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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .
Commission File No. 001-38403
__________________________
CRONOS GROUP INC.
(Exact name of registrant as specified in its charter)
__________________________
British Columbia, Canada
N/A
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
111 Peter St. Suite 300
Toronto, Ontario
M5V 2H1
(Address of principal executive offices)(Zip Code)
416-504-0004
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, no par valueCRONThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filer
Non-accelerated fileroSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes No x

As of August 5, 2022, there were 377,896,371 common shares of the registrant issued and outstanding.

1


Table of Contents
PART I
FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II
OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

Unless otherwise noted or the context indicates otherwise, references in this Quarterly Report on Form 10-Q (this “Quarterly Report”) to the “Company”, “Cronos Group”, “we”, “us” and “our” refer to Cronos Group Inc., its direct and indirect wholly owned subsidiaries and, if applicable, its joint ventures and investments accounted for by the equity method; the term “cannabis” means the plant of any species or subspecies of genus Cannabis and any part of that plant, including all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers; the term “U.S. hemp” has the meaning given to term “hemp” in the United States (“U.S.”). Agricultural Improvement Act of 2018 (the “2018 Farm Bill”), including hemp-derived cannabidiol (“CBD”); and the term “U.S. Schedule I cannabis” means cannabis excluding U.S. hemp.
This Quarterly Report contains references to our trademarks and trade names and to trademarks and trade names belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Quarterly Report may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies’ trademarks or trade names to imply a relationship with, or endorsement or sponsorship of us or our business by, any other companies. In addition, this Quarterly Report includes website addresses. These website addresses are intended to provide inactive, textual references only. The information on or referred to on these websites is not part of or incorporated into this Quarterly Report.
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 “$” are to U.S. dollars; all references to “C$” are to Canadian dollars; all references to “A$” are to Australian dollars; and all references to “ILS” are to New Israeli Shekels.
(Exchange rates are shown as C$ per $)As of
June 30, 2022June 30, 2021December 31, 2021
Quarter-to-date average rate1.27651.2293N/A
Spot rate1.28741.23951.2746
Year-to-date average rate1.27151.24811.2541
All summaries of agreements described herein are qualified by the full text of such agreements (certain of which have been filed as exhibits with the U.S. Securities and Exchange Commission).


2


PART I
FINANCIAL INFORMATION
Table of Contents
Item 1. Financial Statements
Table of Contents
6

3

Cronos Group Inc.
Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars, except share amounts)

As of June 30, 2022As of December 31, 2021
Assets(Unaudited)(Audited)
Current assets
Cash and cash equivalents$789,543 $886,973 
Short-term investments155,352 117,684 
Accounts receivable, net19,375 22,067 
Other receivables2,175 5,765 
Current portion of loans receivable, net7,613 5,460 
Inventory, net39,842 32,802 
Prepaids and other current assets12,150 8,967 
Total current assets1,026,050 1,079,718 
Equity method investments, net21,731 16,764 
Other investments108,669 118,392 
Non-current portion of loans receivable, net78,436 80,635 
Property, plant and equipment, net66,316 74,070 
Right-of-use assets6,113 8,882 
Goodwill1,087 1,098 
Intangible assets, net23,722 18,079 
Other89 100 
Total assets$1,332,213 $1,397,738 
Liabilities
Current liabilities
Accounts payable$12,449 $11,218 
Accrued liabilities23,905 26,069 
Current portion of lease obligation2,267 2,711 
Derivative liabilities574 14,375 
Total current liabilities39,195 54,373 
Due to non-controlling interests1,356 1,913 
Non-current portion of lease obligation6,653 7,095 
Deferred income tax liability46 81 
Total liabilities47,250 63,462 
Shareholders’ equity
Share capital (authorized for issue as of June 30, 2022 and December 31, 2021: unlimited; shares outstanding as of June 30, 2022 and December 31, 2021: 377,896,371 and 374,952,693, respectively)
604,626 595,497 
Additional paid-in capital35,198 32,465 
Retained earnings606,557 659,416 
Accumulated other comprehensive income41,688 49,865 
Total equity attributable to shareholders of Cronos Group1,288,069 1,337,243 
Non-controlling interests(3,106)(2,967)
Total shareholders’ equity1,284,963 1,334,276 
Total liabilities and shareholders’ equity$1,332,213 $1,397,738 
See notes to condensed consolidated interim financial statements.
4

Cronos Group Inc.
Condensed Consolidated Statements of Net Loss and Comprehensive Loss
(In thousands of U.S dollars, except share and per share amounts, unaudited)

Three months ended June 30,Six months ended June 30,
2022202120222021
Net revenue, before excise taxes$28,554 $18,848 $57,960 $33,502 
Excise taxes(5,493)(3,226)(9,866)(5,269)
Net revenue23,061 15,622 48,094 28,233 
Cost of sales18,941 19,445 37,048 35,019 
Inventory write-down 11,961  11,961 
Gross profit4,120 (15,784)11,046 (18,747)
Operating expenses
Sales and marketing5,582 13,209 10,594 23,463 
Research and development4,302 5,199 8,341 10,301 
General and administrative17,005 22,417 39,373 44,323 
Restructuring costs1,270  4,354  
Share-based compensation2,616 2,565 6,302 5,064 
Depreciation and amortization1,411 1,043 2,704 1,778 
Impairment loss on goodwill and indefinite-lived intangible assets 234,914  234,914 
Impairment loss on long-lived assets 1,214 3,493 2,955 
Total operating expenses32,186 280,561 75,161 322,798 
Operating loss(28,066)(296,345)(64,115)(341,545)
Other income
Interest income, net3,775 2,293 5,821 4,622 
Gain (loss) on revaluation of derivative liabilities3,410 115,248 13,829 (1,626)
Share of income (loss) from equity method investments5,197 (1,115)5,197 (2,758)
Gain (loss) on revaluation of financial instruments(2,112)77 2,156 (123)
Impairment loss on other investments  (11,238) 
Foreign currency transaction loss(2,852) (4,724) 
Other, net2 1,050 137 1,034 
Total other income7,420 117,553 11,178 1,149 
Loss before income taxes(20,646)(178,792)(52,937)(340,396)
Income tax expense (benefit)(308) 54  
Loss from continuing operations(20,338)(178,792)(52,991)(340,396)
Loss from discontinued operations (561) (582)
Net loss(20,338)(179,353)(52,991)(340,978)
Net loss attributable to non-controlling interest(117)(279)(132)(592)
Net loss attributable to Cronos Group$(20,221)$(179,074)$(52,859)$(340,386)
Comprehensive loss
Net loss$(20,338)$(179,353)$(52,991)$(340,978)
Other comprehensive income (loss)
Foreign exchange gain (loss) on translation(24,161)13,470 (8,184)29,754 
Comprehensive loss(44,499)(165,883)(61,175)(311,224)
Comprehensive income (loss) attributable to non-controlling interests122 (394)(139)432 
Comprehensive loss attributable to Cronos Group$(44,621)$(165,489)$(61,036)$(311,656)
Net loss from continuing operations per share
Basic - continuing operations$(0.05)$(0.48)$(0.14)$(0.92)
Diluted - continuing operations$(0.05)$(0.48)$(0.14)$(0.92)
See notes to condensed consolidated interim financial statements.
5

Cronos Group Inc.
Condensed Consolidated Statements of Changes in Equity
For the three and six months ended June 30, 2022 and 2021
(In thousands of U.S. dollars, except share amounts, unaudited)
Number of sharesShare capitalAdditional paid-in capitalRetained earnings Accumulated other comprehensive income (loss)Non-controlling interestsTotal shareholders’ equity
Balance as of January 1, 2022374,952,693 $595,497 $32,465 $659,416 $49,865 $(2,967)$1,334,276 
Activities relating to share-based compensation347,287 871 2,900 — — — 3,771 
Net loss— — — (32,638)— (15)(32,653)
Foreign exchange gain (loss) on translation— — — — 16,223 (246)15,977 
Balance as of March 31, 2022375,299,980 $596,368 $35,365 $626,778 $66,088 $(3,228)$1,321,371 
Activities relating to share-based compensation395,156 2,251 (167)— — — 2,084 
Share issuance pursuant to research and development milestones2,201,235 6,007 — — — — 6,007 
Net loss— — — (20,221)— (117)(20,338)
Foreign exchange gain (loss) on translation— — — — (24,400)239 (24,161)
Balance as of June 30, 2022377,896,371 $604,626 $35,198 $606,557 $41,688 $(3,106)$1,284,963 
Number of sharesShare capitalAdditional paid-in capitalRetained earnings Accumulated other comprehensive income (loss)Non-controlling interestsTotal shareholders’ equity
Balance as of January 1, 2021360,253,332 $569,260 $34,596 $1,064,509 $42,999 $(3,196)$1,708,168 
Activities relating to share-based compensation11,403,258 15,652 (2,506)(7,694)— — 5,452 
Net loss— — — (161,312)— (313)(161,625)
Foreign exchange gain on translation— — — — 15,145 1,139 16,284 
Balance as of March 31, 2021371,656,590 $584,912 $32,090 $895,503 $58,144 $(2,370)$1,568,279 
Activities relating to share-based compensation148,957 2,451 278 (63)— — 2,666 
Top-up rights out-of-period adjustment— (14,505)— 3,227 — — (11,278)
Net loss— — — (179,074)— (279)(179,353)
Foreign exchange gain (loss) on translation— — — — 13,585 (115)13,470 
Balance as of June 30, 2021371,805,547 $572,858 $32,368 $719,593 $71,729 $(2,764)$1,393,784 

See notes to condensed consolidated interim financial statements.
6

Cronos Group Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands of U.S. dollars, except share amounts, unaudited)

Six months ended June 30,
20222021
Operating activities
Net loss$(52,991)$(340,978)
 Adjustments to reconcile net loss to cash used in operating activities:
Share-based compensation6,302 5,064 
Depreciation and amortization7,051 5,083 
Impairment loss on goodwill and indefinite-lived intangible assets 234,914 
Impairment loss on long-lived assets3,493 2,955 
Impairment loss on other investments11,238  
(Income) loss from investments(7,193)2,758 
(Gain) loss on revaluation of derivative liabilities(13,829)1,626 
Changes in expected credit losses on long-term financial assets(655) 
Foreign currency transaction loss4,724  
Other non-cash operating activities, net(1,956)(1,192)
Changes in operating assets and liabilities:
Accounts receivable, net1,981 (2,194)
Other receivables3,590 6,960 
Prepaids and other current assets(3,759)1,268 
Inventory(8,145)10,951 
Accounts payable and accrued liabilities(1,042)(13,412)
Cash flows used in operating activities(51,191)(86,197)
Investing activities
Purchase of short-term investments(157,300)(120,180)
Proceeds from short-term investments117,975 136,204 
Purchase of other investments (110,392)
(Advances) repayments on loan receivables1,573 (5,064)
Purchase of property, plant and equipment(2,218)(8,347)
Purchase of intangible assets(421)(843)
Other investing activities70 2,059 
Cash flows used in investing activities(40,321)(106,563)
Financing activities
Withholding taxes paid on share-based awards(2,080)(8,919)
Other financing activities, net46 12 
Cash flows used in financing activities(2,034)(8,907)
Effect of foreign currency translation on cash and cash equivalents(3,884)18,825 
Net change in cash and cash equivalents(97,430)(182,842)
Cash and cash equivalents, beginning of period886,973 1,078,023 
Cash and cash equivalents, end of period$789,543 $895,181 
Supplemental cash flow information
Interest paid$ $ 
Interest received3,490 2,961 
Income taxes paid140 858 

See notes to condensed consolidated interim financial statements.

7

Cronos Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In thousands of U.S. dollars, except share amounts)
1. Background, Basis of Presentation and Accounting Policies
(a)Background
Cronos Group Inc. (“Cronos Group” or the “Company”) is incorporated in the province of British Columbia and under the Business Corporations Act (British Columbia) with principal executive offices at 111 Peter St., Suite 300, Toronto, Ontario, M5V 2H1. The Company’s common shares are currently listed on the Toronto Stock Exchange (“TSX”) and Nasdaq Global Market (“Nasdaq”) under the ticker symbol “CRON.”
Cronos Group is an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology and product development and is seeking to build an iconic brand portfolio. Cronos Group’s diverse international brand portfolio includes Spinach®, PEACE NATURALS®, Lord Jones®, Happy Dance® and PEACE+®.
(b)Basis of presentation
The condensed consolidated interim financial statements of Cronos Group are unaudited. They have been prepared in accordance with Generally Accepted Accounting Principles in the United States (“U.S. GAAP”) for interim financial information and with applicable rules and regulations of the U.S. Securities and Exchange Commission relating to interim financial statements. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for any other reporting period.
These condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”).
Certain prior year amounts have been reclassified to conform to the current year presentation of our condensed consolidated interim financial statements. These reclassifications had no effect on the reported results of operations and ending shareholders’ equity.
(c)Segment information
Segment reporting is prepared on the same basis that the Company’s chief operating decision maker (the “CODM”) manages the business, makes operating decisions and assesses the Company’s performance. The Company determined that it has the following two reportable segments: U.S. (the “U.S. segment”) and ROW (the “ROW segment”). The U.S. operating segment consists of the manufacture and distribution of U.S. hemp-derived cannabinoid infused products. The ROW operating segment is involved in the cultivation, manufacture, and marketing of cannabis and cannabis-derived products for the medical and adult-use markets. These two segments represent the geographic regions in which the Company operates and the different product offerings within each geographic region. The results of each segment are regularly reviewed by the CODM to assess the performance of the segment and make decisions regarding the allocation of resources using Adjusted EBITDA (as defined below) as the measure of segment profit or loss. Adjusted EBITDA is defined as earnings before interest, tax, depreciation, non-cash items and items that do not reflect management’s assessment of ongoing business performance.
(d)Concentration of risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company is exposed to credit risk from its operating activities, primarily accounts receivable and other receivables, and its investing activities, including cash held with banks and financial institutions, short-term investments, loans receivable, and advances to joint ventures. The Company’s maximum exposure to this risk is equal to the carrying amount of these financial assets, which amounted to $1,052,494 and $1,118,684 as of June 30, 2022 and December 31, 2021, respectively.
An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on the days past due for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Accounts receivable are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan and a failure to make contractual payments for a period of greater than 120 days past due. As of June 30, 2022 and December 31, 2021, the Company had $2 and $8, respectively, in expected credit losses that have been recognized on receivables from contracts with customers in the ROW segment. As of June 30, 2022 and December 31, 2021, the Company had $165 and $104, respectively, in expected credit losses that have been recognized on receivables from contracts with customers in the U.S. segment.
8

Cronos Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In thousands of U.S. dollars, except share amounts)
As of June 30, 2022, the Company assessed that there is a concentration of credit risk, as 70% of the Company’s accounts receivable were due from three customers with an established credit history with the Company. As of December 31, 2021, 88% of the Company’s accounts receivable were due from four customers with an established credit history with the Company.
The Company sells products to a limited number of major customers. Major customers are defined as customers that each individually accounted for greater than 10% of the Company’s revenue. During the three months ended June 30, 2022, the Company earned a total net revenue before excise taxes of $12,767 from three major customers in the ROW segment, together accounting for 56% of the Company’s total net revenues before excise taxes. During the three months ended June 30, 2021, the ROW segment earned a total net revenue before excise taxes of $8,497 from three major customers, together accounting for 45% of the Company’s total net revenues before excise taxes. During the six months ended June 30, 2022, the Company earned a total net revenue before excise taxes of $24,690 from three major customers in the ROW segment, together accounting for 51% of the Company’s total net revenue before excise taxes. During the six months ended June 30, 2021, the ROW segment earned a total net revenue before excise taxes of $18,250 from four major customers, together accounting for 54% of the Company’s total net revenues before excise taxes. During the three and six months ended June 30, 2022 and 2021, the U.S. segment had no major customers.
(e)Adoption of new accounting pronouncements
On January 1, 2022, the Company adopted ASU No. 2020-06, Debt –Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815–40) (“ASU No. 2020-06”). ASU No. 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. ASU No. 2020-06 is part of the Financial Accounting Standards Board’s (“FASB”) simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. The adoption of ASU No. 2020-06 did not have an impact on the Company’s condensed consolidated interim financial statements.
(f)New accounting pronouncements not yet adopted
In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU No. 2022-02”). ASU No. 2022-02 eliminates the existing troubled debt restructuring recognition and measurement guidance, and instead aligns the accounting treatment to that of other loan modifications. The amendments enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. ASU No. 2022-02 also requires that entities disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases. ASU No. 2022-02 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, and is to be adopted prospectively. The Company does not expect the adoption of ASU No. 2022-02 to have a material impact on its condensed consolidated interim financial statements.
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU No. 2022-03”). ASU No. 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered in measuring fair value. The amendments also require additional disclosures for equity securities subject to contractual sale restrictions. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, and is to be adopted prospectively. The Company does not expect the adoption of ASU No. 2022-03 to have a material impact on its condensed consolidated interim financial statements.

2. Inventory, net
Inventory, net is comprised of the following items:
As of June 30, 2022As of December 31, 2021
Raw materials$7,435 $9,211 
Work-in-progress14,548 12,405 
Finished goods16,926 10,778 
Supplies and consumables933 408 
Total$39,842 $32,802 

9

Cronos Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In thousands of U.S. dollars, except share amounts)
3. Investments
(a)Variable interest entities and equity method investments, net
A reconciliation of the carrying amount of the investments in equity method investees, net is as follows:
Ownership interestAs of June 30, 2022As of December 31, 2021
Cronos Growing Company Inc. (“Cronos GrowCo”)
50%$21,731 $16,764 
NatuEra S.à.r.l. (“Natuera”)50%  
$21,731 $16,764 
The following is a summary of the Company’s share of net income (loss) from equity method investments:
For the three months ended June 30,For the six months ended June 30,
2022202120222021
Cronos GrowCo5,197 (459)$5,197 $(758)
Natuera (656) (2,000)
$5,197 $(1,115)$5,197 $(2,758)
(b)Other investments
Other investments consist of investments in common shares and options of two companies in the cannabis industry.
PharmaCann, Inc.
In 2021, the Company purchased an option (the “PharmaCann Option”) to acquire 473,787 shares of Class A Common Stock of PharmaCann Inc. (“PharmaCann”), a vertically integrated cannabis company in the United States, which represented an ownership interest of approximately 10.5% as of December 31, 2021. The PharmaCann Option is classified as an equity security without a readily determinable fair value. The Company has elected to measure the fair value of the PharmaCann Option at cost less impairment, if any, and subsequently adjusted for observable price changes in orderly transactions for the identical or a similar investment of the same issuer. On February 28, 2022, PharmaCann closed the previously announced transaction with LivWell Holdings, Inc. (“LivWell”) pursuant to which PharmaCann acquired LivWell (the “LivWell Transaction”). LivWell is a multi-state cannabis cultivation and retail leader based in Colorado. As a result of the LivWell Transaction, the Company’s ownership percentage in PharmaCann on a fully-diluted basis decreased to approximately 6.4%. The decrease in ownership percentage does not materially affect the Company’s rights under the PharmaCann Option.
Cronos Australia Limited
The Company owns approximately 10% of the outstanding common shares of Cronos Australia Limited (“Cronos Australia”). The investment is considered an equity security with a readily determinable fair value. Changes in the fair value of the investment are recorded as gain (loss) on revaluation of financial instruments on the condensed consolidated statements of net loss and comprehensive loss.
10

Cronos Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In thousands of U.S. dollars, except share amounts)
The following table summarizes the Company’s other investments activity:
As of April 1, 2022Unrealized lossImpairment chargesForeign exchange effectAs of June 30, 2022
PharmaCann$99,154 $ $ $ $99,154 
Cronos Australia12,607 (2,200) (892)9,515 
$111,761 $(2,200)$ $(892)$108,669 
As of January 1, 2022Unrealized gainImpairment chargesForeign exchange effectAs of June 30, 2022
PharmaCann$110,392 $ $(11,238)$ $99,154 
Cronos Australia8,000 1,996  (481)9,515 
$118,392 $1,996 $(11,238)$(481)$108,669 
During the three months ended March 31, 2022, the Company identified indicators of impairment related to the PharmaCann Option and conducted an analysis comparing the PharmaCann Option’s carrying amount to its estimated fair value. The fair value was estimated using a combination of the market and income approaches. Under the income approach, significant inputs used in the discounted cash flow method include discount rate, growth rates, and cash flow projections. As a result of this analysis, the Company recorded a non-cash impairment charge of $11,238, as the difference between the carrying amount of the PharmaCann Option and its estimated fair value in the condensed consolidated statements of net loss and comprehensive loss.
During the three and six months ended June 30, 2021, the Company had no gain or loss on revaluation of other investments. As of June 30, 2022 and December 31, 2021, the Company did not hold any additional other investments.

4. Loans Receivable, net
Loans receivable, net consists of the following:
As of June 30, 2022As of December 31, 2021
GrowCo Facility(i)
$3,625 $3,138 
Add: Current portion of accrued interest3,988 2,322 
Total current portion of loans receivable7,613 5,460 
GrowCo Facility(i)
62,310 64,367 
Mucci Promissory Note
14,127 14,019 
Cannasoul Collaboration Loan(ii)
1,999 2,249 
Total long-term portion of loans receivable78,436 80,635 
Total loans receivable, net$86,049 $86,095 
(i)On August 23, 2019, the Company, as lender, and Cronos GrowCo, as borrower, entered into a senior secured credit agreement for an aggregate principal amount of C$100,000 (the “GrowCo Facility”). In August 2021, the GrowCo Facility was amended to increase the aggregate principal amount available to C$105,000. As of June 30, 2022 and December 31, 2021, Cronos GrowCo had outstanding borrowings of C$102,000 ($79,228) and C$104,000 ($81,598), respectively, from the GrowCo Facility. As of June 30, 2022, Cronos GrowCo had repaid C$2,000 ($1,554) under the terms of the GrowCo Facility. The available borrowing capacity under the GrowCo Facility was C$1,000 ($777) at June 30, 2022 and December 31, 2021.
(ii)As of June 30, 2022 and December 31, 2021, Cannasoul Lab Services Ltd. has received ILS 8,297 ($2,376) and ILS 8,297 ($2,664), respectively, from the Cannasoul Collaboration Loan.
11

Cronos Group Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In thousands of U.S. dollars, except share amounts)
Expected credit loss allowances on the Company’s long-term financial assets for the three and six months ended June 30, 2022 and 2021 were comprised of the following items:
As of April 1, 2022
Increase (decrease)(i)
Foreign exchange effectAs of June 30, 2022
GrowCo Facility$14,354 $(660)$(401)$13,293 
Mucci Promissory Note93 1 (3)91 
Cannasoul Collaboration Loan409 4 (36)377 
$14,856 $(655)$(440)$13,761 
As of April 1, 2021Increase (decrease)Foreign exchange effectAs of June 30, 2021
GrowCo Facility$1,569 $ $21 $1,590 
Natuera Series A Loan(ii)
1,151 (1,153)2  
Mucci Promissory Note274  4 278 
Cannasoul Collaboration Loan26  13 39 
$3,020 $(1,153)$40 $1,907 
As of January 1, 2022
Increase (decrease)(i)
Foreign exchange effectAs of June 30, 2022
GrowCo Facility$14,089 $(664)$(132)$13,293 
Mucci Promissory Note90 2 (1)91 
Cannasoul Collaboration Loan415 7 (45)377 
$14,594 $(655)$(178)$13,761 
As of January 1, 2021Increase (decrease)Foreign exchange effect