cron-6k_20190630.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Section 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of August 2019

Commission File No. 001-38403

 

CRONOS GROUP INC.

(Name of registrant)

 

720 King Street W., Suite 320

Toronto, Ontario

M5V 2T3

(Address of registrant’s principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F   Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1):

    Yes      No  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7):

    Yes      No  

 

 

 

 


 

EXHIBIT INDEX

 

 

 

Exhibit

 

Description

 

99.1

Unaudited Condensed Interim Consolidated Financial Statements dated August 7, 2019

99.2

Management’s Discussion and Analysis of Financial Condition and Results of Operations dated August 7, 2019

99.3

Form 52-109F2 – Certification of Interim Filings Full Certificate – Chief Executive Officer dated August 8, 2019

99.4

Form 52-109F2 – Certification of Interim Filings Full Certificate – Chief Financial Officer dated August 8, 2019

 

 

 

1


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

 

 

CRONOS GROUP INC.

(Registrant)

 

 

By:

/s/ Michael Gorenstein  

 

Name:

Michael Gorenstein

Title:

President and Chief Executive Officer

Date:  August 8, 2019

 

 

 

2

cron-ex991_9.htm

 

Exhibit 99.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CRONOS GROUP INC.

 

Unaudited Condensed Interim Consolidated Financial Statements

 

For the Three and Six Months Ended June 30, 2019 and June 30, 2018

 

(in thousands of Canadian dollars)

 

 

 

 

 

 


 

 

Cronos Group Inc.

Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2019 and June 30, 2018

 

Table of Contents

 

Unaudited Condensed Interim Consolidated Statements of Financial Position

1

Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Income (Loss)

2

Unaudited Condensed Interim Consolidated Statements of Changes in Equity

3

Unaudited Condensed Interim Consolidated Statements of Cash Flows

4

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

5

 

 

 

 


  

Cronos Group Inc.

Unaudited Condensed Interim Consolidated Statements of Financial Position

As at June 30, 2019 and December 31, 2018

(in thousands of CDN $)

 

 

 

Notes

 

As at

June 30,

2019

 

 

As at

December 31,

2018

 

Assets

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

22(a)

 

$

1,579,231

 

 

$

32,634

 

Short-term investments

 

22(a)

 

 

744,936

 

 

 

-

 

Interest receivable

 

22(a)

 

 

5,751

 

 

 

-

 

Accounts receivable

 

22(a)

 

 

11,960

 

 

 

4,163

 

Sales taxes receivable

 

 

 

 

7,936

 

 

 

3,419

 

Prepaid expenses and other assets

 

 

 

 

7,079

 

 

 

3,876

 

Biological assets

 

4

 

 

10,032

 

 

 

9,074

 

Inventory

 

4

 

 

41,667

 

 

 

11,584

 

Total current assets

 

 

 

 

2,408,592

 

 

 

64,750

 

Advances to joint ventures

 

5,22(a)

 

 

26,608

 

 

 

6,395

 

Net investments in equity accounted investees

 

5

 

 

2,025

 

 

 

4,038

 

Other investments

 

6

 

 

300

 

 

 

705

 

Loans receivable

 

7,22(a)

 

 

16,664

 

 

 

314

 

Property, plant and equipment

 

8

 

 

196,718

 

 

 

171,720

 

Right-of-use assets

 

3,11

 

 

3,359

 

 

 

171

 

Intangible assets

 

9

 

 

11,461

 

 

 

11,234

 

Goodwill

 

9

 

 

1,792

 

 

 

1,792

 

Total assets

 

 

 

$

2,667,519

 

 

$

261,119

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

Accounts payable and other liabilities

 

22(b)

 

 

30,747

 

 

 

15,372

 

Holdbacks payable

 

22(b)

 

 

2,274

 

 

 

7,887

 

Government remittances payable

 

22(b)

 

 

630

 

 

 

1,123

 

Current portion of lease obligations

 

3,11,22(b)

 

 

417

 

 

 

41

 

Construction loan payable

 

12,22(b)

 

 

-

 

 

 

20,951

 

Derivative liabilities

 

13,22(b)

 

 

1,399,594

 

 

 

-

 

Total current liabilities

 

 

 

 

1,433,662

 

 

 

45,374

 

Lease obligations

 

3,11,22(b)

 

 

3,109

 

 

 

119

 

Due to non-controlling interests

 

10,22(b)

 

 

2,249

 

 

 

2,136

 

Deferred income tax liability

 

20

 

 

4,036

 

 

 

1,850

 

Total liabilities

 

 

 

$

1,443,056

 

 

$

49,479

 

Shareholders' equity

 

 

 

 

 

 

 

 

 

 

Share capital

 

14(a)

 

 

559,296

 

 

 

225,500

 

Warrants

 

15(a)

 

 

754

 

 

 

1,548

 

Stock options

 

15(b)

 

 

8,573

 

 

 

6,241

 

Retained earnings (accumulated deficit)

 

 

 

 

655,047

 

 

 

(22,715

)

Accumulated other comprehensive income

 

 

 

 

944

 

 

 

930

 

Total equity attributable to shareholders of Cronos Group

 

 

 

 

1,224,614

 

 

 

211,504

 

Non-controlling interests

 

3,10

 

 

(151

)

 

 

136

 

Total shareholders' equity

 

 

 

 

1,224,463

 

 

 

211,640

 

Total liabilities and shareholders' equity

 

 

 

$

2,667,519

 

 

$

261,119

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

19

 

 

 

 

 

 

 

 

Subsequent events

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

Approved on behalf of the Board of Directors:

 

 

 

"Michael Gorenstein"

 

"James Rudyk"

 

Director

 

Director

 

 

   

 

1


 

  

Cronos Group Inc.

Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Income (Loss)

For the three and six months ended June 30, 2019 and June 30, 2018

(in thousands of CDN $, except share and per share amounts)

 

 

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

Notes

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Gross revenue

 

16

 

$

10,787

 

 

$

3,394

 

 

$

17,772

 

 

$

6,339

 

Excise taxes

 

 

 

 

(550

)

 

 

-

 

 

 

(1,065

)

 

 

-

 

Net revenue

 

 

 

 

10,237

 

 

 

3,394

 

 

 

16,707

 

 

 

6,339

 

Cost of sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales before fair value adjustments

 

 

 

 

4,762

 

 

 

1,254

 

 

 

7,746

 

 

 

2,821

 

Gross profit before fair value adjustments

 

 

 

 

5,475

 

 

 

2,140

 

 

 

8,961

 

 

 

3,518

 

Fair value adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized change in fair value of biological assets

 

4

 

 

(4,024

)

 

 

(6,831

)

 

 

(17,577

)

 

 

(9,575

)

Realized fair value adjustments on inventory sold in the period

 

 

 

 

3,557

 

 

 

2,625

 

 

 

7,279

 

 

 

4,819

 

Total fair value adjustments

 

 

 

 

(467

)

 

 

(4,206

)

 

 

(10,298

)

 

 

(4,756

)

Gross profit

 

 

 

 

5,942

 

 

 

6,346

 

 

 

19,259

 

 

 

8,274

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

 

 

5,358

 

 

 

364

 

 

 

6,858

 

 

 

950

 

Research and development

 

 

 

 

3,076

 

 

 

-

 

 

 

4,633

 

 

 

-

 

General and administrative

 

 

 

 

15,176

 

 

 

4,219

 

 

 

24,787

 

 

 

6,680

 

Share-based payments

 

15(b)

 

 

2,002

 

 

 

950

 

 

 

2,739

 

 

 

1,724

 

Depreciation and amortization

 

8,9,11

 

 

675

 

 

 

323

 

 

 

1,145

 

 

 

608

 

Total operating expenses

 

 

 

 

26,287

 

 

 

5,856

 

 

 

40,162

 

 

 

9,962

 

Operating loss

 

 

 

 

(20,345

)

 

 

490

 

 

 

(20,903

)

 

 

(1,688

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense)

 

 

 

 

12,531

 

 

 

(37

)

 

 

15,251

 

 

 

(59

)

Financing and transaction costs

 

12,13,25

 

 

(4,505

)

 

 

-

 

 

 

(34,066

)

 

 

-

 

Gain on revaluation of derivative liabilities

 

13

 

 

263,943

 

 

 

-

 

 

 

700,326

 

 

 

-

 

Share of (loss) income from investments in equity accounted investees

 

5

 

 

(991

)

 

 

3

 

 

 

(1,255

)

 

 

44

 

Gain on disposal of Whistler

 

5

 

 

-

 

 

 

-

 

 

 

20,606

 

 

 

-

 

Gain on other investments

 

6

 

 

-

 

 

 

-

 

 

 

924

 

 

 

221

 

Total other income

 

 

 

 

270,978

 

 

 

(34

)

 

 

701,786

 

 

 

206

 

Income (loss) before income taxes

 

 

 

 

250,633

 

 

 

456

 

 

 

680,883

 

 

 

(1,482

)

Deferred income tax (recovery) expense

 

20

 

 

(335

)

 

 

(267

)

 

 

2,222

 

 

 

(1,155

)

Net income (loss)

 

 

 

$

250,968

 

 

$

723

 

 

$

678,661

 

 

$

(327

)

Net income (loss) attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cronos Group

 

 

 

$

251,117

 

 

$

723

 

 

$

678,946

 

 

$

(327

)

Non-controlling interests

 

10

 

 

(149

)

 

 

-

 

 

 

(285

)

 

 

-

 

 

 

 

 

$

250,968

 

 

$

723

 

 

$

678,661

 

 

$

(327

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on revaluation and disposal of other investments, net of tax

 

6,20

 

$

-

 

 

$

39

 

 

$

103

 

 

$

4

 

Foreign exchange loss on translation of foreign operations

 

2(a),10

 

 

(104

)

 

 

-

 

 

 

(87

)

 

 

-

 

Total other comprehensive income (loss)

 

 

 

 

(104

)

 

 

39

 

 

 

16

 

 

 

4

 

Comprehensive income (loss)

 

 

 

$

250,864

 

 

$

762

 

 

$

678,677

 

 

$

(323

)

Comprehensive income (loss) attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cronos Group

 

 

 

$

251,011

 

 

$

762

 

 

$

678,960

 

 

$

(323

)

Non-controlling interests

 

10

 

 

(147

)

 

 

-

 

 

 

(283

)

 

 

-

 

 

 

 

 

$

250,864

 

 

$

762

 

 

$

678,677

 

 

$

(323

)

Earnings (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

17

 

$

0.75

 

 

$

0.00

 

 

$

2.14

 

 

$

(0.00

)

Diluted

 

17

 

$

0.22

 

 

$

0.00

 

 

$

0.58

 

 

$

(0.00

)

Weighted average number of outstanding shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

17

 

 

334,665,873

 

 

 

175,529,196

 

 

 

317,940,749

 

 

 

166,343,078

 

Diluted

 

17

 

 

374,676,595

 

 

 

211,524,230

 

 

 

364,872,093

 

 

 

166,343,078

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

2


 

  

Cronos Group Inc.

Unaudited Condensed Interim Consolidated Statements of Changes in Equity

For the six months ended June 30, 2019 and June 30, 2018

(in thousands of CDN $, except number of share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based reserve

 

 

Retained earnings

 

 

Accumulated other

 

 

Non-

 

 

 

 

 

 

 

Notes

 

Number of shares

 

 

Share capital

 

 

Shares to be issued

 

 

Warrants

 

 

Stock options

 

 

(accumulated deficit)

 

 

comprehensive income

 

 

controlling interests

 

 

Total

 

Balance at January 1, 2019 as previously reported

 

 

 

 

178,720,022

 

 

$

225,500

 

 

$

-

 

 

$

1,548

 

 

$

6,241

 

 

$

(22,715

)

 

$

930

 

 

$

136

 

 

$

211,640

 

Adoption of IFRS 16

 

3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(68

)

 

 

-

 

 

 

(4

)

 

 

(72

)

Balance at January 1, 2019 as restated

 

 

 

 

178,720,022

 

 

 

225,500

 

 

 

-

 

 

 

1,548

 

 

 

6,241

 

 

 

(22,783

)

 

 

930

 

 

 

132

 

 

 

211,568

 

Shares issued

 

14(a)

 

 

149,831,154

 

 

 

334,099

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

334,099

 

Share issuance costs

 

14(a)

 

 

-

 

 

 

(5,002

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,002

)

Warrants exercised

 

15(a)

 

 

7,390,961

 

 

 

2,709

 

 

 

-

 

 

 

(794

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,915

 

Vesting of options

 

15(b)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,739

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,739

 

Options exercised

 

15(b)

 

 

5,325

 

 

 

25

 

 

 

-

 

 

 

-

 

 

 

(8

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

17

 

Share appreciation rights exercised

 

15(b)

 

 

146,143

 

 

 

399

 

 

 

-

 

 

 

-

 

 

 

(399

)

 

 

(1,116

)

 

 

-

 

 

 

-

 

 

 

(1,116

)

Top-up Rights exercised

 

13(c),14(b)

 

 

50,938

 

 

 

1,566

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,566

 

Net income (loss)

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

678,946

 

 

 

-

 

 

 

(285

)

 

 

678,661

 

Other comprehensive income

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

14

 

 

 

2

 

 

 

16

 

Balance at June 30, 2019

 

 

 

 

336,144,543

 

 

$

559,296

 

 

$

-

 

 

$

754

 

 

$

8,573

 

 

$

655,047

 

 

$

944

 

 

$

(151

)

 

$

1,224,463

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2018

 

 

 

 

149,360,603

 

 

$

83,559

 

 

$

-

 

 

$

3,364

 

 

$

2,289

 

 

$

(3,724

)

 

$

880

 

 

$

-

 

 

$

86,368

 

Shares issued

 

14(a)

 

 

15,677,143

 

 

 

146,032

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

146,032

 

Share issuance costs

 

 

 

 

-

 

 

 

(9,444

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(9,444

)

Shares to be issued

 

 

 

 

-

 

 

 

-

 

 

 

17

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

17

 

Warrants exercised

 

15(a)

 

 

11,364,335

 

 

 

3,852

 

 

 

-

 

 

 

(1,496

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,356

 

Vesting of options

 

15(b)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,724

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,724

 

Options exercised

 

15(b)

 

 

353,339

 

 

 

682

 

 

 

-

 

 

 

-

 

 

 

(142

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

540

 

Share appreciation rights exercised

 

15(b)

 

 

150,215

 

 

 

61

 

 

 

-

 

 

 

-

 

 

 

(61

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net loss

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(327

)

 

 

-

 

 

 

-

 

 

 

(327

)

Other comprehensive income

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4

 

 

 

-

 

 

 

4

 

Balance at June 30, 2018