Cronos Group Inc. 10-Q

Item 2. 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 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 This Quarterly Report, the documents incorporated into this Quarterly Report by reference, other reports we file with, or furnish to, the SEC and other regulatory agencies, and statements by our directors, officers, other employees and other persons authorized to speak on our behalf contain information that may constitute forward-looking information and forward-looking statements within the meaning of applicable U.S. and Canadian securities laws and court decisions (collectively, “Forward-Looking Statements”), which are based upon our current internal expectations, estimates, projections, assumptions and beliefs. All information that is not clearly historical in nature may constitute Forward-Looking Statements. In some cases, Forward-Looking Statements can be identified by the use of forward-looking terminology, such as “expect,” “likely,” “may,” “will,” “should,” “intend,” “anticipate,” “potential,” “proposed,” “estimate” and other similar words, expressions and phrases, including negative and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen, or by discussion of strategy. Forward-Looking Statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of historical fact. Forward-Looking Statements include, but are not limited to, statements with respect to: • the ongoing impact of the public investigation into Canadian licensed producers of alleged dumping of medical cannabis imports from Canada into Israel by the Trade Levies Commissioner of the Israel Ministry of Economy and Industry (the “Anti-Dumping Investigation”) and the proposed anti-dumping duty to which the Company’s imports would be subject; • 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, 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. hemp-derived cannabinoid product operations and any future plans to re-enter the U.S. market; • the ongoing impact of our announced realignment (inclusive of any revisions thereto, the “Realignment”) and any progress, challenges and effects related thereto as well as changes in strategy, metrics, investments, reporting structure, costs, operating expenses, employee turnover and other changes with respect thereto; • our expectations as to the use and expansion of our facility in Stayner, Ontario (the “Peace Naturals Campus”); • our ability to acquire raw materials from suppliers, including Cronos Growing Company Inc. (“Cronos GrowCo”), and the costs and timing associated therewith; • expectations regarding the potential success of, and the costs and benefits associated with, our joint ventures, strategic alliances and equity investments; • 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 and research and development (“R&D”) initiatives in cannabinoids, or the success thereof; • expectations regarding revenues, expenses, gross margins and capital expenditures; • expectations regarding our future production and manufacturing strategy and operations, the costs and timing associated therewith and the receipt of applicable production and sale licenses; • the ongoing impact of the legalization of additional cannabis product types and forms for adult-use in Canada, including federal, provincial, territorial and municipal regulations pertaining thereto, the related timing and impact thereof and our intentions to participate in such markets; 32 Table of Contents • the legalization of the use of cannabis for medical or adult-use in jurisdictions outside of Canada, including the U.S. and Germany, the related timing and impact thereof and our intentions to participate in such markets, if and when such use is legalized; • the grant, renewal, withdrawal, suspension, delay and impact of any license or supplemental license to conduct activities with cannabis or any amendments thereof; • our ability to successfully create and launch brands and cannabis products; • expectations related to the differentiation of our products, including through the utilization of rare cannabinoids; • the benefits, viability, safety, efficacy, dosing and social acceptance of cannabis, including CBD and other cannabinoids; • laws and regulations and any amendments thereto applicable to our business and the impact thereof, including uncertainty regarding the application of U.S. state and federal law to cannabis and U.S. hemp (including CBD and other U.S. hemp-derived cannabinoids) products and the scope of any regulations by the U.S. Food and Drug Administration (the “FDA”), the U.S. Drug Enforcement Administration (the “DEA”), the U.S. Federal Trade Commission (the “FTC”), the U.S. Patent and Trademark Office (the “PTO”) and any state equivalent regulatory agencies over cannabis and U.S. hemp (including CBD and other U.S. hemp-derived cannabinoids) products, including the possibility marijuana is moved from Schedule I to Schedule III under the U.S. Controlled Substances Act; • 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; • expectations regarding the implementation and effectiveness of key personnel changes; • expectations regarding business combinations and dispositions and the anticipated benefits therefrom; • expectations of the amount or frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill; • the impact of the ongoing military conflict between Russia and Ukraine (and resulting sanctions) on our business, financial condition and results of operations or cash flows; • our compliance with the terms of the settlement (the “Settlement Order”) with the SEC and the settlement agreement (the “Settlement Agreement”) with the Ontario Securities Commission (the “OSC”); and • the impact of the loss of our ability to rely on private offering exemptions under Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), and the loss of our status as a well-known seasoned issuer, each as a result of the Settlement Order. Certain of the Forward-Looking Statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below. 33 Table of Contents The Forward-Looking Statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including: (i) our ability to effectively navigate developments related to the Anti-Dumping Investigation and the proposed anti-dumping duty to which the Company’s imports would be subject and its impact on our operations in Israel; (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 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; (v) expectations related to the impact of our decision to exit our U.S. hemp-derived cannabinoid product operations; (vi) our ability to realize the expected cost-savings, efficiencies and other benefits of our Realignment and other announced cost-cutting measures and employee turnover related thereto; (vii) our ability to efficiently and effectively manage our operations at our Peace Naturals Campus; (viii) our ability to efficiently and effectively acquire raw materials on a timely and cost-effective basis from third parties or Cronos GrowCo; (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; (xi) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (xii) government regulation of our activities and products including, but not limited to, the areas of cannabis taxation and environmental protection; (xiii) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; (xiv) consumer interest in our products; (xv) our ability to differentiate our products, including through the utilization of rare cannabinoids; (xvi) competition; (xvii) anticipated and unanticipated costs; (xviii) our ability to generate cash flow from operations; (xix) our ability to conduct operations in a safe, efficient and effective manner; (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 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. By their nature, Forward-Looking Statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct, and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the Forward-Looking Statements in this Quarterly Report and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, negative impacts on our business and operations in Israel due to the Anti-Dumping Investigation, including that we may not be able to produce, import or sell our products in Israel as a result thereof; 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, 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; that we may be unable to further streamline our operations and reduce expenses; that we may not be able to effectively and efficiently re-enter the U.S. market in the future; that we may not be able to access raw materials on a timely and cost-effective basis from third-parties or Cronos GrowCo; 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; the risk that cost savings and any other synergies from the Altria Investment may not be fully realized or may take longer to realize than expected; failure to execute key personnel changes; that our Realignment and our further leveraging of our strategic partnerships will not result in the expected cost-savings, efficiencies and other benefits or will result in greater than anticipated turnover in personnel; that we may not be able to efficiently and effectively manage our operations, and any changes thereto, at our Peace Naturals Campus; lower levels of revenues; the lack of consumer demand for our products; our inability to manage disruptions in credit markets; unanticipated future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; failure to realize expected growth opportunities; the lack of cash flow necessary to execute our business plan (either within the expected timeframe or at all); difficulty raising capital; the potential adverse effects of judicial, regulatory or other proceedings, or threatened litigation or proceedings, on our business, financial condition, results of operations and cash flows; volatility in and/or degradation of general economic, market, industry or business conditions; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis and U.S. hemp products in vaping devices; the unexpected effects of actions of third parties such as competitors, activist investors or federal (including U.S. federal), state, provincial, territorial or local regulatory authorities or self-regulatory organizations; adverse changes in regulatory requirements in relation to our business and products; 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. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on Forward-Looking Statements. 34 Table of Contents Forward-Looking Statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management’s current expectations and plans relating to the future, and the reader is cautioned not to place undue reliance on these Forward-Looking Statements because of their inherent uncertainty and to appreciate the limited purposes for which they are being used by management. While we believe that the assumptions and expectations reflected in the Forward-Looking Statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-Looking Statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any Forward-Looking Statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such Forward-Looking Statements. The Forward-Looking Statements contained in this Quarterly Report and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements. Foreign currency exchange rates All currency amounts in this Quarterly Report are stated in U.S. dollars, which is our reporting currency, unless otherwise noted. All references to “dollars” or “$” are to U.S. dollars. The assets and liabilities of our foreign operations are translated into dollars at the exchange rate in effect as of June 30, 2025, June 30, 2024, and December 31, 2024. Transactions affecting the shareholders’ equity (deficit) are translated at historical foreign exchange rates. The condensed consolidated statements of net loss and comprehensive income (loss) and condensed consolidated statements of cash flows of our foreign operations are translated into dollars by applying the average foreign exchange rate in effect for the reporting period as reported on Bloomberg. The exchange rates used to translate from Canadian dollars (“C$”) to dollars is shown below: (Exchange rates are shown as C$ per $) As of June 30, 2025 June 30, 2024 December 31, 2024 Spot rate 1.3608 1.3674 1.4351 Average rate 1.4094 1.3581 N/A The exchange rates used to translate from New Israeli Shekels (“ILS”) to dollars is shown below: (Exchange rates are shown as ILS per $) As of June 30, 2025 June 30, 2024 December 31, 2023 Spot rate 3.3683 3.7742 3.6526 Average rate 3.5954 3.6950 N/A Business Overview Cronos is an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology and product development. With a passion to responsibly elevate the consumer experience, Cronos is building an iconic brand portfolio. Cronos’ diverse international brand portfolio includes Spinach ® , PEACE NATURALS ® and Lord Jones ® . Strategy Cronos seeks to create value for shareholders by focusing on four core strategic priorities: • growing a portfolio of iconic brands that responsibly elevate the consumer experience; • developing a diversified global sales and distribution network; • establishing an efficient global supply chain; and • creating and monetizing disruptive intellectual property. Business Segment Cronos reports through one consolidated segment, which includes operations in both Canada and Israel. In Canada, Cronos operates one wholly owned license holder under the Cannabis Act (Canada) (the “Cannabis Act”), Peace Naturals Project Inc. (“Peace Naturals”), which has production facilities near Stayner, Ontario (the “Peace Naturals Campus”). On July 1, 2024, the Company obtained majority control of the board of directors of Cronos GrowCo, a license holder under the Cannabis Act, which qualified as a business combination under ASC 805. As a result, the Company now consolidates the results of operations of Cronos GrowCo in its consolidated financial statements. Cronos maintains its 50% equity interest in Cronos GrowCo. In Israel, the Company operates under the IMC-GAP, IMC-GMP and IMC-GDP certifications required for the cultivation, production, distribution and marketing of medical cannabis products in Israel. 35 Table of Contents Recent Developments Cronos GrowCo Expansion 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 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 The tables below set forth our condensed consolidated results of operations, expressed in thousands of U.S. dollars for the periods presented. 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 June 30, Six months ended June 30, 2025 2024 2025 2024 Net revenue, before excise taxes $ 44,252 $ 38,678 $ 86,150 $ 74,045 Excise taxes (10,797) (10,916) (20,433) (20,995) Net revenue 33,455 27,762 65,717 53,050 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 Operating expenses Sales and marketing 5,347 4,330 9,912 9,662 Research and development 929 962 1,722 1,959 General and administrative 10,536 12,767 19,845 21,674 Restructuring costs 768 547 1,323 630 Share-based compensation 1,381 2,236 3,469 4,251 Depreciation and amortization 867 1,016 1,363 2,139 Impairment loss on long-lived assets — — — 1,974 Total operating expenses 19,828 21,858 37,634 42,289 Operating loss (5,324) (15,561) (9,396) (31,509) Other income (33,683) 4,628 (22,343) 17,534 Income tax benefit (525) (2,174) (980) (2,732) 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 loss attributable to Cronos Group $ (39,711) $ (8,757) $ (33,589) $ (10,998) 36 Table of Contents Summary of select financial results Three months ended June 30, Change Six months ended June 30, Change 2025 2024 $ % 2025 2024 $ % Net revenue $ 33,455 $ 27,762 $ 5,693 21 % $ 65,717 $ 53,050 $ 12,667 24 % 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 % 23 % N/A 20 pp 43 % 20 % N/A 23 pp (i) Gross margin is defined as gross profit divided by net revenue. Net revenue 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 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. Gross profit 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. 37 Table of Contents Operating expenses Three months ended June 30, Change Six months ended June 30, Change 2025 2024 $ % 2025 2024 $ % Sales and marketing $ 5,347 $ 4,330 $ 1,017 23 % $ 9,912 $ 9,662 $ 250 3 % Research and development 929 962 (33) (3) % 1,722 1,959 (237) (12) % General and administrative 10,536 12,767 (2,231) (17) % 19,845 21,674 (1,829) (8) % Restructuring costs 768 547 221 40 % 1,323 630 693 110 % 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 — — — 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 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 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 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 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 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 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. 38 Table of Contents Impairment loss on long-lived assets 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 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 — 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 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 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. 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 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. 39 Table of Contents 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 Other, net primarily includes gains and losses on the disposal of assets. Income tax benefit 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. Net loss 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 Cronos reports its financial results in accordance with Generally Accepted Accounting Principles in the United States (“U.S. GAAP”). This Quarterly Report refers to measures not recognized under U.S. GAAP (“non-GAAP measures”). These non-GAAP measures do not have a standardized meaning prescribed by U.S. GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these non-GAAP measures are provided as a supplement to corresponding U.S. GAAP measures to provide additional information regarding the results of operations from management’s perspective. Accordingly, non-GAAP measures should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. All non-GAAP measures presented in this Quarterly Report are reconciled to their closest reported U.S. GAAP measure. Reconciliations of historical adjusted financial measures to corresponding U.S. GAAP measures are provided below. Adjusted EBITDA Management reviews Adjusted EBITDA, a non-GAAP measure, which excludes non-cash items and items that do not reflect management’s assessment of ongoing business performance. Management defines Adjusted EBITDA as net income (loss) before interest, tax expense (benefit), depreciation and amortization adjusted for: share of (income) loss from equity method investments; impairment loss on goodwill and intangible assets; impairment loss on long-lived assets; (gain) loss on revaluation of derivative liabilities; (gain) loss on revaluation of financial instruments; gain on revaluation of loan receivable; gain on revaluation of equity method investment; transaction costs related to strategic projects; loss on held-for-sale assets; impairment loss on other investments; foreign currency (gain) loss; other, net; restructuring costs; share-based compensation; costs related to the Israel Ministry of Economy and Industry dumping inquiry; purchase accounting adjustment-related inventory step-up adjustments recorded through cost of sales; 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. Management believes that Adjusted EBITDA provides the most useful insight into underlying business trends and results and provides a more meaningful comparison of period-over-period results. 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 loss as determined in accordance with U.S. GAAP to Adjusted EBITDA for the periods indicated: 40 Table of Contents Three months ended June 30, 2025 Net loss $ (38,482) Interest income, net (8,997) Income tax benefit (525) Depreciation and amortization 4,202 EBITDA (43,802) Loss on revaluation of financial instruments (ii) 640 Foreign currency loss 39,538 Transaction costs (iv) 32 Loss on held-for-sale assets (v) 2,501 Other, net (vi) 1 Restructuring costs (vii) 768 Share-based compensation (viii) 1,381 Financial statement review costs (ix) 391 Israel Ministry of Economy and Industry dumping inquiry expense (xi) 238 Adjusted EBITDA $ 1,688 Three months ended June 30, 2024 Net loss $ (8,759) Interest income, net (13,451) Income tax benefit (2,174) Depreciation and amortization 1,513 EBITDA (22,871) Share of income from equity method investments (917) Loss on revaluation of financial instruments (ii) 3,615 Impairment loss on other investments (iii) 12,916 Foreign currency gain (6,543) Transaction costs (iv) 196 Other, net (vi) (248) Restructuring costs (vii) 547 Share-based compensation (viii) 2,236 Financial statement review costs (ix) 18 Adjusted EBITDA $ (11,051) 41 Table of Contents Six months ended June 30, 2025 Net loss $ (30,759) Interest income, net (18,662) Income tax benefit (980) Depreciation and amortization 7,042 EBITDA (43,359) Loss on revaluation of financial instruments (ii) 591 Foreign currency loss 37,955 Transaction costs (iv) 72 Loss on held-for-sale assets (v) 2,501 Other, net (vi) (42) Restructuring costs (vii) 1,323 Share-based compensation (viii) 3,469 Financial statement review costs (ix) 438 Inventory step-up recorded to cost of sales (x) 517 Israel Ministry of Economy and Industry dumping inquiry expense (xi) 512 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) 1,974 Loss on revaluation of financial instruments (ii) 6,257 Impairment loss on other investments (iii) 25,650 Foreign currency gain (19,802) Transaction costs (iv) 196 Other, net (vi) 422 Restructuring costs (vii) 630 Share-based compensation (viii) 4,251 Financial statement review costs (ix) (506) Adjusted EBITDA $ (21,720) (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. ” 42 Table of Contents (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 To supplement the consolidated financial statements presented in accordance with U.S. GAAP, we have presented Adjusted Gross Profit and Adjusted Gross Margin, non-GAAP measures that exclude the impacts of inventory-related purchase accounting adjustments from the calculations of gross profit and gross margin, which resulted from the Cronos GrowCo Transaction. Results are reported as total consolidated results, reflecting our reporting structure of one reportable segment. Management believes that Adjusted Gross Profit and Adjusted Gross Margin provide useful insight into underlying business trends to facilitate comparisons of period-over-period results by removing the impacts of inventory-related purchase accounting adjustments resulting from the Cronos GrowCo Transaction, which reflect a one-time event and do not reflect management’s assessment of ongoing business performance. The following table sets forth a reconciliation of Gross profit and Gross margin, each as determined in accordance with U.S. GAAP, to Adjusted Gross Profit and Adjusted Gross Margin, respectively, for the periods indicated: (in thousands of USD) Three months ended June 30, Change Six months ended June 30, Change 2025 2024 $ % 2025 2024 $ % Net revenue $ 33,455 $ 27,762 $ 5,693 21 % $ 65,717 $ 53,050 $ 12,667 24 % Gross profit $ 14,504 $ 6,297 $ 8,207 130 % $ 28,238 $ 10,780 $ 17,458 162 % Inventory step-up recorded to cost of sales — — — N/A 517 — 517 N/A Adjusted Gross Profit $ 14,504 $ 6,297 $ 8,207 130 % $ 28,755 $ 10,780 $ 17,975 167 % Gross margin (i) 43 % 23 % N/A 20 pp 43 % 20 % N/A 23 pp Adjusted Gross Margin (ii) 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 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. To present this information, current and comparative prior period income statement results in currencies other than U.S. dollars are converted into U.S. 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. All growth comparisons relate to the corresponding period in 2024. We have provided this non-GAAP financial information to aid investors in better understanding the performance of our operations. The non-GAAP financial measures presented in this Quarterly Report should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. See further discussion on foreign currency risk as noted in Item 3 “Quantitative and Qualitative Disclosures About Market Risk.” 43 Table of Contents 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 June 30, As Reported Change Three months ended June 30, Constant Currency Change 2025 2024 $ % 2025 $ % Net revenue $ 33,455 $ 27,762 $ 5,693 21 % $ 33,334 $ 5,572 20 % Gross profit 14,504 6,297 8,207 130 % 14,421 8,124 129 % Gross margin 43 % 23 % N/A 20 pp 43 % N/A 20 pp Operating expenses 19,828 21,858 (2,030) (9) % 19,843 (2,015) (9) % Net loss (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 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) % Net loss (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) % Short-term investments 40,000 — 40,000 N/A 40,000 40,000 N/A Total cash and cash equivalents and short-term investments $ 834,416 $ 858,805 $ (24,389) (3) % $ 832,622 $ (26,183) (3) % 44 Table of Contents Net revenue 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 $ % Cannabis flower $ 25,025 $ 20,661 $ 4,364 21 % $ 24,820 $ 4,159 20 % Cannabis extracts 8,360 7,064 1,296 18 % 8,446 1,382 20 % Other 70 37 33 89 % 68 31 84 % Net revenue $ 33,455 $ 27,762 $ 5,693 21 % $ 33,334 $ 5,572 20 % 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 $ % 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 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 % 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. 45 Table of Contents Gross profit 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 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. Net loss 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 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 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 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. The following table summarizes the cash flows from operating, investing and financing activities: (In thousands of U.S. dollars) Six months ended June 30, 2025 2024 Net cash provided by (used in) operating activities $ 722 $ (460) Net cash provided by (used in) investing activities (56,339) 180,999 Net cash used in financing activities (10,616) (905) Effect of foreign currency translation on cash and cash equivalents 1,844 (736) Net change in cash $ (64,389) $ 178,898 46 Table of Contents Comparison of cash flows between the six months ended June 30, 2025 and the six months ended June 30, 2024 Operating activities 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 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 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 The Company’s cash requirements have not changed significantly since the filing of the Annual Report. Critical Accounting Policies and Estimates Our critical accounting policies and estimates are discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report. Our critical accounting policies and estimates have not changed significantly since the filing of the Annual Report. 47 Table of Contents