What changed in this filing

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Item 1. Financial Statements

2024-05-09 compared with 2023-11-08 · 204 added, 421 removed, 448 unchanged (58% of the section changed)

Financial Statements

Condensed Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022

Condensed Consolidated Statements of Net Loss and Comprehensive Loss for the three and ni ne months ended September 30, 2023 and 2022 (Unaudited)

Condensed Consolidated Statements of Changes in Equity for the three and ni ne months ended September 30, 2023 and 2022 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the ni ne months ended Septem ber 30, 2023 and 2022 (Unaudited)

Condensed Consolidated Balance Sheets as of March 3 1 , 202 4 (Unaudited) and December 31, 202 3

Condensed Consolidated Statements of Net Loss and Comprehensive Loss for the three months ended March 3 1 , 202 4 and 202 3 (Unaudited)

Condensed Consolidated Statements of Changes in Equity for the three months ended March 3 1 , 202 4 and 202 3 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the three months ended March 3 1 , 202 4 and 202 3 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

2 unchanged sentences

(In thousands of U.S.

dollars, except share amounts) Table of Contents

As of September 30, 2023 As of December 31, 2022

dollars, except share amounts, unaudited)

As of March 31, 2024 As of December 31, 2023

Current assets

7 unchanged sentences

Prepaids and other current assets 6,278 5,405

Held-for-sale assets 19,398 —

Total current assets 942,216 933,306

6 unchanged sentences

Intangible assets, net 20,018 21,078

Deferred tax asset 741 $ 193

Other assets 58 45

Total assets $ 1,108,535 $ 1,140,085

11 unchanged sentences

Shareholders’ equity

Share capital (authorized for issue as of September 30, 2023 and December 31, 2022:

shares outstanding as of September 30, 2023 and December 31, 2022:

Share capital (authorized for issue as of March 31, 2024 and December 31, 2023:

shares outstanding as of March 31, 2024 and December 31, 2023:

382,011,178 and 381,298,853 , respectively)

2 unchanged sentences

Retained earnings 414,478 416,719

Accumulated other comprehensive loss

( 2,110 ) ( 797 )

Accumulated other comprehensive gain (loss) ( 1,793 ) 20,678

Total equity attributable to shareholders of Cronos Group 1,076,358 1,099,571

6 unchanged sentences

(In thousands of U.S dollars, except share and per share amounts, unaudited)

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Three months ended March 31,

Net revenue, before excise taxes $ 35,367 $ 26,554

2 unchanged sentences

Cost of sales 20,805 16,568

Inventory write-down 716 — 716 —

Gross profit 4,483 2,927

9 unchanged sentences

Operating loss ( 15,948 ) ( 20,769 )

Other income (expense)

Interest income, net 14,245 11,175

Gain (loss) on revaluation of derivative liabilities 8 375 ( 14 ) 14,204

Loss on revaluation of derivative liabilities ( 18 ) ( 65 )

Share of income (loss) from equity method investments 1,448 ( 496 )

Gain (loss) on revaluation of financial instruments ( 5,291 ) 17,049 ( 7,856 ) 19,205

Loss on revaluation of financial instruments ( 2,642 ) ( 7,758 )

Impairment loss on other investments ( 12,734 ) —

1 unchanged sentence

Other, net ( 652 ) 85

Total other income (expense) 18,931 ( 3,653 ) 35,006 7,571

Total other income 12,906 1,298

Loss before income taxes ( 3,042 ) ( 19,471 )

Income tax expense (benefit) ( 1,254 ) 2,118 ( 2,870 ) 2,172

Income tax benefit ( 558 ) ( 1,436 )

Loss from continuing operations ( 2,484 ) ( 18,035 )

1 unchanged sentence

Net loss ( 2,484 ) ( 19,257 )

Net income (loss) attributable to non-controlling interest ( 128 ) 105 ( 353 ) ( 27 )

Net loss attributable to non-controlling interest ( 243 ) ( 88 )

Net loss attributable to Cronos Group $ ( 2,241 ) $ ( 19,169 )

2 unchanged sentences

Other comprehensive income (loss)

Foreign exchange loss on translation ( 20,090 ) ( 60,572 ) ( 1,096 ) ( 68,756 )

Foreign exchange gain (loss) on translation ( 22,361 ) 2,414

Comprehensive loss ( 24,845 ) ( 16,843 )

Comprehensive income (loss) attributable to non-controlling interests ( 41 ) 201 ( 136 ) 62

Comprehensive loss attributable to non-controlling interests ( 133 ) ( 8 )

Comprehensive loss attributable to Cronos Group $ ( 24,712 ) $ ( 16,835 )

7 unchanged sentences

Condensed Consolidated Statements of Changes in Equity

For the nine months ended September 30, 2023 and 2022

For the three months ended March 31, 2024 and 2023

(In thousands of U.S.

3 unchanged sentences

Activities relating to share-based compensation 712,325 1,900 ( 401 ) — — — 1,499

Net loss — — — ( 19,169 ) — ( 88 ) ( 19,257 )

Net income (loss) — — — ( 2,241 ) — ( 243 ) ( 2,484 )

Foreign exchange gain on translation — — — — ( 22,471 ) 110 ( 22,361 )

Balance as of March 31, 2024 382,011,178 $ 615,625 $ 48,048 $ 414,478 $ ( 1,793 ) $ ( 3,580 ) $ 1,072,778

Activities relating to share-based compensation 273,436 917 1,273 — — — 2,190

Net loss — — — ( 8,360 ) — ( 137 ) ( 8,497 )

Foreign exchange gain on translation — — — — 16,530 50 16,580

Balance as of June 30, 2023 381,089,357 $ 613,152 $ 45,317 $ 463,153 $ 18,067 $ ( 3,016 ) $ 1,136,673

Activities relating to share-based compensation 24,207 138 1,816 — — — 1,954

Net loss — — — ( 1,644 ) — ( 128 ) ( 1,772 )

Foreign exchange gain (loss) on translation — — — — ( 20,177 ) 87 ( 20,090 )

Balance as of September 30, 2023 381,113,564 $ 613,290 $ 47,133 $ 461,509 $ ( 2,110 ) $ ( 3,057 ) $ 1,116,765

Cronos Group Inc.

Condensed Consolidated Statements of Changes in Equity

For the nine months ended September 30, 2023 and 2022

(In thousands of U.S.

dollars, except share amounts, unaudited)

Number of shares Share capital Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Non-controlling interests Total shareholders’ equity

2 unchanged sentences

Net loss — — — ( 19,169 ) — ( 88 ) ( 19,257 )

Foreign exchange gain (loss) on translation — — — — 16,223 ( 246 ) 15,977

Foreign exchange gain on translation — — — — 2,334 80 2,414

Balance as of March 31, 2023 380,815,921 $ 612,235 $ 44,044 $ 471,513 $ 1,537 $ ( 2,929 ) $ 1,126,400

Activities relating to share-based compensation 395,156 2,251 ( 167 ) — — — 2,084

Share issuance pursuant to research and development milestones 2,201,235 6,007 — — — — 6,007

Net loss — — — ( 20,221 ) — ( 117 ) ( 20,338 )

Foreign exchange gain (loss) on translation — — — — ( 24,400 ) 239 ( 24,161 )

Balance as of June 30, 2022 377,896,371 $ 604,626 $ 35,198 $ 606,557 $ 41,688 $ ( 3,106 ) $ 1,284,963

Activities relating to share-based compensation 449,889 603 3,124 — — — 3,727

Net income (loss) — — — ( 36,991 ) — 105 ( 36,886 )

Foreign exchange gain (loss) on translation — — — — ( 60,668 ) 96 ( 60,572 )

Balance as of September 30, 2022 378,346,260 $ 605,229 38,322 569,566 ( 18,980 ) ( 2,905 ) 1,191,232

See notes to condensed consolidated interim financial statements.

3 unchanged sentences

dollars, except share amounts, unaudited) Table of Contents

Nine months ended September 30,

Three months ended March 31,

Operating activities

5 unchanged sentences

Impairment loss on other investments 12,734 —

Loss (gain) from investments 7,103 ( 23,283 )

Loss (gain) on revaluation of derivative liabilities 14 ( 14,204 )

Loss from investments

Loss on revaluation of derivative liabilities

Changes in expected credit losses on long-term financial assets ( 191 ) ( 764 )

15 unchanged sentences

Proceeds from short-term investments 188,872 113,355

Dividends received from equity method investment 1,301 —

Dividend proceeds

Proceeds from repayment on loan receivables 2,678 6,249

1 unchanged sentence

Purchase of intangible assets ( 270 ) —

Other investing activities 862 70

Cash flows used in investing activities ( 141,392 ) ( 160,300 )

Cash flows provided by (used in) investing activities 189,556 ( 303,812 )

Financing activities

Withholding taxes paid on share-based awards ( 645 ) ( 743 )

Other financing activities, net — ( 69 )

Cash flows used in financing activities ( 645 ) ( 743 )

16 unchanged sentences

(“Cronos” or the “Company”) is incorporated in the province of British Columbia under the Business Corporations Act (British Columbia) with principal executive offices at 111 Peter St., Suite 300, Toronto, Ontario, M5V 2H1.

The Company’s common shares are currently listed on the Toronto Stock Exchange (“TSX”) and Nasdaq Global Market (“Nasdaq”) under the ticker symbol “CRON.”

The Company’s common shares are listed on the Toronto Stock Exchange (“TSX”) and Nasdaq Global Market (“Nasdaq”) under the ticker symbol “CRON.”

Cronos is an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology and product development.

1 unchanged sentence

Cronos’ diverse international brand portfolio includes Spinach ® , PEACE NATURALS ® and Lord Jones ® .

The Company continues to monitor the conflict in Israel and potential impacts the conflict could have on the Company’s personnel and business in Israel and the recorded amounts of assets and liabilities related to the Company’s operations in Israel.

The extent to which the conflict may impact the Company’s personnel, business and activities will depend on future developments which remain highly uncertain and cannot be predicted.

It is possible that the recorded amounts of assets and liabilities related to the Company’s operations in Israel could change materially in the near term.

(b) Basis of presentation

These condensed consolidated interim financial statements of Cronos Group are unaudited.

These condensed consolidated interim financial statements of Cronos are unaudited.

They have been prepared in accordance with Generally Accepted Accounting Principles in the United States (“U.S.

GAAP”) for interim financial information and with applicable rules and regulations of the U.S.

Securities and Exchange Commission relating to interim financial statements.

Securities and Exchange Commission (the “SEC”) relating to interim financial statements.

Accordingly, they do not include all of the information and footnotes required by U.S.

1 unchanged sentence

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for any other reporting period.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for any other reporting period.

These condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”).

10 unchanged sentences

Segment reporting is prepared on the same basis that the Company’s chief operating decision maker (the “CODM”) manages the business, makes operating decisions and assesses the Company’s performance.

Historically, the Company has reported results for two reportable segments, the U.S.

Prior to the second quarter of 2023, the Company reported results for two reportable segments, the U.S.

and Rest of World.

5 unchanged sentences

The following tables present the Company’s revenue by major product category for continuing operations:

Three months ended March 31,

Cannabis flower $ 17,525 $ 13,128

Cannabis extracts 7,727 6,301

Net revenue $ 25,288 $ 19,495

Cronos Group Inc.

2 unchanged sentences

dollars, except share amounts) Table of Contents

Three months ended September 30,

Cannabis flower $ 17,414 $ 13,674

Cannabis extracts 7,268 6,627

Other 128 108

Net revenue $ 24,810 $ 20,409

Nine months ended September 30,

Cannabis flower $ 44,556 $ 48,038

Cannabis extracts 18,495 16,197

Other 275 481

Net revenue $ 63,326 $ 64,716

Net revenue attributed to a geographic region based on the location of the customer were as follows for continuing operations:

Three months ended September 30,

Canada $ 18,738 $ 13,370

Israel 5,673 7,039

Other countries 399 —

Net revenue $ 24,810 $ 20,409

Nine months ended September 30,

Three months ended March 31,

Canada $ 18,871 $ 14,434

Israel 6,417 5,061

Other countries 399 —

Net revenue $ 25,288 $ 19,495

2 unchanged sentences

The Company is exposed to credit risk from its operating activities, primarily accounts receivable and other receivables, and its investing activities, including cash held with banks and financial institutions, short-term investments and loans receivable.

The Company’s maximum exposure to this risk is equal to the carrying amount of these financial assets, which amounted to $ 945,179 and $ 987,836 as of September 30, 2023 and December 31, 2022, respectively.

The Company’s maximum exposure to this risk is equal to the carrying amount of these financial assets, which amounted to $ 952,446 and $ 966,442 as of March 31, 2024 and December 31, 2023, respectively.

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses.

3 unchanged sentences

Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan and a failure to make contractual payments for a period of greater than 120 days past due.

As of September 30, 2023 and December 31, 2022, the Company had $ 45 and $ 2 , respectively, in expected credit losses that have been recognized on receivables from contracts with customers.

As of September 30, 2023, the Company assessed that there is a concentration of credit risk, as 43 % of the Company’s accounts receivable were due from two customers with an established credit history with the Company.

As of December 31, 2022, 56 % of the Company’s accounts receivable were due from three customers with an established credit history with the Company.

As of March 31, 2024 and December 31, 2023, the Company had $ 15 and $ 3 , respectively, in expected credit losses that have been recognized on receivables from contracts with customers.

As of March 31, 2024, the Company assessed that there is a concentration of credit risk, as 40 % of the Company’s accounts receivable were due from two customers with an established credit history with the Company.

As of December 31, 2023, 37 % of the Company’s accounts receivable were due from one customer with an established credit history with the Company.

The Company sells products to a limited number of major customers.

Major customers are defined as customers that each individually accounted for greater than 10% of the Company’s revenue.

During the three months ended March 31, 2024, the Company earned a total net revenue before excise taxes of $ 21,866 from three major customers, together accounting for 62 % of the Company’s total net revenues before excise taxes.

During the three months ended March 31, 2023, the Company earned a total net revenue before excise taxes of $ 15,168 from two major customers, together accounting for 56 % of the Company’s total net revenues before excise taxes.

(g) New accounting pronouncements not yet adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

ASU 2023-07 enhances reportable segment disclosures by requiring disclosures such as significant segment expenses, information on the CODM and disclosures for entities with a single reportable segment.

Additionally, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, and contain other disclosure requirements.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and we expect to adopt ASU 2023-07 retrospectively.

The Company does not expect the adoption of ASU 2023-07 to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

ASU 2023-09 enhances the existing income tax disclosures to provide additional information to better assess how an entity’s operations, related tax risks and tax planning, and operational opportunities affect its tax rate and prospects for future cash flows.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and we expect to adopt ASU 2023-09 prospectively.

The Company does not expect the adoption of ASU 2023-09 to have a material impact on its consolidated financial statements.

Cronos Group Inc.

2 unchanged sentences

dollars, except share amounts) Table of Contents

The Company sells products to a limited number of major customers.

Major customers are defined as customers that each individually accounted for greater than 10% of the Company’s revenue.

During the three months ended September 30, 2023, the Company earned a total net revenue before excise taxes of $ 22,618 from three major customers, together accounting for 67 % of the Company’s total net revenues before excise taxes.

During the three months ended September 30, 2022, the Company earned a total net revenue before excise taxes of $ 12,094 from three major customers, together accounting for 60 % of the Company’s total net revenues before excise taxes.

During the nine months ended September 30, 2023, the Company earned a total net revenue before excise taxes of $ 57,398 from three major customers, together accounting for 67 % of the Company’s total net revenues before excise taxes.

During the nine months ended September 30, 2022, the Company earned a total net revenue before excise taxes of $ 36,564 from three major customers, together accounting for 58 % of the Company’s total net revenues before excise taxes.

(g) Adoption of new accounting pronouncements

On January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”).

ASU 2022-02 eliminates the existing troubled debt restructuring recognition and measurement guidance, and instead aligns the accounting treatment to that of other loan modifications.

The amendments enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

ASU 2022-02 also requires that entities disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases.

The adoption of ASU 2022-02 did not have a material impact on the Company’s condensed consolidated interim financial statements.

(h) New accounting pronouncements not yet adopted

In June 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-03, Fair Value Measurement (Topic 820):

(h) Adoption of new accounting pronouncements

On January 1, 2024, the Company adopted ASU 2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”).

1 unchanged sentence

The amendments also require additional disclosures for equity securities subject to contractual sale restrictions.

ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, and we expect to adopt ASU 2022-03 prospectively.

The Company does not expect the adoption of ASU 2022-03 to have a material impact on its condensed consolidated interim financial statements.

The adoption of ASU 2022-03 did not have a material impact on the Company’s condensed consolidated interim financial statements.

With respect to the adoption of ASU 2022-03, see Note 4 “Investments” for discussion of the contractual restrictions related to the PharmaCann Option (as defined below).

Discontinued Operations

2 unchanged sentences

Accordingly, the net loss of the U.S.

operations for the three and nine months ended September 30, 2023 and 2022 are reported separately as loss from discontinued operations on the condensed consolidated statements of net loss and comprehensive loss.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

The following table presents the major components comprising loss from discontinued operations in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022:

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

operations for the three months ended March 31, 2023 are reported separately as loss from discontinued operations on the condensed consolidated statements of net loss and comprehensive loss.

There was no activity in discontinued operations for the three months ended March 31, 2024.

The following table presents the major components comprising loss from discontinued operations in the condensed consolidated statements of operations for the three months ended March 31, 2023:

Three months ended March 31,

Net revenue $ 649

Cost of sales 1,196

Inventory write-down (i)

Gross profit ( 547 )

3 unchanged sentences

General and administrative 523

Restructuring costs 28 137 562 1,482

Share-based compensation 16

Depreciation and amortization 8

Impairment loss on long-lived assets (ii)

Total operating expenses 680

Interest income 5

Other, net (iii)

31 ( 112 ) ( 132 ) ( 159 )

Total other income (loss)

32 ( 111 ) ( 123 ) ( 157 )

Loss before income taxes ( 1,222 )

1 unchanged sentence

Net loss from discontinued operations $ ( 1,222 )

(i) For the nine months ended September 30, 2023, Inventory write-down relates to the disposal of obsolete inventory as a result of the exit of the U.S.

(ii) During the nine months ended September 30, 2023, as a result of the exit of the U.S.

operations, the Company recognized an impairment charge of $ 205 related to the right-of-use lease assets associated with the Company’s former U.S.

manufacturing facility in Los Angeles, California.

(iii) For the three and nine months ended September 30, 2023 and September 30, 2022, Other, net related to gain and loss on disposal of assets that were part of the U.S.

The following tables present the Company’s discontinued operations revenue by major product category:

Three months ended September 30,

Cannabis extracts — 514

Net revenue $ — $ 514

Nine months ended September 30,

Three months ended March 31,

Cannabis extracts 649

Net revenue $ 649

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

The following tables summarize the Company’s discontinued operations restructuring activity for the three and nine months ended September 30, 2023 and 2022:

Accrual as of June 30, 2023 Expenses Payments/Write-offs Accrual as of September 30, 2023

Employee Termination Benefits $ 219 $ 28 $ ( 169 ) $ 78

Other Restructuring Costs 92 — ( 92 ) —

Total $ 311 $ 28 $ ( 261 ) $ 78

Accrual as of January 1, 2023 Expenses Payments/Write-offs Accrual as of September 30, 2023

Employee Termination Benefits $ — $ 470 $ ( 392 ) $ 78

Other Restructuring Costs — 92 ( 92 ) —

Total $ — $ 562 $ ( 484 ) $ 78

Accrual as of June 30, 2022 Expenses Payments/Write-offs Accrual as of September 30, 2022

Employee Termination Benefits $ 66 $ 137 $ ( 93 ) $ 110

Total $ 66 $ 137 $ ( 93 ) $ 110

Accrual as of January 1, 2022 Expenses Payments/Write-offs Accrual as of September 30, 2022

Employee Termination Benefits $ — $ 1,482 $ ( 1,372 ) $ 110

Total $ — $ 1,482 $ ( 1,372 ) $ 110

The following table presents a reconciliation of assets and liabilities of the discontinued operations presented in the condensed consolidated balance sheets:

As of September 30, 2023 As of December 31, 2022

Current assets

Cash and cash equivalents $ 900 $ 2,300

Accounts receivable, net — 253

Other receivables — 775

Prepaids and other current assets 5 464

Inventory, net — 934

Current assets of discontinued operations 905 4,726

Non-current assets

Property, plant and equipment, net — 254

Right-of-use assets — 430

Intangible assets, net — 1,594

Non-current assets of discontinued operations — 2,278

Current liabilities

Accounts payable — 166

Accrued liabilities 210 807

Current portion of lease obligation — 415

Current liabilities of discontinued operations $ 210 $ 1,388

The Company had no assets or liabilities presented in the condensed consolidated balance sheets related to its discontinued operations as of both March 31, 2024 and December 31, 2023.

For the three months ended March 31, 2024, there were no purchases of property plant and equipment related to discontinued operations.

For the three months ended March 31, 2023, purchases of property plant and equipment related to discontinued operations were $ 67 .

Cronos Group Inc.

2 unchanged sentences

dollars, except share amounts) Table of Contents

For the nine months ended September 30, 2023, purchases of property plant and equipment related to discontinued operations were $ 67 .

For the nine months ended September 30, 2022, purchases of property plant and equipment related to discontinued operations were $ 133 .

Inventory, net

Inventory, net is comprised of the following items:

As of September 30, 2023 As of December 31, 2022

As of March 31, 2024 As of December 31, 2023

Raw materials $ 3,486 $ 4,795

5 unchanged sentences

A reconciliation of the carrying amount of the investments in equity method investees, net is as follows:

Ownership interest As of September 30, 2023 As of December 31, 2022

Ownership interest As of March 31, 2024 As of December 31, 2023

Cronos Growing Company Inc.

2 unchanged sentences

$ 20,521 $ 19,488

The following is a summary of the Company’s share of net gain (loss) from equity method investments:

For the three months ended September 30, For the nine months ended September 30,

2023 2022 2023 2022

The following is a summary of the Company’s share of net income (losses) from equity investments accounted for under the equity method of accounting:

For the three months ended March 31,

Cronos GrowCo $ 1,448 $ ( 496 )

2 unchanged sentences

Other investments consist of investments in common shares and options of two companies in the cannabis industry.

PharmaCann, Inc.

In 2021, the Company purchased an option (the “PharmaCann Option”) to acquire 473,787 shares of Class A Common Stock of PharmaCann, Inc.

(“PharmaCann”), a vertically integrated cannabis company in the United States, which represented an ownership interest of approximately 10.5 % as of the purchase date of the PharmaCann Option, for an aggregate purchase price of approximately $ 110,392 .

The PharmaCann Option is classified as an equity security without a readily determinable fair value.

The Company has elected to measure the fair value of the PharmaCann Option at cost less impairment, if any, and subsequently adjusted for observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

As of September 30, 2023, the Company’s proforma ownership percentage in PharmaCann on a fully-diluted basis was approximately 6.3 %.

PharmaCann Option

On June 14, 2021, the Company purchased an option (the “PharmaCann Option”) to acquire 473,787 shares of Class A Common Stock of PharmaCann, Inc.

(“PharmaCann”), a vertically integrated cannabis company in the United States, at an exercise price of $ 0.0001 per share, representing approximately 10.5 % of PharmaCann’s issued and outstanding capital stock on a fully diluted basis as of the date of the PharmaCann Option, for an aggregate purchase price of approximately $ 110,392 .

The PharmaCann Option is classified as an investment in an equity security without a readily determinable fair value.

The Company measures the PharmaCann Option at cost less accumulated impairment charges, if any, and subsequently adjusted for observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

As of March 31, 2024 and December 31, 2023, based on updated information provided by PharmaCann in the first quarter, the Company’s ownership percentage in PharmaCann on a fully diluted basis was approximately 6.3 % and 6.6 %, respectively.

The decrease in the Company’s ownership percentage since acquisition does not materially affect the Company’s rights under the PharmaCann Option.

1 unchanged sentence

See Note 10 “Fair Value Measurements” for more information on the fair value hierarchy.

Vitura Health Limited (formerly known as Cronos Australia)

The Company owns approximately 10 % of the outstanding common shares of Vitura Health Limited (“Vitura”).

The investment is considered an equity security with a readily determinable fair value.

Changes in the fair value of the investment are recorded as gain (loss) on revaluation of financial instruments on the condensed consolidated statements of net loss and comprehensive loss.

During the three months ended September 30, 2023, Vitura declared a dividend of A$ 0.01 per ordinary share.

Based on the Company’s holding of 55,176,065 ordinary shares in the capital of Vitura, the Company recorded dividend income of $ 346 within other, net on the condensed consolidated statements of net loss and comprehensive loss.

The PharmaCann Option is reported as Other investments on the consolidated balance sheet for the periods ended March 31, 2024 and December 31, 2023.

During the first quarter of 2024, the Company identified adverse forecast changes in the financial performance of PharmaCann as an indicator of impairment related to the PharmaCann Option and conducted an analysis comparing the PharmaCann Option’s carrying amount to its estimated fair value.

The fair value was estimated using the market approach.

Under the market approach, the key assumptions are the selected multiples and the discount for lack of marketability.

As a result of this analysis, the Company recorded a non-cash impairment charge of $ 12,734 in the first quarter of 2024 as the difference between the carrying amount of the PharmaCann Option and its estimated fair value, in the condensed consolidated statements of net loss and comprehensive loss for the three months ended March 31, 2024.

Cronos Group Inc.

2 unchanged sentences

dollars, except share amounts) Table of Contents

The Company may sell, transfer or dispose of the PharmaCann Option without PharmaCann’s prior written consent, subject to the following conditions:

(i) any transferee of any part of the PharmaCann Option must comply with and commit to comply with all regulations issued by a governmental entity applicable to such transferee in all material respects;

(ii) any transferee of any part of the PharmaCann Option must agree to be bound by the terms of the Option Purchase Agreement, dated as of June 14, 2021 (the “Option Purchase Agreement”), as a “Purchaser” thereunder;

(iii) the Company may not split and/or transfer the PharmaCann Option, in the aggregate, to more than four persons (with certain exceptions);

(iv) no transferee may be a Prohibited Assignee (as defined in the Option Purchase Agreement);

and (v) subject to certain exceptions, in the event that the Company (or a Permitted Transferee of the whole PharmaCann Option) transfers less than all of the PharmaCann Option to any third party that is not a Permitted Transferee, certain governance and information rights terminate immediately, unless waived by the PharmaCann board of directors in its sole and absolute discretion.

Additionally, in the event of an initial underwritten public offering of PharmaCann’s common stock pursuant to an effective registration statement, to the extent that holders of PharmaCann common stock are subject to any lock-up period imposed by the underwriter in connection therewith, the Company will, if applicable, execute a customary lock-up agreement on the same material terms and conditions as the other holders of common stock are subject to or as otherwise agreed between PharmaCann and the Company, subject to certain conditions with respect to the duration of the lock-up period.

Vitura Health Limited (formerly known as Cronos Australia)

The Company owns approximately 10 % of the outstanding common shares of Vitura Health Limited (“Vitura”).

The investment is considered an equity security with a readily determinable fair value.

Changes in the fair value of the investment are recorded as gain (loss) on revaluation of financial instruments on the condensed consolidated statements of net loss and comprehensive loss.

The following table summarizes the Company’s other investments activity:

As of July 1, 2023 Unrealized loss Impairment charges Foreign exchange effect As of September 30, 2023

PharmaCann $ 49,000 $ — $ — $ — $ 49,000

Vitura 18,925 ( 5,204 ) — ( 578 ) 13,143

$ 67,925 $ ( 5,204 ) $ — $ ( 578 ) $ 62,143

As of January 1, 2023 Unrealized loss Impairment charges Foreign exchange effect As of September 30, 2023

PharmaCann $ 49,000 $ — $ — $ — $ 49,000

Vitura 21,993 ( 7,933 ) — ( 917 ) 13,143

$ 70,993 $ ( 7,933 ) $ — $ ( 917 ) $ 62,143

As of July 1, 2022 Unrealized gain Impairment charges Foreign exchange effect As of September 30, 2022

As of January 1, 2024 Unrealized loss Impairment charges Foreign exchange effect As of March 31, 2024

PharmaCann $ 25,650 $ — $ ( 12,734 ) $ — $ 12,916

1 unchanged sentence

$ 35,251 $ ( 2,342 ) $ ( 12,734 ) $ ( 417 ) $ 19,758

As of January 1, 2022 Unrealized gain Impairment charges Foreign exchange effect As of September 30, 2022

As of January 1, 2023 Unrealized loss Impairment charges Foreign exchange effect As of March 31, 2023

PharmaCann $ 49,000 $ — $ — $ — $ 49,000

1 unchanged sentence

$ 70,993 $ ( 7,923 ) $ — $ ( 237 ) $ 62,833

During both the three months ended March 31, 2022, and the three months ended September 30, 2022, the Company identified adverse forecast changes in the financial performance of PharmaCann as indicators of impairment related to the PharmaCann Option and conducted analyses comparing the PharmaCann Option’s carrying amount to its estimated fair value.

The fair value was estimated using a combination of the market and income approaches.

Under the income approach, significant inputs used in the discounted cash flow method were the discount rate, growth rates, cash flow projections, and the timing of federal legalization of cannabis in the U.S.

Under the market valuation approach, the key assumptions that require judgment under the Guideline Public Companies method are cash flow projections, selected multiples and the discount for lack of marketability.

As a result of this analysis, the Company recorded non-cash impairment charges of $ 11,238 and $ 28,972 during the three months ended March 31, 2022, and September 30, 2022, respectively, as the difference between the carrying amount of the PharmaCann Option and its estimated fair value in the condensed consolidated statements of net loss and comprehensive loss.

Cronos Group Inc.

4 unchanged sentences

Loans receivable, net consists of the following:

As of September 30, 2023 As of December 31, 2022

As of March 31, 2024 As of December 31, 2023

GrowCo Credit Facility

14 unchanged sentences

In August 2021, the GrowCo Credit Facility was amended to increase the aggregate principal amount available to C$ 105,000 .

As of both September 30, 2023, and December 31, 2022, Cronos GrowCo had drawn C$ 104,000 ($ 76,600 and $ 76,730 , respectively) from the GrowCo Credit Facility.

The interest rate on the outstanding borrowings is the Canadian Prime Rate plus 1.25 %, with interest payments due on December 2021, December 2022, and quarterly thereafter.

Principal payments of C$ 1,000 commenced in March 2022 and are due quarterly thereafter.

For the three months ended September 30, 2023, Cronos GrowCo repaid C$ 1,666 ($ 1,076 ) in principal and C$ 2,032 ($ 1,189 ) in interest related to the GrowCo Credit Facility.

For the nine months ended September 30, 2023, Cronos GrowCo repaid C$ 5,833 ($ 4,170 ) in principal and C$ 11,458 ($ 8,430 ) in interest related to the GrowCo Credit Facility.

As of September 30, 2023, Cronos GrowCo had repaid C$ 9,833 ($ 7,243 ) and C$ 18,518 ($ 13,639 ) in principal and interest, respectively, under the terms of the GrowCo Credit Facility.

As of both March 31, 2024, and December 31, 2023, Cronos GrowCo had drawn C$ 104,000 ($ 76,855 and $ 78,532 , respectively) from the GrowCo Credit Facility.

The interest rate on the outstanding borrowings is the Canadian Prime Rate plus 1.25 %, with interest payments due in December 2021, December 2022, and quarterly thereafter.

Principal payments of C$ 1,000 commenced in March 2022 and are currently C$ 1,667 , due quarterly.

For the three months ended March 31, 2024, Cronos GrowCo repaid C$ 1,667 ($ 1,231 ) in principal and C$ 1,943 ($ 1,435 ) in interest related to the GrowCo Credit Facility.

As of March 31, 2024, Cronos GrowCo had repaid an aggregate C$ 13,167 ($ 9,730 ) and C$ 22,464 ($ 16,601 ) in principal and interest, respectively, under the terms of the GrowCo Credit Facility.

Mucci Promissory Note

5 unchanged sentences

Prior to 2023, there were no repayments of principal or interest on the Mucci Promissory Note.

For the nine months ended September 30, 2023, Mucci repaid C$ 563 ($ 415 ) in principal and C$ 1,187 ($ 874 ) in interest related to the Mucci Promissory Note.

For the three months ended September 30, 2023, there were no repayments of principal or interest on the Mucci Promissory Note.

For the three months ended March 31, 2024 and 2023, there were no repayments of principal or interest on the Mucci Promissory Note.

Cannasoul Collaboration Loan

As of both September 30, 2023 and December 31, 2022, Cannasoul Lab Services Ltd.

As of both March 31, 2024 and December 31, 2023, Cannasoul Lab Services Ltd.

has received ILS 8,297 (approximately $ 2,249 and $ 2,294 , respectively), from the Cannasoul Collaboration Loan.

3 unchanged sentences

dollars, except share amounts) Table of Contents

Expected credit loss allowances on the Company’s long-term financial assets for the three and nine months ended September 30, 2023 and 2022 were comprised of the following items:

As of July 1, 2023 Increase (decrease) (i)

Foreign exchange effect As of September 30, 2023

GrowCo Credit Facility $ 11,579 $ ( 199 ) $ ( 283 ) $ 11,097

Mucci Promissory Note 86 2 ( 2 ) 86

Cannasoul Collaboration Loan 503 4 ( 14 ) 493

$ 12,168 $ ( 193 ) $ ( 299 ) $ 11,676

As of July 1, 2022 Increase (decrease) (i)

Foreign exchange effect As of September 30, 2022

GrowCo Credit Facility $ 13,293 $ 74 $ ( 929 ) $ 12,438

Mucci Promissory Note 91 1 ( 6 ) 86

Cannasoul Collaboration Loan 377 3 ( 8 ) 372

$ 13,761 $ 78 $ ( 943 ) $ 12,896

Expected credit loss allowances on the Company’s long-term financial assets for the three months ended March 31, 2024 and 2023 were comprised of the following items:

As of January 1, 2024 Increase (decrease) (i)

Foreign exchange effect As of September 30, 2023

Foreign exchange effect As of March 31, 2024

GrowCo Credit Facility $ 11,176 $ ( 197 ) $ ( 239 ) $ 10,740

2 unchanged sentences

$ 11,789 $ ( 191 ) $ ( 251 ) $ 11,347

As of January 1, 2022 Increase (decrease) Foreign exchange effect As of September 30, 2022

As of January 1, 2023 Increase (decrease) Foreign exchange effect As of March 31, 2023

GrowCo Credit Facility $ 12,455 $ ( 770 ) $ 34 $ 11,719

2 unchanged sentences

$ 13,066 $ ( 764 ) $ 22 $ 12,324

(i) During the three and nine months ended September 30, 2023, $ 193 and $ 1,339 , respectively, were recorded as decreases to general and administrative expenses on the condensed consolidated statements of net loss and comprehensive loss as a result of principal and interest payments made by Cronos GrowCo reducing our expected credit losses on loans receivable.

During the three months ended September 30, 2022, $ 78 was recorded as an increase to general and administrative expenses on the condensed consolidated statements of net loss and comprehensive loss as a result of adjustments to our expected credit losses.

During the nine months ended September 30, 2022, $ 577 was recorded as a decrease to general and administrative expenses on the condensed consolidated statements of net loss and comprehensive loss as a result of adjustments to our expected credit losses.

Derivative Liabilities

Pursuant to the investor rights agreement (the “Investor Rights Agreement”) between the Company and Altria Group Inc.

(“Altria”), the Company granted Altria certain rights, among others, summarized in this note .

The summaries below are qualified entirely by the terms and conditions fully set out in the Investor Rights Agreement.

The Company granted to Altria, subject to certain qualifications and limitations, upon the occurrence of certain issuances of common shares of the Company executed by the Company (including issuances pursuant to the research and development (“R&D”) partnership with Ginkgo Bioworks Holdings, Inc.

(“Ginkgo”)), the right to purchase up to such number of common shares of the Company in order to maintain its ownership percentage of issued and outstanding common shares of the Company immediately preceding any issuance of shares by the Company (“Pre-emptive Rights”), at the same price per common share of the Company at which the common shares are sold in the relevant issuance;

provided that if the consideration paid in connection with any such issuance is non-cash, the price per common share of the Company that would have been received had such common shares been issued for cash consideration will be determined by an independent committee (acting reasonably and in good faith);

provided further that the price per common share of the Company to be paid by Altria pursuant to its exercise of its Pre-emptive Rights related to the Ginkgo Collaboration Agreement will be C$ 16.25 per common share.

These rights may not be exercised if Altria’s ownership percentage of the issued and outstanding shares of the Company falls below 20 %.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

In addition to (and without duplication of) the Pre-emptive Rights, the Company granted to Altria, subject to certain qualifications and limitations, the right to subscribe for common shares of the Company issuable in connection with the exercise, conversion or exchange of convertible securities of the Company issued prior to March 8, 2019 or thereafter (excluding any convertible securities of the Company owned by Altria or any of its subsidiaries), a share incentive plan of the Company, the exercise of any right granted by the Company pro rata to all shareholders of the Company to purchase additional common shares and/or securities of the Company, bona fide bank debt, equipment financing or non-equity interim financing transactions that contemplate an equity component or bona fide acquisitions (including acquisitions of assets or rights under a license or otherwise), mergers or similar business combination transactions or joint ventures involving the Company in order to maintain their ownership percentage of issued and outstanding common shares of the Company immediately preceding any such transactions (“Top-up Rights”).

The price per common share to be paid by Altria pursuant to the exercise of its Top-up Rights will be, subject to certain limited exceptions, the 10 -day volume-weighted average price of the common shares of the Company on the TSX for the 10 full days preceding such exercise by Altria;

provided that the price per common share of the Company to be paid by Altria pursuant to the exercise of its Top-up Rights in connection with the issuance of common shares of the Company pursuant to the exercise of options or warrants that were outstanding as of March 8, 2019 will be C$ 16.25 per common share without any set off, counterclaim, deduction, or withholding.

These rights may not be exercised if Altria’s ownership percentage of the issued and outstanding shares of the Company falls below 20 %.

The Pre-emptive Rights, and fixed price Top-up Rights have been classified as derivative liabilities on the Company’s consolidated balance sheet.

As of September 30, 2023, Altria beneficially held 156,573,537 of the Company’s common shares, an approximate 41 % ownership interest in the Company (calculated on a non-diluted basis).

Reconciliation of the Company’s derivative liabilities activity are as follows:

As of July 1, 2023 Revaluation (gain) loss Foreign exchange effect As of September 30, 2023

Pre-emptive Rights $ 37 $ ( 7 ) $ ( 1 ) $ 29

Top-up Rights — ( 1 ) 1 —

$ 37 $ ( 8 ) $ — $ 29

As of July 1, 2022 Revaluation gain Foreign exchange effect

As of September 30, 2022

Altria Warrant $ 491 $ ( 336 ) $ ( 121 ) $ 34

Pre-emptive Rights 16 ( 18 ) 2 —

Top-up Rights 67 ( 21 ) ( 7 ) 39

$ 574 $ ( 375 ) $ ( 126 ) $ 73

As of January 1, 2023 Revaluation (gain) loss Foreign exchange effect As of September 30, 2023

Pre-emptive Rights $ — $ 29 — $ 29

Top-up Rights 15 ( 15 ) — —

$ 15 $ 14 $ — $ 29

As of January 1, 2022 Revaluation gain Foreign exchange effect As of September 30, 2022

Altria Warrant $ 13,720 $ ( 13,592 ) $ ( 94 ) $ 34

Pre-emptive Rights 180 ( 182 ) 2 —

Top-up Rights 475 ( 430 ) ( 6 ) 39

$ 14,375 $ ( 14,204 ) $ ( 98 ) $ 73

Fluctuations in the expected life of the derivative instruments and the Company’s share price are primary drivers for the changes in the derivative valuations during each reporting period.

As the period of time that the derivative liability is expected to be outstanding decreases and the share price decreases, the fair value typically decreases for each related derivative instrument.

Weighted-average expected life and share price are two of the significant observable inputs used in the fair value measurement of each of the Company’s derivative instruments.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

The fair values of the derivative liabilities were determined using the Black-Scholes pricing model using the following inputs:

As of September 30, 2023

Pre-emptive Rights Top-up Rights

Share price at valuation date (per share in C$) $ 2.71 $ 2.71

Subscription price (per share in C$) $ 16.25 $ 16.25

Weighted-average risk-free interest rate (i)

5.01 % 5.03 %

Weighted-average expected life (in years) (ii)

Expected annualized volatility (iii)

Expected dividend yield — % — %

As of December 31, 2022

Pre-emptive Rights Top-up Rights

Share price at valuation date (per share in C$) $ 3.44 $ 3.44

Subscription price (per share in C$) $ 16.25 $ 16.25

Weighted-average risk-free interest rate (i)

4.14 % 4.28 %

Weighted-average expected life (in years) (ii)

Expected annualized volatility (iii)

Expected dividend yield — % — %

(i) The risk-free interest rate was based on Bank of Canada government treasury bills and bonds with a remaining term equal to the expected life of the derivative liabilities.

As of September 30, 2023 and December 31, 2022, the risk-free interest rate uses a range of approximately 4.79 % to 5.05 % and 3.81 % to 4.37 %, respectively, for the Pre-emptive Rights and Top-up Rights.

(ii) The expected life represents the period of time, in years, that the derivative liabilities are expected to be outstanding.

The expected life of the Pre-emptive Rights and Top-up Rights is determined based on the expected term of the underlying options, warrants, and shares, to which the Pre-emptive Rights and Top-up Rights are linked.

As of September 30, 2023 and December 31, 2022, the expected life uses a range of approximately 0.75 years to 2.00 years and 0.25 years to 2.75 years, respectively, for the Pre-emptive Rights and Top-up Rights.

(iii) Volatility was based on an equally weighted blended historical and implied volatility level of the underlying equity securities of the Company.

(i) During the three and months ended March 31, 2024, $ 191 was recorded as a decrease to general and administrative expenses on the condensed consolidated statements of net loss and comprehensive loss as a result of principal and interest payments made by Cronos GrowCo reducing our expected credit losses on loans receivable.

During the three months ended March 31, 2023, $ 764 was recorded as a decrease to general and administrative expenses on the condensed consolidated statements of net loss and comprehensive loss as a result of adjustments to our expected credit losses.

Restructuring

4 unchanged sentences

The Realignment initiatives were intended to position the Company to drive profitable and sustainable growth over time.

During the three months ended September 30, 2023, the Company performed an assessment under ASC 360, Property Plant and Equipment , of the recovery of the carrying value of the Canada asset group, which includes Cronos Fermentation, and determined the carrying value of the asset group was recoverable.

As of September 30, 2023, Cronos Fermentation did not meet the criteria to be classified as held-for-sale.

During both the three and nine months ended September 30, 2023, the Company incurred $ 1,423 of restructuring costs in its continuing operations in connection with the Realignment.

During the three and nine months ended September 30, 2022, the Company recognized $ 387 and $ 3,396 , respectively, of restructuring costs in continuing operations in connection with the Realignment.

Charges related thereto include employee-related costs such as severance, relocation and other termination benefits, as well as contract termination and other related costs.

During the three and nine months ended September 30, 2023, as a result of the decision to wind down operations at Cronos Fermentation, the Company recognized an inventory write-down of $ 716 related to certain obsolete raw materials.

Restructuring costs and inventory write-downs incurred in the Company’s discontinued operations during the three and nine months ended September 30, 2023 and 2022 is presented in Note 2 “ Discontinued Operations .”

During the first quarter of 2024, the Company ceased operations at Cronos Fermentation and performed an assessment under ASC 360 of the recoverability of the carrying value of the Cronos Fermentation assets, and determined the carrying value of the assets was not fully recoverable.

The fair value was estimated using a combination of the market and income approaches.

As a result of this analysis, an impairment loss on long-lived assets of $ 1,631 was recorded to the condensed consolidated statements of net loss and comprehensive loss in the three months ended March 31, 2024.

As of March 31, 2024, the assets of Cronos Fermentation met the held-for-sale criteria and were reclassified to assets held for sale on the condensed consolidated balance sheet and the assets were valued at their fair value less costs to sell.

A $ 445 loss for estimated costs to sell was recorded as a result of the classification of the Cronos Fermentation assets as held for sale.

During the three months ended March 31, 2024, the Company incurred $ 83 of restructuring costs in its continuing operations in connection with the Realignment.

Charges related thereto include employee-related costs such as severance and other termination benefits, as well as other related costs.

During the three months ended March 31, 2023, the Company recognized no restructuring costs in continuing operations in connection with the Realignment.

Cronos Group Inc.

2 unchanged sentences

dollars, except share amounts) Table of Contents

The following table summarizes the Company’s restructuring activity for the three and nine months ended September 30, 2023 and 2022:

Accrual as of July 1, 2023 Expenses Payments/Write-offs Accrual as of September 30, 2023

Employee Termination Benefits $ 61 $ 1,420 $ ( 947 ) $ 534

Other Restructuring Costs — 3 ( 3 ) —

Total $ 61 $ 1,423 $ ( 950 ) $ 534

Accrual as of January 1, 2023 Expenses Payments/Write-offs Accrual as of September 30, 2023

Employee Termination Benefits $ 403 $ 1,420 $ ( 1,289 ) $ 534

Other Restructuring Costs 21 3 ( 24 ) —

Total $ 424 $ 1,423 $ ( 1,313 ) $ 534

Accrual as of July 1, 2022 Expenses Payments/Write-offs Accrual as of September 30, 2022

The following table summarizes the Company’s restructuring activity for the three months ended March 31, 2024 and 2023:

Accrual as of January 1, 2024 Expenses Payments/Write-offs Accrual as of March 31, 2024

Employee Termination Benefits $ 150 $ 62 $ ( 174 ) $ 38

1 unchanged sentence

Total $ 150 $ 83 $ ( 195 ) $ 38

Accrual as of January 1, 2022 Expenses Payments/Write-offs Accrual as of September 30, 2022

Accrual as of January 1, 2023 Expenses Payments/Write-offs Accrual as of March 31, 2023

Employee Termination Benefits $ 403 $ — $ ( 295 ) $ 108

3 unchanged sentences

(a) Share-based award plans

The Company has granted stock options, restricted share units (“RSUs”) and deferred share units (“DSUs”) to employees and non-employee directors under the Stock Option Plan dated May 26, 2015 (the “2015 Stock Option Plan”), the 2018 Stock Option Plan dated June 28, 2018 (the “2018 Stock Option Plan” and, together with the 2015 Stock Option Plan, the “Prior Option Plans”), the Employment Inducement Award Plan #1 (the “Employment Inducement Award Plan”), the 2020 Omnibus Equity Incentive Plan dated March 29, 2020 (the “2020 Omnibus Plan”) and the DSU Plan dated August 10, 2019 (the “DSU Plan”).

The Company can no longer make grants under the Prior Option Plans or the Employment Inducement Award Plan.

The following table summarizes the total share-based compensation expense associated with the Company’s stock options, RSUs and liability-classified awards for the three and nine months ended September 30, 2023 and 2022:

Three months ended September 30, For the nine months ended September 30,

2023 2022 2023 2022

The Company has granted stock options, restricted share units (“RSUs”) and deferred share units (“DSUs”) to employees and non-employee directors under the 2018 Stock Option Plan dated June 28, 2018 (the “2018 Stock Option Plan”), the Employment Inducement Award Plan #1 (the “Employment Inducement Award Plan”), the 2020 Omnibus Equity Incentive Plan dated March 29, 2020 (the “2020 Omnibus Plan”) and the DSU Plan dated August 10, 2019 (the “DSU Plan”).

The Company can no longer make grants under the 2018 Stock Option Plan or the Employment Inducement Award Plan.

The following table summarizes the total share-based compensation expense associated with the Company’s stock options and RSUs for the three months ended March 31, 2024 and 2023:

For the three months ended March 31,

Stock options $ 34 $ 734

RSUs 1,981 1,801

Liability-classified awards (i)

Total share-based compensation $ 2,015 $ 2,535

(i) Represents share-based payment awards conditionally approved for grant in the three months ended September 30, 2022 to one of the Company’s former executives for a fixed monetary value, but a variable number of shares.

These awards were liability-classified until the number of shares was determined.

(b) Stock options

Vesting conditions for grants of options are determined by the Compensation Committee of the Company’s Board of Directors.

The typical vesting for stock option grants made under the 2020 Omnibus Plan is annual vesting over three to five years with a maximum term of ten years .

The typical vesting for stock option grants made under the Prior Option Plans is quarterly vesting over three to five years with a maximum term of seven years .

The Prior Option Plans did not, and the 2020 Omnibus Plan does not, authorize grants of options with an exercise price below fair market value.

The typical vesting for stock option grants made under the 2018 Stock Option Plan is quarterly vesting over three to five years with a maximum term of seven years .

The 2018 Stock Option Plan did not, and the 2020 Omnibus Plan does not, authorize grants of options with an exercise price below fair market value.

The following is a summary of the changes in stock options for the three months ended March 31, 2024 and 2023:

Weighted-average exercise price (C$) (i)

Number of options Weighted-average remaining contractual term (years)

Balance as of January 1, 2024 $ 14.50 2,103,201 1.84

Cancellation, forfeiture and expiry of options 23.93 ( 9,501 )

Balance as of March 31, 2024 $ 14.46 2,093,700 1.59

Exercisable as of March 31, 2024 $ 15.72 1,874,123 1.10

Cronos Group Inc.

2 unchanged sentences

dollars, except share amounts) Table of Contents

The following is a summary of the changes in stock options for the nine months ended September 30, 2023 and 2022:

Weighted-average exercise price (C$) (i)

3 unchanged sentences

Cancellation, forfeiture and expiry of options 9.05 ( 335,091 )

Balance as of September 30, 2023 $ 14.50 2,103,201 2.09

Exercisable as of September 30, 2023 $ 16.02 1,845,841 1.50

Weighted-average exercise price (C$) (i)

Number of options Weighted-average remaining contractual term (years)

Balance as of January 1, 2022 $ 7.75 8,939,330 2.70

Exercise of options 2.81 ( 2,583,692 )

Cancellation, forfeiture and expiry of options 11.26 ( 186,992 )

Balance as of September 30, 2022 $ 9.71 6,168,646 2.97

Exercisable as of September 30, 2022 $ 9.99 4,037,319 1.99

Balance as of March 31, 2023 $ 10.40 5,203,826 0.75

Exercisable as of March 31, 2023 $ 11.88 3,624,498 0.48

(i) The weighted-average exercise price reflects the conversion of foreign currency-denominated stock options translated into C$ using the average foreign exchange rate as of the date of issuance.

For the nine months ended September 30, 2023, the weighted-average fair value per option at grant date was C$ 2.07 .

The fair value of the options issued during the period was determined using the Black-Scholes option pricing model, using the following inputs:

Share price at grant date (per share) $ 2.96

Exercise price (per option) $ 2.96

Risk-free interest rate 3.22 %

Expected life of options (in years) 7

Expected annualized volatility 72.68 %

Expected dividend yield —

Weighted average Black-Scholes value at grant date (per option) $ 2.07

Forfeiture rate —

The following table summarizes stock options outstanding:

As of September 30, 2023 As of December 31, 2022

As of March 31, 2024 As of December 31, 2023

2020 Omnibus Plan 702,264 702,264

2018 Stock Option Plan 1,391,436 1,400,937

2015 Stock Option Plan — 1,139,584

Total stock options outstanding 2,093,700 2,103,201

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

(b) Restricted share units

The following is a summary of the changes in RSUs for the nine months ended September 30, 2023 and 2022:

The following is a summary of the changes in RSUs for the three months ended March 31, 2024 and 2023:

Weighted-average grant date fair value (C$) (ii)

4 unchanged sentences

Cancellation and forfeitures 2.95 ( 65,662 )

Balance as of September 30, 2023 $ 3.86 7,334,572

Balance as of March 31, 2024 $ 3.55 8,259,619

Weighted-average grant date fair value (C$) (ii)

4 unchanged sentences

Cancellation and forfeitures 4.19 ( 70,108 )

Balance as of September 30, 2022 $ 4.77 5,327,894

Balance as of March 31, 2023 $ 4.11 7,237,416

(i) RSUs granted in the period vest annually in equal installments over a three-year period from either the grant date or after a three or five year “cliff-period.” All RSUs are subject to such holder’s continued employment through each vesting date.

1 unchanged sentence

(ii) The weighted-average grant date fair value reflects the conversion of foreign currency-denominated RSUs translated into C$ using the foreign exchange rate as of the date of issuance.

The following is a summary of the changes in DSUs for the nine months ended September 30, 2023 and 2022:

(d) Deferred share units

The following is a summary of the changes in DSUs for the three months ended March 31, 2024 and 2023:

Financial liability Number of DSUs

Balance as of January 1, 2024 $ 1,092 521,679

Granting and vesting of DSUs 450 255,947

Gain on revaluation ( 82 ) —

Balance as of September 30, 2023 $ 1,042 521,679

Loss on revaluation 277 —

Balance as of March 31, 2024 $ 1,369 521,679

Financial liability Number of DSUs

1 unchanged sentence

Gain on revaluation ( 163 ) —

Balance as of September 30, 2022 $ 292 104,442

Balance as of March 31, 2023 $ 511 265,732

Cronos Group Inc.

4 unchanged sentences

Basic and diluted loss per share from continuing and discontinued operations are calculated as follows (in thousands, except share and per share amounts):

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Basic and diluted loss per share computation

Three months ended March 31,

Basic loss per share computation

Net loss from continuing operations attributable to the shareholders of Cronos Group $ ( 2,241 ) $ ( 19,169 )

Weighted-average number of common shares outstanding for computation for basic and diluted loss per share (i)

Weighted-average number of common shares outstanding for computation for basic and diluted earnings per share (i)

381,442,597 380,634,208

Basic earnings (loss) from continuing operations per share $ ( 0.00 ) $ ( 0.09 ) $ ( 0.07 ) $ ( 0.21 )

Diluted earnings (loss) per share from continuing operations $ ( 0.00 ) $ ( 0.09 ) $ ( 0.07 ) $ ( 0.21 )

Basic loss from continuing operations per share $ ( 0.01 ) $ ( 0.05 )

Diluted loss per share from continuing operations

$ ( 0.01 ) $ ( 0.05 )

Loss from discontinued operations attributable to the shareholders of Cronos Group $ — $ ( 1,222 )

Weighted-average number of common shares outstanding for computation for basic and diluted loss per share (i)

Weighted-average number of common shares outstanding for computation for basic and diluted earnings per share (i)

381,442,597 380,634,208

2 unchanged sentences

(i) In computing diluted loss per share, incremental common shares are not considered in periods in which a net loss is reported as the inclusion of the common share equivalents would be anti-dilutive.

For the three months ended September 30, 2023 and 2022, total securities of 23,340,811 and 117,100,621 , respectively, were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive.

For the nine months ended September 30, 2023 and 2022, total securities of 27,399,000 and 118,304,608 , respectively, were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive.

For the three months ended March 31, 2024 and 2023, total securities of 24,580,665 and 30,086,428 , respectively, were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive.

Commitments and Contingencies

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On March 11 and 12, 2020, two alleged shareholders of the Company separately filed two putative class action complaints in the U.S.

District Court for the Eastern District of New York against the Company and its Chief Executive Officer and now former Chief Financial Officer.

The court has consolidated the cases, and the consolidated amended complaint alleges violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder against all defendants, and Section 20(a) of the Exchange Act against the individual defendants.

The consolidated amended complaint generally alleges that certain of the Company’s prior public statements about revenues and internal control were incorrect based on the Company’s disclosures relating to the Audit Committee of the Board’s review of the appropriateness of revenue recognized in connection with certain bulk resin purchases and sales of products through the wholesale channel.

District Court for the Eastern District of New York against the Company and its Chief Executive Officer and former Chief Financial Officer.

The court consolidated the cases, and the consolidated amended complaint alleges violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5, promulgated thereunder, against all defendants, and Section 20(a) of the Exchange Act against the individual defendants.

The consolidated amended complaint generally alleges that certain of the Company’s prior public statements about revenues and internal controls were incorrect based on the Company’s disclosures relating to the Audit Committee of the Board of Directors’ review of the appropriateness of revenue recognized in connection with certain bulk resin purchases and sales of products through the wholesale channel.

The consolidated amended complaint does not quantify a damage request.

Defendants moved to dismiss on February 8, 2021.

The defendants moved to dismiss on February 8, 2021.

On November 17, 2023, the court entered an order granting the motion and dismissed the case with prejudice.

On December 1, 2023, the shareholder plaintiffs sought reconsideration of the dismissal, requesting that the court instead dismiss the action without prejudice and permit the plaintiffs to seek leave to further amend the complaint.

The reconsideration motion is pending.

Cronos Group Inc.

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On June 3, 2020, an alleged shareholder filed a Statement of Claim, as amended on August 12, 2020, in the Ontario Superior Court of Justice in Toronto, Ontario, Canada, seeking, among other things, an order certifying the action as a class action on behalf of a putative class of shareholders and damages of an unspecified amount.

The Amended Statement of Claim names (i) the Company, (ii) its Chief Executive Officer, (iii) now former Chief Financial Officer, (iv) former Chief Financial Officer and Chief Commercial Officer, and (v) current and former members of the Board as defendants and alleges breaches of the Ontario Securities Act, oppression under the Ontario Business Corporations Act and common law misrepresentation.

The Amended Statement of Claim generally alleges that certain of the Company’s prior public statements about revenues and internal control were misrepresentations based on the Company’s March 2, 2020 disclosure that the Audit Committee of the Board was conducting a review of the appropriateness of revenue recognized in connection with certain bulk resin purchases and sales of products through the wholesale channel, and the Company’s subsequent restatement.

The Amended Statement of Claim does not quantify a damage request.

The Amended Statement of Claim named (i) the Company, (ii) its Chief Executive Officer, (iii) former Chief Financial Officer, (iv) former Chief Financial Officer and Chief Commercial Officer, and (v) current and former members of the Board as defendants and alleged breaches of the Ontario Securities Act, oppression under the Ontario Business Corporations Act and common law misrepresentation.

The Amended Statement of Claim generally alleged that certain of the Company’s prior public statements about revenues and internal controls were misrepresentations based on the Company’s March 2, 2020 disclosure that the Audit Committee of the Board of Directors was conducting a review of the appropriateness of revenue recognized in connection with certain bulk resin purchases and sales of products through the wholesale channel, and the Company’s subsequent restatement.

The Amended Statement of Claim did not quantify a damage request.

On June 28, 2021, the Court dismissed motions brought by the plaintiff for leave to commence a claim for misrepresentation under the Ontario Securities Act and for certification of the action as a class action.

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On September 26, 2022, the Court of Appeal for Ontario reversed the Superior Court’s dismissal of the leave and certification motions, granted the plaintiff leave to proceed to bring a claim for misrepresentation under the Ontario Securities Act, and remitted the certification motion back to the Superior Court.

On October 10, 2023, the Superior Court certified a class that includes shareholders that acquired shares on the TSX and NASDAQ exchanges.

On April 11, 2023, the plaintiff filed a Fresh as Amended Statement of Claim, which reflected the dismissal of the defendants for which an appeal was not sought, the removal of the claims for oppression under the Ontario Business Corporations Act and common law misrepresentation, as well as shortening the proposed class period.

On October 10, 2023, the Superior Court certified the action on behalf of a class of persons or entities who acquired shares in the secondary market, including on the TSX and Nasdaq, during the period from May 9, 2019 to March 30, 2020, other than certain excluded persons.

(ii) Regulatory reviews relating to restatements

The Company has been responding to requests for information from various regulatory authorities relating to its previously disclosed restatement of its financial statements for the first three quarters of 2019 as well as the previously disclosed restatement of the second quarter of 2021 interim financial statements (collectively, the “Restatements”).

The Company has been responding to all such requests for information and cooperating with all regulatory authorities.

On October 24, 2022, the Company announced regulatory settlements as follows:

SEC Settlement

On October 24, 2022, the SEC issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8(a) of the Securities Act of 1933 (the “Securities Act”) and Section 21(c) of the Exchange Act, Making Findings, and Imposing a Cease-and-Desist Order (the “Settlement Order”) resolving the Restatements.

The Company has agreed to settle with the SEC, without admitting or denying the allegations described in the Settlement Order.

The Settlement Order fully and finally disposes of the investigation of the Company by the SEC into the Restatements without the payment of any civil penalty or other amount.

On October 24, 2022, the SEC issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8(a) of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21(c) of the Exchange Act, Making Findings, and Imposing a Cease-and-Desist Order (the “Settlement Order”) resolving the Restatements.

The Company agreed to settle with the SEC, without admitting or denying the allegations described in the Settlement Order.

The Settlement Order fully and finally disposed of the investigation of the Company by the SEC into the Restatements without the payment of any civil penalty or other amount.

The Settlement Order required the Company to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act, Sections 10(b), 13(a), 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 13a-13, 13a-15(a), 13a-16 and 12b-20 thereunder.

Additionally, the Company agreed to certain undertakings, which include, among other things, retaining a qualified independent consultant (the “Consultant”) to engage in a review of, and make recommendations with respect to, certain of the Company’s internal accounting controls and internal control over financing reporting.

The Consultant’s review has been completed.

As a result of the Settlement Order, the Company (i) lost its status as a well-known seasoned issuer for a period of three years, (ii) is unable to rely on the private offering exemptions provided by Regulations A and D under the Securities Act for a period of five years and (iii) is unable to rely on the safe harbor provisions of the U.S.

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OSC Settlement

On October 24, 2022, the Ontario Capital Markets Tribunal approved a settlement agreement (the “Settlement Agreement”) between the Company and the staff of the OSC, resolving the Restatements.

Pursuant to the terms of the Settlement Agreement, which fully and finally disposed the investigation of the Company by the OSC, Cronos agreed to pay a total of C$ 1.34 million to fully settle the matter, and acknowledged that it had failed to comply with the requirement under Section 77 of the Securities Act (Ontario) to file interim financial reports in the manner set out therein and had acted in a manner contrary to the public interest.

Additionally, the Company agreed to retain the Consultant to engage in a review of, and make recommendations with respect to, certain of the Company’s internal accounting controls and internal control over financing reporting, on substantially the same terms as were required by the SEC pursuant the Settlement Agreement.

The Consultant’s review has been completed.

On October 24, 2022, the Ontario Capital Markets Tribunal approved a settlement agreement (the “Settlement Agreement”) between the Company and the staff of the Ontario Securities Commission (the “OSC”), resolving the Restatements.

Pursuant to the terms of the Settlement Agreement, which fully and finally disposed the investigation of the Company by the OSC, Cronos agreed to pay a total of C$ 1.34 million to fully settle the matter, and acknowledged that it had failed to comply with the requirement under Section 77 of the Ontario Securities Act to file interim financial reports in the manner set out therein and had acted in a manner contrary to the public interest.

Cronos Group Inc.

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dollars, except share amounts) Table of Contents

(iii) Litigation relating to marketing, distribution and sale of products

(iii) Litigation and regulatory inquiries relating to marketing, distribution, import and sale of products

On April 17, 2023, a group of plaintiffs led by the Green Leaf (Ale Yarok) political party filed a Statement of Claim and Request for Approval of a Class Action on behalf of a purported class of Israeli cannabis consumers in the District Court of Tel Aviv, Israel, against 26 cannabis-related parties, including three Cronos Israel entities.

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The Cronos Israel defendants moved to dismiss the action on August 13, 2023.

On January 18, 2024, the Company was notified that the Trade Levies Commissioner of the Israel Ministry of Economy and Industry initiated a public investigation of alleged dumping of medical cannabis imports from Canada into Israel.

The Company is responding to requests for information from the Ministry.

The Company cannot predict the outcome of the investigation.

We expect litigation and regulatory proceedings relating to the marketing, distribution, import and sale of our products to increase.

Fair Value Measurements

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The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis:

September 30, 2023

March 31, 2024

Level 1 Level 2 Level 3 Total

Cash and cash equivalents $ 855,114 $ — $ — $ 855,114

Short-term investments 267,905 — — 267,905

Other investments (i)

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Derivative liabilities — — 118 118

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

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December 31, 2023

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Derivative liabilities — — 102 102

(i) As of September 30, 2023 and December 31, 2022, the Company’s influence on Vitura is deemed non-significant and the investment is considered an equity security with a readily determinable fair value.

(i) As of March 31, 2024 and December 31, 2023, the Company’s influence on Vitura is deemed non-significant and the investment is considered an equity security with a readily determinable fair value.

See Note 4 “ Investments ” for additional information.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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There were no transfers between fair value categories during the periods presented.

The following tables present information about the Company’s assets that are measured at fair value on a non-recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:

As of September 30, 2023

As of March 31, 2024

Level 1 Level 2 Level 3 Total

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(i) On June 14, 2021, the Company purchased an option to acquire 473,787 shares of Class A Common Stock of PharmaCann, a vertically integrated cannabis company in the United States, at an exercise price of $ 0.0001 per share, representing approximately 10.5 % of PharmaCann’s issued and outstanding capital stock on a fully diluted basis as of the date of the PharmaCann Option, for an aggregate purchase price of approximately $ 110,392 .

On February 28, 2022, PharmaCann closed its previously announced transaction with LivWell Holdings Inc.

(“LivWell”) pursuant to which PharmaCann acquired LivWell (“the LivWell Transaction”).

LivWell is a multi-state cannabis cultivation and retail leader based in Colorado.

As a result of the LivWell Transaction, the Company’s ownership percentage in PharmaCann on a fully diluted basis decreased to approximately 6.4 %.

As of both September 30, 2023 and December 31, 2022, the Company’s ownership percentage in PharmaCann on a fully diluted basis was approximately 6.3 %.

See Note 4 “ Investments .”

There were no transfers between fair value categories during the periods presented.

Impairment Loss on Long-lived Assets

(a) Right-of-use assets and property, plant, and equipment, net

During the nine months ended September 30, 2022, the Company recognized an impairment charge of $ 1,986 related to the right-of-use lease asset associated with the Company’s corporate headquarters, encompassing approximately 29,000 square feet, in Toronto, Ontario, Canada, for which the Company determined it would seek a sublease.

In addition, the Company recognized an impairment charge of $ 1,507 during the nine months ended September 30, 2022 related to leasehold improvements and other office equipment that it plans to include in any potential sublease agreement.

The determination to seek a sublease of the property and include leasehold improvements and other office equipment in any potential sublease agreement triggered the impairment charges.

Both of the impairment charges are recognized as impairment loss on long-lived assets on the condensed consolidated statements of net loss and comprehensive loss.

Related Party Transactions

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The Company made the following purchases of cannabis products from Cronos GrowCo:

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Three months ended March 31,

Cronos GrowCo – purchases

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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As of September 30, 2023, and December 31, 2022, the Company had payables outstanding to Cronos GrowCo of $ 307 and $ 2,519 , respectively.

$ 7,010 $ 7,466

As of March 31, 2024, and December 31, 2023, the Company had payables outstanding to Cronos GrowCo of $ 1,501 and $ 2,267 , respectively.

During the third quarter of 2023, the Company, as supplier, entered into a cannabis germplasm supply agreement with Cronos GrowCo as buyer.

For germplasm supplied to GrowCo whose cannabis Cronos expects to purchase, a deferred inventory liability is recorded and subsequently amortized into cost of goods sold.

For germplasm supplied to GrowCo whose cannabis Cronos expects to be sold to unrelated third parties, revenue is recorded.

In relation to this agreement, Cronos recognized $ 353 of revenue and a reduction to cost of goods sold of $ 181 during both the three and nine months ended September 30, 2023.

Also in relation to this agreement, Cronos recorded $ 126 of deferred inventory liabilities and a reduction to inventory of $ 2 as of September 30, 2023.

Also during the third quarter of 2023, the Company sold certain held for sale assets with carrying value of $ 324 and certain other previously expensed assets with a zero net book value to Cronos GrowCo and recognized a $ 433 gain.

During the three months ended March 31, 2024, the Company received $ 361 in relation to this agreement.

Additionally, on August 23, 2019, the Company, as lender, and Cronos GrowCo, as borrower, entered into the GrowCo Facility.

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The vendor then subcontracted out a portion of those services to another company whose chief executive officer is an immediate family member of an executive of the Company.

In late October 2023, the Company was negotiating a direct contract with the related party subcontractor.

During the three and nine months ended September 30, 2023, the Company purchased $ 406 and $ 1,842 , respectively, of products and services under this agreement and had outstanding accounts payable related to the agreement of $ 15 and $ nil as of September 30, 2023 and December 31, 2022, respectively.

The Company purchased $ 833 of products and services under this subcontracted agreement for the three months ended March 31, 2023.

The Company had $ 0 and $ 28 in outstanding payables related to the subcontracted agreement as of March 31, 2024 and December 31, 2023, respectively.

In November 2023, the Company negotiated a direct contract with the related-party vendor.

During the three months ended March 31, 2024, the Company purchased $ 772 of products and services under this agreement and had outstanding accounts payable related to the agreement of $ 134 and $ 11 as of March 31, 2024 and December 31, 2023, respectively.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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Subsequent Events

(a) Held-for-sale Classification of Peace Naturals Campus

On November 27, 2023, the Company announced that Peace Naturals had entered into an agreement (the “Sale Agreement”) with Future Farmco Canada Inc.

(“Future Farmco”) for the sale and leaseback of the Peace Naturals Campus.

Pursuant to the terms of the Sale Agreement, Future Farmco has agreed to acquire the Peace Naturals Campus for an aggregate purchase price of C$ 23 million cash, subject to the terms and conditions set forth therein.

At closing, the parties expect to enter into a lease agreement with respect to portions of the Peace Naturals Campus.

In April 2024, the Company completed the activities required for the Peace Naturals Campus to be considered immediately available for sale, and therefore the underlying assets were reclassified to held-for-sale at that time.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements