TABLE OF CONTENTS
Condensed Consolidated Interim Statements of Financial Position			1
Condensed Consolidated Interim Statements of Operations and Comprehensive Loss			2
Condensed Consolidated Interim Statements of Changes in Equity			3
Condensed Consolidated Interim Statements of Cash Flows			4
Notes to the Condensed Consolidated Interim Financial Statements	5	–	17

ORGANIGRAM HOLDINGS INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

As at March 31, 2024 and September 30, 2023

(Unaudited - expressed in CDN $000’s except share and per share amounts)

	MARCH 31, 2024		SEPTEMBER 30, 2023
ASSETS
Current assets
Cash	$	71,804	$	33,864
Short-term investments	802		—
Accounts and other receivables (Note 4)	29,193		30,157
Biological assets (Note 5)	14,042		17,355
Inventories (Note 6)	69,222		63,598
Prepaid expenses and deposits	9,199		11,002
	194,262		155,976
Restricted funds	11,028		17,893
Property, plant and equipment (Note 7)	97,122		99,046
Intangible assets	9,466		10,624
Deferred charges and deposits	1,033		613
Other financial assets (Note 8)	13,533		8,437
Investments in associates	5,016		5,284
Net investment in sublease	318		582
	$	331,778	$	298,455
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	40,174		$	20,007
Other liabilities	967		1,062
Income taxes payable	—		94
Provisions	—		90
Current portion of long-term debt	66		76
Derivative liabilities (Note 9)	14,827		1,102
	56,034		22,431
Long-term debt	52		79
Derivative liabilities (Note 9)	770		771
Other long-term liabilities	3,125		3,551
	59,981		26,832
SHAREHOLDERS' EQUITY
Share capital	817,342		776,906
Equity reserves	36,152		33,404
Accumulated other comprehensive loss	(344)		(159)
Accumulated deficit	(581,353)		(538,528)
	271,797		271,623
	$	331,778	$	298,455

Subsequent events (Note 17)

On behalf of the Board:

/s/Beena Goldenberg, Director

/s/Peter Amirault, Director

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    1

ORGANIGRAM HOLDINGS INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the three and six months ended March 31, 2024 and February 28, 2023

(Unaudited - expressed in CDN $000’s except share and per share amounts)

	THREE MONTHS ENDED				SIX MONTHS ENDED
	MARCH 31, 2024		FEBRUARY 28, 2023		MARCH 31, 2024		FEBRUARY 28, 2023
REVENUE
Gross revenue (Note 14)	$	57,425	$	52,898	$	113,695	$	113,780
Excise taxes	(19,797)		(13,405)		(39,612)		(30,966)
Net revenue	37,628		39,493		74,083		82,814
Cost of sales	26,366		29,642		53,310		61,263
Gross margin before fair value adjustments	11,262		9,851		20,773		21,551
Realized fair value on inventories sold and other inventory charges (Note 6)	(11,062)		(14,170)		(22,985)		(26,698)
Unrealized gain on changes in fair value of biological assets (Note 5)	9,400		14,121		18,512		38,835
Gross margin	9,600		9,802		16,300		33,688
OPERATING EXPENSES
General and administrative (Note 15)	14,759		11,737		26,626		22,948
Sales and marketing	5,403		4,334		9,998		8,825
Research and development	2,606		3,348		7,073		5,731
Share-based compensation (Note 10)	1,809		1,226		3,509		2,969
Total operating expenses	24,577		20,645		47,206		40,473
LOSS FROM OPERATIONS	(14,977)		(10,843)		(30,906)		(6,785)
Financing costs	65		63		113		104
Investment income	(715)		(1,114)		(1,285)		(1,970)
Share of loss from investments in associates	112		296		267		702
Loss (gain) on disposal of property, plant and equipment and intangible assets	50		(69)		50		313
Change in fair value of contingent share consideration	—		(24)		(50)		(6)
Change in fair value of derivative liabilities and other financial assets (Note 8 & 9)	12,529		(2,433)		12,985		(3,463)
Legal recovery	—		(75)		—		(75)
Other non-operating expenses (income)	87		—		(131)		—
Loss before tax	(27,105)		(7,487)		(42,855)		(2,390)
Income tax expense (recovery)
Current, net	(30)		(304)		(30)		(237)
Deferred, net	—		305		—		6
NET LOSS	(27,075)		(7,488)		(42,825)		(2,159)
OTHER COMPREHENSIVE LOSS
Change in fair value of investments at fair value through other comprehensive income (Note 8)	$	(130)	—		(185)		—
NET LOSS and COMPREHENSIVE LOSS	$	(27,205)	$	(7,488)	$	(43,010)	$	(2,159)
Net loss per common share, basic	$	(0.297)	$	(0.096)	$	(0.497)	$	(0.028)
Net loss per common share, diluted	$	(0.297)	$	(0.096)	$	(0.497)	$	(0.028)

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    2

ORGANIGRAM HOLDINGS INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

For the six months ended March 31, 2024 and February 28, 2023

(Unaudited - expressed in CDN $000’s except share and per share amounts)

	NUMBER OF SHARES1	SHARE CAPITAL		EQUITY RESERVES		ACCUMULATED OTHER COMPREHENSIVE LOSS		ACCUMULATED DEFICIT		SHAREHOLDERS' EQUITY
Balance - September 1, 2022	78,453,879	$	769,725	$	28,338	$	(78)	$	(289,927)	$	508,058
Share-based compensation (Note 10)	—	—		3,194		—		—		3,194
Exercise of stock options	5,800	14		(6)		—		—		8
Exercise of restricted share units	24,982	239		(239)		—		—		—
Net loss and comprehensive loss	—	—		—		—		(2,159)		(2,159)
Balance - February 28, 2023	78,484,661	$	769,978	$	31,287	$	(78)	$	(292,086)	$	509,101
Balance - October 1, 2023	81,161,630	$	776,906	$	33,404	$	(159)	$	(538,528)	$	271,623
Share-based compensation (Note 10)	—	—		4,002		—		—		4,002
Private placement (Note 10)	12,893,175	39,179		—		—		—		39,179
Exercise of stock options (Note 10)	1,650	5		(2)		—		—		3
Exercise of restricted share units (Note 10)	409,887	1,230		(1,230)		—		—		—
Exercise of performance share units (Note 10)	2,216	22		(22)		—		—		—
Net loss and comprehensive loss	—	—		—		(185)		(42,825)		(43,010)
Balance - March 31, 2024	94,468,558	$	817,342	$	36,152	$	(344)	$	(581,353)	$	271,797

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.

1The Company implemented a consolidation of its common shares in July 2023 and the number of Common Shares has been retrospectively adjusted. Refer to Note 1 for further information.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    3

ORGANIGRAM HOLDINGS INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

For the six months ended March 31, 2024 and February 28, 2023

(Unaudited - expressed in CDN $000’s except share and per share amounts)

	SIX MONTHS ENDED
	MARCH 31, 2024		FEBRUARY 28, 2023
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net loss	$	(42,825)	$	(2,159)
Items not affecting operating cash:
Share-based compensation (Note 10)	4,002		3,194
Depreciation and amortization	5,967		13,737
Loss on disposal of property, plant and equipment and intangible assets	50		313
Realized fair value on inventories sold and other inventory charges (Note 6)	22,985		26,698
Unrealized gain on changes in fair value of biological assets (Note 5)	(18,512)		(38,835)
Financing costs	113		104
Investment income	(1,285)		(1,971)
Share of loss from investments in associates	267		702
Change in fair value of contingent consideration	(50)		(6)
Legal recovery	—		(75)
Bad debts and provision for expected credit losses (Note 4)	4,239		—
Change in fair value of derivative liabilities and other financial assets (Note 8 & 9)	12,985		(3,463)
Income tax recovery	(30)		(231)
Cash used in operating activities before working capital changes	(12,094)		(1,992)
Changes in non-cash working capital:
Net change in accounts and other receivables, biological assets, inventories, prepaid expenses and deposits	(9,061)		3,621
Net change in accounts payable and accrued liabilities, provisions and other liabilities	19,864		(17,875)
Net cash used in operating activities	(1,291)		(16,246)
FINANCING ACTIVITIES
Private placement, net of share issue costs of $420 (Note 10)	41,100		—
Payment of lease liabilities, net of sublease receipts	(350)		(378)
Payment of long-term debt	(40)		(40)
Stock options exercised	3		8
Net cash provided by (used in) financing activities	40,713		(410)
INVESTING ACTIVITIES
Purchase of short-term investments	(802)		(10,000)
Proceeds from short-term investments	—		30,279
Investment income	1,285		1,644
Change in restricted funds, net	6,865		1,930
Other financial assets (Note 8)	(6,463)		—
Proceeds on sale of property, plant and equipment	16		66
Purchase of property, plant and equipment (Note 7)	(1,971)		(13,949)
Purchase of intangible assets	(412)		—
Net cash (used in) provided by investing activities	(1,482)		9,970
INCREASE (DECREASE) IN CASH	$	37,940	$	(6,686)
CASH POSITION
Beginning of period	33,864		$	68,515
End of period	$	71,804	$	61,829

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    4

ORGANIGRAM HOLDINGS INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and six months ended March 31, 2024 and February 28, 2023

(Unaudited - expressed in CDN $000’s except share and per share amounts)

1.    NATURE OF OPERATIONS

Organigram Holdings Inc. (the “Company”) is a publicly traded corporation with its common shares (the “Common Shares”) trading on the Toronto Stock Exchange (“TSX”) and on the Nasdaq Global Select Market (“NASDAQ”) under the symbol “OGI”. The head office of the Company is 1400-145 King Street West, Toronto, Ontario, Canada, M5H 1J8 and the registered office is 35 English Drive, Moncton, New Brunswick, Canada, E1E 3X3.

The Company’s major wholly-owned subsidiaries are: (i) Organigram Inc., a licensed producer (“LP” or “Licensed Producer”) of cannabis and cannabis-derived products in Canada regulated by Health Canada under the Cannabis Act (Canada) and the Cannabis Regulations (Canada); and (ii) 10870277 Canada Inc., a special purpose holding company for the Company. The Company was incorporated under the Business Corporations Act (British Columbia) on July 5, 2010, and continued under the Canada Business Corporations Act (“CBCA”) on April 6, 2016. Organigram Inc. was incorporated under the Business Corporations Act (New Brunswick) on March 1, 2013. 10870277 Canada Inc. was incorporated under the CBCA on July 4, 2018.

On October 1, 2023, Organigram Inc. amalgamated with the Company's wholly-owned subsidiaries, The Edibles and Infusions Corporation ("EIC") and Laurentian Organic Inc. ("Laurentian") and continued as a single corporation under the name "Organigram Inc.", a 100% owned subsidiary of the Company. EIC was incorporated under the Business Corporations Act (Ontario) on September 20, 2018. Laurentian was incorporated under the CBCA on March 18, 2019.

In May 2023, to better align the Company's financial statement reporting requirements with other public companies and calendar quarters, the Company's Board of Directors approved a change in the Company's fiscal year end from August 31 to September 30. The Company's current fiscal year commenced on October 1, 2023 and will end on September 30, 2024 (fiscal 2024). As a result of the change in year end, the current period in these condensed consolidated interim financial statements is for the three and six months ended March 31, 2024, whereas the comparative period is for the three and six months ended February 28, 2023.

On June 19, 2023, the Company's Board of Directors approved the consolidation of the Company’s issued and outstanding Common Shares at a consolidation ratio of four (4) pre-consolidation Common Shares for every post-consolidation Common Share (the “Share Consolidation”). The Share Consolidation was implemented with effect from July 5, 2023 to facilitate compliance with NASDAQ's listing requirements with respect to the minimum bid price for listed securities, to reduce volatility, and to enhance the marketability of the Common Shares to institutional investors. In accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (“IASB”), the change has been applied retrospectively and as a result, all disclosures of Common Shares, per Common Share data and data related to stock options, restricted share units ("RSU"), performance share units ("PSU"), warrants and top-up-rights in the accompanying condensed consolidated interim financial statements and related notes reflect this Share Consolidation for all periods presented.

2.     BASIS OF PREPARATION

i.Statement of compliance

These unaudited condensed consolidated interim financial statements ("interim financial statements") have been prepared in accordance with International Accounting Standard (“IAS 34”) Interim Financial Reporting as issued by the IASB. The interim financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the thirteen months ended September 30, 2023 and year ended August 31, 2022 (“Annual Consolidated Financial Statements”), which have been prepared in accordance with IFRS as issued by the IASB.

These interim financial statements were approved and authorized for issue by the Board of Directors of the Company on May 14, 2024.

ii.Basis of measurement

These interim financial statements have been prepared on a historical cost basis except for biological assets, share-based compensation, contingent share consideration, other financial assets and derivative liabilities, which are measured at fair value.

Historical cost is the fair value of the consideration given in exchange for goods and services, which is generally based upon the fair value of the consideration given in exchange for assets at the time of the transaction.

iii.Basis of consolidation

These interim financial statements include the accounts of the Company and its subsidiaries on a consolidated basis after elimination of intercompany transactions and balances. Subsidiaries are entities the Company controls when it is exposed, or

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    5

has rights, to variable returns from its involvement and has the ability to affect those returns through its power to direct the relevant activities of the subsidiaries. The results of subsidiaries acquired during the year are consolidated from the date of acquisition.

Associates are all entities over which the Company has significant influence but not control or joint control. Investments in associates are accounted for using the equity method after initial recognition at cost. Joint operations are arrangements in which the Company has joint control. The Company includes its proportionate share of the assets acquired and expenses incurred of the joint operation.

iv.Foreign currency translation

Functional and presentation currency

These interim financial statements are presented in Canadian dollars, which is the Company’s and its subsidiaries’ functional currency, except for the Company’s investment in its associate, Alpha-Cannabis Pharma GmbH, for which the functional currency has been determined to be Euros.

3.     MATERIAL ACCOUNTING POLICIES

The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Company’s Annual Consolidated Financial Statements, except for the adoption of the following new standards and amendments.

Amendments to IAS 8: Definition of Accounting Estimates

These amendments introduce the definition of an accounting estimate and include other amendments to IAS 8 to help entities distinguish changes in accounting estimates from changes in accounting policies. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty." The amendments also clarify the relationship between accounting policies and accounting estimates by specifying that a company develops an accounting estimate to achieve the objective set out by an accounting policy. The amendments are effective for annual periods beginning on or after January 1, 2023 and changes in accounting policies and changes in accounting estimates that occur on or after the start of that period.

The Company adopted these amendments effective October 1, 2023. Management assessed the Company’s significant accounting estimates under the new definition and concluded that the application of these amendments do not have an impact on the Company's consolidated financial statements.

Amendments to IAS 1: Disclosure of Accounting Policies

These amendments are intended to help preparers in deciding which accounting policies to disclose in their financial statements. The amendments require entities to disclose their material accounting policy information rather than their significant accounting policies. Accounting policy information is material if, when considered together with other information included in an entity's financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments to IAS 1 are effective for annual periods beginning on or after January 1, 2023 and are to be applied prospectively.

The Company adopted these amendments effective October 1, 2023. The application of these amendments have an impact on the Company’s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Company’s consolidated financial statements.

Amendments IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction

The amendments narrow the scope of the recognition exemption in paragraphs 15 and 24 of IAS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences (e.g. leases and decommissioning liabilities). In other words, these amendments clarify that a deferred tax asset and liability must be recognized on the initial recognition of a lease or decommissioning liabilities. The amendments are effective for annual reporting periods beginning on or after January 1, 2023.

The Company adopted these amendments effective October 1, 2023. The Company’s previous accounting policy was to not apply the initial recognition exemption (i.e. the Company previously recognized deferred tax assets and liabilities on the Company’s lease liabilities and right-of-use assets, respectively). This previous accounting policy choice is consistent with the amendments to IAS 12 and therefore, the application of these amendments do not have an impact on the Company's consolidated financial statements.

Critical accounting estimates and judgments

The preparation of the Company’s financial statements requires management to make estimates, assumptions and judgments that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues and expenses.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    6

Significant estimates and judgments used in preparation of the interim financial statements are described in the Company’s Annual Consolidated Financial Statements, except for the following estimate and judgment:

Recognition and measurement of derivative financial instrument

In determining the initial and subsequent measurement of the derivative in relation to non-voting Class A convertible preferred shares, management has applied significant judgment and estimation in regards to the fair valuation of the derivative liability. Refer to Note 9 and 13 for further information.

4.    ACCOUNTS AND OTHER RECEIVABLES

The Company’s accounts and other receivables include the following balances as at March 31, 2024 and September 30, 2023:

	MARCH 31, 2024		SEPTEMBER 30, 2023
Gross trade receivables	$	30,845	$	28,791
Less: reserves for product returns and price adjustments	(700)		(810)
Less: expected credit losses	(4,712)		(524)
Trade receivables	25,433		27,457
Sales taxes receivable	42		9
Current portion of net investment in subleases	522		508
Other receivables	3,196		2,183
	$	29,193	$	30,157

During the three and six months ended March 31, 2024, the Company recognized a provision for expected credit losses of $4,188 and $4,188, respectively and included in general and administrative expenses in the condensed consolidated interim statements of operations and comprehensive loss.

5.     BIOLOGICAL ASSETS

The Company measures biological assets, which consist of cannabis plants, at fair value less costs to sell up to the point of harvest, which then becomes the basis for the cost of finished goods inventories after harvest. Subsequent expenditures incurred on these finished goods inventories after harvest are capitalized based on IAS 2 Inventories. The changes in the carrying value of biological assets are as follows:

	CAPITALIZED COST		BIOLOGICAL ASSET FAIR VALUE ADJUSTMENT		AMOUNT
Balance, September 30, 2023	$	6,945	$	10,410	$	17,355
Unrealized gain on changes in fair value of biological assets	—		18,512		18,512
Production costs capitalized	20,165		—		20,165
Transfer to inventory upon harvest	(20,962)		(21,028)		(41,990)
Balance, March 31, 2024	$	6,148	$	7,894	$	14,042

The fair value less costs to sell of biological assets is determined using a model which estimates the expected harvest yield in grams for plants currently being cultivated, then adjusts that amount for the average selling price per gram, and for any additional costs to be incurred, such as post-harvest costs. The following unobservable inputs, all of which are classified as level 3 within the fair value hierarchy (see Note 13), are used in determining the fair value of biological assets:

i.average selling price per gram – calculated as the weighted average current selling price of cannabis sold by the Company, adjusted for expectations about future pricing;

ii.expected average yield per plant – represents the number of grams of finished cannabis inventory which is expected to be obtained from each harvested cannabis plant currently under cultivation;

iii.wastage of plants based on their various stages of growth – represents the weighted average percentage of biological assets which are expected to fail to mature into cannabis plants that can be harvested;

iv.post-harvest costs – calculated as the cost per gram of harvested cannabis to complete the sale of cannabis plants post-harvest, consisting of the cost of direct and indirect materials and labour related to drying, labelling, and packaging; and

v.stage of completion in the cultivation process – calculated by taking the average number of weeks in production over a total average grow cycle of approximately 14 weeks.

The Company estimates the harvest yields for the cannabis on plants at various stages of growth, based on expected yield of mature plants. As of March 31, 2024, it is expected that the Company’s biological assets will yield 27,382 kg (September 30,

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    7

2023 – 26,917 kg) of cannabis when eventually harvested. The Company’s estimates are, by their nature, subject to change, and differences from the expected yield will be reflected in the fair value adjustment to biological assets in future periods. The Company accretes fair value on a straight-line basis according to stage of growth. As a result, a cannabis plant that is 50% through its 14-week growing cycle would be ascribed approximately 50% of its harvest date expected fair value less costs to sell (subject to wastage adjustments).

Management believes the most significant unobservable inputs and their impact on fair value are as follows:

SIGNIFICANT	WEIGHTED AVERAGE INPUT							EFFECT ON FAIR VALUE
INPUTS & ASSUMPTIONS	March 31, 2024			September 30, 2023			SENSITIVITY	March 31, 2024		September 30, 2023
Average selling price per gram	$	1.30		$	1.52		Increase or decrease by 10% per gram	$	1,366	$	1,690
Expected average yield per plant	168		grams	173		grams	Increase or decrease by 10 grams	$	813	$	978

The expected average yield per plant at March 31, 2024 and September 30, 2023 primarily reflects the average yield of the flower component of the plant (with the exception being cannabidiol (“CBD”) dominant strains where trim is also harvested for extraction).

6.     INVENTORIES

The Company’s inventories are comprised of the following balances as at March 31, 2024 and September 30, 2023:

	March 31, 2024
	CAPITALIZED COST		FAIR VALUE ADJUSTMENT		CARRYING VALUE
Plants in drying stage	$	1,021	$	836	$	1,857
Dry cannabis
Available for packaging	20,961		14,462		35,423
Packaged inventory	3,877		1,318		5,195
Flower and trim available for extraction	973		402		1,375
Concentrated extract	4,348		2,227		6,575
Formulated extracts
Available for packaging	3,871		1,710		5,581
Packaged inventory	3,165		153		3,318
Packaging and supplies	9,898		—		9,898
	$	48,114	$	21,108	$	69,222

	SEPTEMBER 30, 2023
	CAPITALIZED COST		FAIR VALUE ADJUSTMENT		CARRYING VALUE
Plants in drying stage	$	1,033	$	949	$	1,982
Dry cannabis
Available for packaging	15,250		16,398		31,648
Packaged inventory	4,634		1,559		6,193
Flower and trim available for extraction	1,180		1,602		2,782
Concentrated extract	3,745		2,111		5,856
Formulated extracts
Available for packaging	3,681		366		4,047
Packaged inventory	2,224		80		2,304
Packaging and supplies	8,786		—		8,786
	$	40,533	$	23,065	$	63,598

Flower and trim available for extraction are converted into concentrated extract, which can then be used for oil formulation (combining with a carrier oil) or other products such as edibles, hash and vaporizable products.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    8

The amount of inventory expensed in cost of sales for the three and six months ended March 31, 2024 was $21,015 and $41,060 (February 28, 2023 – $21,300 and $47,281), respectively. The amount of inventory provisions and waste for the three and six months ended March 31, 2024 was $1,976 and $5,340 (February 28, 2023 – $5,092 and $7,300), respectively, which include, provisions for excess and unsaleable inventories of $314 and $1,986 (February 28, 2023 – $1,256 and $2,323), respectively, adjustments to net realizable value of $33 and $46 (February 28, 2023 – $2,265 and $2,327), respectively and processing and packaging waste of $1,629 and $3,308 (February 28, 2023 – $1,571 and $2,650), respectively, which is comprised of the production or purchase costs of these inventories. The remaining balance of cost of sales relates to freight and operational overheads.

The amount of realized fair value on inventories sold and other inventory charges for the three and six months ended March 31, 2024 was $11,062 and $22,985 (February 28, 2023 – $14,170 and $26,698), respectively, including realized fair value on inventories sold of $9,518 and $18,997 (February 28, 2023 – $9,713 and $20,370), respectively. Inventory provisions to recognize the realized fair value on waste and to adjust to net realizable value during the three and six months ended March 31, 2024 were $1,577 and $4,034 (February 28, 2023 – $6,722 and $8,655), respectively, consisting of $33 and $46 (February 28, 2023 – $2,265 and $2,327), respectively, recognized in cost of sales and $1,544 and $3,988 (February 28, 2023 – $4,457 and $6,328),respectively, recognized in fair value adjustments.

7.    PROPERTY, PLANT AND EQUIPMENT

	LAND		BUILDINGS		GROWING & PROCESSING EQUIPMENT		OTHER		RIGHT-OF-USE ASSETS		TOTAL
Cost
Balance, September 30, 2023	$	4,705	$	160,980	$	166,940	$	14,839	$	4,600	$	352,064
Additions	—		215		1,458		258		16		1,947
Disposals	—		—		(241)		—		(16)		(257)
Balance, March 31, 2024	$	4,705	$	161,195	$	168,157	$	15,097	$	4,600	$	353,754
Accumulated depreciation and impairment
Balance, September 30, 2023	$	(2,721)	$	(99,897)	$	(136,571)	$	(11,593)	$	(2,236)	$	(253,018)
Adjustment	—		—		591		—		—		591
Depreciation	—		(1,434)		(2,557)		(237)		(169)		(4,397)
Disposals	—		—		176		—		16		192
Balance, March 31, 2024	$	(2,721)	$	(101,331)	$	(138,361)	$	(11,830)	$	(2,389)	$	(256,632)
Net book value
September 30, 2023	$	1,984	$	61,083	$	30,369	$	3,246	$	2,364	$	99,046
March 31, 2024	$	1,984	$	59,864	$	29,796	$	3,267	$	2,211	$	97,122

Included in deferred charges and deposits is $415 (September 30, 2023 – $222) paid to secure the acquisition of growing and processing equipment. The amounts will be recorded into property, plant and equipment as equipment is received.

Reconciliation of property, plant, and equipment additions to the statements of cash flows

The following table reconciles additions of property, plant, and equipment per the above table to the purchases of property, plant, and equipment per the statements of cash flows:

	MARCH 31, 2024		FEBRUARY 28, 2023
Total additions (including right-of-use lease assets)	$	1,947	$	12,249
Less: additions related to right-of-use lease assets	(16)		(2,300)
Net change in deferred charges and deposits related to purchases of property, plant and equipment	193		(2,601)
Net change in accounts payable and accrued liabilities related to purchases of property, plant and equipment	(153)		6,601
Purchase of property, plant and equipment	$	1,971	$	13,949

8. OTHER FINANCIAL ASSETS

i.Weekend Holdings Corp.

On March 30, 2023, the Company entered into a product purchase agreement with Green Tank Technologies Corp. ("Greentank"), a leading vaporization technology company and a subscription agreement with Greentank’s parent company,

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    9

Weekend Holdings Corp. (“WHC”). The product purchase agreement provides the Company with an exclusivity period in Canada for the new technology incorporated into 510 vape cartridges (along with other formats) for use with cannabis, including the development of a custom all-in-one device that will be proprietary to the Company. The period of exclusivity for the new technology will be for 18 months following its commercialization. Under the terms of the subscription agreement, the Company subscribed for preferred shares of WHC for an aggregate subscription price of US $4.0 million ($5,504 including transaction costs of $73) representing an approximate 2.6% interest in WHC.

At initial recognition, the investment in WHC is classified as an equity investment and the Company irrevocably elected to measure this investment at fair value through other comprehensive income. As at March 31, 2024, the investment had a fair value of $5,160 (September 30, 2023 – $5,345). During the three and six months ended March 31, 2024, the Company recognized a decrease in fair value of $130 and $185 respectively, in the condensed consolidated interim statements of operations and comprehensive loss within other comprehensive loss.

ii.Phylos Bioscience Inc.

On May 25, 2023, the Company entered into a secured convertible loan agreement (the "Secured Convertible Loan Agreement") with Phylos Bioscience Inc. ("Phylos"), a cannabis genetics company and provider of production-ready seeds, based in Portland, Oregon. Under the terms of this agreement, the Company will advance up to US $8 million to Phylos in three tranches structured as a secured convertible loan. The Company advanced Phylos an initial US $3.25 million ($4,429) on the closing date of the first tranche of the secured convertible loan and is committed to fund up to an additional US $4.75 million over two tranches within 12 and 24 months from the initial closing date, subject to the completion of certain milestones. The secured convertible loan will accrue paid-in-kind interest (“PIK”) at a rate of the U.S. Prime Rate + 3.5% (with an overall cap of 11%) subject to certain conditions. The maturity date of the secured convertible loan will be on the fifth anniversary of the initial closing date subject to one-year extensions at the Company's discretion and certain other conditions stipulated in the Secured Convertible Loan Agreement. The secured convertible loan (principal and PIK outstanding) is convertible into common share equity of Phylos under certain circumstances.

In November 2023, Phylos met the first milestone under the Secured Convertible Loan Agreement and the Company funded the second tranche of US $2.75 million ($3,746). The initial recognition of the second tranche was adjusted against the value of the derivative liability that was already recognized as part of the overall transaction at the time of initial recognition of the first tranche of the secured convertible loan. Refer to Note 9 (ii) for further information.

As at March 31, 2024, the secured convertible loan had a total fair value of $5,656 (September 30, 2023 – $3,092). During the the three and six months ended March 31, 2024, the Company recognized an increase in fair value of $99 and $203 respectively, in the condensed consolidated interim statements of operations and comprehensive loss.

iii.Steady State LLC (d/b/a Open Book Extracts)

In March 2024, the Company invested US $2 million ($2,717) in Open Book Extracts (“OBX”) in the form of a convertible promissory note. U.S. based OBX specializes in legal cannabinoid ingredient production and serves as a one-stop formulation and finished goods manufacturer, simplifying its clients’ supply chains. This convertible promissory note accrues simple interest at the Bank of England base rate plus 8%, capped to a maximum of 15%. All accrued interest is due and payable in full upon maturity, conversion, or prepayment of the convertible promissory note. Unless earlier converted, the principal amount and all accrued interest will be due and payable on October 16, 2026 (the “Maturity Date”). Upon maturity of the convertible promissory note, the principal amount and unpaid accrued interest may be converted, at the Company’s option, into shares of OBX. As at March 31, 2024, the Company has not noted any change in the fair valuation.

9.    DERIVATIVE LIABILITIES

i.    Top-up Rights

In connection with the closing of the first tranche of the Follow-on BAT Investment (as hereinafter defined) by from British American Tobacco P.L.C ("BAT"), the Company and BAT entered into an amended and restated investor rights agreement (the "Amended and Restated IRA") that has superseded the earlier investor rights agreement. Refer to Note 10 for further information.

As at March 31, 2024, the Company revalued the top-up-rights (the "Top-up Rights") of BAT pursuant to the Amended and Restated IRA at an estimated fair value of $1,019 (September 30, 2023 – $130). The Company recorded an increase in the estimated fair value change of the Top-up Rights for the three and six months ended March 31, 2024 of $713 and $889 (February 28, 2023 – decrease of $239 and $222).

The following inputs were used to estimate the fair value of the Top-up Rights at March 31, 2024 and September 30, 2023:

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    10

	MARCH 31, 2024
	STOCK OPTIONS	PSUs	RSUs
Average exercise price	$1.20 - $45.08	$—	$—
Risk free interest rate	3.63% - 4.25%	3.78%	3.94%
Expected future volatility of common shares	75.00% - 90.00%	90.00%	75.00%
Expected life (years)	1.69 - 4.08	3.29	2.58
Forfeiture rate	10%	25%	5%

	SEPTEMBER 30, 2023
	STOCK OPTIONS	WARRANTS	PSUs	RSUs
Average exercise price	$1.20 - $45.08	$2.50	$—	$—
Risk free interest rate	4.11% - 4.54%	3.59%	3.65%	3.78%
Expected future volatility of common shares	70.00% - 90.00%	90.00%	85.00%	85.00%
Expected life (years)	1.34 - 5.12	0.12	5.92	5.18
Forfeiture rate	10%	—%	25%	6%

ii.    Secured Convertible Loan Agreement

On May 25, 2023, the Company entered into the Secured Convertible Loan Agreement with Phylos. Under the terms of the Secured Convertible Loan Agreement, upon the completion of certain milestones the Company had a commitment to fund US $4.75 million over two tranches within 12 and 24 months from the initial closing date. This commitment meets the definition of a derivative and the value of such derivative was considered as part of the overall transaction price in the initial recognition of the secured convertible loan and intangible assets. At initial recognition, the Company recognized a derivative liability of $1,424 based on the estimated fair value of the secured convertible loan. As at September 30, 2023, the Company revalued this commitment at an estimated fair value of $1,743.

In November, 2023, the Company funded the second tranche of US $2.75 million and a derivative liability of $1,385 was derecognized. As at March 31, 2024, the Company revalued its commitment for the third tranche at an estimated fair value of $770. The Company recorded an increase in fair value of $28 and $412 for the three and six months ended March 31, 2024.

iii.    Non-voting Class A preferred shares

In relation to the Follow-on BAT Investment (as hereinafter defined), the Company is required to issue non-voting Class A convertible preferred shares ("Preferred Shares"). The Preferred Shares to be issued as part of future tranches represent an obligation for the Company to deliver a variable number of its own Common Shares and hence meet the definition of an instrument classified as a derivative financial instrument as per IAS 32 Financial Instruments: Presentation. The Company measured the derivative at fair value on initial recognition. The derivative financial instrument would be classified as a derivative asset or a derivative liability depending partly on whether the fair value of the Company's Preferred Shares is above or below the $3.2203 subscription price. At initial recognition, the carrying amount of the Common Shares issued in the first tranche was measured as the difference between the proceeds received from BAT for the first tranche minus transactions costs and the fair value of the derivative of $1,921. Refer to Note 10 (iii) for further information regarding Follow-on BAT Investment.

As at March 31, 2024, the Company revalued the derivative liability at an estimated fair value of $13,808 and accordingly, the Company recognized a fair value loss of $11,887 in the condensed consolidated interim statements of operations and comprehensive loss. The derivative liability is included in the current derivative liabilities on the condensed consolidated interim statement of financial position.

10.    SHARE CAPITAL

i.    Authorized share capital

The authorized share capital of the Company is an unlimited number of Common Shares without par value and an unlimited number of preferred shares without par value. All issued shares, consisting only of Common Shares, are fully paid and non-assessable.

ii.    Issued share capital

As at March 31, 2024, the Company’s issued and outstanding share capital consisted of 94,468,558 (September 30, 2023 – 81,161,630) Common Shares with a carrying value of $817,342 (September 30, 2023 - $776,906).

iii.    Issuances of share capital

Private Placement

In November 2023, the Company entered into a subscription agreement (the "Subscription Agreement") with BAT for a $124.6 million follow-on investment (the "Follow-on BAT Investment"), whereby BAT, acting through its wholly owned subsidiary BT DE Investments Inc., agreed to subscribe for a total of 38,679,525 shares at a price of $3.2203 per share, subject to the receipt of

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    11

shareholder approval, certain regulatory approvals and other conditions. At each tranche closing, BAT will be issued Common Shares in the Company insofar as the aggregate number of Common Shares owned or controlled by BAT does not exceed 30% of the aggregate number of Common Shares issued and outstanding. To the extent that BAT would otherwise acquire in excess of 30% of the outstanding Common Shares, it will be issued Preferred Shares.

The Preferred Shares will be eligible for conversion into voting Common Shares at BAT’s option, provided that such conversion would not result in BAT’s voting interest in the Company exceeding 30%. Each Preferred Share shall be economically equivalent to a Common Share and will be convertible into Common Shares without payment of any additional consideration. The conversion ratio shall initially be one-for-one, and post-issuance shall increase at a rate of 7.5% per annum, compounded annually, until such time as the Preferred Shares are converted into Common Shares or the aggregate equity interest of BAT in the Company (inclusive of both the Common Shares and Preferred Shares as if converted into Common Shares) reaches 49%. BAT shall be periodically required to convert Preferred Shares to the extent that it holds less than 30% of the Common Shares outstanding.

In connection with the closing of the first tranche, the Company and BAT also entered the Amended & Restated IRA, pursuant to which BAT is eligible to appoint up to 30% of the Board of Directors. Furthermore, the Amended & Restated IRA extends the period within which BAT is eligible to exercise certain Top-Up Rights to 12 months after the closing date of the final tranche of the Follow-on BAT Investment.

In January 2024, the Company obtained shareholder and other regulatory approvals and closed the first of three tranches of the Follow-on BAT Investment. Pursuant to the first tranche closing, BAT acquired 12,893,175 Common Shares of the Company at a price of $3.2203 per share for gross proceeds of $41,520. The remaining 25,786,350shares are to be subscribed for in two further equal tranches on or around August 30, 2024 and February 28, 2025, subject to certain customary conditions. Considering the Company will be issuing the Preferred Shares as part of future tranches, this represents an obligation for the Company to deliver a variable number of its own Common Shares and hence meet the definition of an instrument classified as a derivative financial instrument as per IAS 32 Financial Instruments: Presentation. IFRS 9 requires the value of such derivative to be recognized as part of closing of the first tranche and therefore, the carrying amount of the Common Shares issued in the first tranche on initial recognition was measured as the difference between the gross proceeds of $41,520 received from BAT for the first tranche minus transaction costs of $420 and the fair value of the derivative of $1,921.Refer to Note 9 (iii) for further details.

The Company incurred the total costs of $1,259 in the form of listing fees, regulatory fees, and legal and professional fees. Out of this total cost, $420 was allocated to the Common Shares that were issued on closing of the first tranche of Follow-on BAT Investment. Out of the remaining costs, $19 were allocated to the derivative liability and recognized as an expense in the condensed consolidated interim statements of operations and comprehensive loss and $820 are related to a probable issue of shares in the future and recognized as prepaid expenses and deposits.

iv.    Share-based compensation

During the three and six months ended March 31, 2024, the Company recognized total share-based compensation charges, including those related to production employees that are charged to biological assets and inventory of $1,995 and $4,002 (February 28, 2023 – $1,342 and $3,194).

Stock options

The following table summarizes changes in the Company’s outstanding stock options for the six months ended March 31, 2024:

	NUMBER	WEIGHTED AVERAGE EXERCISE PRICE
Balance - September 30, 2023	2,829,676	$	9.94
Granted	62,000	$	5.60
Exercised	(1,650)	$	1.90
Cancelled / Forfeited	(46,673)	$	12.83
Expired	(2,900)	$	13.13
Balance - March 31, 2024	2,840,453	$	9.80

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    12

The fair value of options granted during the six months ended March 31, 2024 was $123 (February 28, 2023 - $1,027) and was estimated using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted.

For the three and six months ended March 31, 2024, share-based compensation charges, including related to production employees that are charged to biological assets and inventory, were $385 and $683 (February 28, 2023– $694 and $1,800), respectively, related to the Company’s stock option plan.

Restricted share units ("RSUs")

The following table summarizes the movement in the Company’s outstanding RSUs:

	NUMBER
Balance - September 30, 2023	881,149
Granted	3,354,201
Exercised	(409,887)
Balance - March 31, 2024	3,825,463

The estimated fair value of the equity-settled RSUs granted during the six months ended March 31, 2024 was $6,794 (February 28, 2023 – $1,828), which was based on the Company’s share price at the grant date and will be recognized as an expense over the vesting period of the RSUs, which is over a period of three years except for certain RSUs that were vested on the grant date.

For the three and six months ended March 31, 2024, $1,464 and $3,095 (February 28, 2023 – $601 and $1,318) has been recognized as share-based compensation expenses.

Performance share units ("PSUs")

The following table summarizes the movements in the Company’s outstanding PSUs:

	NUMBER
Balance - September 30, 2023	260,713
Granted	911,213
Exercised	(2,216)
Balance - March 31, 2024	1,169,710

The estimated fair value of the equity-settled PSUs granted during the six months ended March 31, 2024 was $765 (February 28, 2023 – $472), which was based on the Company’s share price at the grant date, adjusted for an estimate of the likelihood of forfeiture, and will be recognized as an expense over the vesting period of the PSUs, which is three years.

For the three and six months ended March 31, 2024, $146 and $224 (February 28, 2023 – $47 and $76) has been recognized as share-based compensation expense.

11.    RELATED PARTY TRANSACTIONS

Key management personnel are those persons having the authority and responsibility for planning, directing, and controlling activities of the Company, directly or indirectly. The key management personnel of the Company are the members of the Company’s executive management team and Board of Directors. The transactions are conducted at arm’s length and in the normal course of operations.

Management and Board compensation

For the three and six months ended March 31, 2024 and February 28, 2023, the Company’s expenses included the following management and Board of Directors compensation:

	THREE MONTHS ENDED				SIX MONTHS ENDED
	MARCH 31, 2024		FEBRUARY 28, 2023		MARCH 31, 2024		FEBRUARY 28, 2023
Salaries	$	1,479	$	1,545	$	3,050	$	3,022
Share-based compensation	1,450		790		2,387		2,032
Total key management compensation	$	2,929	$	2,335	$	5,437	$	5,054

During the three and six months ended March 31, 2024, 62,000 and 62,000 stock options, respectively (February 28, 2023 – nil and 200,000) were granted to key management personnel with an aggregate fair value of $123 and $123 (February 28,

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    13

2023 – $nil and $631). In addition, during the three and six months ended March 31, 2024, 830,888 and 2,138,542 RSUs, respectively (February 28, 2023 – nil and 285,191) were granted with a fair value of $2,116 and $4,300, respectively (February 28, 2023 – $nil and $1,325). For the three and six months ended March 31, 2024, 16,785 and 678,717 PSUs, respectively (February 28, 2023 – nil and 136,920) were issued to key management personnel with an aggregate fair value of $25 and $543, respectively (February 28, 2023 – $nil and $305).

Significant Transactions with Associates and Joint Operations

The Company has transactions with related parties, as defined in IAS 24 Related Party Disclosures, all of which are undertaken in the normal course of business.

For the three and six months ended March 31, 2024, under the Product Development Collaboration Agreement between the Company and BAT dated March 10, 2021, BAT incurred $1,282 and $2,388 (February 28, 2023 – $1,394 and $1,812) for direct expenses and the Company incurred $1,746 and $6,770 (February 28, 2023 – $2,801 and $5,073) of direct expenses and capital expenditures of $1 and $95 (February 28, 2023 – $409 and $642) related to the Center of Excellence, respectively. The Company recorded in the three and six months ended March 31, 2024, $1,514 and $4,579 (February 28, 2023 – $2,098 and $3,443) of these expenditures within research and development expenses in the condensed consolidated interim statements of operations and comprehensive loss. For the three and six months ended March 31, 2024, the Company recorded $1 and $48 (February 28, 2023 – $205 and $321) of capital expenditures which are included in the condensed consolidated interim statement of financial position.

At March 31, 2024, there is a balance receivable from BAT of $2,406 (September 30, 2023 – $167).

In November 2023, the Company entered into a subscription agreement (the "Subscription Agreement") with BAT for a $124.6 million Follow-on BAT Investment, whereby BAT, agreed to subscribe for a total of 38,679,525 shares at a price of $3.2203 per share, subject to the receipt of shareholder approval, certain regulatory approvals and other conditions. In January, 2024, the Company obtained shareholder and other regulatory approvals and closed the first of three tranches of the Follow-on BAT Investment. Pursuant to the first tranche closing, the Company issued 12,893,175 Common Shares, resulting in BAT's beneficial ownership in the Company reaching at approximately 29.9%. For the remaining two tranches, BAT will be issued Common Shares in the Company insofar as the aggregate number of Common Shares owned or controlled by BAT does not exceed 30% of the aggregate number of Common Shares issued and outstanding. To the extent that BAT would otherwise acquire in excess of 30% of the outstanding Common Shares, it will be issued Preferred Shares. Refer to Note 10 (iii) for further information regarding Follow-on BAT Investment.

12.     CAPITAL MANAGEMENT

The Company considers its capital to consist of long-term debt, derivative liabilities, share capital, equity reserves, accumulated other comprehensive loss, and accumulated deficit, which at March 31, 2024 is $287,512 (September 30, 2023 - $273,651). Equity reserves is comprised of any amounts recorded with respect to the recognition of share-based compensation expense (stock options, RSUs, or PSUs) and the fair value of warrants issued. Accumulated other comprehensive loss is entirely comprised of fair value changes recorded on the Company's investment in Greentank.

The Company manages its capital structure and adjusts it based on funds available to the Company, in order to fund its growth. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative stage of the Company, is reasonable. There has been no change in how the Company manages capital during the period.

13.    FAIR VALUE OF FINANCIAL INSTRUMENTS AND FINANCIAL RISK FACTORS

i.Fair value of financial instruments

Financial instruments recorded at fair value on the consolidated statement of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value measurement based on the lowest-level input significant to the fair value measurement in its entirety.

The three levels of the fair value hierarchy are described as follows:

•level 1 inputs are quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date;

•level 2 inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    14

•level 3 inputs are unobservable inputs for the asset or liability.

The fair values of cash, short term investments, accounts and other receivables, accounts payable and accrued liabilities and restricted funds approximate their carrying amounts due to their short-term nature. The fair value of long-term debt approximates $118 (September 30, 2023 – $155), which is its carrying value.

The fair value of the investment in WHC is primarily based on level 3 unobservable inputs and is determined using a market-based approach, based on revenue multiples for comparable companies.

The fair value of the secured convertible loan advanced to Phylos under the Secured Convertible Loan Agreement was determined using the Cox-Ross-Rubinstein binomial lattice option pricing model and has been classified as level 3 in the fair value hierarchy. The fair value of the secured convertible loan was based on certain assumptions, including likelihood, and timing of the federal legalization or decriminalization of cannabis in the United States. Similarly, the fair value of the commitment to fund an additional US $2 million was based on certain assumptions, including the probability of Phylos meeting required milestones.

The fair value of the Top-up Rights is based on level 3 inputs utilized in a Monte Carlo pricing model to estimate the fair value of such Top-up Rights. The key assumptions used in the model are the expected future price of the Company’s Common Shares, the weighted average expected life of the instruments and the expected future volatility of Common Shares. A sensitivity analysis for a change in inputs was not presented as it was deemed that the impact of reasonable changes in inputs would not be significant.

The fair value of the contractual commitment to issue Preferred Shares in the future is based on level 1, level 2 and level 3 inputs and is determined based on estimated fair value of the Preferred Shares and the present value of the share price agreed with BAT. The fair value of the Preferred Shares was estimated using certain assumptions, including tenure of BAT's Common Shares and potential shareholding meeting 30% and 49% thresholds, respectively, market price and volatility of the Company's Common Shares, risk free rate and discount for lack of marketability.

During the period, there were no transfers of amounts between levels 1, 2 and 3.

ii.Financial risk factors

The Company is exposed to various risks through its financial instruments, as follows:

(a) Credit risk arises from deposits with banks, outstanding trade and other receivables, restricted funds and other financial assets. For trade receivables, the Company does not hold any collateral as security but mitigates this risk by dealing only with what management believes to be financially sound counterparties and, accordingly, does not anticipate significant loss for non-performance, except potentially from outstanding receivable from one of our international customers. For certain trade and other receivables, management also obtains insurance, guarantees or general security agreements, where applicable. The maximum exposure to credit risk of cash, short-term investments, restricted funds, other financial assets and accounts receivable and other receivables on the statement of financial position at March 31, 2024 approximates $126,360 (September 30, 2023 – $90,351).

As of March 31, 2024 and September 30, 2023, the Company’s aging of trade receivables was as follows:

	MARCH 31, 2024		SEPTEMBER 30, 2023
0-60 days	$	25,749	$	22,946
More than 60 days	5,096		5,845
Gross trade receivables	$	30,845	$	28,791
Less: Expected credit losses and reserve for product returns and price adjustments	(5,412)		(1,334)
	$	25,433	$	27,457

(b) Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by reviewing on an ongoing basis its capital requirements. At March 31, 2024, the Company had $71,804 (September 30, 2023 – $33,864) of cash and working capital of $138,228 (September 30, 2023 – $133,545). Further, the Company may potentially access equity capital through the capital markets if required.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    15

The Company is obligated to the following contractual maturities relating to their undiscounted cash flows as at March 31, 2024:

	Carrying Amount		Contractual Cash Flows		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years
Accounts payable and accrued liabilities	40,174		40,174		40,174		—		—		—
Long-term debt	118		121		66		55		—		—
Lease obligations	4,081		5,110		1,179		1,268		926		1,737
	$	44,373	$	45,405	$	41,419	$	1,323	$	926	$	1,737

The contractual maturities noted above are based on contractual due dates of the respective financial liabilities.

In connection with the Company’s facilities, the Company is contractually committed to approximately $985 of capital expenditures.

(c) Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk for the Company is comprised of interest rate risk.

(d) Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with floating interest rates. The Company has determined that a 1% change in rates would not have a material impact on the interim financial statements.

14.    REVENUE

Net revenue for the Company is defined as gross revenue, which is net of any customer discounts, rebates, and sales returns and recoveries, less excise taxes.

Gross revenue for the three and six months ended March 31, 2024 and February 28, 2023 is disaggregated as follows:

	THREE MONTHS ENDED				SIX MONTHS ENDED
	MARCH 31, 2024		FEBRUARY 28, 2023		MARCH 31, 2024		FEBRUARY 28, 2023
Adult-use recreational wholesale revenue (Canadian)	$	52,915	$	40,819	$	107,157	$	94,162
Direct to patient medical and medical wholesale revenue (Canadian)	448		769		894		2,332
International wholesale (business to business)	2,184		10,758		3,209		16,627
Wholesale to Licensed Producers (Canadian)	1,794		499		2,341		563
Other revenue	84		53		94		96
Gross revenue	$	57,425	$	52,898	$	113,695	$	113,780
Excise taxes	(19,797)		(13,405)		(39,612)		(30,966)
Net revenue	$	37,628	$	39,493	$	74,083	$	82,814

Adult-use recreational revenue is primarily comprised of provincial government bodies and large retailers that sell cannabis through their respective distribution models, whereas international and domestic wholesale revenue is comprised of wholesale shipments to other cannabis companies, including Licensed Producers, for further processing and sales onto their end customers.

During the three and six months ended March 31, 2024, the Company had four and four customers (February 28, 2023 – four and four customers), respectively, that individually represented more than 10% of the Company’s net revenue.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    16

15.    GENERAL AND ADMINISTRATIVE EXPENSES BY NATURE

	THREE MONTHS ENDED				SIX MONTHS ENDED
	MARCH 31, 2024		FEBRUARY 28, 2023		MARCH 31, 2024		FEBRUARY 28, 2023
Office and general	$	8,056	$	4,196	$	12,394	$	7,822
Wages and benefits	3,924		3,466		7,933		7,230
Professional fees	1,389		2,316		3,736		4,403
Depreciation and amortization	1,108		1,445		1,925		2,839
Travel and accommodation	143		206		358		390
Utilities	139		108		280		264
Total general and administrative expenses	$	14,759	$	11,737	$	26,626	$	22,948

During the three and six months ended March 31, 2024, the Company recognized a provision for expected credit losses of $4,188 and $4,188, respectively and included in Office and general category in the table above.

16.     OPERATING SEGMENTS

An operating segment is a component of the Company for which discrete financial information is available and whose operating results are regularly reviewed by the Company's chief operating decision maker, to make decisions about resources to be allocated to the segment and assess its performance, and that engages in business activities from which it may earn revenue and incur expenses. The Company only has one operating segment.

17.    SUBSEQUENT EVENTS

In April 2024, the Company closed an underwritten public offering (the "Offering") for gross proceeds of $28.8 million, including exercise of an over-allotment option. The Company sold 8,901,000 Units at a price of $3.23 per Unit, which included 1,161,000 Units sold pursuant to the exercise in full of the underwriters’ over-allotment option. Each Unit is comprised of one Common Share of the Company and one-half of one Common Share purchase warrant (each full Common Share purchase warrant, a “Warrant”). Each Warrant is exercisable to acquire one Common Share (a “Warrant Share”) for a period of four years following the closing date of the Offering at an exercise price of $3.65 per Warrant Share, subject to adjustment in certain events.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) | FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2024 AND FEBRUARY 28, 2023    17