewhere in these consolidated financial statements, are described as follows.

(a) Related party balances

The following amounts due to related parties are unsecured and have no specific terms of repayment:

	December 31, 2020	March 31,2020
	$	$
Short term loans from directors and officers(1)	855	-
Revolving credit promissory note from a director (Note 12 (e))	612	-
Due to an officer and a director for fees pursuant to consulting	163	136
agreements
Due to officers and a director for expense reimbursements	113	94

(1) The short term loans from directors and officers bear an average fixed interest at 12% and are payable on demand.

(b) Compensation of key management personnel

Key management personnel includes the Company’s directors and officers. The compensation paid or accrued to directors and officers consisted of the following:

	Nine months ended	Twelve months ended
	December 31, 2020	March 31, 2020
	$	$
Consulting fees to former directors and officers	35	364
Management fees	1,199	956
Share-based compensation(1)	1,265	3,325
	2,499	4,645

(2) An aggregate of 7,336,108 stock options (March 31, 2020 – 250,000), 9,476,108 RSUs (March 31, 2020 – 3,250,000) and Nil retention bonus shares (March 31, 2020 – 2,500,000) were issued to these related parties.

All related party transactions were in the ordinary course of business and were conducted on terms substantially similar to arm’s length transactions.

18. Commitments and contingencies

(a) Office and operating leases

(i) MDHS entered into a commercial lease agreement for the lease of its dispensary operating premises for a monthly rent of US$5. The lease expired on December 8, 2020, with 3 additional 5-year term renewal options. The Company is currently in negotiations with the landlord on the share of certain leasehold improvement costs and is expected to renew the lease agreement in the near future.
(ii) The Company entered into a lease agreement for rental of an office space in Kelowna, British Columbia for an annual rent payment of $23 in the first year and $25 in the second year. The lease expires on May 3, 2021.

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

18. Commitments and contingencies (continued)

(a) Office and operating leases (continued)
(iii) The Company entered into a lease agreement for rental of an office space in Calgary, Alberta for an annual rent payment of $25 in the first year, $29 in the second year and $33 in the third year. The lease expires on April 30, 2023. Subsequent to December 31, 2020, the lease agreement was terminated.
(b) Claims and litigations

(i) Veritas vs. Citation

On February 28, 2019, a claim was commenced against the Company by Veritas to recover a loan in the principal amount of $1,000 plus interest. Veritas claims that the loan is in default and has made a demand for repayment of the loan and interest on or before January 21, 2019.

On April 12, 2019, the Company filed a counterclaim against Veritas alleging, among other things, that the Company and Veritas entered into a loan agreement which included repayment terms consisting of $100 and the assignment of the Company’s ownership interest in the Property. (Note 8(c))

The Company intends to vigorously defend itself against the claim made by Veritas. As set out in the Company’s response to civil claim, it believes that the allegations are without merit and that the loan agreement is in full force and effect.

(c) Notice of default

The Company has been provided with a notice of default on the debt with NPI Debt Fund II secured by a deed of trust in the principal amount US$1.9 million and demand for payment of past due interest, fees and expenses of approximately US$459,000 on or before October 31, 2019 (the “Default Notice”). If the Company fails to remedy the Default Notice, it will be given a notice of foreclosure sale under the deed of trust. During the nine months ended December 31, 2020, the loan has been settled from the sales of Lynden Washington properties. (Note 10(a))

19. Segmented information

The assets and operations of the Company are located in Canada and the United States.

	Canada	US	Total
	$	$	$
Nine months ended December 31, 2020
Net revenue	-	1,521	1,521
Gross loss	-	(64)	(64)
Loss from operations	(4,360)	(1,554)	(5,914)
Net loss from continuing operations	(15,491)	(1,260)	(16,751)
Twelve months ended March 31, 2020
Net revenue	1	2,267	2,268
Gross profit	1	548	549
Loss from operations	(9,618)	(1,272)	(10,890)
Net loss from continuing operations	(31,251)	(6,955)	(38,206)

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

19. Segmented information (continued)

	Canada	US	Total
	$	$	$
As at December 31, 2020
Current assets	6,656	3,437	10,093
Total assets	6,948	16,018	22,966
Total liabilities	17,942	1,976	19,918
As at March 31, 2020
Current assets	6,398	6,380	12,778
Total assets	14,975	20,980	35,955
Total liabilities	12,834	5,483	18,317

20. Fair value of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (an exit price) regardless of whether that price is directly observable or estimated using another valuation technique.

The Company uses the following hierarchy for determining fair value measurements:

Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

The carrying values of cash, accounts receivable, accounts payables and accrued liabilities, loans and borrowings and convertible debentures approximate their fair values due to their short-term nature. The fair value of marketable securities is based on quoted prices in active markets. The fair values of derivative assets and derivative liabilities are determined using the Black-Scholes option pricing model. During the year, there were no transfers of amounts between level 1, 2 and 3 of the fair value hierarchy.

The following table summarizes the Company’s financial instruments as at December 31, 2020:

		Amortized		Fair value
	FVTPL	cost	Total	hierarchy
	$	$	$
Financial assets
Cash	406	-	406	N/A
Accounts receivable	-	496	496	N/A
Financial liabilities
Accounts payable and accrued liabilities	-	5,674	5,674	N/A
Income tax payable	-	356	356	N/A
Loans and borrowings	-	4,164	4,164	Level 2
Convertible debentures(1)	-	4,373	4,373	Level 2
Derivative liabilities (1)	1,565	-	1,565	Level 3

(1) The fair value of convertible debentures includes the financial liability component and derivative liability component.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

FIORE CANNABIS LTD.

Notes to the Consolidated Financial Statements For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

21. Financial risk management

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s policies on an ongoing basis.

The Company is exposed to various risks in relation to financial instruments. The most significant financial risks to which the Company is exposed are described below.

(a) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company ensures, as far as is reasonably possible, that it will have sufficient capital in order to meet its working capital and other operating requirements, fund capital expenditures, settle liabilities and meet its scheduled debt repayments. As of December 31, 2020, the Company had working capital deficiency of $6,223 (March 31, 2020 - working capital deficiency of $4,440). There can be no assurance that the Company will be able to secure debt and/or equity financing for working capital and be successful in generating and maintaining profitable operations.

The Company has the following gross contractual obligations:

	Total	< 1year	1 – 3years	3 – 5years
	$	$	$	$
Accounts payable and accrued liabilities	5,674	5,674	-	-
Loans and borrowings	4,164	3,084	1,080	-
Lease liabilities	288	133	155	-
Convertible debentures	4,373	2,006	2,367	-
	14,499	10,897	3,602	-

(b) Currency risk

The Company operates internationally and is exposed to foreign currency risk arising from currency exposures to Canadian dollars. The main currency to which the Company has exposure is the U.S. dollar. The Company is exposed to currency risk to the extent of its cash, accounts payables and accrued liabilities, liabilities associated with assets held for sale, and convertible bonds payable that are denominated in U.S. dollars. The Company does not hedge its exposure to fluctuations in the related foreign exchange rates.

As at December 31, 2020, the Company has determined that a 10% change in US dollars against the Canadian dollar on financial assets and liabilities would result in an increase or decrease of approximately $1,404 for the nine months ended December 31, 2020 (March 31, 2020 - $1,550) to net income and comprehensive income.

(c) Interest rate risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Interest on the Company’s loans and borrowings and convertible bonds payable are based on fixed rates, and as such, the Company is not exposed to significant interest rate risk.

FIORE CANNABIS LTD.

21. Financial risk management (continued)

(d) Covid-19

On March 11, 2020, the current outbreak of COVID-19 (Coronavirus) was declared a global pandemic, which has had a significant impact on businesses through the restrictions put in place by the Canadian, provincial and municipal governments regarding travel, business operations and isolation/quarantine orders. As a result, global equity markets and oil prices have experienced significant volatility and weakness. At this time, it is unknown the extent of the impact the COVID-19 outbreak may have on the Company as this will depend on future developments that are highly uncertain and that cannot be predicted with confidence. These uncertainties arise from the inability to predict the ultimate geographic spread of the disease, and the duration of the outbreak, including the duration of travel restrictions, business closures or disruptions, and quarantine/isolation measures that are currently, or may be put, in place by Canada and other countries to fight the virus.

(e) Credit risk

Financial instruments that subject the Company to credit risk primarily consist of accounts receivable. The Company maintains an allowance for estimated credit losses using an expected credit loss provision for accounts receivable. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar credit risk and aging. The expected loss rates are based on the Company’s historical credit losses experienced over previous periods.

The Company sells its product in Nevada but its credit risk is not concentrated to any particular customer. The Company mitigates the risk by reviewing accounts receivable past due on an ongoing basis and by managing and monitoring the relationships with its customers. The Company provides credit to its customers in the normal course of business and has established credit evaluation and monitoring processes to mitigate credit risk.

As at December 31, 2020, a $477 (US$375) receivable from Internal Revenue Service ("IRS") for the FIRPTA income tax withheld was aged over 90 days. There was a service delay from IRS due to the outbreak of COVID-19 in 2020. Management expects to receive the full amount in fiscal 2021. (Note10(a))

As at December 31, 2020, the Company’s aging of receivables was as follows:

December 31, 2020	March 31, 2020
$ 0 – 30 days 19 31 – 60 days - 61 – 90 days - 91 days and over 477	$ 83 - - 1
Gross accounts receivable 496 Provision for doubtful accounts -	84 -
496	84

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

FIORE CANNABIS LTD.

Notes to the Consolidated Financial Statements For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

22. Capital management

The Company manages its share capital as capital, which as at December 31, 2020, was $108,730. The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the development and expansion of its business and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk level.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Company may attempt to issue new shares or debt, dispose of assets, or adjust the amount of cash and cash equivalents. There can be no assurance that the Company will be able to obtain debt or equity capital in the case of operating cash deficits.

In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. The Company does not pay out dividends in order to conserve cash reserves and to maximize ongoing development efforts. The Company’s share capital is not subject to external restrictions. The Company has not paid or declared any dividends since the date of incorporation, nor are any contemplated in the foreseeable future.

23. Income taxes

(a) Income tax expense

The income tax expense of the Company is reconciled to the net loss as follows:

December 31, 2020	March 31, 2020
$ Expected Income Tax Recovery at Statutory Tax Rates (4,524) Permanent Differences 3,452 Change in Valuation Allowance 2,001 Tax Losses Not Recognized Prior Year (1,335) Other 14	$ (7,925) 6,191 2,643 (144) -
Income Tax(Recovery)Expense (392)	765

Income tax expense consists of $118 (March 31, 2020 - $255) current income tax expense and ($510) (March 31, 2020 - $510) future income tax (recovery) expenses related to two subsidiaries in United States.

(b) Deferred tax assets and liabilities

As at December 31, 2020 and March 31, 2020, the Company has temporary differences between the carrying value of the assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Accordingly, the Company recorded deferred tax assets and liabilities as follows:

FIORE CANNABIS LTD.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

23. Income taxes (Continued)

(b) Deferred tax assets and liabilities (Continued)

December 31, 2020	March 31, 2020
$ Deferred Income Tax Assets (“DITA”) Tax Losses Available for Offset Against Future Taxable Income 14,384 Capital Losses Available for Offset Against Future Capital Gains 275 Property and Equipment 342 Intangible Assets 746 Financing Fees 46 Valuation Allowance (15,712) Available to offset against same entity’s DITL (81)	$ 12,963 190 740 672 106 (14,479) -
Net Deferred Tax Assets -	192

December 31, 2020	March 31, 2020
$ Deferred Income Tax Liabilities (“DITL”) Property and Equipment (2) Intangible Assets (7) Right-of-use assets (IFRS 16) (72) Available to offset against same entity’s DITA 81	$ 8 680 14 -
Net Deferred Tax Liabilities -	702

As at December 31, 2020, the Company has Canadian non-capital losses of $49,901 and US net operating losses of US$4,587 which are available to offset future taxable income earned in Canada and the United States respectively. These tax losses expire as follows:

	Canadian	US
	Losses	Losses
	$	US$
March 31, 2033	54	-
March 31, 2034	663	3
March 31, 2035	820	-
March 31, 2036	1,290	2
March 31, 2037	7,383	92
March 31, 2038	12,486	53
March 31, 2039	15,808	3,044
March 31, 2040	6,941	1,172
December 31, 2040	4,456	221
	49,901	4,587

Deferred tax assets are recognized to the extent that the realization of the related tax benefit through future taxable income is probable. The Company has recorded a significant amount of valuation allowance against its deferred tax assets because of uncertainty as to the realization of these assets.

Tax attributes are subject to review, and potential adjustment, by tax authorities.

(Formerly Citation Growth Corporation and Liht Cannabis Corp.)

FIORE CANNABIS LTD.

Notes to the Consolidated Financial Statements

For the Nine Months Ended December 31, 2020 and Year Ended March 31, 2020 (In thousands of Canadian dollars except for share data)

24. Subsequent events

(a) Financing

On April 21, 2021, the Company closed a non-brokered private placement of 6,445,880 units at $0.15 per unit for gross proceeds of $967. Each unit consists of one common share and one common share purchase warrant. Each warrant is exercisable into one common share of the Company at a price of $0.22 per share for a period of 18 months expiring October 21, 2022, subject to an accelerated expiry if the VWAP of the Company’s common shares is equal to or above $0.50 for a period of ten consecutive trading days.

Subsequent to December 31, 2020, the Company received US$1,450 from the revolving credit promissory note. (Note 12(e)) As consideration, the Company issued 2,175,000 common shares at a fair value of $399 and 1,450,000 warrants at an exercise of $0.15 expiring December 23, 2023.

(b) Share issuances

931,731 common shares were issued for services at a fair value of $188.

700,000 common shares were issued for warrant exercise for total proceeds of $105.

604,000 common shares were issued for conversion of debenture at conversion price of $0.25 per share.

(c) Stock option grants

The Company granted stock options to an employee to purchase 100,000 common shares at an exercise price of $0.20 expiring on March 10, 2026.

AI assistant

Fiore Cannabis Ltd. — Annual Report 2021

47184_rns_2021-04-30_e0551904-76c0-4740-8dd4-63f8bffb22d1.pdf

FIORE CANNABIS LTD.

CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditor’s Report

To the Shareholders of:

FIORE CANNABIS LTD.

Opinion

Basis for Opinion

Material Uncertainty Related to Going Concern

Other Information

Responsibility of Management and Those Charged with Governance for the Consolidated Financial Statements

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

WDM

Chartered Professional Accountants

FIORE CANNABIS LTD.

Consolidated Statements of Financial Position

FIORE CANNABIS LTD.

Consolidated Statements of Comprehensive Loss

FIORE CANNABIS LTD.

Consolidated Statements of Changes in Equity

FIORE CANNABIS LTD.

Consolidated Statements of Cash Flows

FIORE CANNABIS LTD.

1. Nature of operations and going concern

2. Significant accounting policies

FIORE CANNABIS LTD.

2. Significant accounting policies (continued)

(b) Basis of consolidation

(c) Basis of measurement

(d) Foreign currency translation

FIORE CANNABIS LTD.

(f) Inventory

(g) Leases

FIORE CANNABIS LTD.

2. Significant accounting policies (continued)

(j) Intangible assets

(k) Impairment of property, plant and equipment and intangible assets

FIORE CANNABIS LTD.

2. Significant accounting policies (continued)

(l) Goodwill

(m) Assets held for sale

(n) Share capital

FIORE CANNABIS LTD.

2. Significant accounting policies (continued)

(o) Loss per share

(p) Share-based compensation

(q) Provisions

(r) Revenue recognition

(s) Income taxes

(i) Current income tax

FIORE CANNABIS LTD.

2. Significant accounting policies (continued)

3. Significant accounting judgments, estimates and assumptions

FIORE CANNABIS LTD.

(d) Impairment of property, plant and equipment and intangible assets

(f) Share-based compensation

FIORE CANNABIS LTD.

IFRS 3 Business Combinations

5. Biological assets

FIORE CANNABIS LTD.

Notes to the Consolidated Financial Statements

6. Inventory

7. Property, plant and equipment

FIORE CANNABIS LTD.

Notes to the Consolidated Financial Statements

8. Business combination and asset acquisitions

(a) ACC

FIORE CANNABIS LTD.

8. Business combination and asset acquisitions (Continued)

(a) ACC (continued)

(b) Full Spectrum

FIORE CANNABIS LTD.

8. Business combination and asset acquisitions (continued)

FIORE CANNABIS LTD.

Notes to the Consolidated Financial Statements

9. Intangible assets

10. Assets and liabilities held for sale

FIORE CANNABIS LTD.

Fiore Cannabis Ltd. Annual Report 2021