Company Quick10K Filing
Cronos Group
10-Q 2020-06-30 Filed 2020-08-06
10-Q 2020-03-31 Filed 2020-05-08
10-K 2019-12-31 Filed 2020-03-02
8-K 2020-09-08 Officers, Regulation FD, Exhibits
8-K 2020-08-06 Earnings, Exhibits
8-K 2020-07-20 Officers, Exhibits
8-K 2020-07-09 Other Events, Exhibits
8-K 2020-06-25
8-K 2020-05-08
8-K 2020-03-30
8-K 2020-03-17
8-K 2020-03-17
8-K 2020-01-15

CRON 10Q Quarterly Report

Part I
Financial Information
Item 1. Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part Ii
Other Information
Item 1: Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits
EX-3.1 exhibit31q2.htm
EX-10.1 ex101omnibusplan1.htm
EX-10.2 a102rsuawardagreement.htm
EX-10.3 a103rsuawardagreementi.htm
EX-31.1 a10-q22020311.htm
EX-31.2 a10-q22020312.htm
EX-32.1 a10-q22020321.htm
EX-32.2 a10-q22020322.htm

Cronos Group Earnings 2020-06-30

Balance SheetIncome StatementCash Flow

cron-20200630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
Form 10-Q
_______________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
or
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File No. 001-38403
__________________________
CRONOS GROUP INC.
(Exact name of registrant as specified in its charter)
__________________________
British Columbia, Canada
N/A
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
111 Peter St. Suite 300
Toronto, Ontario
M5V 2G9
(Address of principal executive offices)(Zip Code)
416-504-0004
(Registrant’s telephone number, including area code)
____________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, no par valueCRONThe Nasdaq Stock Market LLC


Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filer
Non-accelerated fileroSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x
As of August 5, 2020, there were 349,886,402 common shares of the registrant issued and outstanding.






1



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

Unless otherwise noted or the context indicates otherwise, references in this Quarterly Report on Form 10-Q (the “Quarterly Report”) to the “Company”, “Cronos Group”, “we”, “us” and “our” refer to Cronos Group Inc., its direct and indirect wholly owned subsidiaries and, if applicable, its joint ventures and investments accounted for by the equity method; the term “cannabis” means the plant of any species or subspecies of genus Cannabis and any part of that plant, including all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers; and the term “U.S. hemp” has the meaning given to 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 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 U.S. dollars, which is our reporting currency, unless otherwise noted. All references to “dollars” or “$” are to U.S. dollars; all references to “C$” are to Canadian dollars; all references to “A$” are to Australian dollars and all references to “ILS” are to Israeli New Shekels.

2


PART I
FINANCIAL INFORMATION

Item 1. Financial statements (Unaudited)
Table of Contents

3


Cronos Group Inc.
Condensed Consolidated Balance Sheets
As of June 30, 2020 and December 31, 2019
(In thousands of U.S. dollars, except share amounts, unaudited)


As of
June 30, 2020December 31, 2019
Assets
Current assets
Cash and cash equivalents$1,109,700  $1,199,693  
Short-term investments213,614  306,347  
Accounts receivable(1)
3,477  4,638  
Other receivables9,568  7,232  
Current portion of loans receivable4,458  4,664  
Prepaids and other assets7,827  9,395  
Inventory53,216  38,043  
Total current assets1,401,860  1,570,012  
Investments in equity accounted investees933  557  
Advances to joint ventures18,598  19,437  
Loan receivable, net65,371  44,967  
Property, plant and equipment164,290  161,809  
Right-of-use assets10,100  6,546  
Intangible assets69,399  72,320  
Goodwill179,736  214,794  
Total assets$1,910,287  $2,090,442  
Liabilities
Current liabilities
Accounts payable and other liabilities$28,316  $35,301  
Current portion of lease obligation1,206  427  
Derivative liabilities205,714  297,160  
Total current liabilities235,236  332,888  
Due to non-controlling interests3,048  1,844  
Lease obligation8,958  6,680  
Total liabilities$247,242  $341,412  
Commitments and contingencies(2)
Shareholders’ equity
Share capital(3,4)
$565,211  $561,165  
Additional paid-in capital27,046  23,234  
Retained earnings1,106,709  1,137,646  
Accumulated other comprehensive income (loss)(33,970) 27,838  
Total equity attributable to shareholders of Cronos Group1,664,996  1,749,883  
Non-controlling interests(1,951) (853) 
Total shareholders’ equity1,663,045  1,749,030  
Total liabilities and shareholders’ equity$1,910,287  $2,090,442  
(1) Net of current expected credit loss allowance of $80 as of June 30, 2020 (December 31, 2019 – $136)
(2) Refer to Note 19 and Note 20 in the notes to condensed consolidated financial statements.
(3) Authorized for issuance as of June 30, 2020: unlimited (December 31, 2019 – unlimited).
(4) Shares issued as of June 30, 2020: 349,886,402 (as of December 31, 2019: 348,817,472)

See notes to condensed consolidated financial statements.
4


Cronos Group Inc.
Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)
For the three and six months ended June 30, 2020 and 2019
(In thousands of U.S dollars, except share and per share amounts)


Three months ended June 30,Six months ended June 30,
2020201920202019
Net revenue, before excise taxes$11,432  $8,064  $20,776  $11,455  
Excise taxes(1,549) (411) (2,461) (798) 
Net revenue9,883  7,653  18,315  10,657  
Cost of sales9,774  3,560  16,720  5,009  
Inventory write-down3,062    11,024    
Gross profit (loss)(2,953) 4,093  (9,429) 5,648  
Operating expenses
Sales and marketing6,504  4,005  13,616  5,133  
Research and development (“R&D”)3,631  2,300  8,221  3,471  
General and administrative18,437  11,488  42,196  18,781  
Share-based payments2,546  2,647  4,982  4,418  
Depreciation and amortization684  408  1,371  726  
Total operating expenses31,802  20,848  70,386  32,529  
Operating loss(34,755) (16,755) (79,815) (26,881) 
Other income (expense)
Interest income, net3,734  9,442  11,485  11,528  
Share of loss from investments in equity accounted investees(794) (741) (1,966) (939) 
Gain (loss) on revaluation of derivative liabilities(35,880) 197,310  77,488  525,526  
Impairment loss on goodwill and intangible assets(40,000)   (40,000)   
Financing and transaction costs  (3,368)   (25,601) 
Other income (loss)(8)   786  16,243  
Total other income (loss)(72,948) 202,643  47,793  526,757  
Income (loss) before income taxes(107,703) 185,888  (32,022) 499,876  
Income tax expense        
Net income (loss)$(107,703) $185,888  $(32,022) $499,876  
Net income (loss) attributable to:
Cronos Group$(106,977) $185,999  $(30,937) $500,090  
Non-controlling interests(726) (111) (1,085) (214) 
$(107,703) $185,888  $(32,022) $499,876  
Other comprehensive income (loss)
Foreign exchange gain (loss) on translation$51,871  $17,947  $(61,821) $21,845  
Total other comprehensive income (loss)51,871  17,947  (61,821) 21,845  
Comprehensive income (loss)$(55,832) $203,835  $(93,843) $521,721  
Comprehensive income (loss) attributable to:
Cronos Group$(55,070) $203,947  $(92,745) $521,932  
Non-controlling interests(762) (112) (1,098) (211) 
$(55,832) $203,835  $(93,843) $521,721  
Net income (loss) per share
Basic$(0.31) $0.56  $(0.09) $1.57  
Diluted$(0.31) $0.16  $(0.09) $0.41  
Weighted average number of outstanding shares
Basic349,075,408  334,665,873  348,946,439  317,940,749  
Diluted(1)
349,075,408  374,676,595  348,946,439  364,872,093  
(1) In computing diluted earnings per share, incremental common shares are not considered in periods in which a net loss is reported, as the inclusion of the common share equivalents would be anti-dilutive.
See notes to condensed consolidated financial statements.
5


Cronos Group Inc.
Condensed Consolidated Statements of Changes in Equity (Deficit)
For the three months ended June 30, 2020 and 2019
(In thousands of U.S. dollars, except share amounts)


Number of sharesShare capitalAdditional paid-in capitalRetained earnings Accumulated other comprehensive income (loss)Non-controlling interestsTotal shareholders' equity (deficit)
Balance at March 31, 2020348,817,472  $563,165  $25,483  $1,213,686  $(85,877) $(1,189) $1,715,268  
Vesting of options—  —  1,770  —  —  —  1,770  
Options exercised1,068,930  1,329  (1,328) —  —  —  1  
Top-up rights exercised—  717  —  —  —  —  717  
Vesting of restricted share units—  —  776  —  —  —  776  
Vesting of common shares issued in connection with the use of certain publicity rights in brand development—  —  345  —  —  —  345  
Net income (loss)—  —  —  (106,977) —  (726) (107,703) 
Other comprehensive income (loss)—  —  —  —  51,907  (36) 51,871  
Balance at June 30, 2020349,886,402  $565,211  $27,046  $1,106,709  $(33,970) $(1,951) $1,663,045  
Number of sharesShare capitalAdditional paid-in capitalRetained earnings Accumulated other comprehensive income (loss)Non-controlling interestsTotal shareholders' equity (deficit)
Balance at March 31, 2019333,020,377  $421,340  $12,244  $285,736  $(5,975) $  $713,345  
Share issuance costs—  (76) —  —  —  —  (76) 
Warrants exercised3,000,000  617  (67) —  —  —  550  
Vesting of options—  —  2,647  —  —  —  2,647  
Options exercised73,228  56  (45) (425) —  —  (414) 
Top-up rights exercised50,938  1,171  —  —  —  —  1,171  
Net income (loss)—  —  —  185,999  —  (111) 185,888  
Other comprehensive loss—  —  —  —  17,948  (1) 17,947  
Balance at June 30, 2019336,144,543  $423,108  $14,779  $471,310  $11,973  $(112) $921,058  

See notes to condensed consolidated financial statements.
6


Cronos Group Inc.
Condensed Consolidated Statements of Changes in Equity (Deficit)
For the six months ended June 30, 2020 and 2019
(In thousands of U.S. dollars, except share amounts, unaudited)


Number of sharesShare capitalAdditional paid-in capitalRetained earningsAccumulated other comprehensive income (loss)Non-controlling interestsTotal shareholders’ equity (deficit)
Balance as of January 1, 2020348,817,472  $561,165  $23,234  $1,137,646  $27,838  $(853) $1,749,030  
Vesting of options—  —  3,500  —  —  —  3,500  
Options exercised1,068,930  1,329  (1,328) —  —  —  1  
Vesting of restricted share units—  —  1,482  —  —  —  1,482  
Top-up rights exercised—  717  —  —  —  —  717  
Vesting of common shares issued in connection with the use of certain publicity rights in brand development—  2,000  158  —  —  —  2,158  
Net income (loss)—  —  —  (30,937) —  (1,085) (32,022) 
Other comprehensive income (loss)—  —  —  —  (61,808) (13) (61,821) 
Balance at June 30, 2020349,886,402  $565,211  $27,046  $1,106,709  $(33,970) $(1,951) $1,663,045