BZAM LTD. — Interim / Quarterly Report 2022

Nov 23, 2022

==> picture [314 x 136] intentionally omitted <==

==> picture [314 x 136] intentionally omitted <==

The Green Organic Dutchman Holdings Ltd. Unaudited Interim Condensed Consolidated Financial Statements For the three and nine months ended September 30, 2022 and September 30, 2021

1

The Green Organic Dutchman Holdings Ltd. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited)

(expressed in thousands of Canadian dollars, except common shares outstanding)

	Notes	As at September 30, 2022	As at December 31, 2021
ASSETS
Current assets
Cashand cashequivalents	$	1,828 $	4,089
Restricted cash	17	1,227	219
Tradereceivables	17	7,042	8,833
Biologicalassets	8	6,574	3,149
Inventories	9	24,670	20,942
Prepaid expenses and deposits		2,088	1,502
Othercurrent assets	10	1,584	1,841
Duefrom related parties		1,482	573
Assets held for sale	4	-	13,612
	$	46,495 $	54,760
Non-current assets
Property, plant and equipment	6	102,139	117,980
Intangible assets	7	14,555	15,585
Goodwill	7	3,939	3,939
Other assets	10,16	1,281	1,735
Total assets	$	168,409 $	193,999
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accruedliabilities	$	19,064 $	17,664
Sales taxes payable		531	248
Current portionof loans	5	30,325	2,021
Current portionof leaseliabilities	12	1,363	1,049
Loanpayable to disposalgroup	4	—	5,492
Liabilitiesheldforsale	4	—	2,570
Currentportion of contingent consideration	11	822	—
		52,105	29,044
Non-current liabilities
Leaseliabilities	12	8,086	6,517
Loans	5	—	18,204
Contingent consideration	11	—	3,423
		8,086	28,144
Total liabilities	$	60,191 $	57,188
Shareholders' equity
Share capital	13	509,378	508,504
Contributed surplus	14	109,396	108,836
Deficit		(505,825 )	(478,697 )
Reserve for foreign currencytranslations		(3,868 )	(969 )
Total Shareholders' Equity attributed to The Green Organic Dutchman	$	109,081 $	137,674
Holdings Ltd.
Non-controlling interests		(863 )	(863 )
Total Shareholders' Equity		108,218	136,811
Total Liabilities and Shareholders' Equity	$	168,409 $	193,999
Total number of common shares outstanding	13	754,179,027	749,660,647
Going concern	2
Commitments and contingencies	16
Events after the reporting period	2, 5, 20

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

1

The Green Organic Dutchman Holdings Ltd.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Unaudited)

( expressed in thousands of Canadian Dollars, except per share amounts)

	For the three months ended For the nine months ended	For the three months ended For the nine months ended	For the three months ended For the nine months ended	For the three months ended For the nine months ended	For the three months ended For the nine months ended
	Notes September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Continuing operations
Revenue	$ 13,819 $ 9,745 $ 44,013 $ 26,813
Excise duties		(3,897)	(2,465)	(11,889) (6,038)
Net revenue		9,922	7,280	32,124 20,775
Cost of sales		9,326	5,154	25,328 16,033
Gross profit before change in fair value of biological		596	2,126	6,796 4,742
assets
Realizedfairvalue adjustment onsale of inventories		(8,597)	(1,765)	(14,877) (5,626)
Unrealized gain on changes in fair value of biological	8	8,998	2,185	21,986 7,750
assets
Grossprofit	$ 997 $ 2,546 $ 13,905 $ 6,866
Operating expenses
Sales andmarketing expenses	$ 1,824 $ 890 $ 5,416 $ 2,764
Researchand development expenses		121	60	422 471
Generaland administrative expenses		4,191	6,369	13,009 15,643
Share based compensation	14	370	884	1,207 2,516
Depreciation and amortization	6,7	3,209	3,494	10,046 8,543
Total operating expenses	$ 9,715 $ 11,697 $ 30,100 $ 29,937
Loss from operations		(8,718)	(9,151)	(16,195) (23,071)
Foreignexchange gain/(loss)	17[c]	(1,373)	(803)	(2,995) (578)
Finance costs		(1,296)	(1,002)	(3,409) (5,323)
Accretionexpense	5	(384)	(295)	(1,186) (5,148)
Financeincome		6	8	13 55
Revaluationgainofcontingent consideration	11	1,716	—	2,601 39
Gain(loss) ondisposalofassets		—	(159)	8 (63)
Reversal of impairment / (impairment) charge for non-	6	—	—	(6,183) 21,811
financialassets
Loss onderecognitionon investmentinjoint venture		—	—	— (761)
Impairmentloss on remeasurement ofdisposalgroup		—	(4,442)	(2,489) (4,442)
Gainondisposalofsubsidiary	4	3,187	—	3,187 —
Loss onassetsheldforsale		—	—	— (17,688)
Debt modification	5	—	1,275	(48) 1,275
Income (loss) before income taxes		(6,862)	(14,569)	(26,696) (33,894)
Deferred income tax recovery		—	628	— 628
Net loss from continuing operations	$ (6,862) $ (13,941) $ (26,696) $ (33,266)
Discontinued operations
Net Income/(loss)from discontinued operation	4	21	(603)	(432)	(1,295)
Net loss from operations		(6,841)	(14,544)	(27,128)	(34,561)

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

2

The Green Organic Dutchman Holdings Ltd. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (CONTINUED)

(Unaudited)

( expressed in thousands of Canadian Dollars, except per share amounts)

	For the three months ended	For the three months ended	For the nine months ended	For the nine months ended
	September 30, 2022	September 30, 2021	September 30, 2022 September 30, 2021
Other comprehensive loss
Foreign currencytranslation loss	2,010	(483)	2,899 866
Comprehensive loss $ (8,851) $ (14,061) $ (30,027) $ (35,427)
Net loss attributable to:
The GreenOrganicDutchman HoldingsLtd.	(6,841)	(14,509)	(27,128)	(34,451)
Non-controllinginterests	—	(35)	—	(110)
Comprehensive loss attributable to:
The GreenOrganicDutchman HoldingsLtd.	(8,851)	(14,026)	(30,027)	(35,317)
Non-controllinginterests	—	(35)	—	(110)
Basic and diluted lossper share $ (0.01) $ (0.03) $ (0.04) $ (0.07)
Basic and diluted lossper share - Continuingoperations $ (0.01) $ (0.03) $ (0.04) $ (0.06)
Weighted average number of outstanding common shares	753,547,234	530,900,216	752,321,789	522,625,638

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

3

The Green Organic Dutchman Holdings Ltd. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited)

(expressed in thousands of Canadian Dollars, except number of shares)

		Share Capital	Share Capital			Contributed Surplus	Contributed Surplus
	Notes	Common Shares	Amount	Reserve for share based payments	Reserve for warrants	Other contributed surplus	Escrowed share units	Total Contributed surplus	Reserve for foreign currency translations	Accumulated deficit		Total
											Non-
											Controlling
											Interests
		#	$	$	$	$	$	$	$	$	$	$
Balance, December 31, 2021		749,660,647	508,504	21,653	10,375	76,768	40	108,836	(969)	(478,697)	(863)	136,811
Issuance ofcommonshares	13[a]	904,000	102	—	—	—	—	—	—	—	—	102
Share based compensation	14[a,c]	—	—	567	—	—	—	567	—	—	—	567
Restricted share units exercised during	13[c]	9,842	40	—	—	—	(40)	(40)	—	—		—
period-escrowed											—
Shares and warrants issued in connection	13[b]	500,000	50	—	—	—	—	—	—	—		50
withdebtmodification											—
Comprehensive loss		—	—	—	—	—	—	—	(509)	(13,506)	—	(14,015)
Balance, March 31, 2022		751,074,489	508,696	22,220	10,375	76,768	—	109,363	(1,478)	(492,203)	(863)	123,515
Share based compensation	14[a,c]	—	—	270	—	—	—	270	—	—	—	270
Restricted share units exercised during	13[d]	2,167,038	607	(607)	—	—	—	(607)	—	—		—
period											—
Comprehensive loss		—	—	—	—	—	—	—	(380)	(6,781)	—	(7,161)
Balance, June 30, 2022		753,241,527	509,303	21,883	10,375	76,768	—	109,026	(1,858)	(498,984)	(863)	116,624
Share based compensation	14[a,c]	—	—	370	—	—	—	370	—	—	—	370
Sharesissued to settle accounts payable	13[e]	937,500	75	—	—	—	—	—	—	—	—	75
Comprehensive loss		—	—	—	—	—	—	—	(2,010)	(6,841)	—	(8,851)
Balance, September 30, 2022		754,179,027	509,378	22,253	10,375	76,768	—	109,396	(3,868)	(505,825)	(863)	108,218

4

	Share Capital	Share Capital			Contributed Surplus	Contributed Surplus
	Common Shares	Amount	Reserve for share based payments	Reserve for warrants	Other contributed surplus	Escrowed share units	Shares to be issued	Total Contributed surplus	Reserve for foreign currency translations
											Non-
										Accumulated
											Controlling
										deficit
											Interests
												Total
	#	$	$	$	$	$	$	$	$	$	$	$
Balance, December 31, 2020	486,675,760	468,379	23,258	66,111	11,129	7,972	404	108,874	255	(436,559)	(1,145)	139,804
Issuance ofcommonshares	14,341,958	7,655	—	—	—	—	—	—	—	—	—	7,655
Share based compensation	—	—	613	—	—	—	—	613	—	—	—	613
Exercise ofwarrants	24,198,600	8,684	—	(1,124)	—	—	—	(1,124)	—	—	—	7,560
Expiry ofstockoptions	—	—	(4,102)	—	4,102	—	—	—	—	—	—	—
Expiry ofwarrants	—	—	—	(37,638)	37,638	—	—	—	—	—	—	—
Restricted share units exercised during
period	390,810	175	(175)	—	—	—	—	(175)	—	—	—	—
Shares issued to settle accounts
payable	1,591,535	404	—	—	—	—	(104)	(104)	—	—	—	300
Comprehensiveincome/(loss)	—	—	—	—	—	—	—	—	(1,304)	12,518	(55)	11,159
Elimination of non-controlling interest
on disposal of Denmark	—	—	—	—	—	—	—	—	5	—	441	446
Balance, March 31, 2021	527,198,663	485,297	19,594	27,349	52,869	7,972	300	108,084	(1,044)	(424,041)	(759)	167,537
Issuance ofcommonshares	1,073,000	377	—	—	—	—	—	—	—	—	—	377
Share based compensation	—	—	1,019	—	—	—	—	1,019	—	—	—	1,019
Expiry ofwarrants	—	—	—	(17,243)	17,243	—	—	—	—	—	—	—
Shares issued in connection with
accounts payable	872,093	300	—	—	—	—	(300)	(300)	—	—	—	—
Comprehensive income/(loss)	—	—	—	—	—	—	—	—	(45)	(32,460)	(20)	(32,525)
Balance, June 30, 2021	529,143,756	485,974	20,613	10,106	70,112	7,972	—	108,803	(1,089)	(456,501)	(779)	136,408
Issuance ofcommonshares	4,677,000	1,187	—	—	—	—	—	—	—	—	—	1,187
Share based compensation	—	—	884	—	—	—	—	884	—	—	—	884
Restricted share units exercised during
period	120,000	33	(33)	—	—	—	—	(33)	—	—	—	—
Shares issued in connection with debt
modification	2,736,842	520	—	—	—	—	—	—	—	—	—	520
Comprehensive income/(loss)	—	—	—	—	—	—	—	—	483	(14,509)	(35)	(14,061)
Balance, September 30, 2021	536,677,598	487,714	21,464	10,106	70,112	7,972	—	109,654	(606)	(471,010)	(814)	124,938

An unlimited number of common shares are authorized for issue.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

5

The Green Organic Dutchman Holdings Ltd. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(expressed in thousands of Canadian dollars)

(Unaudited) (expressed in thousands of Canadian dollars)
		For the three months ended		For the nine months ended
	Notes	September 30, 2022	September 30, 2021	September 30, 2022 September 30, 2021
OPERATING ACTIVITIES
Netlossfromoperations	$ (6,841 ) $ (14,544 ) $ (27,128 ) $ (34,561 )
Itemsnot affecting cash:
(Reversal of impairment) / Impairment of property, plant	6	—	—	6,183 (17,765 )
and equipment
Reversalof impairment of intangible assets		—	—	— (4,046 )
Loss onassetsheldforsale		—	—	— 17,688
Impairmentloss on remeasurement ofdisposalgroup		—	4,442	2,489 4,442
Share based compensation	14	370	884	1,207 2,516
Depreciationofproperty, plant and equipment	6	2,866	3,503	9,016 8,679
Amortizationof intangible assets	7	343	450	1,030 1,240
Realizedfairvalue adjustment onsale of inventories		4,261	1,765	10,541 5,626
Unrealized gainonchangein fairvalue ofbiologicalassets	8	(8,998 )	(2,185 )	(21,986 ) (7,750 )
Accretionexpense	5	384	295	1,186 5,148
Revaluationgainofcontingent consideration	11	(1,716 )	—	(2,601 ) (39 )
Loss (gain) ondisposalofassets	6	—	173	(25 ) 63
Loss onderecognitionon investmentinjoint venture		—	—	— 761
Gainondisposalofsubsidiary	4	(3,187 )	—	(3,187 ) —
Deferredfinancing costs expensed		—	230	— 682
Deferredincome tax recovery		—	(661 )	— (804 )
Write-downofdeposit		—	1,564	— 1,564
Provision recorded on inventory	9	6,026	—	6,026 —
Debtmodification	5	—	(1,275 )	48 (1,275 )
Changes in non-cash operatingworkingcapital items	15	3,283	(179 )	5,520 957
Net cash used in operating activities	$ (3,209 ) $ (5,538 ) $ (11,681 ) $ (16,874 )
INVESTING ACTIVITIES
Additions to property, plant and equipment		(20 )	(786 )	(716 ) (6,804 )
Net proceedsfromthe dispositionofthe ValleyfieldAssets		—	—	— 25,512
Net cash inflow ondeposits	10[b]	450	—	450 5,761
Proceeds ondisposalofassets	6	—	609	1,970 1,698
Transferto/(from)restricted cash	17[c]	245	386	(1,008 ) 291
Net cash inflow onsale of investment		—	—	— 1,242
Proceeds ondisposalof HemPoland	4	1,350	—	1,350 —
Additions to intangible assets	7	—	—	— (6 )
Net cashprovided from investing activities	$ 2,025 $ 209 $ 2,046 $ 27,694
FINANCING ACTIVITIES
Proceedsfrom issuance ofshares,net ofshareissue costs	13	—	1,187	102 9,219
Proceedsfromborrowings,net ofcosts	5	—	2,940	3,920 2,940
Proceedsfromthe exercise ofstockoptions and warrants		—	—	— 7,560
Interestreceived		6	15	13 55
Interest paid on leaseliabilities	12	(302 )	(161 )	(816 ) (415 )
Interest paid ondebt		(999 )	(576 )	(2,620 ) (3,905 )
Principalpayments of leaseliabilities	12	(95 )	(342 )	(494 ) (640 )
Principalpayments ofdebt	5	—	—	— (32,200 )
Net proceeds/(repayments) of borrowings under the Revolver	5
		(119 )	(1,561 )	5,896 785
Loan
Net cashprovided/(used) by financing activities	$ (1,509 ) $ 1,502 $ 6,001 $ (16,601 )
Net cash inflow(outflow)	$ (2,693 ) $ (3,827 ) $ (3,634 ) $ (5,781 )
Net effects of foreignexchange		1,144	578	532 (405 )
Cash, beginning ofperiod		3,377	8,275	4,930 11,212
Cash related to assets held for sale		—	(1,091 )	— (1,091 )
Cash and cash equivalents, end of period	$ 1,828 $ 3,935 $ 1,828 $ 3,935

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

6

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021 (Unaudited) (expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

1. NATURE OF ACTIVITIES

The Green Organic Dutchman Holdings Ltd. (“Company”) was incorporated on November 16, 2016, under the Canada Business Corporations Act (“CBCA”). The Company is a reporting issuer domiciled in Canada whose common shares (the “Common Shares”) are publicly traded on the Canadian Securities Exchange (“CSE”) under the symbol “TGOD” and on the OTCQX under the symbol “TGODF”. The Company also has four classes of warrants listed on the CSE under the symbols “TGOD.WS”, “TGOD.WR”, “TGOD.WA” and “TGOD.WB”. The Company’s registered and head office is located at 6205 Airport Road, Building A – Suite 200, Mississauga, ON, L4V 1E3. These unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2022 and September 30, 2021 (“Interim Condensed Consolidated Financial Statements”) include the financial statements of The Green Organic Dutchman Holdings Ltd. and its subsidiaries from the date the Company gained control of each subsidiary through to the date of disposition (if applicable).

The Company’s wholly-owned Canadian subsidiaries, The Green Organic Dutchman Ltd. (“TGOD”) and Galaxie Brands Corporation (“Galaxie”) are licensed producers under the Cannabis Act (Canada) and hold licences to produce cannabis plants, cannabis plant seeds, dried cannabis, fresh cannabis, cannabis oils, cannabis topicals, cannabis extracts and edible cannabis and sell such cannabis products within Canada to provincially authorized retailers or distributors and federally licensed entities. The Company owns cannabis cultivation facilities near Hamilton, Ontario (the “ Hamilton Facility ”) and also has an operating licence in Puslinch, Ontario (the “ Puslinch Facility ”) and a presence in Valleyfield, Québec (the “ Quebec Facility ”).

In addition to its Canadian operations, the Company, through its subsidiaries and strategic investments, is pursuing an international growth strategy, and has established strategic partnerships for the distribution of cannabis derived medical products primarily focused in Germany.

The outbreak of the novel strain of the coronavirus, SARS-COV-2 (“COVID-19”), and its eventual declaration as a pandemic by the World Health Organization (“WHO”) on March 11, 2020, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures have caused material disruption to businesses globally resulting in an economic slowdown. The Company implemented measures to protect its global workforce from COVID‐19 and endeavours to mitigate any long-term impact of the pandemic on its business which remain unknown. While it is difficult to predict the impact of COVID-19 on the Company’s business, the Company continues to seek to mitigate these impacts through various means including engagement with its retailers, transition of its staff to working remotely where possible, increasing safety protocols and sanitation measures within the workplace, and monitoring developments in order to adapt and respond in order to protect the health and safety of the Company’s employees and the best interests of the Company.

2. BASIS OF PRESENTATION

[i] Going concern

These Interim Condensed Consolidated Financial Statements have been prepared on a going concern basis which presumes that the Company will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the normal course of its operations.

As of September 30, 2022, the Company had negative working capital of $5,610 (inclusive of non-cash contingent consideration of $822) (December 31, 2021 positive $25,716) and an accumulated deficit of $505,825 (December 31, 2021 - $478,697). During the nine months ended September 30, 2022, the Company used cash in operating activities of $11,681 (nine months ended September 30, 2021 - $16,874) resulting primarily from the loss from operations of $16,195 (nine months ended September 30, 2021 - $23,071) offset by items not affecting cash such as changes in fair value of biological assets, depreciation, amortization and share based compensation. The Company has insufficient cash on hand to fund its planned operations. The Company’s ability to continue as a going concern is dependent upon its ability to generate sufficient revenues and positive cash flows from its operating activities and/or obtain sufficient funding to meet its obligations, neither of which is guaranteed to occur. Achieving such revenues, positive cash flows from operating activities or funding may be influenced by matters that are not in the Company’s control, and as such, there is no certainty that such revenues, cash flows, or funding will be realized. In addition, the Company currently does not have any commitments in place that would provide the level of revenues, cash flows, or funding required to provide sufficient funding to meet its obligations.

The Company will need to obtain further funding in the form of asset sales, debt, equity or a combination thereof to continue operations for the next twelve months. There can be no assurance that additional funding will be available to the Company, or, if available, that this funding will be on acceptable terms. If positive operating cash flows are not achieved, debt obligations are not repaid, or adequate funding is not available, the Company will be required to delay, reduce or cease the

7

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

scope of any or all of its operations. In addition, the terms of the renewed secured revolving credit facility (the “Revolver Loan”) require the Company to satisfy various affirmative and negative covenants and to meet certain future financial tests. A failure to comply with these covenants, including a failure to meet the financial tests, would result in an event of default under the Revolver Loan and if not cured would allow the lender to accelerate the repayment of the debt, which could materially and adversely affect the business, results of operations and financial condition of the Company. These conditions indicate the existence of a material uncertainty that casts significant doubt about the Company’s ability to continue as a going concern.

On October 18, 2022 the Company entered into a share exchange agreement with BZAM Holdings Inc., a corporation incorporated under the laws of the province of British Columbia (“BZAM”) and its sole shareholder BZAM International Ltd. (“BZAM Shareholder”), to purchase and acquire all of the issued and outstanding common shares of BZAM from the BZAM Shareholder (the “BZAM Transaction”). See Note 20 for more information on BZAM Transaction.

In connection with the BZAM Transaction, the Company’s lender under its Revolver Loan, agreed to amend the terms of its Amended and Restated Agreement (as defined herein) to incorporate the assets of BZAM into the security collateral and, amongst other things: (i) remove the reduction of the limit to revolving portion of the credit facility as a result of prepayment on the term portion of the credit facility; (ii) amend the EBITDA financial covenant to take effect on April 30, 2023; (iii) extend the maturity date of the credit facility to March 24, 2024; and (iv) introduce a 1.5% reduction of the interest rate upon achieving three consecutive months of positive earnings before depreciation and amortization. All other terms of the Amended and Restated Agreement not specifically amended will remain the same as before. As a result, subsequent to September 30, 2022, the current portion of loans move to long-term and the Company has additional collateral available in order to access the full amount of the $34 million facility under the Credit Agreement.

These Interim Condensed Consolidated Financial Statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. Should the Company be unable to generate sufficient cash flow from operating and/or financing activities, the carrying value of the Company’s assets could be subject to material adjustments and other adjustments may be necessary to these Interim Condensed Consolidated Financial Statements should such events impair the Company’s ability to continue as a going concern.

[ii] Interim Financial Reporting

These Interim Condensed Consolidated Financial Statements have been prepared by management in accordance with International Accounting Standards (“IAS”) 34, “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IASB”). The same accounting policies and methods of computation were followed in the preparation of these Interim Condensed Consolidated Financial Statements as those disclosed in the Company’s annual audited consolidated financial statements for the year ended December 31, 2021.

These Interim Condensed Consolidated Financial Statements do not include all of the information required for full annual consolidated financial statements and accordingly should be read in conjunction with the annual audited consolidated financial statements for the year ended December 31, 2021 which are made available on SEDAR at www.sedar.com.

These Interim Condensed Consolidated Financial Statements were approved by the Board of Directors of the Company (the “Board”) and authorized for issue by the Board on November 23, 2022.

3. SIGNIFICANT ACCOUNTING POLICIES

The preparation of these Interim Condensed Consolidated Financial Statements requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Interim Condensed Consolidated Financial Statements are consistent with those disclosed in the notes to the annual consolidated financial statements for the year ended December 31, 2021.

4. DISPOSAL OF HEMPOLAND

On September 6, 2022, the Company completed the sale of HemPoland S.p.a. Z.o.o. (“HemPoland”), its wholly owned hemp cultivation and extraction business based in Poland, for net proceeds of $6,810 which included $1,350 in cash and a $5,460 loan forgiveness for amounts owed to HemPoland by the Company.

8

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

The results of disposed entity which are also included in the current results are as follows:

Theresults ofdisposed entity whichare alsoincluded	inthe currentresults are asfollows:	inthe currentresults are asfollows:	inthe currentresults are asfollows:
	For the three months ended For the nine months ended
	September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Revenue $ 305 $ 1,298 $ 1,926 $ 5,028
Grossprofit/(loss) $ (19) $ 652 $ 305 $ 2,641
Expenses $ 176 $ 1,251 $ 1,124 $ 4,075
Loss from discontinued operations $ (195) $ (599) $ (819) $ (1,434)
Income Tax Recovery/(Expense) $ 216 $ (4) $ 387 $ 139
Loss from discontinued operations, net of tax $ 21 $ (603) $ (432) $ (1,295)
Basic and diluted loss per share $ (0.00) $ (0.00) $ (0.00) $ (0.01)

Cash flows from (used in) discontinued operation:

	For the three months ended For the nine months ended
	September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Net cashprovided by/(usedin) operating activities $ 119 $ 451 $ (147) $ (1,073)
Net cashprovided by/(usedin)investing activities 2 29 (46) 188
Net cash provided by/(used in) financing activities (59) 126 (410) 393
Net cash (outflows) inflows for the year $ 62 $ 606 $ (603) $ (492)

Gain on Disposal	Gain on Disposal
	As a result of the disposal a gain on disposal arose as follows:
		HemPoland
ProceedsfromSale			6,810
Less: Net assets atDisposal			(5,938)
Add: Reclassification of foreign currency translation reserve applicable to HemPoland			2,315
Gain on Disposal			3,187

The reclassification of the foreign currency translation reserve applicable to HemPoland represents the cumulative foreign currency differences previously included in shareholders equity since the date of acquisition.

5. LOANS

The following tables illustrate the continuity schedule and presentation of the Company’s loans:

9

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

	For the nine months ended September 30, 2022 For the year ended December 31, 2021
OpeningBalance $ 20,225 $ 40,755
Additions	4,000 7,000
Additionthroughbusiness combination	— 1,152
Deferredfinancingfee	(130) (1,000)
Accretion	1,186 5,445
Debtmodification	48 (1,187)
Principalpayments	(900) (32,200)
Effects of movementsin foreignexchange	— (33)
Reclassificationtoliabilitiesheldforsale	— (473)
Net proceeds related to the borrowing from and to the Revolver Loan
	5,896 766
Ending Balance $ 30,325 $ 20,225
	September 30, 2022 December 31, 2021
Loans $ 30,325 $ 20,225
Currentportion	(30,325) (2,021)
Longtermportion $ — $ 18,204
Revolver Loan $ 29,898 $ 19,045
Promissorynotes to relatedparties	427 1,180
$ 30,325 $ 20,225

			September 30, 2022			December 31, 2021
Loans		$		30,325	$	20,225
Currentportion				(30,325)		(2,021)
Longtermportion		$		—	$	18,204
Revolver Loan		$		29,898	$	19,045
Promissorynotes to relatedparties				427		1,180
		$		30,325	$	20,225

Revolver Loan

The Company entered into the Revolver Loan on April 22, 2020, which was amended and restated on September 29, 2021, and further amended on November 29, 2021 (the “Amended and Restated Agreement”). The Revolver Loan had a credit limit of $25,000, bore interest at 12% or TD Prime plus 8.05% whichever is higher, with a due date of June 30, 2023. The Company must comply with certain financial covenants as set out in the Amended and Restated Agreement relating to the achievement of positive EBITDA (as defined in the Amended and Restated Agreement).

On March 10, 2022, the Company entered into a second amendment to the Amended and Restated Agreement (the “Second Amendment”) whereby the Revolver Loan was amended to increase the overall Revolver Loan limit from $25,000 to $30,000, allow certain eligible inventory to be included as collateral to the Revolver Loan, and relax certain covenants set forth in the Amended and Restated Agreement relating to the Revolver Loan. As consideration for the Second Amendment, the Company issued 500,000 Common Shares measured at $50 to the lender.

On April 29, 2022, the Company entered into a third amendment to the Amended and Restated Agreement (the “Third Amendment”), whereby the Revolver Loan was amended to increase the overall Revolver Loan limit from $30,000 to $34,000, increase the term portion of the Revolver Loan from $20,000 to $24,000, amend the EBITDA financial covenant to take effect June 30, 2022, remove the covenant requiring a $6,000 prepayment through funds raised by public issuance of equity securities in the Company, remove the covenant requiring a $4,000 prepayment through funds raised by the sale of HemPoland, and introduce certain prepayment fees in the combined amount of 2% of any prepayments, subject to the satisfaction of the various conditions set out therein.

The Revolver Loan is secured by a first lien over the Hamilton Facility and assets of the Company, including a lien over substantially all of the cannabis and cannabis derived inventories and Canadian trade receivables. As the accounts receivable balance eligible for collateral increases, additional credit is available to the Company up to $10,000.

As at September 30, 2022, the total principal balance outstanding related to the Revolver Loan was $31,117. The Company did not meet the EBITDA financial covenant as at September 30, 2022, however all other covenants within the Amended and Restated Agreement were met. The breach gives the lender the right to immediately terminate the agreement and request payment of outstanding amounts. On October 18, 2022, the Company obtained a waiver from the lender for the failure to meet the EBITDA covenant. The terms of the Revolver Loan were also further amended subsequent to the waiver as detailed below.

10

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021 (Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

In connection with the BZAM Transaction, the Company entered into a fourth amendment to the Amended and Restated Agreement (the “Fourth Amendment”) to incorporate the assets of BZAM into the security collateral and, amongst other things: (i) remove the reduction of the limit to the revolving portion of the credit facility as a result of prepayment on the term portion of the credit facility; (ii) amend the EBITDA financial covenant to take effect on April 30, 2023; (iii) extend the maturity date of the credit facility to March 24, 2024; and (iv) introduce a 1.5% reduction of the interest rate upon achieving three consecutive months of positive earnings before depreciation and amortization, from TD Prime plus 8.05% to TD Prime plus 6.55%. All other terms of the Amended and Restated Agreement not specifically amended will remain the same as before. As consideration for the Fourth Amendment, the Company issued to the lender 7,000,000 warrants to purchase Common Shares at a price of $0.095 per Common Share for a period of 60 months.

Promissory notes to related parties

In connection with the acquisition of all of the issued and outstanding shares of Galaxie on November 17, 2021 (the “Galaxie Acquisition”), the Company assumed shareholder loans with principal note balances totaling $1,300 (the “Promissory Notes”). The fair value of the shareholder loans at acquisition date was determined to be $1,152, based on the time to maturity. The Promissory Notes are subordinate to the Revolver Loan. On May 17, 2022, Promissory Note #1 and Promissory Note #3 with a total principal note balance of $900, were repaid in full from the consideration for the Puslinch Facility building improvements sale and leaseback (note 6). Promissory Note #2 remains outstanding as shown below.

	Principal note balance	Amortized Cost	Agreement Date	Maturity Date
					Terms
					No interest to maturity, 10% interest
Promissory Note #2 $ 400		427	2021-10-28	2022-01-31	compounded monthly if note not repaid in
					full at maturity
Total Promissory Notes to related parties $ 400
		427

11

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

6. PROPERTY, PLANT AND EQUIPMENT

**PROPERTY, PLANT AND EQUIPMENT **
		Land	Buildings	Furniture and fixtures	Production equipment	Leasehold improvements	Computer equipment	Automobiles	Right-of-use assets	Total
Cost:
Balance,December31,2021		$ 2,775	$ 63,086	$ 420	$ 65,734	$ 9,920	$ 1,374	$ 294	$ 7,134	$ 150,737
Additions		—	—	1	18	—	—	—	—	19
Disposals		—	—	—	(159 )	—	—	—	—	(159 )
Balance, March 31, 2022		$ 2,775	$ 63,086	$ 421	$ 65,593	$ 9,920	$ 1,374	$ 294	$ 7,134	$ 150,597
Additions		—	—	—	305	—	—	—	1,994	2,299
Disposals		—	—	—	—	(8,901 )	—	(35 )	—	(8,936 )
Balance, June 30, 2022		$ 2,775	$ 63,086	$ 421	$ 65,898	$ 1,019	$ 1,374	$ 259	$ 9,128	$ 143,960
Additions		—	—	—	9	11	—	—	—	20
Disposals		—	—	—	—	—	—	—	—	—
Balance, September 30, 2022		$ 2,775	$ 63,086	$ 421	$ 65,907	$ 1,030	$ 1,374	$ 259	$ 9,128	$ 143,980
Accumulated depreciation and impairment:
Balance,December31,2021		$ —	$ 8,417	$ 143	$ 22,124	$ 452	$ 845	$ 227	$ 549	$ 32,757
Depreciation		—	683	14	2,202	123	44	5	113	3,184
Disposals		—	—	—	(80 )	—	—	—	—	(80 )
Impairment		—	—	—	—	6,183	—	—	—	6,183
Balance, March 31, 2022		$ —	$ 9,100	$ 157	$ 24,246	$ 6,758	$ 889	$ 232	$ 662	$ 42,044
Depreciation		—	675	13	2,096	7	40	4	131	2,966
Disposals		—	—	—	—	(6,006 )	—	(29 )	—	(6,035 )
Balance, June 30, 2022		$ —	$ 9,775	$ 170	$ 26,342	$ 759	$ 929	$ 207	$ 793	$ 38,975
Depreciation		—	666	12	2,001	7	37	3	140	2,866
Disposals		—	—	—	—	—	—	—	—	—
Balance, September 30, 2022		$ —	$ 10,441	$ 182	$ 28,343	$ 766	$ 966	$ 210	$ 933	$ 41,841
Net book value, September 30, 2022		$ 2,775	$ 52,645	$ 239	$ 37,564	$ 264	$ 408	$ 49	$ 8,195	$ 102,139

On May 17, 2022, the Company sold its leasehold improvements acquired through the Galaxie Acquisition at the Puslinch Facility for gross proceeds of $3,000 (net proceeds $2,900). The net proceeds were paid $1,940 in cash, $900 repayment of promissory notes owed and $60 set-off for other amounts owing to the purchaser. During the nine months ended September 30, 2022, the Company tested the leasehold improvements for impairment and recognized an impairment loss of $6,183.

During the nine months ended September 30, 2021, the Company completed the sale of the majority of its assets in Valleyfield, Quebec, including all of the industrial and agricultural land, main hybrid greenhouse, rooftop greenhouse, all support buildings and certain related equipment (the “Valleyfield Assets”). As a result of the reclassification of the Valleyfield Assets held for sale, the Company performed an impairment analysis as at March 31, 2021 on its cannabis related activities from production in Canada (the Canadian cash generating unit (“Canadian CGU”)). As a result of this impairment assessment, the Company determined that the Valleyfield Assets met the criteria to be tested for impairment separately from the Canadian CGU. The Company tested the Valleyfield Assets for impairment first, then subsequently tested the Canadian CGU for an impairment reversal. The Company recognized a $46,475 impairment loss at March 31, 2021 associated with the Valleyfield Assets recognized in property, plant and equipment, and a $68,286 reversal of previously recognized impairment losses on the Canadian CGU of which $64,240 was allocated to property, plant and equipment and $4,046 allocated to intangible assets. The net impact to property, plant and equipment was a reversal of impairment of $17,765.

12

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021 (Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

7. INTANGIBLE ASSETS AND GOODWILL

A continuity of the intangible assets is as follows:

	Health Canada Licences	Technology Licences	Website	Brands	Other acquired rights	Goodwill	Total
Cost:
Balance,December31,2021	$ 10,302	$ 2,613	$ 400	$ 2,783	$ 2,667	$ 3,939	$ 22,704
Additions	—	—	—	—	—	—	—
Balance, March 31, 2022	$ 10,302	$ 2,613	$ 400	$ 2,783	$ 2,667	$ 3,939	$ 22,704
Additions	—	—	—	—	—	—	—
Balance, June 30, 2022	$ 10,302	$ 2,613	$ 400	$ 2,783	$ 2,667	$ 3,939	$ 22,704
Additions	—	—	—	—	—	—	—
Balance, September 30, 2022	$ 10,302	$ 2,613	$ 400	$ 2,783	$ 2,667	$ 3,939	$ 22,704
Accumulated amortization and
impairment:
Balance,December31,2021	$ 1,752	$ 1,186	$ 179	$ 15	$ 48	$ —	$ 3,180
Amortization for theperiod	123	103	16	35	66	—	343
Balance, March 31, 2022	$ 1,875	$ 1,289	$ 195	$ 50	$ 114	$ —	$ 3,523
Amortization for theperiod	123	103	16	36	66	—	344
Balance, June 30, 2022	$ 1,998	$ 1,392	$ 211	$ 86	$ 180	$ —	$ 3,867
Amortization for theperiod	123	103	16	35	66	—	343
Balance, September 30, 2022	$ 2,121	$ 1,495	$ 227	$ 121	$ 246	$ —	$ 4,210
Net book value, September 30,
	$ 8,181	$ 1,118	$ 173	$ 2,662	$ 2,421	$ 3,939	$ 18,494
2022

8. BIOLOGICAL ASSETS

As at September 30, 2022, the Company’s biological assets consisted of cannabis seeds and cannabis plants. The continuity of the Company’s biological assets is as follows:

		Biological asset
	Capitalized cost	fair value	Amount
		adjustment
Balance, December 31, 2021 $	1,482 $	1,667 $	3,149
Unrealized gainonchangesin fairvalue ofbiologicalassets	—	21,986	21,986
Productioncosts capitalized	6,944	—	6,944
Transfer to inventories upon harvest	(6,631 )	(18,874 )	(25,505 )
Balance, September 30, 2022 $	1,795 $	4,779 $	6,574

The Company measures its biological assets at their fair values less estimated costs to sell. This is determined using a model which estimates the expected harvest yields in grams for plants currently being cultivated, and then adjusts that amount for the expected selling price per gram, waste and also for any additional costs to be incurred, such as post-harvest cost.

The following significant unobservable inputs, all of which are classified as level 3 on the fair value hierarchy, were used by management as part of this model:

• Estimated net selling price per gram – calculated as the expected approximate future per gram selling prices of the Company’s cannabis products.

• Stage of growth – represents the weighted average number of weeks out of the estimated week growing cycle that biological assets have reached as of the measurement date based on historical experience. The Company accretes fair value on a straight-line basis according to the stage of growth and estimated costs to complete cultivation.

• Yield by plant – represents the expected number of grams of finished cannabis inventories which are expected to be obtained from each harvested cannabis plant based on historical experience.

13

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021 (Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

The inter-relationship between these aforementioned unobservable inputs and the fair-value of the biological assets is such that the carrying value of the biological assets as at September 30, 2022 and December 31, 2021 would increase (decrease) if any of these inputs were to be higher (lower).

Other unobservable, level 3 inputs into the biological asset model include estimated post-harvest costs, costs to complete and wastage. These additional level 3 inputs are not considered to be significant.

The following table quantifies each significant unobservable input, and provides the impact of a 10% increase or decrease in each input would have on the fair value of biological assets:

	As at September 30, 2022	As at	Impact of 10% change as at September 30, 2022 Impact of 10% change as at December 31, 2021
		December 31,
		2021
Estimatednet selling price pergram(1)	$1.86 to $4.67	$1.83 to $4.79	$1,058 $ 535
Estimated stage ofgrowth	9 to10 weeks	8 to 9 weeks	$ 500 $ 824
Estimated yield of agricultural produce by plant (2)	95 to 152 grams	80 to 100 grams	$ 706 $ 357

(1) The estimated net selling price per gram is based on the negotiated distribution selling prices which exclude excise duties.

(2) The estimated yield varies based on the Company’s different cannabis strains.

The Company’s estimates are, by their nature, subject to change. Changes in the significant assumptions described will be reflected in future changes in the gain or loss on biological assets. There were no changes between fair value hierarchy levels during the three and nine months ended September 30, 2022.

9. INVENTORIES

The Company’s inventories include the following as of September 30, 2022 and December 31, 2021:

	As at September 30, 2022	As at December 31, 2021
RawMaterials andPackaging $	2,481 $	2,617
Work-in-progress	19,479	14,946
Finished Goods	2,710	3,379
Total Inventories $	24,670 $	20,942

During the three and nine months ended September 30, 2022, inventories expensed directly to cost of sales were $5,762 and $16,479, respectively (three and nine months ended September 30, 2021 - $2,787 and $8,432, respectively).

During the three and nine months ended September 30, 2022, a write-down of inventory of $6,026 was recognized as an expense including $4,336 relating to fair value adjustment and $1,690 expensed directly in cost of sales (three and nine months ended September 30, 2021 - $0).

10. OTHER ASSETS

A summary of the Company’s other assets is presented as follows:

Asummary ofthe Company’s otherassetsis presented asfollows:
		As at September 30, 2022 As at December 31, 2021
	Notes
Termdepositsheld asletterofcredit collateral	16,17	524 935
Termdepositsnotheld asletterofcredit collateral		100 100
Other	10[a]	2,241 2,541
		2,865 3,576
Less: Currentportion		(1,584) (1,841)
Non current portion		1,281 1,735

14

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021 (Unaudited) (expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

[a] Other

Other comprises of deposits paid for goods and services of $1,113 (December 31, 2021 - $1,317) and other amounts receivable from various non-trade debtors of $1,128 (December 31, 2021 - $1,224).

[b] Deposits reimbursed

During the three months ended September 30, 2022, a letter of credit with a value of $450 was cancelled and the corresponding GIC of $450 held as collateral was converted to cash.

11. CONTINGENT CONSIDERATION

As part of the purchase price paid in connection with the Galaxie Acquisition in November 2021, the Company issued up to 85,714,286 Common Shares valued at the date of closing of the Galaxie Acquisition at $5,235 (the “Contingent Milestone Shares”). The Contingent Milestone Shares are subject to revaluation based on the modified probability assessment of asymmetric payment structures model at each period end (combination of level 1 and level 3 inputs on the fair value hierarchy). As at September 30, 2022, the Contingent Milestone Shares were revalued to $822, resulting in a gain on revaluation of $1,716 and $2,601 for the three and nine months ended September 30, 2022, respectively. Management estimates that only 22,857,144 of the Contingent Milestone Shares are expected to remain issued. The Contingent Milestone Shares are to be released no later than January 31, 2023, subject to the achievement of certain financial targets.

12. LEASES

Below is a summary of the activity related to the Company’s lease liabilities:

	For the nine months ended	For the year ended
	September 30, 2022	December 31, 2021
OpeningBalance $	7,566 $	5,570
Additions 12[a]	1,994	2,049
Additionsfrombusiness combination	—	3,665
Interest on leaseliabilities	789	535
Interest payments on leaseliabilities	(789 )	(535 )
Principalpayments on leaseliabilities	(111 )	(704 )
Extinguishment of leaseliabilities 12[b]	—	(1,687 )
Reclassificationtoliabilitiesheldforsale	—	(1,235 )
Foreign exchange differences	—	(92 )
Closing Balance $	9,449 $	7,566
Current portion lease liabilities $	1,363 $	1,049
Long-term portion lease liabilities $	8,086 $	6,517

[a] Puslinch Lease

In connection with the Galaxie Acquisition, the Company acquired a 20-year lease on the land on which the Puslinch Facility is located, which commenced on December 1, 2020. On May 17, 2022, the Company entered into a sale and leaseback transaction for the leasehold improvements at the Puslinch Facility (see note 6) which was added to the existing 20-year lease.

[b] Valleyfield Lease

In connection with the Quebec Facility disposition in Q2 2021, the Company entered into a two-year lease for 80,000 square feet, representing cultivation, processing and manufacturing spaces in the Quebec Facility. On September 24, 2021, the lease was terminated and modified to an operating agreement in conjunction with the landlord obtaining its own Health Canada licence.

15

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021 (Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

13. SHARE CAPITAL

			For the nine months ended	For the nine months ended	For the year ended	For the year ended
			September 30, 2022		December 31,	2021
			Number of shares	Amount	Number of shares	Amount
Balance-beginning ofperiod		[i]	749,660,647	$508,504	486,675,760	$468,379
	Issuance ofcommonshares	[a]	904,000	102	21,035,458	9,322
	Sharesissuedinconnectionwithdebtmodification	[b]	500,000	50	—	—
	Restricted share units exercised during period	[c], [d]	2,176,880	647	314,933	1,276
	Issuance ofcommonsharesin relationto acquisition		—	—	122,805,153	19,035
	Issuance ofcontingent sharesin relationto acquisition		—	—	85,714,286	—
	Exercise ofwarrants		—	—	24,198,600	8,684
	Sharesissued to settle accounts payable	[e]	937,500	75	4,241,712	704
	Sharesissuedinconnectionwithdebtmodification		—	—	2,736,842	520
	Restricted share units exercised during period		—	—	1,937,903	584
Balance- end of period			754,179,027	$509,378	749,660,647	$508,504

[i] Includes 85,714,286 shares that are issued contingent upon certain milestones being achieved in 2022 related to the Galaxie Acquisition (note 11).

[i] Authorized

An unlimited number of Common Shares.

[ii] Issued capital

• a) During the nine months ended September 30, 2022, 904,000 Common Shares were issued under the Company’s atthe-market prospectus supplement dated December 2, 2020, for gross proceeds of $105 (net proceeds of $102).

• b) During the nine months ended September 30, 2022, 500,000 Common Shares were issued to the lender of the Revolver Loan measured at $50 related to the modification (see note 5).

• c) During the nine months ended September 30, 2022, 9,842 Common Shares of the Company were issued to former shareholders of HemPoland as a result of the conversion of 9,842 escrowed restricted share units (“RSUs”) issued to such former shareholders. There are no proceeds related to the conversion of such escrowed RSUs.

• d) d) During the nine months ended September 30, 2022, 2,167,038 Common Shares of the Company were also issued to certain employees and directors of the Company pursuant to the vesting of RSUs.

• e) During the nine months ended September 30, 2022, 937,500 Common Shares were issued to settle accounts payable balances.

14. CONTRIBUTED SURPLUS

[a] Share based payments

For the three and nine months ended September 30, 2022, the Company recorded $362 and $870, respectively in non-cash share-based compensation expense pursuant to the grant of stock options (three and nine months ended September 30, 2021 - $699 and $2,095 respectively).

The following is a summary of the changes in options issued pursuant to the Company’s employee stock option plan:

	For the nine months ended	For the nine months ended	For the year ended	For the year ended
	September	30, 2022	December	31, 2021
	Number of Options	Weighted Average Exercise Price	Number of Options	Weighted Average Exercise Price
Outstanding -beginning of period	24,607,998 $	1.01	24,339,401 $	1.74
Granted	30,178,000	0.13	10,035,000	0.26
Cancelled/Expired	(9,557,997 )	0.50	(9,766,403 )	2.04
Outstanding, end ofperiod	45,228,001 $	0.51	24,607,998 $	1.01
Exercisable, end of period	10,526,499 $	1.72	7,836,325 $	2.08

16

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021 (Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

					Weighted Average
					remaining
		Options	Options	Exercise	contractual life of
		Outstanding	Exercisable	Price	outstanding
Grant date		#	#	$	options in years
June25,2018- December 14,2018		965,000	965,000	$3.08-$6.91	0.74-1.21
January 8,2019- August21,2019		2,685,000	2,651,667	$2.67-$5.13	1.27-1.89
November 18,2019		612,667	409,339	$0.83	2.14
March 13,2020- December 21,2020		8,681,001	4,755,835	$0.26-$0.51	2.45-3.23
March 12,2021 - August13,2021		4,805,333	1,744,658	$0.30-$0.36	3.45-3.87
December 2, 2021-August 31, 2022		27,479,000	-	$0.09-$0.14	4.18-4.92
Balance, September 30, 2022		45,228,001	10,526,499		3.83

In determining the amount of share-based compensation, the Company uses the Black-Scholes option pricing model to establish the fair value as at the grant date of options granted. Stock options granted during the respective periods highlighted below were fair valued based on the following weighted average assumptions:

	Averages for the nine months ended Averages for the year ended
	September 30, 2022 December 31, 2021
Risk-freeinterestrate	2.46% 0.78%
Expected dividend yield	Nil Nil
Expected annualized volatility	116% 85.00%
Expectedlife ofoptions (years)	3.50 3.49
Black-Scholes value of each option	$0.09 $0.15

Volatility was estimated by using the historical volatility of the Company. The expected life of the options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the expected life of the options is indicative of future trends, which may also not necessarily be the actual outcome. The expected life in years represents the period of time that options granted are expected to be outstanding. The risk-free rate was based upon the Canada government bonds with a remaining term equal to the expected life of the options.

[b] Reserve for warrants

The following table reflects the continuity of warrants:

	Number of warrants	Weighted Average Exercise Price	Amount, net of
			warrant issue costs
	#	$	$
Balance,December 31,2021	160,591,440	0.47	10,375
Balance, September 30, 2022	160,591,440	0.47	10,375

As at September 30, 2022, the following warrants were outstanding:

Expiry Date	Exercise Price
		Number of Warrants
	$	#
December 19,2022	1.00	20,607,500
April 1,2023	0.39	3,000,000
April 13,2023	0.39	1,500,000
April 27,2023	0.38	10,813,052
May27,2024	0.50	500,000
June12,2024	0.50	45,712,500
October 23,2025	0.30	24,873,354
November 2,2025	0.30	8,500,000
December 10,2025	0.35	42,085,034
November 29,2026	0.14	3,000,000
		160,591,440

17

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

[c] Restricted share units

Under the Company’s RSU plan (the “RSU Plan”), RSUs may be granted up to a fixed maximum of 10,000,000 Common Shares, which entitle the holder to receive one Common Share without payment of additional consideration at the end of the restricted period, as determined by the Board at the time of the grant. The RSUs vest in tranches based on certain performance conditions being met, with share-based compensation expense being recognized from grant date to the expected performance completion date.

As at September 30, 2022, 261,250 (December 31, 2021 – 4,651,040) shares of the Company were reserved for issuance under the RSU Plan. For the three and nine months ended September 30, 2022, the Company recorded $8 and $337, respectively in non-cash share-based compensation related to RSU compensation (three and nine months ended September 30, 2021 – $185 and $421, respectively).

	For the nine months ended September	For the nine months ended September	For the year ended	For the year ended
	30, 2022		December 31, 2021
	Number of Units	Weighted	Number of Units	Weighted
		Fair Value		Fair Value
Outstanding -beginning of period	4,651,040	0.30	1,243,845	0.33
Granted	350,000	0.10	6,170,098	0.30
Exercised	(2,167,038)	0.28	(1,937,903)	0.30
Forfeited	(2,572,752)	0.30	(825,000)	0.30
Outstanding, end of period	261,250	0.23	4,651,040	0.30

The accounting fair value of the equity settled RSUs as at the grant date is calculated using the number of RSUs expected to be earned multiplied by the grant date fair market value of a share of the Company’s stock. Each reporting period, the number of RSUs that are expected to be earned is re-determined and the fair value of these RSUs is amortized over the remaining requisite service period less amounts previously recognized.

[d] Employee Stock Purchase Plan

The Company has established an employee stock purchase plan which created a reserve of 3,000,000 Common Shares that may be issued from treasury. As at September 30, 2022, no securities were issued under this plan.

15. SUPPLEMENTARY CASH FLOW INFORMATION

The changes in non-cash working capital items are as follows:

	For the three months ended	For the three months ended	For the three months ended	For the nine months ended	For the nine months ended
	September 30, 2022		September	September 30, 2022 September 30, 2021
			30, 2021
Prepaid expenses and deposits	$ 501 $ (422 ) $ (524 ) $ (531 )
Refundable sales taxesreceivable		11	(38 )		17 (91 )
Tradereceivables		2,019	1,202		2,063 2,091
Capitalized cost ofbiologicalassets		3,398	1,817		6,318 5,062
Inventories		(4,131 )	(3,191 )		(7,410 ) (8,992 )
Deferredrevenue		—	—		— (150 )
Duefrom related parties		(266 )	—		(909 ) —
Othercurrent assets		(6 )	(934 )		244 (1,105 )
Otherassets		1	1,520		4 1,664
Accounts payable and accruedliabilities		1,844	13		5,435 2,861
Sales taxespayable		(88 )	(146 )		282 148
Total	$ 3,283 $ (179 ) $ 5,520 $ 957

16. COMMITMENTS AND CONTINGENCIES

The Company has the following gross contractual obligations as at September 30, 2022, which are expected to be payable

18

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

in the following respective periods:

				Contractual cash	Contractual cash	flows- 12	months ending	months ending	(1)
		Carrying amount	Total	September 2023	September 2024	September 2025		September 2026	September 2027	Thereafter
		$	$	$	$		$	$	$	$
Accounts payable and accrued
liabilities		19,064	19,064	19,064	-		-	-	-	-
Sales taxes payable		531	531	531	-		-	-	-	-
Loans (2)		30,325	33,869	33,869	-		-	-	-	-
Lease liabilities		9,449	22,545	1,363	1,366	1,377		1,478	1,498	15,463
Total contractual obligations		59,369	76,009	54,827	1,366	1,377		1,478	1,498	15,463

(1) Contractual cash flows include expected interest payable until the maturity date.

(2) Subsequent to September 30, 2022, the lender extended the maturity of the loan to March 24, 2024 pursuant to the Fourth Amendment.

[a] Construction agreements

In prior years, the Company entered into contracts to facilitate the construction of the Hamilton Facility with various vendors. Pursuant to some of these agreements, as at September 30, 2022, the Company had letters of credit in the amount of $129 which may be drawn upon in the event of breaches of the respective agreements. These letters of credit bear conventional rates of interest partially offset by the interest earned on guaranteed investment certificates (“GIC”) securing the letters as collateral. The Company has pledged corresponding GICs as collateral, which have been recorded in other assets. As at September 30, 2022, there have been no material breaches as defined by the agreements and no amounts have been drawn on the letters of credit.

[b] Other contractual commitments

The lease for the office space of the Company’s headquarters required the issuance of a letter of credit in the amount $350, which may be drawn upon by the landlord in the event of a material breach of the agreement. As at September 30, 2022, there have been no breaches and no amounts have been drawn upon this letter of credit.

[c] Claims and Litigation

From time to time, the Company and/or its subsidiaries may become defendants in legal actions. The Company is subject to an employment related claim by a former employee for which a provision in accounts payable and accrued liabilities has been recognized only to the extent that it is likely to result in future economic outflows.

The Company has been subject to a claim by former warrant holders for approximately $1,250. The claim was settled and paid during the three months ended September 30, 2022, for $325. On August 3, 2020, the Company was named as a defendant in a litigation matter commenced in the United States District Court for the Middle District of Georgia relating to a disposed of minority investment in a U.S. based beverage incubation business, seeking, among other things, unquantified compensatory damages and injunctive relief. The case was settled and paid for US$75 thousand during the three months ended September 30, 2022.

Other than the claims previously described, the Company is not aware of any other material or significant claims against the Company.

17. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

[a] Fair values

The Company’s financial instruments were comprised of the following as at September 30, 2022: cash and cash equivalents; restricted cash; trade receivables; due from related parties; certain other current assets; accounts payable and accrued liabilities; lease liabilities; sales taxes payable; loans and contingent consideration.

The fair values of the financial assets and financial liabilities are determined at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The assumption for the instruments recorded at amortized cost that the instruments’ fair values approximate their carrying amounts is due to the largely short-term maturities of these instruments.

[b] Fair value hierarchy

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 fair value hierarchy has the

19

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

following levels:

• Level 1 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 - valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• Level 3 - valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified to the lowest level of the hierarchy for which a significant input has been considered in measuring fair value.

During the three and nine months ended September 30, 2022, there were no transfers of amounts between levels (year ended December 31, 2021 – none).

[c] Management of risks arising from financial instruments

[i] Market risk

Foreign currency risk

Foreign currency risk arises due to fluctuations in the fair value or cash flows of financial instruments due to changes in foreign exchange rates. As at September 30, 2022, a portion of the Company’s financial assets and liabilities were held in US dollars and European Euros. The Company has not used foreign exchange contracts to hedge its exposure to foreign currency cash flows for the nine months ended September 30, 2022 as management has determined that this risk is not significant at this time.

Interest rate risk

The Company’s exposure to interest rate risk relates to any investments of surplus cash as the Company’s debt is fixed at a prescribed rate. The Company may invest surplus cash in highly liquid investments with short terms to maturity that would accumulate interest at prevailing rates for such investments. As at September 30, 2022, the Company had term deposits of $479 bearing interest of 0.55% (December 31, 2021 - $585, bearing interest of 0.80% and 1.00%). The Company also has $1,227 of restricted cash in a separate account related to the Revolver Loan. The restricted cash with regards to the Revolver Loan was added in the current year as part of the conditions for the amended Revolver Loan agreements.

[ii] Credit risk

Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. The Company is exposed to credit-related losses in the event of non-performance by the counterparties.

The carrying amount of cash and cash equivalents, trade receivables, prepaid expenses and deposits, and other assets represents the maximum exposure to credit risk as at September 30, 2022. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors. Credit risk is mitigated by entering into sales contracts with stable, creditworthy parties and through frequent reviews of exposures to individual entities.

The Company assesses the credit risk of trade receivables by evaluating the aging of trade receivables based on the invoice date and credit worthiness. The carrying amount of trade receivables is reduced through the use of an allowance account and the amount of the loss is recognized in the consolidated statements of loss and comprehensive loss. When a trade receivable balance is considered uncollectible, it is written off against the allowance for expected credit losses. Subsequent recoveries of amounts previously written off are credited against operating expenses in the consolidated statements of loss and comprehensive loss. The Company had two customers whose balances individually were greater than 10% of total trade receivables as at September 30, 2022 (December 31, 2021 – two customers). Customer A accounted for 50% and Customer B accounted for 20% of trade receivables as at September 30, 2022 (December 31, 2021 – Customer A accounted for 48% and Customer B accounted for 24%). Customer A and B are provincial government entities.

The following tables set forth details of trade receivables, including aging of trade receivables that are not overdue, as well as an analysis of overdue amounts and related allowance for doubtful accounts:

20

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021 (Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

	September 30, 2022	September 30, 2022		December 31, 2021	December 31, 2021
	$			$
Totaltradereceivables		7,042			8,833
Less allowance for expected credit losses		—			—
Total trade receivables, net		7,042			8,833
Ofwhich
Current		5,423			6,447
31-90 days		1,363			2,256
Over 90 days		256			130
Total trade receivables, net		7,042			8,833

[iii] Liquidity risk

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 in relation to its current cash balances, maturity schedules and internal budgets. Refer to Note 16 – Commitments and Contingencies.

18. CAPITAL MANAGEMENT

The Company’s objective is to maintain sufficient capital base to maintain investor, creditor and supplier confidence and to sustain future development of the business and provide the ability to continue as a going concern (See Note 2[i] – Going Concern). Management defines capital as the Company’s shareholders’ equity (excluding deficit, contributed surplus and reserve for foreign currency translations) and loans (excluding loan from disposal group). The Board does not establish quantitative return on capital criteria for management but rather promotes year over year sustainable profitable growth. The Company currently has not paid any dividends to its shareholders. As at September 30, 2022, total managed capital was comprised of share capital and loans of $539,703 (December 31, 2021 - $528,729), contributed surplus of $109,396 (December 31, 2021 - $108,836), and reserve for foreign currency translations of $3,868 (December 31, 2021 – $969). There were no changes in the Company’s approach to capital management during the nine months ended September 30, 2022 (year ended December 31, 2021 – no changes).

19. OPERATING EXPENSES

The following table presents share-based compensation, depreciation, and amortization by nature:

	For the three months ended For the nine months ended	For the three months ended For the nine months ended
	September 30, 2022	September 30, 2021 September 30, 2022 September 30, 2021
Cost ofsalesrelated toinventory production $ 2,291 $ 2,571 7,179 $ 6,343
Sales andmarketing expenses 232 289 730 733
Researchand development expenses 94 129 296 336
General and administrative expenses 962 1,389 3,048 3,647

20. EVENTS AFTER THE REPORTING PERIOD

a) On October 18, 2022 the Company entered into a share exchange agreement with BZAM and the BZAM Shareholder, to complete the BZAM Transaction in exchange for 49.5% of the issued and outstanding Combined Entity Shares of the Combined Entity at a deemed priced per Combined Entity Shares of $0.0596. The BZAM Shareholder also has the ability to earn additional Combined Entity Shares valued up to $33,000 (the “Earnout Shares”), subject to achievement of certain milestones tied to annual net revenue targets and positive adjusted EBITDA targets for the 2023 calendar year (the "Milestones").

On closing of the BZAM Transaction on November 3, 2022 (“Closing”), the Company paid a purchase price (the “Purchase Price”) as follows:

• a. A nominal cash payment on Closing in the amount of one hundred dollars; and;

• b. The issuance on Closing of an aggregate of 655,227,815 Combined Entity Shares, being 650,313,607 Combined Entity Shares issued to the BZAM Shareholder, and 4,914,208 Combined Entity Shares issued to Clarus Securities

21

The Green Organic Dutchman Holdings Ltd. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Unaudited)

(expressed in thousands of Canadian Dollars except per share amounts or as otherwise indicated)

Inc. (“Clarus”) as payment by the BZAM Shareholder for certain finders fees owed by the BZAM Shareholder to Clarus in connection with the Transaction, which constitutes, on a pro forma basis immediately following Closing, 49.5% of the aggregate number of Combined Entity Shares issued and outstanding as of immediately following the Closing (the “Closing Shares”). For purposes of calculating the Closing Shares, the determination of the issued and outstanding Combined Entity Shares as of immediately following the Closing did not take into account (i) any securities issued by the Company that are convertible into, or exercisable for, Combined Entity Shares; or (ii) the 85,714,286 Common Shares (the “Milestone Escrow Shares”) held in escrow pursuant to a certain indemnity escrow agreement dated November 17, 2021, between the Company, Computershare Trust Company of Canada, and certain securityholders of the Company.

Following the release from escrow on December 31, 2022, of the Milestone Escrow Shares, the Company shall issue such number of Combined Entity Shares, equal to 49.5% of the aggregate number of Milestone Escrow Shares not returned to treasury of the Combined Entity, and issued to the escrow securityholders, to the BZAM Shareholder, at the Issue Price.

The Earnout Shares will be issued based on the following conditions: (i) $1,500 worth of the Combined Entity Shares at the Issue Price, for every $2,500 worth of net Revenue over $90,000 generated by the combined entity from January 1, 2023 until December 31, 2023, up to a maximum payout of $16,500 and; (ii) $1,500 worth of the Combined Entity Share at the Issue Price, for every $375 worth of positive Adjusted EBITDA generated by the combined entity from January 1, 2023 until December 31, 2023, up to a maximum payout of $16,500.

Due to the limited period of time between the closing of the Acquisition and the issuance of these Interim Condensed Consolidated Financial Statements, certain business combination disclosures required under IFRS 3 – Business Combinations, including the preliminary purchase price allocation, have not been provided as this information has not yet been determined. The Company is currently in the process for determining the accounting for the transaction.

• b) On October 3, 2022 and October 6, 2022 the Company received funds totalling $2,200 under a demand promissory note with a company controlled by the BZAM Shareholder. The promissory note bears interest at a rate of 12% per annum and demand can only occur after December 1, 2022. The promissory note is subordinated to the Amended and Restated Agreement.

• c) In connection with the BZAM Transaction, the Company’s lender under its Revolver Loan, agreed to amend the terms of its Amended and Restated Agreement (as defined herein) to incorporate the assets of BZAM into the security collateral and, amongst other things: (i) remove the reduction of the limit to revolving portion of the credit facility as a result of prepayment on the term portion of the credit facility; (ii) amend the EBITDA financial covenant to take effect on April 30, 2023; (iii) extend the maturity date of the credit facility to March 24, 2024; and (iv) introduce a 1.5% reduction of the interest rate upon achieving three consecutive months of positive earnings before depreciation and amortization. All other terms of the Amended and Restated Agreement not specifically amended will remain the same as before. As a result, subsequent to September 30, 2022, the current portion of loans move to long-term and the Company has additional collateral available in order to access the full amount of the $34 million facility under the Credit Agreement.

• d) Subsequent to quarter-end, on November 8, 2022, the Company filed articles of amendment to effect a consolidation (the “Consolidation”) of all of the issued and outstanding Common Shares. Pursuant to the Consolidation, shareholders received one post-Consolidation Common Share for every ten pre-Consolidation Common Shares (the “Consolidation Ratio”). The Consolidation Ratio will also apply to the Common Share purchase warrants (the “Warrants”), which are currently exercisable on the basis of one Warrant for one Common Share. Accordingly, effective as of the Consolidation date, the holders of Warrants will be entitled to receive one post-Consolidation Common Share on the exercise of ten Warrants. The Consolidation also applied to the stock options and restricted share units outstanding, which were consolidated at the Consolidation Ratio with the exercise price being adjusted to reflect the Consolidation.

22