What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-08 compared with 2024-05-09 · 241 added, 127 removed, 525 unchanged (41% of the section changed)

Financial Statements

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)

Condensed Consolidated Balance Sheets as of June 30 , 2024 (Unaudited) and December 31, 202 3

Condensed Consolidated Statements of Net Loss and Comprehensive Income ( Loss ) for the three and six months ended June 30 , 2024 and 2023 (Unaudited)

Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30 , 2024 and 2023 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the six months ended June 30 , 2024 and 2023 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

3 unchanged sentences

dollars, except share amounts, unaudited)

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

As of June 30, 2024 As of December 31, 2023

Current assets

30 unchanged sentences

Shareholders’ equity

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:

Share capital (authorized for issue as of June 30, 2024 and December 31, 2023:

shares outstanding as of June 30, 2024 and December 31, 2023:

382,280,725 and 381,298,853 , respectively)

9 unchanged sentences

Cronos Group Inc.

Condensed Consolidated Statements of Net Loss and Comprehensive Loss

Condensed Consolidated Statements of Net Loss and Comprehensive Income (Loss)

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

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Net revenue, before excise taxes $ 38,678 $ 25,798 $ 74,045 $ 52,352

2 unchanged sentences

Cost of sales 21,070 15,922 41,875 32,490

Inventory write-down 395 — 395 —

Gross profit 6,297 3,099 10,780 6,026

10 unchanged sentences

Interest income, net 13,451 12,471 27,696 23,646

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

Share of income (loss) from equity method investments 917 270 2,365 ( 226 )

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

Gain (loss) on revaluation of financial instruments ( 3,615 ) 5,193 ( 6,257 ) ( 2,565 )

Impairment loss on other investments ( 12,916 ) — ( 25,650 ) —

9 unchanged sentences

Net loss attributable to Cronos Group

Comprehensive loss

$ ( 8,757 ) $ ( 8,360 ) $ ( 10,998 ) $ ( 27,529 )

Comprehensive income (loss)

Net loss $ ( 8,759 ) $ ( 8,497 ) $ ( 11,243 ) $ ( 27,754 )

1 unchanged sentence

Foreign exchange gain (loss) on translation ( 10,160 ) 16,580 ( 32,521 ) 18,994

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

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

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

Comprehensive income (loss) ( 18,919 ) 8,083 ( 43,764 ) ( 8,760 )

Comprehensive income (loss) attributable to non-controlling interests 58 ( 87 ) ( 75 ) ( 95 )

Comprehensive income (loss) attributable to Cronos Group $ ( 18,977 ) $ 8,170 $ ( 43,689 ) $ ( 8,665 )

Net loss per share

6 unchanged sentences

Condensed Consolidated Statements of Changes in Equity

For the three months ended March 31, 2024 and 2023

For the six months ended June 30, 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 income (loss) — — — ( 2,241 ) — ( 243 ) ( 2,484 )

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

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

Foreign exchange gain (loss) 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 269,547 754 1,250 ( 71 ) — — 1,933

Net loss — — — ( 8,757 ) — ( 2 ) ( 8,759 )

Foreign exchange gain (loss) on translation — — — — ( 10,220 ) 60 ( 10,160 )

Balance as of June 30, 2024 382,280,725 $ 616,379 $ 49,298 $ 405,650 $ ( 12,013 ) $ ( 3,522 ) $ 1,055,792

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

4 unchanged sentences

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 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

See notes to condensed consolidated interim financial statements.

3 unchanged sentences

dollars, except share amounts, unaudited) Table of Contents

Three months ended March 31,

Six months ended June 30,

Operating activities

6 unchanged sentences

Loss from investments

Loss on revaluation of derivative liabilities

Changes in expected credit losses on long-term financial assets 1,021 ( 1,146 )

15 unchanged sentences

Proceeds from short-term investments 187,447 169,418

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

Dividends received from equity method investment — 1,299

Advances on loans receivable

Proceeds from repayment on loans receivable 5,298 11,388

Purchase of property, plant and equipment ( 2,453 ) ( 1,298 )

20 unchanged sentences

Cronos Group Inc.

(“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.

(“Cronos” or the “Company”) is incorporated in the province of British Columbia under the Business Corporations Act (British Columbia) with principal executive offices at 4491 Concession Rd 12, Stayner, Ontario, L0M 1S0.

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

10 unchanged sentences

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

Operating results for the three and six months ended June 30, 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”).

5 unchanged sentences

The exit of the U.S.

operations represented a strategic shift that has a major effect on the Company’s operations and financial results, and as such, qualifies for reporting as discontinued operations in our condensed consolidated statements of net loss and comprehensive loss.

operations represented a strategic shift that had a major effect on the Company’s operations and financial results, and as such, qualifies for reporting as discontinued operations in our condensed consolidated statements of net loss and comprehensive income (loss).

Prior period amounts have been reclassified to reflect the discontinued operations classification of the U.S.

10 unchanged sentences

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

Three months ended March 31,

Three months ended June 30,

Cannabis flower $ 20,661 $ 14,014

5 unchanged sentences

dollars, except share amounts) Table of Contents

Six months ended June 30,

Cannabis flower $ 38,186 $ 27,142

Cannabis extracts 14,791 11,227

Net revenue $ 53,050 $ 38,516

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

Three months ended March 31,

Three months ended June 30,

Canada $ 19,844 $ 13,595

Israel 6,889 5,426

Other countries 1,029 —

Net revenue $ 27,762 $ 19,021

Six months ended June 30,

Canada $ 38,715 $ 28,029

Israel 13,306 10,487

Other countries 1,029 —

Net revenue $ 53,050 $ 38,516

(f) Concentration of risk

1 unchanged sentence

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 $ 952,446 and $ 966,442 as of March 31, 2024 and December 31, 2023, respectively.

The Company’s maximum exposure to this risk is equal to the carrying amount of these financial assets, which amounted to $ 954,818 and $ 966,442 as of June 30, 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 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 June 30, 2024 and December 31, 2023, the Company had $ 20 and $ 3 , respectively, in expected credit losses that have been recognized on receivables from contracts with customers.

As of June 30, 2024, the Company assessed that there is a concentration of credit risk, as 30 % of the Company’s accounts receivable were due from one customer 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.

1 unchanged sentence

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.

During the three months ended June 30, 2024, the Company earned a total net revenue before excise taxes of $ 19,941 from two major customers, together accounting for 52 % of the Company’s total net revenues before excise taxes.

During the three months ended June 30, 2023, the Company earned a total net revenue before excise taxes of $ 16,839 from three major customers, together accounting for 67 % of the Company’s total net revenues before excise taxes.

During the six months ended June 30, 2024, the Company earned a total net revenue before excise taxes of $ 45,482 from three customers, together accounting for 62 % of the Company’s total net revenues before excise taxes.

During the six months ended June 30, 2023, the Company earned a total net revenue before excise taxes of $ 34,732 from three major customers, together accounting for 67 % of the Company’s total net revenue before excise taxes.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

(g) New accounting pronouncements not yet adopted

10 unchanged sentences

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

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

(h) Adoption of new accounting pronouncements

9 unchanged sentences

Accordingly, the net loss of the U.S.

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,

operations for the three and six months ended June 30, 2023 are reported separately as loss from discontinued operations on the condensed consolidated statements of net loss and comprehensive income (loss).

There was no activity in discontinued operations for the three and six months ended June 30, 2024.

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 six months ended June 30, 2023:

Three months ended June 30, Six months ended June 30,

Net revenue $ 380 $ 1,029

Cost of sales 848 2,044

Inventory write-down 839 839

Gross profit ( 1,307 ) ( 1,854 )

3 unchanged sentences

General and administrative 213 736

Restructuring costs 534 534

Share-based compensation 5 21

Depreciation and amortization 5 13

Impairment loss on long-lived assets (i)

Total operating expenses 1,367 2,047

Interest income 3 8

Other, net (ii)

( 163 ) ( 163 )

Total other income (loss)

( 160 ) ( 155 )

Loss before income taxes ( 2,834 ) ( 4,056 )

1 unchanged sentence

Net loss from discontinued operations $ ( 2,834 ) $ ( 4,056 )

(i) During the three and six months ended June 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.

(ii) For the three and six months ended June 30, 2023, Other, net related to 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 March 31,

Three months ended June 30, Six months ended June 30,

Cannabis extracts 380 1,029

Net revenue $ 380 $ 1,029

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 .

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

Accrual as of April 1, 2023 Expenses Payments/Write-offs Accrual as of June 30, 2023

Employee Termination Benefits $ — $ 442 $ ( 223 ) $ 219

Other Restructuring Costs — 92 — 92

Total $ — $ 534 $ ( 223 ) $ 311

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

Employee Termination Benefits $ — $ 442 $ ( 223 ) $ 219

Other Restructuring Costs — 92 — 92

Total $ — $ 534 $ ( 223 ) $ 311

Cronos Group Inc.

2 unchanged sentences

dollars, except share amounts) Table of Contents

The Company had no assets or liabilities presented in the condensed consolidated balance sheets related to its discontinued operations as of both June 30, 2024 and December 31, 2023.

For the six months ended June 30, 2024, there were no purchases of property plant and equipment related to discontinued operations.

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

Inventory, net

Inventory, net is comprised of the following items:

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

As of June 30, 2024 As of December 31, 2023

Raw materials $ 5,351 $ 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 March 31, 2024 As of December 31, 2023

Ownership interest As of June 30, 2024 As of December 31, 2023

Cronos Growing Company Inc.

3 unchanged sentences

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,

For the three months ended June 30, For the six months ended June 30,

2024 2023 2024 2023

Cronos GrowCo $ 917 $ 270 $ 2,365 $ ( 226 )

$ 917 $ 270 $ 2,365 $ ( 226 )

Beginning in the third quarter of 2024, the results of Cronos GrowCo will be consolidated into the results of the Company, and the Company’s investment in Cronos GrowCo will be reclassified as an intercompany transaction and eliminated upon consolidation.

For more information, see Note 12 “ Subsequent Events.

(b) Other investments

5 unchanged sentences

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.

As of June 30, 2024 and December 31, 2023, based on updated information provided by PharmaCann in the second quarter, the Company’s ownership percentage in PharmaCann on a fully diluted basis was approximately 6.2 % 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.

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.

The PharmaCann Option is reported as Other investments on the consolidated balance sheet as of June 30, 2024 and December 31, 2023.

Cronos Group Inc.

2 unchanged sentences

dollars, except share amounts) Table of Contents

During the first and second quarters of 2024, 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 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 these analyses, the Company recorded non-cash impairment charges of $ 12,734 and $ 12,916 in the first and second quarters of 2024, 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 for the six months ended June 30, 2024.

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

10 unchanged sentences

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

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

As of April 1, 2024 Unrealized loss Impairment charges Foreign exchange effect As of June 30, 2024

PharmaCann $ 12,916 $ — $ ( 12,916 ) $ — $ —

1 unchanged sentence

$ 19,758 $ ( 3,755 ) $ ( 12,916 ) $ 81 $ 3,168

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

As of January 1, 2024 Unrealized loss Impairment charges Foreign exchange effect As of June 30, 2024

PharmaCann $ 25,650 $ — $ ( 25,650 ) $ — $ —

1 unchanged sentence

$ 35,251 $ ( 6,097 ) $ ( 25,650 ) $ ( 336 ) $ 3,168

As of April 1, 2023 Unrealized gain Impairment charges Foreign exchange effect As of June 30, 2023

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

Vitura 13,833 5,194 — ( 102 ) 18,925

$ 62,833 $ 5,194 $ — $ ( 102 ) $ 67,925

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

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

Vitura 21,993 ( 2,729 ) — ( 339 ) 18,925

$ 70,993 $ ( 2,729 ) $ — $ ( 339 ) $ 67,925

Cronos Group Inc.

4 unchanged sentences

Loans receivable, net consists of the following:

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

As of June 30, 2024 As of December 31, 2023

GrowCo Credit Facility

1 unchanged sentence

Current portion of accrued interest — 507

Total current portion of loans receivable 5,668 5,541

Total current portion of loans receivable, net

GrowCo Credit Facility

4 unchanged sentences

Long-term portion of accrued interest 273 248

Total long-term portion of loans receivable 66,545 69,036

Total long-term portion of loans receivable, net

73,165 69,036

Total loans receivable, net $ 78,040 $ 74,577

3 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 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.

In June 2024, the GrowCo Credit Facility was amended to increase the aggregate principal amount available by C$ 70,000 by providing a second secured non-revolving credit facility (“Term Loan B”).

The funds from Term Loan B will be used to expand Cronos GrowCo’s purpose-built cannabis facility and will mature 10 years after the commencement of sales from the expansion area, following which, principal will be repaid on a quarterly basis.

Interest on Term Loan B is payable on a quarterly basis until maturity beginning after the first borrowing under Term Loan B.

Prior to July 1, 2024, only C$ 12,000 of the C$ 70,000 increased principal availability could be drawn, which Cronos GrowCo drew in full on June 20, 2024.

As of June 30, 2024 and December 31, 2023, Cronos GrowCo had drawn C$ 116,000 and C$ 104,000 ($ 84,833 and $ 78,532 , respectively), 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 quarterly.

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.

For the three months ended June 30, 2024, Cronos GrowCo repaid C$ 1,667 ($ 1,216 ) in principal and C$ 1,920 ($ 1,401 ) in interest related to the GrowCo Credit Facility.

For the six months ended June 30, 2024, Cronos GrowCo repaid C$ 3,333 ($ 2,447 ) in principal and C$ 3,862 ($ 2,835 ) in interest related to the GrowCo Credit Facility.

As of June 30, 2024, Cronos GrowCo had repaid an aggregate C$ 14,833 ($ 10,848 ) and C$ 24,384 ($ 17,832 ) in principal and interest, respectively, under the terms of the GrowCo Credit Facility.

Beginning in the third quarter of 2024, the results of Cronos GrowCo will be consolidated into the results of the Company, and the Cronos GrowCo Credit Facility will be reclassified as an intercompany transaction and eliminated upon consolidation.

For more information, see Note 12 “ Subsequent Events.

Mucci Promissory Note

2 unchanged sentences

On September 30, 2022, the Mucci Promissory Note was amended and restated to increase the interest rate from 3.95 % to the Canadian Prime Rate plus 1.25 %, change the interest payments from quarterly to annual, and defer Mucci’s initial cash interest payment from September 30, 2022 to July 1, 2023.

On June 20, 2024, the Mucci Promissory Note was amended and restated.

As a result, interest accrued on the Mucci Promissory Note between July 1, 2023 and July 1, 2024 was capitalized as part of the principal balance, which increased the loans receivable and decreased interest receivable by $ 974 on the condensed consolidated balance sheets as of June 30, 2024.

As of July 1, 2024, interest is accrued and to be paid in cash beginning on July 1, 2025.

Prior to July 1, 2022, interest accrued on the Mucci Promissory Note was capitalized as part of the principal balance.

1 unchanged sentence

Prior to 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 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.

For the three and six months ended June 30, 2023, Mucci made a payment of C$ 1,750 (approximately $ 1,322 ) under the Mucci Promissory Note, with C$ 1,187 ($ 897 ) related to accrued interest and C$ 563 ($ 425 ) related to outstanding principal.

For the three and six months ended June 30, 2024, there were no repayments of principal or interest on the Mucci Promissory Note.

Cronos Group Inc.

2 unchanged sentences

dollars, except share amounts) Table of Contents

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 March 31, 2024

Cannasoul Collaboration Loan

As of both June 30, 2024 and December 31, 2023, Cannasoul Lab Services Ltd.

has received ILS 8,297 (approximately $ 2,198 and $ 2,294 , respectively), from the Cannasoul Collaboration Loan.

Expected credit loss allowances on the Company’s long-term financial assets for the six months ended June 30, 2024 and 2023 were comprised of the following items:

As of April 1, 2024 Increase (i)

Foreign exchange effect As of June 30, 2024

GrowCo Credit Facility $ 10,740 $ 1,207 $ ( 109 ) $ 11,838

2 unchanged sentences

$ 11,347 $ 1,212 $ ( 125 ) $ 12,434

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

As of January 1, 2024 Increase (i)

Foreign exchange effect As of June 30, 2024

GrowCo Credit Facility $ 11,176 $ 1,010 $ ( 348 ) $ 11,838

2 unchanged sentences

$ 11,789 $ 1,021 $ ( 376 ) $ 12,434

(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.

As of April 1, 2023 Increase (decrease) Foreign exchange effect As of June 30, 2023

GrowCo Credit Facility $ 11,719 $ ( 379 ) $ 239 $ 11,579

Mucci Promissory Note 91 ( 7 ) 2 86

Cannasoul Collaboration Loan 514 4 ( 15 ) 503

$ 12,324 $ ( 382 ) $ 226 $ 12,168

As of January 1, 2023 Increase (decrease) Foreign exchange effect As of June 30, 2023

GrowCo Credit Facility $ 12,455 $ ( 1,149 ) $ 273 $ 11,579

Mucci Promissory Note 89 ( 5 ) 2 86

Cannasoul Collaboration Loan 522 8 ( 27 ) 503

$ 13,066 $ ( 1,146 ) $ 248 $ 12,168

(i) During the three and six months ended June 30, 2024, $ 1,212 and $ 1,021 , respectively, were recorded as increases to general and administrative expenses on the condensed consolidated statements of net loss and comprehensive income (loss) primarily as a result of the increased loans under the GrowCo Credit Facility.

During the three and six months ended June 30, 2023, $ 382 and $ 1,146 , respectively, were recorded as decreases to general and administrative expenses on the condensed consolidated statements of net loss and comprehensive income (loss) as a result of adjustments to our expected credit losses.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

Restructuring

1 unchanged sentence

As part of the Realignment, on February 28, 2022, the Board approved plans to leverage the Company’s strategic partnerships to improve supply chain efficiencies and reduce manufacturing overhead by exiting its production facility in Stayner, Ontario, Canada (the “Peace Naturals Campus”).

On February 27, 2023, the Board approved revisions to the Realignment, which are expected to result in the Company maintaining select components of its operations at the Peace Naturals Campus, namely distribution warehousing, certain research and development activities and manufacturing of certain of the Company’s products, while seeking to sell and lease back all or some of the Peace Naturals Campus or to lease certain portions of the Peace Naturals Campus to third parties.

On February 27, 2023, the Board approved revisions to the Realignment, which were expected to result in the Company maintaining select components of its operations at the Peace Naturals Campus, namely distribution warehousing, certain research and development activities and manufacturing of certain of the Company’s products, while seeking to sell and lease back all or some of the Peace Naturals Campus or to lease certain portions of the Peace Naturals Campus to third parties.

In the third quarter of 2023, the Board approved revisions to the Realignment to wind-down operations at its Winnipeg, Manitoba facility (“Cronos Fermentation”), list the Cronos Fermentation facility for sale, and implement additional organization-wide cost reductions as the Company continues its Realignment initiatives.

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

On November 26, 2023, the Company entered into an agreement with Future Farmco Canada Inc.

for the sale and leaseback of the Peace Naturals Campus.

This agreement was subsequently terminated pursuant to its terms during the second quarter of 2024.

The Company is continuing to evaluate its strategic options for the Peace Naturals Campus, which may include continuing and expanding operations at the facility.

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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

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

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 six months ended June 30, 2024.

As of June 30, 2024, the assets of Cronos Fermentation met the held-for-sale criteria and were classified to assets held for sale on the condensed consolidated balance sheet and the assets are valued at their fair value less costs to sell.

A $ 445 loss for estimated costs to sell was recorded in the six months ended June 30, 2024 as a result of the classification of the Cronos Fermentation assets as held for sale.

During the three and six months ended June 30, 2024, the Company incurred $ 547 and $ 630 of restructuring costs in its continuing operations in connection with the Realignment.

Charges related thereto include shutdown costs at the Cronos Fermentation facility, as well as employee-related costs such as severance and other termination benefits.

During the three and six months ended June 30, 2023, the Company recognized no restructuring costs in continuing operations in connection with the Realignment.

Restructuring costs incurred in the Company’s discontinued operations during the three and six months ended June 30, 2023 is presented in Note 2 “ Discontinued Operations .”

The following table summarizes the Company’s restructuring activity for the three and six months ended June 30, 2024:

Accrual as of April 1, 2024 Expenses Payments/Write-offs Accrual as of June 30, 2024

Employee Termination Benefits $ 38 $ — $ ( 14 ) $ 24

1 unchanged sentence

Total $ 38 $ 547 $ ( 14 ) $ 571

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

Accrual as of January 1, 2024 Expenses Payments/Write-offs Accrual as of June 30, 2024

Employee Termination Benefits $ 150 $ 62 $ ( 188 ) $ 24

1 unchanged sentence

Total $ 150 $ 630 $ ( 209 ) $ 571

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

Share-based Compensation

2 unchanged sentences

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,

The following table summarizes the total share-based compensation expense associated with the Company’s stock options and RSUs for the three and six months ended June 30, 2024 and 2023:

For the three months ended June 30, For the six months ended June 30,

2024 2023 2024 2023

Stock options $ 33 $ 372 $ 67 $ 1,106

6 unchanged sentences

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:

The following is a summary of the changes in stock options for the six months ended June 30, 2024 and 2023:

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

2 unchanged sentences

Cancellation, forfeiture and expiry of options

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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

19.05 ( 1,381,696 )

Balance as of June 30, 2024 $ 5.78 721,505 4.13

Exercisable as of June 30, 2024 $ 6.59 520,820 3.58

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

3 unchanged sentences

Cancellation, forfeiture and expiry of options

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

7.75 ( 3,435,716 )

Balance as of June 30, 2023 $ 14.50 2,103,201 2.34

Exercisable as of June 30, 2023 $ 18.72 1,426,612 1.00

(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.

The following table summarizes stock options outstanding:

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

As of June 30, 2024 As of December 31, 2023

2020 Omnibus Plan 702,264 702,264

1 unchanged sentence

Total stock options outstanding 721,505 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

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

The following is a summary of the changes in RSUs for the six months ended June 30, 2024 and 2023:

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

4 unchanged sentences

Cancellation and forfeitures 2.98 ( 91,726 )

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

Balance as of June 30, 2024 $ 3.57 8,450,225

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

4 unchanged sentences

Cancellation and forfeitures 3.93 ( 254,382 )

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

Balance as of June 30, 2023 $ 3.87 7,554,739

(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.

2 unchanged sentences

(d) Deferred share units

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

The following is a summary of the changes in DSUs for the six months ended June 30, 2024 and 2023:

Financial liability Number of DSUs

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

DSU liabilities settled ( 359 ) ( 155,383 )

Loss on revaluation 122 —

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

Balance as of June 30, 2024 $ 855 366,296

Financial liability Number of DSUs

1 unchanged sentence

Gain on revaluation ( 150 ) —

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

Balance as of June 30, 2023 $ 524 265,732

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 March 31,

Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Basic loss per share computation

10 unchanged sentences

Diluted loss from discontinued operations per share

$ — $ ( 0.01 ) $ — $ ( 0.01 )

(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 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.

For the three months ended June 30, 2024 and 2023, total securities of 19,434,059 and 28,769,758 , respectively, were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive.

For the six months ended June 30, 2024 and 2023, total securities of 22,007,363 and 29,428,093 , respectively, were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive.

Commitments and Contingencies

50 unchanged sentences

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

The court granted the motion (and similar motions filed by other defendants) on May 16, 2024, dismissing the plaintiffs’ petition for class certification without prejudice and their individual claims with prejudice, and ordering the plaintiffs to pay ILS 10 thousand to each of the defendants for costs.

On July 14, 2024, the plaintiffs appealed to the Supreme Court of Israel seeking to overturn both the dismissal of plaintiffs’ individual claims and the award of costs.

The appeal is pending.

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.

On July 9, 2024, the Commissioner announced a preliminary determination proposing to impose an anti-dumping duty on Canadian licensed producers.

The Company would be subject to a proposed duty of 369%.

The Commissioner determined not to impose a provisional duty at this time pending the conclusion of the Ministry’s investigation.

The Company previously responded to requests for information from the Ministry and is providing additional information.

The Company cannot predict the outcome of the investigation.

7 unchanged sentences

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

March 31, 2024

June 30, 2024

Level 1 Level 2 Level 3 Total

10 unchanged sentences

Derivative liabilities — — 102 102

(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.

(i) As of June 30, 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.

5 unchanged sentences

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 March 31, 2024

As of June 30, 2024

Level 1 Level 2 Level 3 Total

6 unchanged sentences

(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 .

As of June 30, 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 6.2 % and 6.6 %.

In the three and six months ended June 30, 2024, the PharmaCann Option was impaired to zero.

See Note 4 “ Investments .”

5 unchanged sentences

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

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Cronos GrowCo – purchases

$ 9,942 $ 6,549 $ 16,952 $ 14,015

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

As of June 30, 2024, and December 31, 2023, the Company had payables outstanding to Cronos GrowCo of $ 1,640 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.

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.

During the three and six months ended June 30, 2024, the Company received $ 266 and $ 627 , respectively, in relation to this agreement.

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

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

In June 2024, the GrowCo Credit Facility was further amended to increase the aggregate principal amount available by providing a second secured non-revolving credit facility.

See Note 5 “ Loans Receivable, net ” for additional information.

(b) Vendor Agreement

In November 2022, the Company entered into an agreement with an external vendor whereby the vendor would provide certain manufacturing services to the Company.

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.

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.

On June 20, 2024, the Company entered into an amended and restated supply agreement with Cronos GrowCo (the “Supply Agreement”).

Pursuant to the terms of the Supply Agreement, prior to the commencement of sales from Cronos GrowCo’s Phase 2 expansion area, the Company and its affiliates have the right, but not the obligation, to purchase an aggregate total quantity of 80 % of what is produced by Cronos GrowCo.

Thereafter, the Company and its affiliates will have the right, but not the obligation, to purchase 70 % of Cronos GrowCo’s forecasted production capacity over a given period and 70 % of Cronos GrowCo’s actual production in a given month.

All prices for products purchased pursuant to the Supply Agreement are fixed throughout the four year term of the Supply Agreement.

Beginning in the third quarter of 2024, the results of Cronos GrowCo will be consolidated into the results of the Company, and all transactions with Cronos GrowCo will be treated as intercompany transactions and eliminated upon consolidation.

For more information, see Note 12 “ Subsequent Events.

Cronos Group Inc.

2 unchanged sentences

dollars, except share amounts) Table of Contents

(b) Vendor Agreement

In November 2022, the Company entered into an agreement with an external vendor whereby the vendor would provide certain manufacturing services to the Company.

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.

The Company purchased $ 603 and $ 1,436 of products and services under this subcontracted agreement for the three and six months ended June 30, 2023.

The Company had $ 0 and $ 28 in outstanding payables related to the subcontracted agreement as of June 30, 2024 and December 31, 2023, respectively.

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

During the three and six months ended June 30, 2024, the Company purchased $ 260 and $ 936 of products and services under this agreement and had outstanding accounts payable related to the agreement of $ 7 and $ 11 as of June 30, 2024 and December 31, 2023, respectively.

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.

(a) Cronos GrowCo Amended Shareholders’ Agreement

On July 1, 2024, the Company attained majority control of the board of directors of Cronos GrowCo.

As a result, the Company will consolidate the results of operations of Cronos GrowCo in its condensed consolidated financial statements beginning in the third quarter of 2024.

The consolidation of Cronos GrowCo results in a business combination under ASC 805.

Acquisition costs of $ 196 were recorded to general and administrative expense on the condensed consolidated statements of loss and comprehensive income (loss) in the three and six months ended June 30, 2024.

The initial accounting for the GrowCo business combination is incomplete as of the issuance of these financial statements.

In addition, we have not yet completed our valuations of certain assets, including inventory, fixed assets and intangible assets.

As such, it is impracticable to provide certain pro-forma financial information, information on the acquisition-date fair value of our equity interest in GrowCo or the allocation of fair value to the acquired GrowCo assets and liabilities.

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