Ayr Wellness Inc (AYRWF)

[JohnCM]

Ayr Strategies Inc. (AYRSF)

Quarter ending September 20th, 2020

Income (Loss) from operations +$22,013,737 (10,734,451) 18,169,432 (20,568,955) Other (expense) income Share of loss on equity investments [Note 10] (8,244) (420,626) (31,383) (313,714) Foreign exchange (6,421) (104,834) (9,038) (123,202) Unrealized (loss) gain - changes to fair value of financial liabilities

[Note 14] -($38,210,209) 40,427,308 (29,321,360) (122,006,820) Interest expense (729,469) (1,272,421) (2,249,046) (1,859,213) Interest income 5,034 31,834 5,034 396,352 Other (141,079) 12,864 19,971 17,152 Total other (expense) income (39,090,388) 38,674,125 (31,585,822) (123,889,445) (Loss) Income before income tax -($17,076,651) 27,939,674 (13,416,390) (144,458,400)

Make-Whole Provision and Contingent Consideration As part of the purchase price of the Qualifying Transaction, the Corporation entered into make-whole provisions relating to the Exchangeable Shares issued. The Corporation uses a Monte-Carlo simulation model to estimate the fair value of the make-whole provision liability. Upon initial recognition, the Corporation recorded a derivative liability of $2,813,718.

On November 20, 2019, the Corporation issued a total of 389,905 Exchangeable Shares with a value of $3,245,180 as a partial settlement of the make-whole liability. On May 18, 2020, the Corporation issued the remaining shares related to the make-whole liability, a total of 614,515 Exchangeable Shares with a value of $3,765,927. As of September 30, 2020 and December 31, 2019, the Corporation revalued the make-whole provision for a value of $nil and $3,540,803, respectively, which is included in purchase consideration payable on the interim statements of financial position.

The earn-out provision related to the acquisition of Sira is measured at fair value by taking a probability-weighted average of possible outcomes, as estimated by management, and discounting the payment to a present value. Upon initial recognition, the fair value of the liability was recorded as $21,821,132. As of September 30, 2020 and December 31, 2019, the fair value of the contingent consideration was $23,744,258 and $22,656,980, respectively.

Note:14 The fair value adjustment relating to derivative liabilities has been reflected in the interim financial statements under “Unrealized (loss) gain - changes to fair value of financial liabilities” as detailed below: September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 $ $ $ $ (Loss) Gain from FV adjustment on Warrants (37,842,107) 43,886,295 (28,008,959) (17,092,093) Loss from FV adjustment on Class A Restricted Voting Shares - (3,458,987) - (101,455,740) Loss from FV adjustment on make-whole provision - - (225,125) (3,458,987) Loss from FV adjustment on contingent consideration (368,102) - (1,087,276) - Total -($38,210,209) 40,427,308 (29,321,360) (122,006,820)