Canopy Growth Corp [CGC] Filings

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10-Q 1 cgc-20230930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38496

Canopy Growth Corporation

(Exact name of registrant as specified in its charter)


Canada	N/A
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1 Hershey Drive Smiths Falls, Ontario	K7A 0A8
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (855) 558-9333

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common shares, no par value

CGC

NASDAQ Global Select Market

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of November 7, 2023, there were 829,083,667 common shares of the registrant issued and outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Interim Consolidated Balance Sheets	1
	Condensed Interim Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Interim Consolidated Statements of Shareholders’ Equity	3
	Condensed Interim Consolidated Statements of Cash Flows	5
	Notes to Condensed Interim Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	69
Item 4.	Controls and Procedures	71
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	73
Item 1A.	Risk Factors	74
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75
Item 3.	Defaults Upon Senior Securities	75
Item 4.	Mine Safety Disclosures	75
Item 5.	Other Information	75
Item 6.	Exhibits	75
Signatures		78

Unless otherwise noted or the context indicates otherwise, references in this Quarterly Report on Form 10-Q (“Quarterly Report”) to the “Company,” “Canopy Growth,” “we,” “us” and “our” refer to Canopy Growth Corporation and its direct and indirect wholly-owned subsidiaries; the term “cannabis” means the plant of any species or subspecies of genus Cannabis and any part of that plant, including all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers; and the term “U.S. hemp” has the meaning given to the term “hemp” in the U.S. Agricultural Improvement Act of 2018 (the “2018 Farm Bill”), including hemp-derived cannabidiol (“CBD”).

This Quarterly Report contains references to our trademarks and trade names and to trademarks and trade names belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Quarterly Report may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies’ trademarks or trade names to imply a relationship with, or endorsement or sponsorship of us or our business by, any other companies.

All currency amounts in this Quarterly Report are stated in Canadian dollars, which is our reporting currency, unless otherwise noted. All references to “dollars” or “CDN$” are to Canadian dollars and all references to “US$” are to U.S. dollars.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CANOPY GROWTH CORPORATION

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

(in thousands of Canadian dollars, except number of shares and per share data, unaudited)


	September 30, 2023			March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	240,376		$	667,693
Short-term investments		30,000			105,526
Restricted short-term investments		7,990			11,765
Amounts receivable, net		68,856			68,459
Inventory		87,470			83,230
Assets of discontinued operations		35,541			116,291
Prepaid expenses and other assets		23,462			24,290
Total current assets		493,695			1,077,254
Other financial assets		556,355			568,292
Property, plant and equipment		346,227			471,271
Intangible assets		148,765			160,750
Goodwill		83,858			85,563
Noncurrent assets of discontinued operations		20,366			56,569
Other assets		18,958			19,996
Total assets	$	1,668,224		$	2,439,695

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	22,724		$	31,835
Other accrued expenses and liabilities		51,668			53,743
Current portion of long-term debt and convertible debentures		49,964			556,890
Liabilities of discontinued operations		18,627			67,624
Other liabilities		53,269			93,750
Total current liabilities		196,252			803,842
Long-term debt		631,228			749,991
Noncurrent liabilities of discontinued operations		1,962			3,417
Other liabilities		89,318			122,423
Total liabilities		918,760			1,679,673
Commitments and contingencies
Canopy Growth Corporation shareholders' equity:
Common shares - $nil par value; Authorized - unlimited number of shares; Issued - 829,083,667 shares and 517,305,551 shares, respectively		8,219,846			7,938,571
Additional paid-in capital		2,575,174			2,506,485
Accumulated other comprehensive loss		(24,799	)		(13,860	)
Deficit		(10,020,896	)		(9,672,761	)
Total Canopy Growth Corporation shareholders' equity		749,325			758,435
Noncontrolling interests		139			1,587
Total shareholders' equity		749,464			760,022
Total liabilities and shareholders' equity	$	1,668,224		$	2,439,695

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

CANOPY GROWTH CORPORATION

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF

OPERATIONS AND COMPREHENSIVE LOSS

(in thousands of Canadian dollars, except number of shares and per share data, unaudited)


	Three months ended September 30,						Six months ended September 30,
	2023			2022			2023			2022
				(As Restated)						(As Restated)
Revenue	$	82,076		$	100,437		$	170,720		$	205,411
Excise taxes		12,481			12,496			24,867			25,243
Net revenue		69,595			87,941			145,853			180,168
Cost of goods sold		46,169			88,552			108,665			184,604
Gross margin		23,426			(611	)		37,188			(4,436	)
Operating expenses
Selling, general and administrative expenses		57,611			95,020			120,374			181,821
Share-based compensation		2,717			9,573			6,434			14,838
(Gain)/loss on asset impairment and restructuring		(29,895	)		43,968			(27,961	)		1,771,953
Total operating expenses		30,433			148,561			98,847			1,968,612
Operating loss from continuing operations		(7,007	)		(149,172	)		(61,659	)		(1,973,048	)
Other income (expense), net		(128,334	)		(39,074	)		(82,233	)		(280,584	)
Loss from continuing operations before income taxes		(135,341	)		(188,246	)		(143,892	)		(2,253,632	)
Income tax expense		(12,821	)		(8,220	)		(14,839	)		(11,969	)
Net loss from continuing operations		(148,162	)		(196,466	)		(158,731	)		(2,265,601	)
Discontinued operations, net of tax		(176,638	)		(109,345	)		(207,930	)		(131,960	)
Net loss		(324,800	)		(305,811	)		(366,661	)		(2,397,561	)
Net loss from continuing operations attributable to noncontrolling interests and redeemable noncontrolling interest		-			(1,289	)		-			(794	)
Discontinued operations attributable to noncontrolling interests and redeemable noncontrolling interest		(14,786	)		(12,352	)		(18,526	)		(18,154	)
Net loss attributable to Canopy Growth Corporation	$	(310,014	)	$	(292,170	)	$	(348,135	)	$	(2,378,613	)

Basic and diluted loss per share
Continuing operations	$	(0.21	)	$	(0.41	)	$	(0.25	)	$	(5.21	)
Discontinued operations		(0.22	)		(0.21	)		(0.30	)		(0.26	)
Basic and diluted loss per share	$	(0.43	)	$	(0.62	)	$	(0.55	)	$	(5.47	)
Basic and diluted weighted average common shares outstanding		716,294,433			471,592,150			633,830,000			435,229,653

Comprehensive income (loss):
Net loss from continuing operations	$	(148,162	)	$	(196,466	)	$	(158,731	)	$	(2,265,601	)
Other comprehensive income (loss), net of income tax
Fair value changes of own credit risk of financial liabilities		(26,648	)		1,249			(12,470	)		28,309
Foreign currency translation		(2,369	)		9,015			(9,529	)		9,773
Total other comprehensive income (loss), net of income tax		(29,017	)		10,264			(21,999	)		38,082
Comprehensive loss from continuing operations		(177,179	)		(186,202	)		(180,730	)		(2,227,519	)
Comprehensive loss from discontinued operations		(176,638	)		(109,345	)		(207,930	)		(131,960	)
Comprehensive loss		(353,817	)		(295,547	)		(388,660	)		(2,359,479	)
Comprehensive loss from continuing operations attributable to noncontrolling interests and redeemable noncontrolling interest		-			(1,289	)		-			(794	)
Comprehensive loss from discontinued operations attributable to noncontrolling interests and redeemable noncontrolling interest		(14,786	)		(12,352	)		(18,526	)		(18,154	)
Comprehensive loss attributable to Canopy Growth Corporation	$	(339,031	)	$	(281,906	)	$	(370,134	)	$	(2,340,531	)

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

CANOPY GROWTH CORPORATION

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands of Canadian dollars, unaudited)


			Additional paid-in capital											Accumulated
	Common shares		Share-based reserve			Warrants		Ownership changes			Redeemable noncontrolling interest			other comprehensive income (loss)			Deficit			Noncontrolling interests			Total
Balance at March 31, 2023	$	7,938,571	$	498,150		$	2,581,788	$	(521,961	)	$	(51,492	)	$	(13,860	)	$	(9,672,761	)	$	1,587		$	760,022
Private Placement, net of issuance costs		12,836		9,820			8,977		-			-			-			-			-			31,633
Other issuances of common shares and warrants		253,023		(80	)		-		-			-			11,060			-			-			264,003
Exercise of Previous Equity Incentive Plan stock options		165		(165	)		-		-			-			-			-			-			-
Share-based compensation		-		6,434			-		-			-			-			-			-			6,434
Issuance and vesting of restricted share units and performance share units		6,801		(6,801	)		-		-			-			-			-			-			-
Changes in redeemable noncontrolling interest		-		-			-		-			(18,526	)		-			-			18,526			-
Ownership changes relating to noncontrolling interests, net		-		-			-		-			70,018			-			-			(1,436	)		68,582
Redemption of redeemable noncontrolling interest		8,450		-			-		(988	)		-			-			-			(12	)		7,450
Comprehensive income (loss)		-		-			-		-			-			(21,999	)		(348,135	)		(18,526	)		(388,660	)
Balance at September 30, 2023	$	8,219,846	$	507,358		$	2,590,765	$	(522,949	)	$	-		$	(24,799	)	$	(10,020,896	)	$	139		$	749,464

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

CANOPY GROWTH CORPORATION

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands of Canadian dollars, unaudited)


			Additional paid-in capital											Accumulated
	Common shares		Share-based reserve			Warrants		Ownership changes			Redeemable noncontrolling interest			other comprehensive income (loss)			Deficit			Noncontrolling interests		Total
Balance at March 31, 2022 (As Restated)	$	7,482,809	$	492,041		$	2,581,788	$	(509,723	)	$	(42,860	)	$	(42,282	)	$	(6,378,199	)	$	4,341	$	3,587,915
Cumulative effect from adoption of ASU 2020-06		-		4,452			-		-			-			-			(729	)		-		3,723
Other issuances of common shares and warrants		60,222		(353	)		-		-			-			-			-			-		59,869
Exercise of Previous Equity Incentive Plan stock options		1,506		(1,236	)		-		-			-			-			-			-		270
Share-based compensation		-		14,838			-		-			-			-			-			-		14,838
Issuance and vesting of restricted share units

Canopy Growth Corp [CGC] Filings
10-Q	[2023-11-09]
S-1	[2023-09-20]
S-1	[2023-08-30]
10-Q	[2023-08-09]
S-1	[2023-07-19]
10-K	[2023-06-22]
10-Q	[2023-02-09]
10-Q	[2022-11-09]
10-Q	[2022-08-09]
10-K	[2022-05-31]
10-Q	[2022-02-09]
10-Q	[2021-11-08]
10-Q	[2021-08-06]
10-K	[2021-06-01]
10-Q	[2021-02-09]
10-Q	[2020-11-09]
10-Q	[2020-08-10]
10-K	[2020-06-01]