What changed in this filing

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Item 1. Financial Statements

2024-11-12 compared with 2024-08-08 · 468 added, 234 removed, 532 unchanged (57% of the section changed)

Financial Statements

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)

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

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

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

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

Notes to Condensed Consolidated Financial Statements (Unaudited)

3 unchanged sentences

dollars, except share amounts, unaudited)

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

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

Current assets

28 unchanged sentences

Non-current portion of lease obligation 872 1,559

Deferred tax liability 11,143 —

Total liabilities 52,822 43,961

Shareholders’ equity

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:

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

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

382,294,707 and 381,298,853 , respectively)

9 unchanged sentences

Cronos Group Inc.

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 June 30, Six months ended June 30,

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

(In thousands of U.S.

dollars, except share and per share amounts, unaudited)

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

2024 2023 2024 2023

16 unchanged sentences

Interest income, net 12,460 13,375 40,156 37,021

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

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

Share of income from equity method investments — 1,057 2,365 831

Gain on revaluation of loan receivable 11,804 — 11,804 —

Gain on revaluation of equity method investment 32,469 — 32,469 —

Loss on revaluation of financial instruments ( 293 ) ( 5,291 ) ( 6,550 ) ( 7,856 )

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

Foreign currency transaction gain (loss) ( 7,432 ) 8,816 12,370 3,999

Loss on held-for-sale assets ( 10,422 ) — ( 10,422 ) —

Other, net ( 315 ) 974 ( 737 ) 1,011

Total other income 38,271 18,931 55,805 35,006

Loss before income taxes ( 10,933 ) ( 5,843 ) ( 13,975 ) ( 25,314 )

Income (loss) before income taxes 4,616 ( 2,844 ) ( 9,359 ) ( 28,158 )

Income tax benefit ( 2,708 ) ( 1,254 ) ( 5,440 ) ( 2,870 )

Loss from continuing operations ( 8,759 ) ( 5,663 ) ( 11,243 ) ( 23,698 )

Income (loss) from continuing operations 7,324 ( 1,590 ) ( 3,919 ) ( 25,288 )

Loss from discontinued operations — ( 182 ) — ( 4,238 )

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

Net income (loss) 7,324 ( 1,772 ) ( 3,919 ) ( 29,526 )

Net loss attributable to non-controlling interest ( 1,025 ) ( 128 ) ( 1,270 ) ( 353 )

Net loss attributable to Cronos Group

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

Net income (loss) attributable to Cronos Group $ 8,349 $ ( 1,644 ) $ ( 2,649 ) $ ( 29,173 )

Cronos Group Inc.

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

(In thousands of U.S.

dollars, except share and per share amounts, unaudited)

Comprehensive income (loss)

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

Net income (loss) $ 7,324 $ ( 1,772 ) $ ( 3,919 ) $ ( 29,526 )

Other comprehensive income (loss)

1 unchanged sentence

Comprehensive income (loss) 19,732 ( 21,862 ) ( 24,032 ) ( 30,622 )

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

Comprehensive loss attributable to non-controlling interests ( 269 ) ( 41 ) ( 344 ) ( 136 )

Comprehensive income (loss) attributable to Cronos Group $ 20,001 $ ( 21,821 ) $ ( 23,688 ) $ ( 30,486 )

Net loss per share

Basic and diluted - continuing operations $ ( 0.02 ) $ ( 0.01 ) $ ( 0.03 ) $ ( 0.06 )

Basic and diluted - discontinued operations — ( 0.01 ) — ( 0.01 )

Basic and diluted - total

Net income (loss) per share

Basic - continuing operations

$ 0.02 $ — $ ( 0.01 ) $ ( 0.07 )

Basic - discontinued operations

— — — ( 0.01 )

Basic net income (loss) per share attributable to Cronos Group

$ 0.02 $ — $ ( 0.01 ) $ ( 0.08 )

Diluted - continuing operations

$ 0.02 $ — $ ( 0.01 ) $ ( 0.07 )

Diluted - discontinued operations

— — — ( 0.01 )

Diluted net income (loss) per share attributable to Cronos Group

$ 0.02 $ — $ ( 0.01 ) $ ( 0.08 )

See notes to condensed consolidated interim financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Changes in Equity

For the six months ended June 30, 2024 and 2023

For the nine months ended September 30, 2024 and 2023

(In thousands of U.S.

1 unchanged sentence

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

Balance as of January 1, 2024 381,298,853 $ 613,725 $ 48,449 $ 416,719 $ 20,678 $ ( 3,447 ) $ 1,096,124

Balance as of December 31, 2023

381,298,853 $ 613,725 $ 48,449 $ 416,719 $ 20,678 $ ( 3,447 ) $ 1,096,124

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

6 unchanged sentences

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

Non-controlling interest resulting from business combination

— — — — — 53,542 53,542

Activities relating to share-based compensation 13,982 24 2,225 ( 4 ) — — 2,245

Net income (loss) — — — 8,349 — ( 1,025 ) 7,324

Foreign exchange gain on translation — — — — 11,652 756 12,408

Balance as of September 30, 2024 382,294,707 $ 616,403 $ 51,523 $ 413,995 $ ( 361 ) $ 49,751 $ 1,131,311

Cronos Group Inc.

Condensed Consolidated Statements of Changes in Equity

For the nine months ended September 30, 2024 and 2023

(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

Balance as of January 1, 2023 380,575,403 $ 611,318 $ 42,682 $ 490,682 $ ( 797 ) $ ( 2,921 ) $ 1,140,964

Balance as of December 31, 2022

380,575,403 $ 611,318 $ 42,682 $ 490,682 $ ( 797 ) $ ( 2,921 ) $ 1,140,964

Activities relating to share-based compensation 240,518 917 1,362 — — — 2,279

6 unchanged sentences

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

See notes to condensed consolidated interim financial statements.

3 unchanged sentences

dollars, except share amounts, unaudited) Table of Contents

Six months ended June 30,

Nine months ended September 30,

Operating activities

7 unchanged sentences

Changes in expected credit losses on long-term financial assets 1,026 ( 1,339 )

Foreign currency transaction (gain) loss

Revaluation of equity method investment ( 32,469 ) —

Revaluation of loan receivable ( 11,804 ) —

Loss on held-for-sale assets

Inventory step-up recorded to cost of sales

Foreign currency transaction gain

( 12,370 ) ( 3,999 )

9 unchanged sentences

Accrued liabilities 1,633 1,910

Cash flows used in operating activities ( 460 ) ( 59,467 )

Cash flows provided by (used in) operating activities 11,123 ( 59,650 )

Investing activities

1 unchanged sentence

Proceeds from short-term investments 187,166 380,765

Cash acquired in business combinations

Dividends received from equity method investment — 1,301

Dividend proceeds

Advances on loans receivable

2 unchanged sentences

Purchase of intangible assets ( 578 ) ( 344 )

Other investing activities — 862

Cash flows provided by (used in) investing activities 180,181 ( 141,392 )

31 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 and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for any other reporting period.

Operating results for the three and nine months ended September 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 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 June 30,

Three months ended September 30,

Cannabis flower $ 26,328 $ 17,414

Cannabis extracts 7,789 7,268

Other 147 128

Net revenue $ 34,264 $ 24,810

3 unchanged sentences

dollars, except share amounts) Table of Contents

Six months ended June 30,

Nine months ended September 30,

Cannabis flower $ 64,514 $ 44,556

Cannabis extracts 22,580 18,495

Other 220 275

Net revenue $ 87,314 $ 63,326

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

Three months ended June 30,

Three months ended September 30,

Canada $ 24,067 $ 18,738

2 unchanged sentences

Net revenue $ 34,264 $ 24,810

Six months ended June 30,

Nine months ended September 30,

Canada $ 62,781 $ 46,767

5 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 $ 954,818 and $ 966,442 as of June 30, 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 $ 911,713 and $ 966,442 as of September 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 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 September 30, 2024 and December 31, 2023, the Company had $ 14 and $ 3 , respectively, in expected credit losses that have been recognized on receivables from contracts with customers.

As of September 30, 2024, the Company assessed that there is a concentration of credit risk, as 29 % 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.

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 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.

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

During the three months ended September 30, 2024, the Company earned a total net revenue before excise taxes of $ 21,993 from two major customers, together accounting for 48 % of the Company’s total net revenue before excise taxes.

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 revenue before excise taxes.

During the nine months ended September 30, 2024, the Company earned a total net revenue before excise taxes of $ 71,846 from three customers, together accounting for 59 % of the Company’s total net revenue 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 revenue before excise taxes.

Cronos Group Inc.

21 unchanged sentences

With respect to the adoption of ASU 2022-03, see Note 5 “ Investments ” for discussion of the contractual restrictions related to the PharmaCann Option (as defined below).

Business Combination

On July 1, 2024, the Company obtained majority control of the board of directors of Cronos Growing Company Inc.

(“Cronos GrowCo”), a cannabis cultivation company, which qualified as a business combination under ASC 805 (the “Cronos GrowCo Transaction”).

Prior to this date, our investment in Cronos GrowCo consisted of an investment accounted for under the equity method and loans receivable from Cronos GrowCo.

Cronos GrowCo was formed under the Canada Business Corporations Act on June 14, 2018, with the objective of cultivating and commercializing cannabis and cannabis products.

Cronos GrowCo is licensed to sell certain cannabis products to other license holders in the wholesale channel, as well as to provincial cannabis control authorities.

It is also licensed to export dried flower to Israel.

In connection with the Cronos GrowCo Transaction, the Company provided an approximately $ 51,000 secured non-revolving credit facility to Cronos GrowCo to fund the expansion of Cronos GrowCo’s cultivation and processing facilities (the “Phase 2 Expansion”), and the Company entered into a new supply agreement (the “Supply Agreement”) with Cronos GrowCo.

Pursuant to the Supply Agreement, prior to the commencement of sales from Cronos GrowCo’s Phase 2 Expansion area, the Company and its controlled affiliates (other than Cronos GrowCo) have the right, but not the obligation, to purchase an aggregate total quantity of 80 % of Cronos GrowCo’s production.

Thereafter, the Company and its controlled affiliates (other than Cronos GrowCo) 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.

The Cronos GrowCo Transaction is intended to support the Company’s current and future biomass supply requirements.

As there was no cash consideration paid, the Cronos GrowCo Transaction has been valued with reference to the fair value of our existing equity method investment of $ 53,542 , as well as the effective settlement of various preexisting relationships between the Company and Cronos GrowCo.

These preexisting relationships are now classified as intercompany transactions and eliminated upon consolidation.

In the three and nine months ended September 30, 2024, we recorded a gain of $ 32,469 on the condensed consolidated statements of net income (loss) and comprehensive income (loss) from remeasuring our equity method investment in Cronos GrowCo.

We also recorded $ 11,804 to gain on revaluation of loan receivable on the condensed consolidated statements of net income (loss) and comprehensive income (loss) in the three and nine months ended September 30, 2024, from remeasuring our outstanding loans receivable with Cronos GrowCo.

Additionally, the consideration also included the effective settlement of various preexisting trade receivables and payables and other related accounts that are now classified as intercompany transactions and eliminated upon consolidation.

The effective settlement of the preexisting trade receivables, payables, and related accounts did not result in the recognition of any gain or loss on settlement.

As of the date of the Cronos GrowCo Transaction, the fair value of the non-controlling interest in Cronos GrowCo was $ 53,542 .

The Company used the income approach to estimate both the fair value of the Company’s equity method investment in Cronos GrowCo and the fair value of the non-controlling interest in Cronos GrowCo.

Under the income

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

approach, significant assumptions used in the discounted cash flow method that required the use of judgment were the discount rate, growth rates and cash flow projections.

The Company used the income approach to estimate the fair value of the Company’s loan receivable with Cronos GrowCo.

Under the income approach, significant assumptions used that required the use of judgment were the credit spread and interest rate volatility.

The table below summarizes the unaudited provisional estimates of the fair values of the identifiable assets acquired and liabilities assumed in the Cronos GrowCo Transaction.

The Company's preliminary estimates and the allocation of the purchase price to the assets acquired and liabilities assumed may change as the Company completes the valuation process, which may result in an adjustment, which could be material, to the preliminary values presented below.

The Company expects to complete the purchase price allocation as soon as reasonably possible, but not to exceed one year from the date of completion of the Cronos GrowCo Transaction.

Accounts receivable 2,437

Inventory 31,041

Prepaids and other current assets 795

Goodwill 36,421

Property, plant and equipment 119,600

Accounts payable ( 2,913 )

Accrued liabilities ( 2,757 )

Deferred income tax liability ( 11,738 )

Total purchase price

The inventory acquired in the Cronos GrowCo Transaction of $ 31,041 includes a step-up to fair value of $ 17,908 .

For both the three and nine months ended September 30, 2024, the Company recognized $ 7,116 of this inventory step-up into cost of sales on the condensed consolidated statements of income (loss) and comprehensive income (loss).

The following table presents details of the property, plant and equipment acquired by major category:

Fair value at date of Cronos GrowCo Transaction

Building and leasehold improvements 49,356

Machinery and equipment

Furniture and fixtures 580

Construction in progress

The Company’s results of operations for the three and nine months ended September 30, 2024, included three months of the operating results of Cronos GrowCo, which was comprised of revenue of $ 4,268 and loss before income taxes of $ 1,606 .

Business combination-related costs of $ 334 and $ 530 were incurred in relation to the Cronos GrowCo Transaction in the three and nine months ended September 30, 2024, respectively, and were reported in general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss).

As part of the Cronos GrowCo Transaction, the Company preliminarily recorded goodwill of $ 36,421 , none of which is deductible for income tax purposes.

The goodwill acquired was primarily attributable to the ability to secure a long-term supply of cannabis and to take advantage of growth opportunities from the expansion of Cronos GrowCo’s cultivation and processing facilities.

The following table presents unaudited supplemental pro forma results for the three and nine months ended September 30, 2024 and 2023, respectively, as if the Cronos GrowCo Transaction had occurred as of January 1, 2023.

The unaudited pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the business combination had taken place at such time.

The unaudited pro forma results presented below include adjustments such as amortization of inventory step-up, amortization charges for acquired intangible assets, depreciation adjustments for property, plant and equipment that has been revalued, adjustment of interest expense and interest income resulting from the effective settlement of pre-existing debt financing in connection with the Cronos GrowCo Transaction and adjustments for certain business combination-related charges.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

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

2024 2023 2024 2023

$ 34,264 $ 31,249 $ 94,788 $ 76,258

( 3,540 ) 3,686 14,124 ( 881 )

Operating expenses

37,266 27,036 82,715 77,107

( 6,002 ) 17,416 8,892 74,788

Net income (loss) attributable to Cronos Group $ ( 29,447 ) $ ( 3,914 ) $ ( 39,578 ) $ ( 10,786 )

Material nonrecurring pro forma adjustments directly attributable to the Cronos GrowCo Transactions include the following:

• Acquired inventory fair value step-up of $ 18,283 is assumed to be recorded at January 1, 2023.

As such, historical amortization of the acquired inventory step-up of $ 7,116 recognized in the historical three month period ended September 30, 2024 was removed from pro forma net income for the three months and nine months ended September 30, 2024.

The entire inventory fair value step-up of $ 18,283 was recognized as an incremental product cost in the nine months ended September 30, 2023, with $ 4,583 recognized in the three months ended September 30, 2023 as the inventory acquired at the business combination date is expected to turnover within eight months.

• Pre-business combination revenues for sales from Cronos GrowCo to the Company of $ 2,664 and $ 15,489 were adjusted out for the three months and nine months ended September 30, 2023, respectively, and $ 14,776 of pre-business combination revenues were adjusted out for the nine months ended September 30, 2024 as these amounts would have been eliminated in consolidation.

Company pre-business combination cost of sales of $ 4,232 and $ 12,147 were adjusted out for the three and nine months ended September 30, 2023, respectively, and $ 11,386 of pre-business combination cost of sales were adjusted out for the nine months ended September 30, 2024, as these amounts would have been eliminated in consolidation.

• The gain on the revaluation of the equity method investment and loan receivable relating to the Cronos GrowCo Transaction of $ 32,469 and $ 11,804 , respectively, were adjusted out for the three months and nine months ended September 30, 2024 and added into the nine months ended September 30, 2023 as this revaluation is assumed to have occurred on January 1, 2023.

Discontinued Operations

2 unchanged sentences

Accordingly, the net loss of the U.S.

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.

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

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

Cronos Group Inc.

2 unchanged sentences

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,

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:

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

Net revenue $ — $ 1,029

Cost of sales — 2,044

Inventory write-down 839 839

Inventory write-down (i)

Gross profit — ( 1,854 )

6 unchanged sentences

Depreciation and amortization — 13

Impairment loss on long-lived assets (i)

Impairment loss on long-lived assets (ii)

Total operating expenses 214 2,261

Interest income 1 9

Other, net (ii)

( 163 ) ( 163 )

Other, net (iii)

Total other income (loss)

( 160 ) ( 155 )

Loss before income taxes ( 182 ) ( 4,238 )

1 unchanged sentence

Net loss from discontinued operations $ ( 182 ) $ ( 4,238 )

(i) During the three and six months ended June 30, 2023, as a result of the exit of the U.S.

(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.

(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.

(iii) For the three and nine months ended September 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 June 30, Six months ended June 30,

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

Cannabis extracts — 1,029

Net revenue $ — $ 1,029

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

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

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

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

5 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 .

Accrual as of December 31, 2022 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

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

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

For the nine months ended September 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 June 30, 2024 As of December 31, 2023

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

Raw materials $ 5,133 $ 4,795

3 unchanged sentences

Total $ 47,250 $ 30,495

As a result of the Cronos GrowCo Transaction, the Company recorded a step-up to Cronos GrowCo’s existing inventory of $ 17,908 to bring the inventory balance acquired by the Company to its fair value.

For more information, see Note 2 “ Business Combination.

(a) Equity method investments, net

As a result of the Cronos GrowCo Transaction, the existing equity method investment in Cronos GrowCo was remeasured at its fair value.

In both the three and nine months ended September 30, 2024, we recorded a gain of $ 32,469 on the condensed consolidated statements of net income (loss) and comprehensive income (loss) from remeasuring our equity method investment in Cronos GrowCo.

For more information, see Note 2 “ Business Combination ”

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

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

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

Cronos Growing Company Inc.

(“Cronos GrowCo”)

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

Cronos GrowCo (i)

50 % $ — $ 19,488

(i) The Company obtained control of Cronos GrowCo on July 1, 2024, and, as a result, the investment in Cronos GrowCo is now accounted for as an intercompany transaction and eliminated upon consolidation from the business combination date onwards.

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

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

2024 2023 2024 2023

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 June 30, For the six months ended June 30,

Cronos GrowCo (i)

$ — $ 1,057 $ 2,365 $ 831

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

$ — $ 1,057 $ 2,365 $ 831

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 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.

As of September 30, 2024 and December 31, 2023, based on updated information provided by PharmaCann in the third quarter, the Company’s ownership percentage in PharmaCann on a fully diluted basis was approximately 5.8 % 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 13 “ Fair Value Measurements ” for more information on the fair value hierarchy.

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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

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

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.

1 unchanged sentence

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.

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 income (loss) and comprehensive income (loss) for the nine months ended September 30, 2024.

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

4 unchanged sentences

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.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

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)

1 unchanged sentence

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.

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 income (loss) and comprehensive income (loss).

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

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

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

PharmaCann $ — $ — $ — $ — $ —

1 unchanged sentence

$ 3,168 $ ( 371 ) $ — $ 103 $ 2,900

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

As of December 31, 2023 Unrealized loss Impairment charges Foreign exchange effect As of September 30, 2024

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

1 unchanged sentence

$ 35,251 $ ( 6,468 ) $ ( 25,650 ) $ ( 233 ) $ 2,900

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

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

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

1 unchanged sentence

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

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

As of December 31, 2022 Unrealized loss Impairment charges Foreign exchange effect As of September 30, 2023

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

7 unchanged sentences

Loans receivable, net consists of the following:

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

GrowCo Credit Facility

$ 4,875 $ 5,034

Current portion of accrued interest — 507

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

GrowCo Credit Facility (i)

Current portion of Mucci Promissory Note accrued interest 233 507

Total current portion of loans receivable, net

GrowCo Credit Facility

57,271 53,638

GrowCo Credit Facility (i)

Mucci Promissory Note

4 unchanged sentences

16,086 69,036

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

Total loans receivable, net (i)

$ 16,319 $ 74,577

(i) The Company obtained control of Cronos GrowCo on July 1, 2024, and, as a result, the loans receivable from Cronos GrowCo are now accounted for as intercompany transactions and eliminated upon consolidation from the business combination date onwards.

Cronos GrowCo Credit Facility

3 unchanged sentences

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.

The funds from Term Loan B will be used to expand Cronos GrowCo’s purpose-built cannabis facility and Term Loan B will mature 10 years after the commencement of sales from the Phase 2 Expansion area.

Principal will be repaid under Term Loan B on a quarterly basis after the commencement of sales from the Phase 2 Expansion area.

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

1 unchanged sentence

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 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.

As a result of the Cronos GrowCo Transaction on July 1, 2024, the existing loans receivable under the GrowCo Credit Facility were remeasured at their fair value and effectively settled.

We recorded a gain of $ 11,804 to revaluation gain on loan receivable on the condensed consolidated statements of net income (loss) and comprehensive income (loss) in the three and nine months ended September 30, 2024, from remeasuring our outstanding loans receivable with GrowCo.

For more information, see Note 2 “ Business Combination.

Mucci Promissory Note

3 unchanged sentences

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 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.

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.

As of July 1, 2022, interest was accrued and to be paid in cash beginning on July 1, 2023.

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

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

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

As of July 1, 2022, interest was accrued and to be paid in cash beginning on July 1, 2023.

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

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

Cannasoul Collaboration Loan

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

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

has received ILS 8,297 (approximately $ 2,175 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

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

As of June 30, 2024

Increase (decrease) (ii)

Foreign exchange effect As of September 30, 2024

GrowCo Credit Facility (i)

$ 11,838 $ ( 11,804 ) $ ( 34 ) $ —

Mucci Promissory Note 90 1 1 92

1 unchanged sentence

$ 12,434 $ ( 11,799 ) $ ( 23 ) $ 612

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

As of December 31, 2023

Increase (decrease) (ii)

Foreign exchange effect As of September 30, 2024

GrowCo Credit Facility (i)

$ 11,176 $ ( 10,794 ) $ ( 382 ) $ —

Mucci Promissory Note 89 4 ( 1 ) 92

1 unchanged sentence

$ 11,789 $ ( 10,778 ) $ ( 399 ) $ 612

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

As of June 30, 2023

Increase (decrease) (iii)

Foreign exchange effect As of September 30, 2023

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

2 unchanged sentences

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

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

As of December 31, 2022

Increase (decrease) (iii)

Foreign exchange effect As of September 30, 2023

GrowCo Credit Facility $ 12,455 $ ( 1,348 ) $ ( 10 ) $ 11,097

2 unchanged sentences

$ 13,066 $ ( 1,339 ) $ ( 51 ) $ 11,676

(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.

(ii) During the three and nine months ended September 30, 2024, $ 5 and $ 1,026 , respectively, were recorded as increases to general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss) as a result of adjustments to our expected credit losses.

During both the three and nine months ended September 30, 2024, $ 11,804 was recorded as a gain on revaluation of loans receivable on the condensed consolidated statements of net income (loss) and comprehensive income (loss) from remeasuring our outstanding loans receivable with Cronos GrowCo as a result of the Cronos GrowCo Transaction.

(iii) 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 income (loss) and comprehensive income (loss) as a result of adjustments to our expected credit losses.

Cronos Group Inc.

2 unchanged sentences

dollars, except share amounts) Table of Contents

Property, plant and equipment, net

Property, plant and equipment, net consisted of the following:

September 30, 2024 December 31, 2023

Land $ 6,656 $ 2,764

Building and leasehold improvements 198,016 168,498

Machinery and Equipment 70,719 21,322

Furniture and fixtures 2,700 3,385

Construction in progress 21,401 3,269

Total Cost 299,492 199,238

accumulated depreciation ( 28,116 ) ( 30,707 )

accumulated impairment charges ( 108,860 ) ( 109,063 )

Total $ 162,516 $ 59,468

During the first quarter of 2024, the Company ceased operations at its Winnipeg, Manitoba facility (“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 income loss and comprehensive loss in the nine months ended September 30, 2024.

In addition, the Cronos Fermentation assets were classified as held-for-sale in the first quarter of 2024 at a fair value less costs to sell of $ 19,398 .

For more information, see Note 9, “ Restructuring .”

For the three and nine months ended September 30, 2024, depreciation expense on property, plant and equipment was $ 2,552 and $ 3,861 , respectively.

For the three and nine months ended September 30, 2023, depreciation expense on property, plant and equipment was $ 1,158 and $ 3,766 , respectively.

This depreciation expense was included in cost of sales as well as depreciation and amortization in operating expenses on the consolidated statements of net loss and comprehensive loss.

The following table presents details of the property, plant and equipment acquired on July 1, 2024, in the Cronos GrowCo Transaction by major category:

Fair value at date of Cronos GrowCo Transaction

Building and leasehold improvements 49,356

Machinery and Equipment 53,573

Furniture and fixtures 580

Construction in progress

Total $ 119,600

For more information, see Note 2 “ Business Combination.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

Goodwill and Intangible Assets, net

As a result of the Cronos GrowCo Transaction, the Company preliminarily recorded goodwill of $ 36,421 , none of which is deductible for income tax purposes.

The goodwill recognized was primarily attributable to the ability to secure a long-term supply of cannabis and to take advantage of growth opportunities from the expansion of Cronos GrowCo’s cultivation and processing facilities.

See Note 2 “ Business Combination ” for additional information.

Goodwill is comprised of the following items as of September 30, 2024 and December 31, 2023:

September 30, 2024

Cost Accumulated impairment charges Net

Peace Naturals $ 1,035 $ — $ 1,035

Cronos GrowCo 36,993 — 36,993

$ 38,028 $ — $ 38,028

As of December 31, 2023

Cost Accumulated impairment charges Net

Peace Naturals $ 1,057 $ — $ 1,057

$ 1,057 $ — $ 1,057

(b) Intangible assets, net

In the third quarter of 2024, the Company determined that it was no longer utilizing and had no current plans to utilize the intellectual property associated with its exclusive licenses with Ginkgo Bioworks Holdings, Inc.

As a result, the remaining net book value of $ 14,258 was impaired and recorded to impairment loss on long-lived assets on the condensed consolidated statements of income (loss) and comprehensive income (loss) in both the three and nine months ended September 30, 2024.

Intangible assets, net are comprised of the following items as of September 30, 2024 and December 31, 2023:

Useful life (in years) As of September 30, 2024

Cost Accumulated amortization Accumulated impairment charges Net

Software 5 $ 7,156 $ ( 4,538 ) $ ( 76 ) $ 2,542

Health Canada licenses 17 8,287 ( 1,775 ) ( 6,512 ) —

Ginkgo exclusive licenses 10 27,736 ( 5,655 ) ( 22,081 ) —

Israeli codes (i)

20 276 ( 71 ) — 205

Total definite-lived intangible assets 43,455 ( 12,039 ) ( 28,669 ) 2,747

Lord Jones ® brand

N/A 64,000 — ( 62,500 ) 1,500

Trademarks N/A 142 — ( 142 ) —

Total intangible assets $ 107,597 $ ( 12,039 ) $ ( 91,311 ) $ 4,247

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

Useful life (in years) As of December 31, 2023

Cost Accumulated amortization Accumulated impairment charges

Software 5 $ 6,860 $ ( 3,508 ) $ ( 78 ) $ 3,274

Health Canada licenses 17 8,463 ( 1,813 ) ( 6,650 ) —

Ginkgo exclusive licenses 10 28,326 ( 4,276 ) ( 7,968 ) 16,082

Israeli codes (i)

20 284 ( 62 ) — 222

Total definite-lived intangible assets 43,933 ( 9,659 ) ( 14,696 ) 19,578

Lord Jones ® brand

N/A 64,000 — ( 62,500 ) 1,500

Trademarks N/A 142 — ( 142 ) —

Total intangible assets $ 108,075 $ ( 9,659 ) $ ( 77,338 ) $ 21,078

(i) The Israeli codes were transferred by non-controlling interests to Cronos Israel in exchange for their equity interests in the Cronos Israel entities.

As of September 30, 2024, the estimated future amortization of definite-lived intangible assets is as follows:

As of September 30, 2024

Remainder of 2024 (3 months) $ 360

Thereafter 126

Impairment of Intangible Assets

Accumulated impairment charges on intangible assets, net consist of:

As of December 31, 2023 Impairment charges Foreign exchange effect As of September 30, 2024

Software $ ( 78 ) $ — $ 2 $ ( 76 )

Health Canada licenses ( 6,650 ) — 138 ( 6,512 )

Ginkgo exclusive license ( 7,968 ) ( 14,258 ) 145 ( 22,081 )

Lord Jones ® brand

( 62,500 ) — — ( 62,500 )

Trademarks ( 142 ) — — ( 142 )

$ ( 77,338 ) $ ( 14,258 ) $ 285 $ ( 91,311 )

As of December 31, 2022 Impairment charges Foreign exchange effect As of December 31, 2023

Software $ ( 76 ) $ — $ ( 2 ) $ ( 78 )

Health Canada licenses ( 6,498 ) — ( 152 ) ( 6,650 )

Ginkgo exclusive license ( 4,434 ) ( 3,366 ) ( 168 ) ( 7,968 )

Lord Jones ® brand

( 62,500 ) — — ( 62,500 )

Trademarks ( 142 ) — — ( 142 )

$ ( 73,650 ) $ ( 3,366 ) $ ( 322 ) $ ( 77,338 )

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

Restructuring

2 unchanged sentences

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.

In the third quarter of 2023, the Board approved revisions to the Realignment to wind-down operations at Cronos Fermentation, list the Company’s Winnipeg, Manitoba facility (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.

5 unchanged sentences

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 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.

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 nine months ended September 30, 2024.

In addition, the Cronos Fermentation assets were classified as held-for-sale in the first quarter of 2024 at a fair value less costs to sell of $ 19,398 and continue to be classified as held-for-sale as of September 30, 2024.

During the third quarter of 2024, the Company adjusted its sales strategy for the Cronos Fermentation assets to market the assets to a broader buyer pool, which resulted in the recognition of a loss on held-for-sale assets of $ 10,422 on the condensed consolidated statements of net income (loss) and comprehensive income (loss) in both the three and nine months ended September 30, 2024.

During the three and nine months ended September 30, 2024, the Company incurred nil 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

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.

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

Restructuring costs incurred in the Company’s discontinued operations during the three and nine months ended September 30, 2023 is presented in Note 3 “ Discontinued Operations .”

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 and nine months ended September 30, 2024:

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

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

1 unchanged sentence

Total $ 571 $ — $ ( 571 ) $ —

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

Accrual as of December 31, 2023 Expenses Payments/Write-offs Accrual as of September 30, 2024

Employee Termination Benefits $ 150 $ 62 $ ( 212 ) $ —

1 unchanged sentence

Total $ 150 $ 630 $ ( 780 ) $ —

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

Accrual as of June 30, 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 December 31, 2022 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

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 and six months ended June 30, 2024 and 2023:

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

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

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

2024 2023 2024 2023

7 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 six months ended June 30, 2024 and 2023:

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 stock options for the nine months ended September 30, 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

Balance as of December 31, 2023 $ 14.50 2,103,201 1.84

Cancellation, forfeiture and expiry of options

19.05 ( 1,385,937 )

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

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

Balance as of September 30, 2024 $ 5.63 717,264 3.90

Exercisable as of September 30, 2024 $ 6.39 535,469 3.42

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

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

Balance as of January 1, 2023 $ 10.57 5,350,600 0.73

Balance as of December 31, 2022

$ 10.57 5,350,600 0.73

Issuance of options 2.96 188,317

1 unchanged sentence

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

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

(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 June 30, 2024 As of December 31, 2023

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

2020 Omnibus Plan 702,264 702,264

1 unchanged sentence

Total stock options outstanding 717,264 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 six months ended June 30, 2024 and 2023:

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

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

Number of RSUs

Balance as of January 1, 2024 $ 3.77 7,381,541

Balance as of December 31, 2023 $ 3.77 7,381,541

2.95 2,503,835

1 unchanged sentence

Cancellation and forfeitures 2.99 ( 125,616 )

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

Balance as of September 30, 2024 $ 3.53 8,394,896

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

Number of RSUs

Balance as of January 1, 2023 $ 4.63 5,725,470

Balance as of December 31, 2022

$ 4.63 5,725,470

2.65 2,883,500

Vested and issued 5.13 ( 764,056 )

Cancellation and forfeitures 3.65 ( 510,342 )

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

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

(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.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

(d) Deferred share units

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

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

Financial liability Number of DSUs

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

Balance as of December 31, 2023 $ 1,092 521,679

Granting and vesting of DSUs 450 193,965

DSU liabilities settled ( 359 ) ( 155,383 )

Loss on revaluation 59 —

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

Balance as of September 30, 2024 $ 1,242 560,261

Financial liability Number of DSUs

Balance as of January 1, 2023 $ 674 265,732

Balance as of December 31, 2022

$ 674 265,732

Granting and vesting of DSUs 450 255,947

Gain on revaluation ( 82 ) —

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

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

Cronos Group Inc.

2 unchanged sentences

dollars, except share amounts) Table of Contents

Loss per Share

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 June 30, Six months ended June 30,

2024 2023 2024 2023

Basic loss per share computation

Net loss from continuing operations attributable to the shareholders of Cronos Group $ ( 8,757 ) $ ( 5,526 ) $ ( 10,998 ) $ ( 23,473 )

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

382,157,555 380,961,682 381,800,078 380,792,802

Basic loss from continuing operations per share $ ( 0.02 ) $ ( 0.01 ) $ ( 0.03 ) $ ( 0.06 )

Diluted loss per share from continuing operations

Income (Loss) per Share

Basic and diluted income (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,

2024 2023 2024 2023

Basic income (loss) per share computation

Net income (loss) from continuing operations attributable to the shareholders of Cronos Group $ 8,349 $ ( 1,462 ) $ ( 2,649 ) $ ( 24,935 )

Weighted-average number of common shares outstanding for computation for basic income (loss) per share 382,285,589 381,100,005 381,963,097 380,900,334

Basic income (loss) from continuing operations per share $ 0.02 $ ( 0.00 ) $ ( 0.01 ) $ ( 0.07 )

Loss from discontinued operations attributable to the shareholders of Cronos Group $ — $ ( 182 ) $ — $ ( 4,238 )

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

382,157,555 380,961,682 381,800,078 380,792,802

Weighted-average number of common shares outstanding for computation of basic loss from discontinued operations per share 382,285,589 381,100,005 381,963,097 380,900,334

Basic loss from discontinued operations per share $ — $ ( 0.00 ) $ — $ ( 0.01 )

Diluted loss from discontinued operations per share

Diluted income (loss) per share computation

Net income (loss) from continuing operations attributable to the shareholders of Cronos Group $ 8,349 $ ( 1,462 ) $ ( 2,649 ) $ ( 24,935 )

Weighted-average number of common shares outstanding used in the computation of basic income (loss) per share 382,285,589 381,100,005 381,963,097 380,900,334

Dilutive effect of RSUs 3,408,093 — — —

Dilutive effect of Top-up Rights – market price 290,725 — — —

Weighted-average number of common shares for computation of diluted income (loss) from continuing operations per share (i)

385,984,407 381,100,005 381,963,097 380,900,334

Diluted income (loss) from continuing operations per share $ 0.02 $ ( 0.00 ) $ ( 0.01 ) $ ( 0.07 )

Loss from discontinued operations attributable to the shareholders of Cronos Group $ — $ ( 182 ) $ — $ ( 4,238 )

Weighted-average number of common shares for computation of diluted loss from discontinued operations per share 385,984,407 381,100,005 381,963,097 380,900,334

Diluted loss from discontinued operations per share $ 0.00 $ ( 0.00 ) $ 0.00 $ ( 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 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.

For the three months ended September 30, 2024 and 2023, total securities of 15,065,666 and 23,340,811 , 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, 2024 and 2023, total securities of 20,926,402 and 27,399,000 , respectively, were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive.

Commitments and Contingencies

1 unchanged sentence

There have been no material changes in the information regarding commitments as disclosed in the Company’s Annual Report.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

(b) Contingencies

6 unchanged sentences

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 generally alleges that certain of the Company’s prior public statements about revenue 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.

3 unchanged sentences

The reconsideration motion is pending.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

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 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 generally alleged that certain of the Company’s prior public statements about revenue 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.

12 unchanged sentences

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.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

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.

3 unchanged sentences

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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

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

8 unchanged sentences

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.

Under the proposal, the Company would have been subject to a proposed duty of 369%.

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

The Company responded to requests for information from the Ministry.

On July 25, 2024, a group of cannabis cultivators filed an administrative petition in the District Court of Jerusalem, Israel against the Trade Levies Commissioner and certain Israeli and Canadian businesses.

The administrative petition seeks a court order requiring the Trade Levies Commissioner to impose a temporary duty on cannabis imported from Canada during the pendency of the investigation until the date on which a final determination is made by the Ministry whether to impose a duty.

On September 9, 2024, the Company filed a motion to join the litigation;

the court granted the Company’s motion on September 23, 2024.

On November 10, 2024, the Trade Levies Commissioner published final findings under which the Company would be subject to a proposed duty of 175%.

A provisional duty is not being imposed at this time.

The Commissioner’s findings will now be evaluated by an ad hoc advisory committee, which is expected to make recommendations to the Ministers of Economy and Finance and the Finance Committee of the Knesset of whether to impose a duty.

The Company cannot predict the outcome of the ad hoc committee’s review or the determinations of the Ministers of Economy or Finance, or the Finance Committee of the Knesset.

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

5 unchanged sentences

• Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

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

June 30, 2024

September 30, 2024

Level 1 Level 2 Level 3 Total

10 unchanged sentences

Derivative liabilities — — 102 102

(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.

(i) As of September 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 5 “ Investments ” for additional information.

Cronos Group Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

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 June 30, 2024

Level 1 Level 2 Level 3 Total

Other investments (i)

$ — $ — $ — $ —

As of December 31, 2023

3 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.

As of September 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 5.8 % and 6.6 %.

In the second quarter of, 2024, the PharmaCann Option was impaired to zero.

See Note 5 “ Investments .”

1 unchanged sentence

Related Party Transactions

(a) Cronos GrowCo

The Company holds a variable interest in Cronos GrowCo through its ownership of 50 % of Cronos GrowCo’s common shares and senior secured debt in Cronos GrowCo.

See Note 4 “ Investments ” for additional information.

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

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 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 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.

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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands of U.S.

dollars, except share amounts) Table of Contents

(b) Vendor Agreement

(a) 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.

The Company purchased $ 406 and $ 1,842 of products and services under this subcontracted agreement for the three and nine months ended September 30, 2023.

The Company had $ 0 and $ 28 in outstanding payables related to the subcontracted agreement as of September 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) 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.

During the three and nine months ended September 30, 2024, the Company purchased $ 410 and $ 1,346 of products and services under this agreement and had outstanding accounts payable related to the agreement of $ 82 and $ 11 as of September 30, 2024 and December 31, 2023, respectively.

(b) Consulting Agreement

In connection with the Cronos GrowCo Transaction, Cronos GrowCo entered into a consulting services agreement with a consulting firm managed by a member of the group of investors holding the remaining 50% ownership of Cronos GrowCo, pursuant to which the consulting firm provides management services to Cronos GrowCo.

During both the three and nine months ended September 30, 2024, the Company incurred $ 220 of expense under this agreement.

As of September 30, 2024, the Company had $ 665 in outstanding payables related to this agreement, which included $ 444 that were acquired in the Cronos GrowCo Transaction.

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