What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-08 · 266 added, 181 removed, 313 unchanged (59% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read together with other information, including the Company’s condensed consolidated interim financial statements and the related notes to those statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025 (this “Quarterly Report”), consolidated financial statements appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report”), Part I, Item 1A, Risk Factors, of the Annual Report and Part II, Item 1A, Risk Factors, of this Quarterly Report.

The following discussion and analysis should be read together with other information, including the Company’s condensed consolidated interim financial statements and the related notes to those statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025 (this “Quarterly Report”), consolidated financial statements appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report”), Part I, Item 1A, Risk Factors, of the Annual Report and Part II, Item 1A, Risk Factors, of this Quarterly Report.

Forward-Looking Statements

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• expectations related to the conflict involving Israel, Hamas, Hezbollah, Houthis, Iran, Iran’s proxies and other stakeholders in the region (the “Middle East Conflict”) and its impact on our operations in Israel, the supply of product in the market and the demand for product by medical patients in Israel, as well as any regional or global escalations and their impact to global commerce and stability;

• expectations related to the German, Australian and United Kingdom (“UK”) markets, including our strategic partnerships with Cansativa GmbH (“Cansativa”), Vitura Health Limited (“Vitura”), and other distributors, respectively, and our ability to successfully distribute the PEACE NATURALS ® brand in Germany and the UK;

• expectations related to our announcement of cost-cutting measures, including our decision to wind down operations at our Winnipeg, Manitoba facility and list the facility for sale, the expected costs and benefits from the wind-down of production activities at the facility, challenges and effects related thereto as well as changes in strategy, metrics, investments, costs, operating expenses, employee turnover and other changes with respect thereto;

• expectations related to the German, Australian, United Kingdom (“UK”), Swiss, and Malta markets and our ability to successfully distribute the PEACE NATURALS ® brand in our overseas markets;

• expectations related to our announcement of cost-cutting measures, including our decision to wind down operations at our Winnipeg, Manitoba facility and list the facility for sale, the expected costs and benefits from the wind-down of production activities at the facility, as well as changes in strategy, metrics, investments, costs, operating expenses, employee turnover and other changes with respect thereto;

• expectations related to the impact of our decision to exit our U.S.

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• expectations related to the transaction by which we obtained majority control of the board of directors of Cronos GrowCo (the “Cronos GrowCo Transaction”), which qualified as a business combination under Accounting Standards Codification (“ASC”) 805, and the expansion of Cronos GrowCo’s purpose-built cultivation and processing facilities;

• our ability or plans to identify, develop, commercialize or expand our technology research and development (“R&D”) initiatives in cannabinoids, or the success thereof;

• our ability or plans to identify, develop, commercialize or expand our technology and research and development (“R&D”) initiatives in cannabinoids, or the success thereof;

• expectations regarding revenues, expenses, gross margins and capital expenditures;

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• the anticipated benefits and impact of Altria Group, Inc.’s investment in the Company (the “Altria Investment”), pursuant to a subscription agreement dated December 7, 2018;

• uncertainties as to our ability to exercise our option (the “PharmaCann Option”) in PharmaCann Inc.

(“PharmaCann”) in the near term or the future, in full or in part, including the uncertainties as to the status and future development of federal legalization of cannabis in the U.S.

and our ability to realize the anticipated benefits of the transaction with PharmaCann;

• expectations regarding the implementation and effectiveness of key personnel changes;

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(ii) our ability to effectively navigate developments related to the Middle East Conflict and its impact on our employees and operations in Israel, the supply of product in the market and demand for product by medical patients in Israel;

(iii) our ability to efficiently and effectively distribute our PEACE NATURALS ® brand in Germany with our strategic partner Cansativa and in the UK and our ability to efficiently and effectively distribute products in Australia with our strategic partner Vitura;

(iii) our ability to efficiently and effectively distribute our PEACE NATURALS ® brand in our overseas markets;

(iv) our ability to realize the expected cost-savings and other benefits related to the wind-down of our operations at our Winnipeg, Manitoba facility;

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(viii) our ability to efficiently and effectively acquire raw materials on a timely and cost-effective basis from third parties or Cronos GrowCo;

(ix) the timely completion of the expansion of Cronos GrowCo’s purpose-built cannabis facility and the ability of Cronos GrowCo to repay the credit facility provided by Cronos;

(ix) our ability to realize the expected benefits related to the expansion of Cronos GrowCo’s purpose-built cannabis facility and the ability of Cronos GrowCo to repay the credit facility provided by Cronos;

(x) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our business combinations and strategic investments;

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(xx) our ability to hire and retain qualified staff and acquire equipment and services in a timely and cost-efficient manner;

(xxi) our ability to exercise the PharmaCann Option and realize the anticipated benefits of the transaction with PharmaCann;

(xxii) our ability to complete planned dispositions, and, if completed, obtain our anticipated sales price;

(xxiii) general economic, financial market, regulatory and political conditions in which we operate;

(xxiv) management’s perceptions of historical trends, current conditions and expected future developments;

and (xxv) other considerations that management believes to be appropriate in the circumstances.

(xxi) our ability to complete planned dispositions, and, if completed, obtain our anticipated sales price;

(xxii) general economic, financial market, regulatory and political conditions in which we operate;

(xxiii) management’s perceptions of historical trends, current conditions and expected future developments;

and (xxiv) other considerations that management believes to be appropriate in the circumstances.

While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.

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negative impacts on our employees, business and operations in Israel due to the Middle East Conflict, including that we may not be able to produce, import or sell our products or protect our people or facilities in Israel during the Middle East Conflict, the supply of product in the market and the demand for product by medical patients in Israel;

that we may not be able to successfully continue to distribute our products in Germany, Australia and the UK or generate material revenue from sales in those markets;

that we may not be able to successfully continue to distribute our products in Germany, Australia, the UK, Switzerland and Malta or generate material revenue from sales in those markets;

that we may not be able to achieve the anticipated benefits of the wind-down of our operations at our Winnipeg, Manitoba facility;

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that we may not be able to access raw materials on a timely and cost-effective basis from third-parties or Cronos GrowCo;

that Cronos GrowCo may not be able to complete the expansion of its purpose-built cannabis facility within a reasonable time or repay its borrowings under the credit facility provided by Cronos;

that the expected benefits of the expansion of Cronos GrowCo’s purpose-built cannabis facility may not be fully realized within a reasonable time or at all or that Cronos GrowCo may not be able to repay its borrowings under the credit facility provided by Cronos;

the military conflict between Russia and Ukraine may disrupt our operations and those of our suppliers and distribution channels and negatively impact the demand for and use of our products;

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adverse changes in regulatory requirements in relation to our business and products;

legal or regulatory obstacles that could prevent us from being able to exercise the PharmaCann Option and thereby realize the anticipated benefits of the transaction with PharmaCann;

dilution of our fully diluted ownership of PharmaCann and the loss of our rights as a result of that dilution;

our failure to improve our internal control environment and our

systems, processes and procedures;

our failure to improve our internal control environment and our systems, processes and procedures;

and the factors discussed under Part I, Item 1A “Risk Factors” in our Annual Report and under Part II, Item 1A “Risk Factors” in this Quarterly Report.

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All references to “dollars” or “$” are to U.S.

The assets and liabilities of our foreign operations are translated into dollars at the exchange rate in effect as of March 31, 2025, March 31, 2024, and December 31, 2024.

The assets and liabilities of our foreign operations are translated into dollars at the exchange rate in effect as of June 30, 2025, June 30, 2024, and December 31, 2024.

Transactions affecting the shareholders’ equity (deficit) are translated at historical foreign exchange rates.

The condensed consolidated statements of net income (loss) and comprehensive income (loss) and condensed consolidated statements of cash flows of our foreign operations are translated into dollars by applying the average foreign exchange rate in effect for the reporting period as reported on Bloomberg.

The condensed consolidated statements of net loss and comprehensive income (loss) and condensed consolidated statements of cash flows of our foreign operations are translated into dollars by applying the average foreign exchange rate in effect for the reporting period as reported on Bloomberg.

The exchange rates used to translate from Canadian dollars (“C$”) to dollars is shown below:

(Exchange rates are shown as C$ per $) As of

March 31, 2025 March 31, 2024 December 31, 2024

June 30, 2025 June 30, 2024 December 31, 2024

Spot rate 1.3608 1.3674 1.4351

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(Exchange rates are shown as ILS per $) As of

March 31, 2025 March 31, 2024 December 31, 2023

June 30, 2025 June 30, 2024 December 31, 2023

Spot rate 3.3683 3.7742 3.6526

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Recent Developments

Share Repurchase Authorization

On May 7, 2025, the Company’s Board of Directors authorized a share repurchase program of up to $50 million.

The share repurchase program is expected to commence on May 14, 2025 and terminate on May 13, 2026, unless earlier terminated.

Repurchases under the program may be made from time to time, either through open market purchases at then-prevailing market prices through the facilities of the NASDAQ Global Market or other U.S.

published markets, privately negotiated transactions or otherwise.

Open market repurchases will not exceed 19,270,951 common shares, being 5% of the outstanding common shares as of May 7, 2025.

The timing and amount of repurchases are subject to market conditions, compliance with applicable laws and regulations and any other factors management of the Company may deem relevant.

The program does not obligate Cronos to acquire any specific dollar amount or number of shares and may be modified, suspended, or discontinued at any time.

Brand and Product Portfolio

Despite strong consumer demand for our flower products, we have been constrained by supply limitations that have restricted growth for the Spinach ® brand, which we believe to be temporary.

In Q1 2025, the SOURZ by Spinach ® brand expanded its edible lineup with new launches.

A key addition to our gummy portfolio has been the 1-piece, 10mg THC Fully Blasted SOURZ by Spinach ® gummies featuring rare cannabinoids, including Mango Lime with CBC, Peach Passionfruit with CBN and Strawberry Watermelon with CBG.

In Q1 2025, we introduced two new Spinach ® 1-gram vapes, Cherry Crush and Cocoa Mintz, alongside new 1.2g cartridges, which extended our winning SOURZ by Spinach ® flavor profiles into this category with Mango Kiwi Haze CBC, Peach Passionfruit Kush CBN and Strawberry Watermelon OG CBG.

In January 2025, the brand launched a Lord Jones Chocolate Fusions™ fudge brownie bite flavor, which features a 1:1:1 ratio of CBN, CBD and THC.

Lord Jones Chocolate Fusions™ edibles highlight the brand’s commitment to innovation and craftsmanship, now offering four unique flavors:

cookies and cream, dazzle berry pop, salted caramel crunch and fudge brownie bite.

PEACE NATURALS ®

New launches in Israel in Q1 2025 included two new PEACE NATURALS ® strain-based cannabis oils, designed to deliver the full benefits and essence of our best-selling strains in the market, Wedding Cake and GMO Cookies.

In Germany and the United Kingdom (“UK”), we are experiencing strong traction with Cronos’ proprietary genetics, including GMO Cookies and Wedding Cake, under the PEACE NATURALS ® brand.

The expansion of Cronos GrowCo is intended to help enable Cronos to execute on these growth opportunities and other international markets as they become available.

Cronos GrowCo Expansion

The construction of Cronos GrowCo’s expanded cultivation facilities is on track for completion in Q2 2025, with first harvests and sales beginning in the second half of the year.

The Phase 2 Expansion Area is now complete and we expect sales from the expansion in Fall 2025.

The Company believes this additional supply will fuel growth internationally and within the domestic Canadian market.

Proposed Tariffs in Israel

Following an investigation into allegations of dumping of Canadian medical cannabis imports into Israel—which Cronos firmly disputes—on April 10, Israel’s Minister of Economy approved an anti-dumping duty of up to 165% on Canadian medical cannabis, which would include Cronos’ imports.

On April 25, Israel’s Minister of Finance vetoed the proposed duty.

Despite the veto, on April 29, the Minister of Economy issued a memorandum stating that the Ministry of Economy and Industry intends to move forward with the duty process, including seeking final approval from the Knesset’s Finance Committee.

Cronos agrees with the conclusions of Israel’s Ministry of Finance, Ministry of Health, and Competition Authority that the proposed duty is inappropriate and would

adversely impact the Israeli medical cannabis market by significantly raising prices and reducing product choice for patients.

The Company intends to continue to advocate for a fair and equitable medical cannabis market in Israel.

In March 2025, Cronos appointed Anna Shlimak as Chief Financial Officer.

Shlimak, who previously served as Cronos’ Chief Strategy Officer, has been a key member of the leadership team for seven years, driving strategic initiatives such as cost optimization, revenue growth, and corporate branding, all of which have positioned the Company for long-term success.

Prior to joining Cronos, Anna was the Head of Investor Relations at Quest Partners LLC, a research-driven alternative investment firm.

Anna was responsible for business development, investor reporting, marketing, and communication initiatives for the fund.

Before that, Anna held a range of roles at the New York Stock Exchange in both the New York and London offices.

Proposed Anti-Dumping Duty in Israel

On July 3, 2025, the Israel Ministry of Justice announced that it had concluded that the Minister of Finance’s veto of the proposed anti-dumping duty was valid.

The Minister of Economy had sought to impose an anti-dumping duty of 165% on the Company’s medical cannabis imports into Israel, which the Minister of Finance subsequently vetoed.

This matter stems from an investigation launched in January 2024 into allegations of dumping of Canadian medical cannabis into Israel.

The Company strongly refuted the allegations and is pleased with the decision to veto the proposed anti-dumping duty.

Cronos will continue to advocate for a fair and equitable market structure that benefits Israel’s medical cannabis patients.

Agreement with High Tide Inc.

On July 16, 2025, the Company, as lender, and High Tide Inc.

(“High Tide”), as borrower, entered into a loan agreement for junior secured convertible debt with a principal amount of C$30,000 and an original issue discount of 16% (the “Junior Secured Loan”).

The Junior Secured Loan bears interest at 4% per annum, payable in cash quarterly, and provides for conversion of the debt into common shares of High Tide at a price of C$4.20 per common share.

The Junior Secured Loan is convertible only upon the agreement of both parties.

The Junior Secured Loan has a term of five years and may be repaid early with no penalty.

Additionally, the Company received a common share purchase warrant (the “Warrant”), which is exercisable into up to 3,836,317 common shares (the “Warrant Shares”) of High Tide at an exercise price of C$3.91 per Warrant Share.

Consolidated Results of Operations

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Our condensed consolidated financial results for these periods are not necessarily indicative of the consolidated financial results that we will achieve in future periods .

Three months ended March 31,

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

2025 2024 2025 2024

Net revenue, before excise taxes $ 44,252 $ 38,678 $ 86,150 $ 74,045

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Cost of sales 18,865 21,070 37,393 41,875

Inventory write-down 86 395 86 395

Gross profit 14,504 6,297 28,238 10,780

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Income tax benefit (525) (2,174) (980) (2,732)

Net income (loss) 7,723 (2,484)

Net loss (38,482) (8,759) (30,759) (11,243)

Net income (loss) attributable to non-controlling interest 1,229 (2) 2,830 (245)

Net income (loss) attributable to Cronos Group $ 6,122 $ (2,241)

Net loss attributable to Cronos Group $ (39,711) $ (8,757) $ (33,589) $ (10,998)

Summary of select financial results

Three months ended March 31, Change

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

2025 2024 $ % 2025 2024 $ %

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Cost of sales 18,865 21,070 (2,205) (10) % 37,393 41,875 (4,482) (11) %

Inventory write-down 86 395 (309) (78) % 86 395 (309) (78) %

Gross profit 14,504 6,297 8,207 130 % 28,238 10,780 17,458 162 %

Gross margin (i)

43 % 18 % N/A 25 pp

43 % 23 % N/A 20 pp 43 % 20 % N/A 23 pp

(i) Gross margin is defined as gross profit divided by net revenue.

For the three months ended March 31, 2025, we reported consolidated net revenue of $32.3 million, representing an increase of $7.0 million from the three months ended March 31, 2024.

The increase was primarily due to higher cannabis flower sales in Israel and other countries, which carry no excise taxes, and higher cannabis extract sales in the Canadian market.

Due to the consolidation of Cronos GrowCo’s results of operations in our financial statements beginning July 1, 2024, Cronos GrowCo contributed $2.9 million of cannabis flower sales in the three months ended March 31, 2025.

No such sales were recognized for the three months ended March 31, 2024.

For the three months ended June 30, 2025, we reported consolidated net revenue of $33.5 million, representing an increase of $5.7 million from the three months ended June 30, 2024.

For the six months ended June 30, 2025, we reported consolidated net revenue of $65.7 million, representing an increase of $12.7 million from the six months ended June 30, 2024.

For both the three and six month comparative periods, the increase was primarily due to higher cannabis flower sales in Israel and other countries, which carry no excise taxes, the consolidation of Cronos GrowCo, and higher cannabis extract sales in the Canadian market.

Due to the consolidation of Cronos GrowCo’s results of operations in our financial statements beginning July 1, 2024, Cronos GrowCo contributed $2.2 million and $5.1 million, respectively, of cannabis flower sales in the three and six months ended June 30, 2025.

No such sales were recognized for both the three and six months ended June 30, 2024.

Cost of sales

For the three months ended March 31, 2025, we reported consolidated cost of sales of $18.5 million, representing a decrease of $2.3 million from the three months ended March 31, 2024.

The decrease was primarily due to lower direct costs and production efficiencies, partially offset by higher sales volumes and the impact of the inventory step-up from the Cronos GrowCo Transaction.

For the three months ended March 31, 2025, we recognized $0.5 million of inventory step-up from the Cronos GrowCo Transaction into cost of sales.

No such costs were recognized for the three months ended March 31, 2024.

For the three months ended March 31, 2025, we reported gross profit of $13.7 million, representing an increase of $9.3 million from the three months ended March 31, 2024.

The increase was primarily due to higher sales volumes and average sales prices, lower direct costs, and production efficiencies, partially offset by the impact on cost of sales from the inventory step-up from the Cronos GrowCo Transaction.

For the three months ended March 31, 2025, gross profit was reduced by $0.5 million as a result of the impact of the inventory step-up from the Cronos GrowCo Transaction that was recorded into cost of sales.

No such costs were recognized for the three months ended March 31, 2024.

For the three months ended June 30, 2025, we reported consolidated cost of sales of $18.9 million, representing a decrease of $2.2 million from the three months ended June 30, 2024.

For the six months ended June 30, 2025, we reported consolidated cost of sales of $37.4 million, representing a decrease of $4.5 million from the six months ended June 30, 2024.

For both the three and six month comparative periods, the decrease was primarily due to the consolidation of Cronos GrowCo and production efficiencies, partially offset by higher sales volumes.

For the six months ended June 30, 2025, we recognized $0.5 million of inventory step-up from the Cronos GrowCo Transaction into cost of sales.

No such costs were recognized for the three months ended June 30, 2025 or the three and six months ended June 30, 2024.

Inventory write-down

For the three and six months ended June 30, 2025, we reported inventory write-downs of $0.1 million related to the destruction of certain inventory.

For the three and six months ended June 30, 2024, we reported inventory write-downs of $0.4 million related to the destruction of certain inventory.

For the three months ended June 30, 2025, we reported gross profit of $14.5 million, representing an increase of $8.2 million from the three months ended June 30, 2024.

For the six months ended June 30, 2025, we reported gross profit of $28.2 million, representing an increase of $17.5 million from the six months ended June 30, 2024.

For both the three and six month comparative periods, the increase was primarily due to the consolidation of Cronos GrowCo, higher average sales prices driven primarily by a mix shift to Israel and other countries, higher sales volumes, and production efficiencies.

For the six months ended June 30, 2025, gross profit was reduced by $0.5 million as a result of the impact of the inventory step-up from the Cronos GrowCo Transaction that was recorded into cost of sales.

No such costs were recognized for the three months ended June 30, 2025 or the three and six months ended June 30, 2024.

Operating expenses

Three months ended March 31, Change

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

2025 2024 $ % 2025 2024 $ %

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Restructuring costs 768 547 221 40 % 1,323 630 693 110 %

Share-based payments 2,088 2,015 73 4 %

Share-based compensation 1,381 2,236 (855) (38) % 3,469 4,251 (782) (18) %

Depreciation and amortization 867 1,016 (149) (15) % 1,363 2,139 (776) (36) %

Impairment loss on long-lived assets — 1,974 (1,974) N/A

Impairment loss on long-lived assets — — — N/A — 1,974 (1,974) N/A

Total operating expenses $ 19,828 $ 21,858 $ (2,030) (9) % $ 37,634 $ 42,289 $ (4,655) (11) %

Sales and marketing

For the three months ended March 31, 2025, sales and marketing expenses were $4.6 million, representing a decrease of $0.8 million compared to the three months ended March 31, 2024.

The decrease was primarily due to lower marketing expenses and lower salaries and benefits.

For the three months ended June 30, 2025, sales and marketing expenses were $5.3 million, representing an increase of $1.0 million compared to the three months ended June 30, 2024.

For the six months ended June 30, 2025, sales and marketing expenses were $9.9 million, representing an increase of $0.3 million from the six months ended June 30, 2024.

For both the three and six month comparative periods, the increase was primarily due to higher marketing expenses, partially offset by lower salaries and benefits.

Research and development

For the three months ended March 31, 2025, research and development expenses were $0.8 million, representing a decrease of $0.2 million compared to the three months ended March 31, 2024.

For the three months ended June 30, 2025, research and development expenses were flat at $0.9 million compared to the three months ended June 30, 2024.

For the six months ended June 30, 2025, research and development expenses were $1.7 million, representing a decrease of $0.2 million from the six months ended June 30, 2024.

General and administrative

For the three months ended March 31, 2025, general and administrative expenses were $9.3 million, representing an increase of $0.4 million from the three months ended March 31, 2024.

The increase was primarily due to higher legal fees and the impact of the Cronos GrowCo Transaction, partially offset by lower salaries and benefits.

The impact of the Cronos GrowCo Transaction increased general and administrative expenses by $0.8 million.

No such costs were incurred in the three months ended March 31, 2024.

For the three months ended June 30, 2025, general and administrative expenses were $10.5 million, representing a decrease of $2.2 million from the three months ended June 30, 2024.

For the six months ended June 30, 2025, general and administrative expenses were $19.8 million, representing a decrease of $1.8 million from the six months ended June 30, 2024.

For both the three and six month comparative periods, the decrease was primarily due to lower salaries and benefits and higher expected credit loss allowance on loans receivable recorded in the prior period, partially offset by the consolidation of Cronos GrowCo.

For the three and six months ended June 30, 2025, the impact of the consolidation of Cronos GrowCo increased general and administrative expenses by $0.9 million and $1.7 million, respectively.

No such costs were recorded in the three or six months ended June 30, 2024.

Restructuring costs

For the three months ended March 31, 2025, restructuring costs were $0.6 million, representing an increase of $0.5 million from the three months ended March 31, 2024.

For the three months ended June 30, 2025, restructuring costs were $0.8 million, representing an increase of $0.2 million from the three months ended June 30, 2024.

For the six months ended June 30, 2025, restructuring costs were $1.3 million, representing an increase of $0.7 million from the six months ended June 30, 2024.

For further information, see Note 8 “ Restructuring ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Share-based compensation

For the three months ended March 31, 2025, share-based compensation expense was $2.1 million, representing an increase of $0.1 million from the three months ended March 31, 2024.

For the three months ended June 30, 2025, share-based compensation expense was $1.4 million, representing a decrease of $0.9 million from the three months ended June 30, 2024.

For the six months ended June 30, 2025, share-based compensation expense was $3.5 million, representing a decrease of $0.8 million from the six months ended June 30, 2024.

For both the three and six month comparative periods, the decrease was primarily due to lower amounts of share-based compensation awards outstanding.

Depreciation and amortization

For the three months ended March 31, 2025, depreciation and amortization expenses were $0.5 million, representing a decrease of $0.6 million from the three months ended March 31, 2024.

The decrease was primarily due to lower amortization on intangible assets.

For the three months ended June 30, 2025, depreciation and amortization expenses were $0.9 million, representing a decrease of $0.1 million from the three months ended June 30, 2024.

For the six months ended June 30, 2025, depreciation and amortization expenses were $1.4 million, representing a decrease of $0.8 million from the six months ended June 30, 2024.

For the six month comparative period, the decrease was primarily due to lower amortization on intangible assets.

Impairment loss on long-lived assets

For the three months ended March 31, 2024, impairment loss on long-lived assets was $2.0 million and was primarily due to the cessation of operations at Cronos Fermentation during the first quarter of 2024.

For the three months ended March 31, 2025, there were no such impairment losses.

For the six months ended June 30, 2024, impairment loss on long-lived assets was $2.0 million and was primarily due to the cessation of operations at Cronos Fermentation during the first quarter of 2024.

There were no such impairment losses for the three and six months ended June 30, 2025, or the three months ended June 30, 2024.

For further information, see Note 8 “ Restructuring ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Other income and income tax expense (benefit)

Three months ended March 31, Change

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

2025 2024 $ % 2025 2024 $ %

Interest income, net $ 8,997 $ 13,451 $ (4,454) (33) % $ 18,662 $ 27,696 $ (9,034) (33) %

Share of income from equity method investments — 1,448 (1,448) (100) %

Gain (loss) on revaluation of financial instruments 49 (2,642) 2,691 102 %

Impairment loss on other investments — (12,734) 12,734 N/M

Foreign currency transaction gain 1,583 13,259 (11,676) (88) %

Other, net 43 (670) 713 N/M

Total other income 11,340 12,906 (1,566) (12) %

Income tax expense (benefit) (455) (558) 103 18 %

Net income (loss) $ 7,723 $ (2,484) $ 10,207 N/M

Share of income from equity method investments — 917 (917) N/A — 2,365 (2,365) N/A

Loss on revaluation of financial instruments

(640) (3,615) 2,975 82 % (591) (6,257) 5,666 91 %

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

Foreign currency gain (loss) (39,538) 6,543 (46,081) N/M (37,955) 19,802 (57,757) N/M

Loss on held-for-sale assets (2,501) — (2,501) N/A (2,501) — (2,501) N/A

Other, net (1) 248 (249) N/M 42 (422) 464 N/M

Total other income (expense) (33,683) 4,628 (38,311) N/M (22,343) 17,534 (39,877) N/M

Income tax benefit (525) (2,174) 1,649 76 % (980) (2,732) 1,752 64 %

Net loss (38,482) (8,759) (29,723) (339) % (30,759) (11,243) (19,516) (174) %

(i) “N/M” is defined as not meaningful.

Interest income, net

For the three months ended March 31, 2025, interest income, net was $9.7 million, representing a decrease of $4.6 million from the three months ended March 31, 2024.

The decrease in net interest income was primarily due to lower interest rates in the current period and the absence of income recognized on the Cronos GrowCo loan receivable, which is eliminated in consolidation, effective from and after July 1, 2024.

For the three months ended June 30, 2025, interest income, net was $9.0 million, representing a decrease of $4.5 million from the three months ended June 30, 2024.

For the six months ended June 30, 2025, interest income, net was $18.7 million, representing a decrease of $9.0 million from the six months ended June 30, 2024.

For both the three and six month comparative periods, the decrease in net interest income was primarily due to lower interest rates in the current period and the absence of income recognized on the Cronos GrowCo loan receivable, which is eliminated in consolidation, effective from and after July 1, 2024.

Share of income from equity method investments

For the three months ended March 31, 2025, we had no income from equity method investments, compared to $1.4 million for the three months ended March 31, 2024.

For the three months ended June 30, 2025, we had no income from equity method investments, compared to $0.9 million for the three months ended June 30, 2024.

For the six months ended June 30, 2025, we had no income from equity method investments, compared to $2.4 million for the six months ended June 30, 2024.

As a result of the Cronos GrowCo Transaction on July 1, 2024, we now consolidate Cronos GrowCo and no longer account for our investment in Cronos GrowCo as an equity method investment.

For further information, see Note 4 “ Investments ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Gain (loss) on revaluation of financial instruments

For the three months ended March 31, 2025, the income on revaluation of financial instruments was $49 thousand, representing an improvement of $2.7 million from the three months ended March 31, 2024.

The change was primarily related to the change in fair value of our investment in Vitura.

Loss on revaluation of financial instruments

For the three months ended June 30, 2025, the loss on revaluation of financial instruments was $0.6 million, representing an improvement of $3.0 million from the three months ended June 30, 2024.

For the six months ended June 30, 2025, the loss on revaluation of financial instruments was $0.6 million, representing an improvement of $5.7 million from the six months ended June 30, 2024.

For both the three and six month comparative periods, the change was primarily related to the change in fair value of our investment in Vitura.

For further information, see Note 4 “ Investments ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Impairment loss on other investments

For the three months ended March 31, 2024, we recognized $12.7 million of impairment loss on other investments, driven by an impairment charge recorded on our PharmaCann Option for the difference between its estimated fair value and its carrying amount.

There was no such impairment loss on other investments for the three months ended March 31, 2025.

For the three and six months ended June 30, 2024, we recognized $12.9 million and $25.7 million, respectively, of impairment loss on other investments, driven by impairment charges recorded on our PharmaCann Option for the difference between its estimated fair value and its carrying amount.

There was no such impairment loss on other investments for the three and six months ended June 30, 2025.

For further information, see Note 4 “ Investments ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Foreign currency transaction gain (loss)

For the three months ended March 31, 2025, foreign currency transaction gain was $1.6 million, representing a deterioration of $11.7 million from the three months ended March 31, 2024.

The change was primarily due to certain foreign currency-denominated cash equivalents and certain foreign currency-denominated intercompany loans anticipated to be settled in the foreseeable future.

Foreign currency gain (loss)

For the three months ended June 30, 2025, foreign currency loss was $39.5 million, representing a deterioration of $46.1 million from the three months ended June 30, 2024.

For the six months ended June 30, 2025, foreign currency loss was $38.0 million, representing a deterioration of $57.8 million from the six months ended June 30, 2024.

For both the three and six month comparative periods, the change was primarily due to the weakening of the U.S.

dollar compared to the Canadian dollar impacting the revaluation of certain foreign currency-denominated cash equivalents and short-term investments held in Canada.

Loss on held-for-sale assets

For both the three and six months ended June 30, 2025, we recognized a loss on held-for-sale assets of $2.5 million, relating to a decrease in the fair value of the Cronos Fermentation assets.

There were no such losses on held-for-sale assets for the three and six months ended June 30, 2024.

For further information, see Note 8 “ Restructuring ” to the condensed consolidated interim financial statements under Item 1 of this Quarterly Report.

Other, net primarily includes gains and losses on the disposal of assets.

Income tax benefit

For the three months ended March 31, 2025, income tax benefit was $0.5 million, compared to a benefit of $0.6 million for the three months ended March 31, 2024.

For the three months ended June 30, 2025, income tax benefit was $0.5 million, compared to a benefit of $2.2 million for the three months ended June 30, 2024.

For the six months ended June 30, 2025, income tax benefit was $1.0 million, compared to a benefit of $2.7 million for the six months ended June 30, 2024.

For both the three and six month comparative periods, the decrease in benefit was mainly driven by deferred tax expense that was recorded in connection with the utilization of the loss carryforward balances.

For the three months ended June 30, 2025, net loss was $38.5 million, compared to a net loss of $8.8 million for the three months ended June 30, 2024.

For the six months ended June 30, 2025, net loss was $30.8 million, compared to a net loss of $11.2 million for the six months ended June 30, 2024.

For both the three and six month comparative periods, the higher net loss was primarily due to an unrealized foreign exchange loss on our U.S.

dollar-denominated cash and cash equivalents and short-term investments held in Canada, driven by the Canadian dollar strengthening against the U.S.

dollar, partially offset by higher gross profit and lower operating expenses.

Non-GAAP Measures

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impairment loss on other investments;

foreign currency transaction (gain) loss;

loss from discontinued operations;

foreign currency (gain) loss;

restructuring costs;

inventory write-downs resulting from restructuring actions;

share-based compensation;

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purchase accounting adjustment-related inventory step-up adjustments recorded through cost of sales;

and financial statement review costs and reserves related to the restatements of our 2019 and 2021 interim financial statements (the “Restatements”), including the costs related to the settlement of the SEC’s and the OSC’s investigations of the Restatements and legal costs of defending shareholder class action complaints brought against us as a result of the 2019 restatement (see Part II, Item 1 “Legal Proceedings” of this Quarterly Report for a discussion of the shareholder class action complaints relating to the restatement of the 2019 interim financial statements and the settlement of the SEC’s and the OSC’s investigations of the Restatements).

and financial statement review costs related to the restatements of our 2019 and 2021 interim financial statements (the “Restatements”), including legal costs of defending shareholder class action complaints brought against us as a result of the 2019 restatement.

Results are reported as total consolidated results, reflecting our reporting structure of one reportable segment.

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Management uses Adjusted EBITDA for planning, forecasting and evaluating business and financial performance, including allocating resources and evaluating results relative to employee compensation targets.

The following tables set forth a reconciliation of Net income (loss) as determined in accordance with U.S.

The following tables set forth a reconciliation of Net loss as determined in accordance with U.S.

GAAP to Adjusted EBITDA for the periods indicated:

Three months ended March 31, 2025

Three months ended June 30, 2025

Interest income, net (8,997)

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Depreciation and amortization 4,202

Gain on revaluation of financial instruments (ii)

Foreign currency transaction gain (1,583)

EBITDA (43,802)

Loss on revaluation of financial instruments (ii)

Foreign currency loss

Transaction costs (iv)

Other, net (v)

Restructuring costs (vi)

Share-based compensation (vii)

Financial statement review costs (viii)

Inventory step-up recorded to cost of sales (ix)

Israel Ministry of Economy and Industry dumping inquiry expense (x)

Loss on held-for-sale assets (v)

Other, net (vi)

Restructuring costs (vii)

Share-based compensation (viii)

Financial statement review costs (ix)

Israel Ministry of Economy and Industry dumping inquiry expense (xi)

Adjusted EBITDA $ 1,688

Three months ended March 31, 2024

Three months ended June 30, 2024

Net loss $ (8,759)

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Share of income from equity method investments (917)

Loss on revaluation of financial instruments (ii)

Impairment loss on other investments (iii)

Foreign currency gain

Transaction costs (iv)

Other, net (vi)

Restructuring costs (vii)

Share-based compensation (viii)

Financial statement review costs (ix)

Adjusted EBITDA $ (11,051)

Six months ended June 30, 2025

Interest income, net (18,662)

Income tax benefit

Depreciation and amortization 7,042

EBITDA (43,359)

Loss on revaluation of financial instruments (ii)

Foreign currency loss

Transaction costs (iv)

Loss on held-for-sale assets (v)

Other, net (vi)

Restructuring costs (vii)

Share-based compensation (viii)

Financial statement review costs (ix)

Inventory step-up recorded to cost of sales (x)

Israel Ministry of Economy and Industry dumping inquiry expense (xi)

Adjusted EBITDA $ 3,977

Six months ended June 30, 2024

Net loss $ (11,243)

Interest income, net (27,696)

Income tax benefit (2,732)

Depreciation and amortization 3,244

EBITDA (38,427)

Share of income from equity method investments (2,365)

Impairment loss on long-lived assets (i)

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Impairment loss on other investments (iii)

Foreign currency transaction gain (13,259)

Other, net (v)

Restructuring costs (vi)

Share-based compensation (vii)

Financial statement review costs (viii)

Foreign currency gain

Transaction costs (iv)

Other, net (vi)

Restructuring costs (vii)

Share-based compensation (viii)

Financial statement review costs (ix)

Adjusted EBITDA $ (21,720)

(i) For the three months ended March 31, 2024, impairment loss on long-lived assets was primarily the result of the cessation of operations at Cronos Fermentation during the quarter.

(ii) For the three months ended March 31, 2025 and 2024, the (gain) loss on revaluation of financial instruments related primarily to the Company’s equity securities in Vitura.

(iii) For the three months ended March 31, 2024, impairment loss on other investments represents the fair value change on the PharmaCann Option.

(iv) For the three months ended March 31, 2025, transaction costs represented legal, financial and other advisory fees and expenses incurred in connection with the Cronos GrowCo Transaction.

These costs are included in general and administrative expenses on the condensed consolidated statement of net income (loss) and comprehensive income (loss).

(v) For the three months ended March 31, 2025 and 2024, other, net related to (gain) loss on disposal of assets and (gain) loss on revaluation of derivative liabilities.

(vi) For the three months ended March 31, 2025, restructuring costs related to employee-related severance costs and IT infrastructure and finance transformation costs associated with the Realignment, as described in Note 8 “ Restructuring .” For the three months ended March 31, 2024, restructuring costs related to employee-related severance costs and other restructuring costs associated with the Realignment, as described in Note 8 “ Restructuring .”

(vii) For the three months ended March 31, 2025 and 2024, share-based compensation related to the non-cash expenses of share-based compensation awarded to employees under the Company’s share-based award plans as described in Note 9 “ Share-based Compensation.

(viii) For the three months ended March 31, 2025 and 2024, financial statement review costs include costs and reserves taken related to the Restatements, costs related to the Company’s responses to requests for information from various regulatory authorities relating to the Restatements and legal costs incurred defending shareholder class action complaints brought against the Company as a result of the 2019 restatement.

(ix) For the three months ended March 31, 2025, inventory step-up recorded to cost of sales represents the portion of the inventory step-up from the Cronos GrowCo Transaction that was recorded through the condensed consolidated statements of income (loss) and comprehensive income (loss).

(x) For the three months ended March 31, 2025, Israel Ministry of Economy and Industry dumping inquiry expense included expenditures relating to the regulatory inquiry about alleged dumping of medical cannabis products in Israel and related litigation and external relations expenses.

(i) For the six months ended June 30, 2024, impairment loss on long-lived assets related to the winding down of operations at Cronos Fermentation.

(ii) For the three and six months ended June 30, 2025 and 2024, the loss on revaluation of financial instruments related primarily to the Company’s equity securities in Vitura.

(iii) For the three and six months ended June 30, 2024, impairment loss on other investments represents the fair value change on the PharmaCann Option.

(iv) For the three and six months ended June 30, 2025 and 2024, transaction costs represented legal, financial and other advisory fees and expenses incurred in connection with the Cronos GrowCo Transaction.

These costs are included in general and administrative expenses on the condensed consolidated statement of net loss and comprehensive income (loss).

(v) For the three and six months ended June 30, 2025, loss on held-for-sale assets related to a revaluation of the Cronos Fermentation held-for-sale asset group.

(vi) For the three and six months ended June 30, 2025, other, net related to (gain) loss on revaluation of derivative liabilities.

For the three and six months ended June 30, 2024, other, net related to (gain) loss on disposal of assets and (gain) loss on revaluation of derivative liabilities.

(vii) For the three and six months ended June 30, 2025, restructuring costs related to employee-related severance costs and IT infrastructure and finance transformation costs associated with the Realignment, as described in Note 8 “ Restructuring .” For the three months ended June 30, 2024, restructuring costs related to employee-related severance costs and other restructuring costs associated with the Realignment, as described in Note 8 “ Restructuring .”

(viii) For the three and six months ended June 30, 2025 and 2024, share-based compensation related to the non-cash expenses of share-based compensation awarded to employees under the Company’s share-based award plans as described in Note 9 “ Share-based Compensation.

(ix) For the three and six months ended June 30, 2025 and 2024, financial statement review costs included legal costs incurred defending shareholder class action complaints brought against the Company as a result of the 2019 restatement.

(x) For the six months ended June 30, 2025, inventory step-up recorded to cost of sales represents the portion of the inventory step-up from the Cronos GrowCo Transaction that was recorded through the condensed consolidated statements of loss and comprehensive income (loss).

(xi) For the three and six months ended June 30, 2025, Israel Ministry of Economy and Industry dumping inquiry expense included expenditures relating to the regulatory inquiry about alleged dumping of medical cannabis products in Israel and related litigation and external relations expenses.

For the three months ended June 30, 2025 Adjusted EBITDA was $1.7 million, representing an improvement of $12.7 million from three months ended June 30, 2024.

For the six months ended June 30, 2025, Adjusted EBITDA was $4.0 million, representing an improvement of $25.7 million from the six months ended June 30, 2024.

The improvement year-over-year was primarily driven by higher revenue, lower cost of sales due to the consolidation of Cronos GrowCo, as well as by lower operating expenses due to a decline in general and administrative costs.

Adjusted Gross Profit and Adjusted Gross Margin

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GAAP, to Adjusted Gross Profit and Adjusted Gross Margin, respectively, for the periods indicated:

(in thousands of USD) Three months ended March 31, Change

(in thousands of USD) Three months ended June 30, Change Six months ended June 30, Change

2025 2024 $ % 2025 2024 $ %

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Gross profit $ 14,504 $ 6,297 $ 8,207 130 % $ 28,238 $ 10,780 $ 17,458 162 %

Inventory step-up recorded to cost of sales 517 — 517 N/A

Inventory step-up recorded to cost of sales — — — N/A 517 — 517 N/A

Adjusted Gross Profit

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Gross margin (i)

43 % 18 % N/A 25 pp

43 % 23 % N/A 20 pp 43 % 20 % N/A 23 pp

Adjusted Gross Margin (ii)

44 % 18 % N/A 26 pp

43 % 23 % N/A 20 pp 44 % 20 % N/A 24 pp

(i) Gross margin is defined as gross profit divided by net revenue.

(ii) Adjusted Gross Margin is defined as Adjusted Gross Profit divided by net revenue.

For the three months ended June 30, 2025 Adjusted Gross Profit was $14.5 million, representing an increase of $8.2 million from the three months ended June 30, 2024.

For the six months ended June 30, 2025, Adjusted Gross Profit was $28.8 million, representing an increase of $18.0 million from the six months ended June 30, 2024.

The increase was primarily due to the consolidation of Cronos GrowCo, higher average sales prices driven primarily by a mix shift to Israel and other countries, higher sales volumes, and production efficiencies.

Constant Currency

To supplement the consolidated financial statements presented in accordance with U.S.

GAAP, we have presented constant currency adjusted financial measures for net revenue, gross profit, gross profit margin, operating expenses, net income (loss) and Adjusted EBITDA for the three months ended March 31, 2025, as well as cash and cash equivalents and short-term investment balances as of March 31, 2025 compared to December 31, 2024, which are considered non-GAAP financial measures.

GAAP, we have presented constant currency adjusted financial measures for net revenue, gross profit, gross profit margin, operating expenses, net income (loss) and Adjusted EBITDA for the three and six months ended June 30, 2025, as well as cash and cash equivalents and short-term investment balances as of June 30, 2025 compared to December 31, 2024, which are considered non-GAAP financial measures.

We present constant currency information to provide a framework for assessing how our underlying operations performed excluding the effect of foreign currency rate fluctuations.

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dollars are converted into U.S.

dollars using the average exchange rates from the three month comparative period in 2024 rather than the actual average exchange rates in effect during the respective current period;

dollars using the average exchange rates from the three and six month comparative periods in 2024 rather than the actual average exchange rates in effect during the respective current period;

constant currency current and prior comparative balance sheet information is translated at the prior year-end spot rate rather than the current period spot rate.

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See further discussion on foreign currency risk as noted in Item 3 “Quantitative and Qualitative Disclosures About Market Risk.”

The table below sets forth certain measures of consolidated results from continuing operations on a constant currency basis for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 as well as cash and cash equivalents and short-term investments as of March 31, 2025 and December 31, 2024, both on an as-reported and constant currency basis (in thousands):

The table below sets forth certain measures of consolidated results from continuing operations on a constant currency basis for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024 as well as cash and cash equivalents and short-term investments as of June 30, 2025 and December 31, 2024, both on an as-reported and constant currency basis (in thousands):

As Reported As Adjusted for Constant Currency

Three months ended March 31, As Reported Change Three months ended March 31, Constant Currency Change

Three months ended June 30, As Reported Change Three months ended June 30, Constant Currency Change

2025 2024 $ % 2025 $ %

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Operating expenses 19,828 21,858 (2,030) (9) % 19,843 (2,015) (9) %

Net income (loss) 7,723 (2,484) 10,207 N/M 7,321 9,805 N/M

(38,482) (8,759) (29,723) (339) % (39,798) (31,039) (354) %

Adjusted EBITDA $ 1,688 $ (11,051) $ 12,739 N/M $ 1,587 $ 12,638 N/M

As of March 31, As of December 31, As Reported Change As of March 31, Constant Currency Change

Six months ended June 30, As Reported Change Six months ended June 30, Constant Currency Change

2025 2024 $ % 2025 $ %

Net revenue $ 65,717 $ 53,050 $ 12,667 24 % $ 66,956 $ 13,906 26 %

Gross profit 28,238 10,780 17,458 162 % 28,645 17,865 166 %

Gross margin 43 % 20 % N/A 23 pp 43 % N/A 23 pp

Operating expenses 37,634 42,289 (4,655) (11) % 38,319 (3,970) (9) %

(30,759) (11,243) (19,516) (174) % (32,477) (21,234) (189) %

Adjusted EBITDA $ 3,977 $ (21,720) $ 25,697 N/M $ 3,920 $ 25,640 N/M

As of June 30, As of December 31, As Reported Change As of June 30, Constant Currency Change

2025 2024 $ % 2025 $ %

Cash and cash equivalents $ 794,416 $ 858,805 $ (64,389) (7) % $ 792,622 $ (66,183) (8) %

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As Reported As Adjusted for Constant Currency

Three months ended March 31, As Reported Change Three months ended March 31, Constant Currency Change

Three months ended June 30, As Reported Change Three months ended June 30, Constant Currency Change

2025 2024 $ % 2025 $ %

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As Reported As Adjusted for Constant Currency

Three months ended March 31, As Reported Change Three months ended March 31, Constant Currency Change

Six months ended June 30, As Reported Change Six months ended June 30, Constant Currency Change

2025 2024 $ % 2025 $ %

Cannabis flower $ 48,369 $ 38,186 $ 10,183 27 % $ 48,985 $ 10,799 28 %

Cannabis extracts 16,968 14,791 2,177 15 % 17,597 2,806 19 %

Other 380 73 307 421 % 374 301 412 %

Net revenue $ 65,717 $ 53,050 $ 12,667 24 % $ 66,956 $ 13,906 26 %

As Reported As Adjusted for Constant Currency

Three months ended June 30, As Reported Change Three months ended June 30, Constant Currency Change

2025 2024 $ % 2025 $ %

Canada $ 19,150 $ 19,844 $ (694) (3) % $ 19,633 $ (211) (1) %

Israel 9,376 6,889 2,487 36 % 9,001 2,112 31 %

Other countries 2,903 — 2,903 N/A 3,058 3,058 N/A

Other countries 4,929 1,029 3,900 379 % 4,700 3,671 357 %

Net revenue $ 33,455 $ 27,762 $ 5,693 21 % $ 33,334 $ 5,572 20 %

For the three months ended March 31, 2025, net revenue on a constant currency basis was $33.6 million, representing a 33% increase from the three months ended March 31, 2024.

On a constant currency basis, net revenue increased for the three months ended March 31, 2025, primarily due to higher cannabis flower sales in Israel and other countries, which carry no excise taxes, and higher cannabis extract sales in the Canadian market.

On a constant currency basis, the Cronos GrowCo Transaction contributed $3.1 million of cannabis flower sales in the three months ended March 31, 2025.

No such sales were recognized for the three months ended March 31, 2024.

For the three months ended March 31, 2025, gross profit on a constant currency basis was $14.2 million, representing a 217% increase from the three months ended March 31, 2024.

On a constant currency basis, gross profit increased for the three months ended March 31, 2025, primarily due to higher sales volumes and average sales prices, lower direct costs, and production efficiencies, partially offset by the impact on cost of sales from the inventory step-up from the Cronos GrowCo Transaction.

On a constant currency basis, for the three months ended March 31, 2025, we recognized $0.6 million of inventory step-up from the Cronos GrowCo Transaction in cost of sales.

No such costs were recognized for the three months ended March 31, 2024.

As Reported As Adjusted for Constant Currency

Six months ended June 30, As Reported Change Six months ended June 30, Constant Currency Change

2025 2024 $ % 2025 $ %

Canada $ 39,280 $ 38,715 $ 565 1 % $ 41,104 $ 2,389 6 %

Israel 18,605 13,306 5,299 40 % 18,094 4,788 36 %

Other countries 7,832 1,029 6,803 661 % 7,758 6,729 654 %

Net revenue $ 65,717 $ 53,050 $ 12,667 24 % $ 66,956 $ 13,906 26 %

For the three months ended June 30, 2025, net revenue on a constant currency basis was $33.3 million, representing a 20% increase from the three months ended June 30, 2024.

For the six months ended June 30, 2025, net revenue on a constant currency basis was $67.0 million, representing a 26% increase from the six months ended June 30, 2024.

On a constant currency basis, net revenue increased for the three and six months ended June 30, 2025, primarily due to higher cannabis flower sales in Israel and other countries, which carry no excise taxes, the consolidation of Cronos GrowCo, and higher cannabis extract sales in the Canadian market.

On a constant currency basis, the consolidation of Cronos GrowCo as a result of the Cronos GrowCo Transaction contributed $2.2 million and $5.3 million, respectively, of cannabis flower sales in the three and six months ended June 30, 2025.

No such sales were recognized for the three and six months ended June 30, 2024.

For the three months ended June 30, 2025, gross profit on a constant currency basis was $14.4 million, representing a 129% increase from the three months ended June 30, 2024.

For the six months ended June 30, 2025, gross profit on a constant currency basis was $28.6 million, representing a 166% increase from the six months ended June 30, 2024.

On a constant currency basis, gross profit increased for the three and six months ended June 30, 2025, primarily due to the consolidation of Cronos GrowCo, higher average sales prices driven primarily by a mix shift to Israel and other countries, higher sales volumes, and production efficiencies.

On a constant currency basis, for the six months ended June 30, 2025, we recognized $0.6 million of inventory step-up from the Cronos GrowCo Transaction in cost of sales.

No such costs were recognized for the three months ended June 30, 2025, or the three and six months ended June 30, 2024.

Operating expenses

For the three months ended March 31, 2025, operating expenses on a constant currency basis were $18.5 million, representing a 10% decrease from the three months ended March 31, 2024.

On a constant currency basis, operating expenses decreased for the three months ended March 31, 2025, primarily due to lower impairment loss on long-lived assets, lower salaries and benefits, and lower amortization on intangible assets, partially offset by higher restructuring costs.

Net income (loss)

For the three months ended March 31, 2025, net income on a constant currency basis was $7.3 million, representing an improvement of $9.8 million from the three months ended March 31, 2024.

For the three months ended June 30, 2025, operating expenses on a constant currency basis were $19.8 million, representing a 9% decrease from the three months ended June 30, 2024.

For the six months ended June 30, 2025, operating expenses on a constant currency basis were $38.3 million, representing a 9% decrease from the six months ended June 30, 2024.

On a constant currency basis, operating expenses decreased for the three and six months ended June 30, 2025, primarily due to lower salaries and benefits, higher expected credit loss allowance on loans receivable recorded in the prior period, and lower share-based compensation expense, partially offset by higher sales and marketing expenses and restructuring costs and the consolidation of Cronos GrowCo.

On a constant currency basis, for the three and six months ended June 30, 2025, the consolidation of Cronos GrowCo increased operating expenses by $1.0 million and $1.9 million, respectively.

No such costs were recorded in the three or six months ended June 30, 2024.

Operating expenses on a constant currency basis also declined for the six months ended June 30, 2025 due to lower impairment loss on long-lived assets.

For the three months ended June 30, 2025, net loss on a constant currency basis was $39.8 million, representing a higher net loss of $31.0 million from the three months ended June 30, 2024.

For the six months ended June 30, 2025, net loss on a constant currency basis was $32.5 million, representing a higher net loss of $21.2 million from six months ended June 30, 2024.

On a constant currency basis, the increased net loss was primarily due to an unrealized foreign exchange loss on our U.S.

dollar-denominated cash and cash equivalents and short-term investments held in Canada, driven by the Canadian dollar strengthening against the U.S.

dollar, partially offset by higher gross profit and lower operating expenses.

Adjusted EBITDA

For the three months ended March 31, 2025, Adjusted EBITDA on a constant currency basis was $2.3 million, representing a $13.0 million improvement from the three months ended March 31, 2024.

The improvement in Adjusted EBITDA for the three months ended March 31, 2025 on a constant currency basis was driven by higher sales volumes and average sales prices, lower direct costs, production efficiencies, and lower operating expenses.

For the three months ended June 30, 2025, Adjusted EBITDA on a constant currency basis was $1.6 million, representing a $12.6 million improvement from the three months ended June 30, 2024.

For the six months ended June 30, 2025, Adjusted EBITDA on a constant currency basis was $3.9 million, representing a $25.6 million improvement from the six months ended June 30, 2024.

The improvement in Adjusted EBITDA for the three and six months ended June 30, 2025 on a constant currency basis was driven by higher gross profit, as well as by lower operating expenses due to a decline in general and administrative costs.

Cash and cash equivalents & short-term investments

Cash and cash equivalents and short-term investments on a constant currency basis decreased 2% to $838.1 million as of March 31, 2025, from $858.8 million as of December 31, 2024.

The decrease in cash and cash equivalents and short-term investments on a constant currency basis is primarily due to purchases of property, plant and equipment in the three months ended March 31, 2025.

Cash and cash equivalents and short-term investments on a constant currency basis decreased 3% to $832.6 million as of June 30, 2025, from $858.8 million as of December 31, 2024.

The decrease in cash and cash equivalents and short-term investments on a constant currency basis is primarily due to purchases of property, plant and equipment, repurchases of common stock, dividend payments to non-controlling interests and withholding taxes paid on share-based awards in the six months ended June 30, 2025.

Liquidity and Capital Resources

As of March 31, 2025, we had $798 million in cash and cash equivalents and $40 million in short-term investments.

As of June 30, 2025, we had $794 million in cash and cash equivalents and $40 million in short-term investments.

We believe that the existing cash and cash equivalents and short-term investments will be sufficient to fund the business operations and capital expenditures over the next twelve months.

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(In thousands of U.S.

dollars) Three months ended March 31,

Net cash used in operating activities $ (2,096) $ (2,204)

dollars) Six months ended June 30,

Net cash provided by (used in) operating activities $ 722 $ (460)

Net cash provided by (used in) investing activities (56,339) 180,999

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Net change in cash $ (64,389) $ 178,898

Comparison of cash flows between the three months ended March 31, 2025 and the three months ended March 31, 2024

Comparison of cash flows between the six months ended June 30, 2025 and the six months ended June 30, 2024

Operating activities

During the three months ended March 31, 2025, we used $2.1 million of cash from operating activities as compared to cash used of $2.2 million in the three months ended March 31, 2024, representing a decrease in cash used of $0.1 million.

This change is primarily driven by a $7.9 million increase in net income after adjusting for non-cash items during the three months ended March 31, 2025 compared to the three months ended March 31, 2024, partially offset by increases in accounts receivable and other receivables and decreases in accrued liabilities.

During the six months ended June 30, 2025, we generated $0.7 million of cash from operating activities as compared to cash used of $0.5 million in the six months ended June 30, 2024, representing a decrease in cash used of $1.2 million.

This change is primarily driven by a $13.1 million increase in net income after adjusting for non-cash items during the six months ended June 30, 2025 compared to the six months ended June 30, 2024 and lower interest receivable, partially offset by increases in accounts receivable and inventory and decreases in accrued liabilities.

Investing activities

During the three months ended March 31, 2025, we used $55.4 million of cash from investing activities, compared to $189.6 million of cash provided in investing activities during the three months ended March 31, 2024, representing a change of $244.9 million.

This change was driven by the purchase of short-term investments and higher capital expenditures during the three months ended March 31, 2025, compared to the maturity of certain short-term investments, which were reinvested as cash equivalents upon maturity during the three months ended March 31, 2024.

During the six months ended June 30, 2025, we used $56.3 million of cash in investing activities, compared to $181.0 million of cash provided by investing activities during the six months ended June 30, 2024, representing a change of $237.3 million.

This change was driven by the purchase of $40.0 million of short-term investments and higher capital expenditures during the six months ended June 30, 2025, compared to the maturity of certain short-term investments, which were reinvested as cash equivalents upon maturity during the six months ended June 30, 2024.

Financing activities

During the three months ended March 31, 2025, cash used in financing activities was $2.9 million, compared to $0.6 million of cash used in financing activities during the three months ended March 31, 2024, representing an increase of $2.3 million.

This change is primarily driven by an increase in withholding taxes paid on share-based awards during the three months ended March 31, 2025 compared to three months ended March 31, 2024.

During the six months ended June 30, 2025, cash used in financing activities was $10.6 million, compared to $0.9 million of cash used in financing activities during the six months ended June 30, 2024, representing an increase of $9.7 million.

This change is primarily driven by dividends paid to non-controlling interests, repurchases of common stock and an increase in withholding taxes paid on share-based awards during the six months ended June 30, 2025 compared to six months ended June 30, 2024.

Share Repurchase Program

On May 7, 2025, the Company’s Board of Directors (the “Board”) authorized a share repurchase program of up to $50.0 million, but not to exceed 19,270,951 common shares, being 5% of the outstanding common shares as of May 7, 2025.

The repurchase program commenced on May 14, 2025 and is expected to terminate on May 13, 2026 unless earlier terminated.

In both the three and six months ended June 30, 2025, we repurchased 1,874,951 common shares at a cost of approximately $3.6 million.

As of June 30, 2025, the Company has remaining authorization to repurchase up to $46.4 million of additional common shares, not to exceed the remaining 17,396,000 common shares authorized by the Board.

Cash Requirements

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What changed 10-Q

Item 2. Management’s Discussion and Analysis