cron-6k_20191112.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 November 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 November 11, 2019

99.2

Management’s Discussion and Analysis of Financial Condition and Results of Operations dated November 11, 2019

99.3

Form 52-109F2 – Certification of Interim Filings Full Certificate – Chief Executive Officer dated November 12, 2019

99.4

Form 52-109F2 – Certification of Interim Filings Full Certificate – Chief Financial Officer dated November 12, 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:  November 12, 2019

 

 

 

2

cron-ex991_7.htm

 

Exhibit 99.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CRONOS GROUP INC.

 

Unaudited Condensed Interim Consolidated Financial Statements

 

For the Three and Nine Months Ended September 30, 2019 and September 30, 2018

 

(in thousands of Canadian dollars)

 

 

 

 

 

 


 

Cronos Group Inc.

Unaudited Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2019 and September 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 September 30, 2019 and December 31, 2018

(in thousands of CDN $)

 

 

 

Notes

 

As at

September 30,

2019

 

 

As at

December 31,

2018

 

Assets

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

23(a)

 

$

1,475,459

 

 

$

32,634

 

Short-term investments

 

23(a)

 

 

517,064

 

 

 

-

 

Interest receivable

 

23(a)

 

 

3,829

 

 

 

-

 

Accounts receivable

 

23(a)

 

 

12,655

 

 

 

4,163

 

Sales taxes receivable

 

 

 

 

4,624

 

 

 

3,419

 

Current portion of loans receivable

 

7,23(a)

 

 

6,083

 

 

 

314

 

Prepaid expenses and other assets

 

 

 

 

11,742

 

 

 

3,876

 

Biological assets

 

4

 

 

2,101

 

 

 

9,074

 

Inventory

 

4

 

 

52,865

 

 

 

11,584

 

Total current assets

 

 

 

 

2,086,422

 

 

 

65,064

 

Advances to joint ventures

 

5,23(a)

 

 

26,367

 

 

 

6,395

 

Net investments in equity accounted investees

 

5

 

 

1,389

 

 

 

4,038

 

Other investments

 

6

 

 

-

 

 

 

705

 

Loans receivable

 

7,23(a)

 

 

44,082

 

 

 

-

 

Property, plant and equipment

 

9

 

 

216,277

 

 

 

171,720

 

Right-of-use assets

 

3,12

 

 

7,957

 

 

 

171

 

Intangible assets

 

10

 

 

96,047

 

 

 

11,234

 

Goodwill

 

8,10

 

 

284,227

 

 

 

1,792

 

Total assets

 

 

 

$

2,762,768

 

 

$

261,119

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

Accounts payable and other liabilities

 

23(b)

 

 

57,722

 

 

 

15,372

 

Holdbacks payable

 

23(b)

 

 

-

 

 

 

7,887

 

Government remittances payable

 

23(b)

 

 

738

 

 

 

1,123

 

Current portion of lease obligations

 

3,12,23(b)

 

 

420

 

 

 

41

 

Construction loan payable

 

13,23(b)

 

 

-

 

 

 

20,951

 

Derivative liabilities

 

14,23(b)

 

 

545,514

 

 

 

-

 

Total current liabilities

 

 

 

 

604,394

 

 

 

45,374

 

Lease obligations

 

3,12,23(b)

 

 

7,744

 

 

 

119

 

Due to non-controlling interests

 

11,23(b)

 

 

2,378

 

 

 

2,136

 

Deferred income tax liability

 

21

 

 

77

 

 

 

1,850

 

Total liabilities

 

 

 

$

614,593

 

 

$

49,479

 

Shareholders' equity

 

 

 

 

 

 

 

 

 

 

Share capital

 

15(a)

 

 

693,620

 

 

 

225,500

 

Share-based reserve

 

16

 

 

11,808

 

 

 

7,789

 

Retained earnings (accumulated deficit)

 

 

 

 

1,443,382

 

 

 

(22,715

)

Accumulated other comprehensive (loss) income

 

 

 

 

(98

)

 

 

930

 

Total equity attributable to shareholders of Cronos Group

 

 

 

 

2,148,712

 

 

 

211,504

 

Non-controlling interests

 

3,11

 

 

(537

)

 

 

136

 

Total shareholders' equity

 

 

 

 

2,148,175

 

 

 

211,640

 

Total liabilities and shareholders' equity

 

 

 

$

2,762,768

 

 

$

261,119

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

20

 

 

 

 

 

 

 

 

Subsequent events

 

27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 nine months ended September 30, 2019 and September 30, 2018

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

 

 

 

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

Notes

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Gross revenue

 

17

 

$

13,339

 

 

$

3,760

 

 

$

31,111

 

 

$

10,099

 

Excise taxes

 

 

 

 

(639

)

 

 

-

 

 

 

(1,704

)

 

 

-

 

Net revenue

 

 

 

 

12,700

 

 

 

3,760

 

 

 

29,407

 

 

 

10,099

 

Cost of sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales before fair value adjustments

 

 

 

 

7,432

 

 

 

1,688

 

 

 

15,178

 

 

 

4,509

 

Gross profit before fair value adjustments

 

 

 

 

5,268

 

 

 

2,072

 

 

 

14,229

 

 

 

5,590

 

Fair value adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized change in fair value of biological assets

 

4

 

 

10,015

 

 

 

(1,533

)

 

 

(7,562

)

 

 

(11,108

)

Realized fair value adjustments on inventory sold in the period

 

 

 

 

14,617

 

 

 

1,511

 

 

 

21,896

 

 

 

6,330

 

Total fair value adjustments

 

 

 

 

24,632

 

 

 

(22

)

 

 

14,334

 

 

 

(4,778

)

Gross profit (loss)

 

 

 

 

(19,364

)

 

 

2,094

 

 

 

(105

)

 

 

10,368

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

 

 

6,057

 

 

 

598

 

 

 

12,915

 

 

 

1,548

 

Research and development

 

 

 

 

3,439

 

 

 

-

 

 

 

8,072

 

 

 

-

 

General and administrative

 

 

 

 

21,270

 

 

 

4,820

 

 

 

46,057

 

 

 

11,500

 

Share-based payments

 

16

 

 

3,125

 

 

 

1,223

 

 

 

5,864

 

 

 

2,947

 

Depreciation and amortization

 

9,10,12

 

 

907

 

 

 

330

 

 

 

2,052

 

 

 

938

 

Total operating expenses

 

 

 

 

34,798

 

 

 

6,971

 

 

 

74,960

 

 

 

16,933

 

Operating loss

 

 

 

 

(54,162

)

 

 

(4,877

)

 

 

(75,065

)

 

 

(6,565

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense)

 

 

 

 

11,703

 

 

 

(62

)

 

 

26,954

 

 

 

(121

)

Financing and transaction costs

 

 

 

 

(8,031

)

 

 

-

 

 

 

(42,097

)

 

 

-

 

Gain on revaluation of derivative liabilities

 

14

 

 

835,079

 

 

 

-

 

 

 

1,535,405

 

 

 

-

 

Gain on revaluation of financial liabilities

 

16(d)

 

 

194

 

 

 

-

 

 

 

194

 

 

 

-

 

Share of (loss) income from equity accounted investees

 

5

 

 

(746

)

 

 

20

 

 

 

(2,001

)

 

 

64

 

Gain on disposal of Whistler

 

5

 

 

-

 

 

 

-

 

 

 

20,606

 

 

 

-

 

Gain on other investments

 

6

 

 

-

 

 

 

-

 

 

 

924

 

 

 

221

 

Total other income (expense)

 

 

 

 

838,199

 

 

 

(42

)

 

 

1,539,985

 

 

 

164

 

Income (loss) before income taxes

 

 

 

 

784,037

 

 

 

(4,919

)

 

 

1,464,920

 

 

 

(6,401

)

Deferred income tax (recovery) expense

 

21

 

 

(3,959

)

 

 

2,352

 

 

 

(1,737

)

 

 

1,197

 

Net income (loss)

 

 

 

$

787,996

 

 

$

(7,271

)

 

$

1,466,657

 

 

$

(7,598

)

Net income (loss) attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cronos Group

 

 

 

$

788,368

 

 

$

(7,210

)

 

$

1,467,314

 

 

$

(7,537

)

Non-controlling interests

 

11

 

 

(372

)

 

 

(61

)

 

 

(657

)

 

 

(61

)

 

 

 

 

$

787,996

 

 

$

(7,271

)

 

$

1,466,657

 

 

$

(7,598

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on revaluation or disposal of other investments

 

6,21

 

$

(300

)

 

$

233

 

 

$

(197

)

 

$

237

 

Foreign exchange gain (loss) on translation of subsidiaries

 

2(a),11

 

 

(755

)

 

 

3

 

 

 

(843

)

 

 

3

 

Total other comprehensive income (loss)

 

 

 

 

(1,055

)

 

 

236

 

 

 

(1,040

)

 

 

240

 

Comprehensive income (loss)

 

 

 

$

786,941

 

 

$

(7,035

)

 

$

1,465,617

 

 

$

(7,358

)

Comprehensive income (loss) attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cronos Group

 

 

 

$

787,327

 

 

$

(6,975

)

 

$

1,466,286

 

 

$

(7,298

)

Non-controlling interests

 

11

 

 

(386

)

 

 

(60

)

 

 

(669

)

 

 

(60

)

 

 

 

 

$

786,941

 

 

$

(7,035

)

 

$

1,465,617

 

 

$

(7,358

)

Earnings (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

18

 

$

2.33

 

 

$

(0.04

)

 

$

4.92

 

 

$

(0.04

)

Diluted

 

18

 

$

0.53

 

 

$

(0.04

)

 

$

1.22

 

 

$

(0.04

)

Weighted average number of outstanding shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

18

 

 

338,957,949

 

 

 

177,483,122

 

 

 

297,964,058

 

 

 

170,097,232

 

Diluted

 

18

 

 

369,268,672

 

 

 

177,483,122

 

 

 

333,618,691

 

 

 

170,097,232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 nine months ended September 30, 2019 and September 30, 2018

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based reserve

 

 

Retained

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Notes

 

Number of shares

 

 

Share capital

 

 

Shares to be issued

 

 

Warrants

 

 

Stock options

 

 

Restricted

stock

units

 

 

earnings (accumulated deficit)

 

 

other comprehensive income (loss)

 

 

Non-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

 

15(a)

 

 

154,917,740

 

 

 

408,516

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

408,516

 

Share issuance costs

 

15(a)

 

 

-

 

 

 

(5,007

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,007

)

Warrants exercised

 

16(a)

 

 

7,390,961

 

 

 

2,709

 

 

 

-

 

 

 

(794

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,915

 

Vesting of options

 

16(b)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,018

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,018

 

Options exercised

 

16(b)

 

 

8,217

 

 

 

36

 

 

 

-

 

 

 

-

 

 

 

(12

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

24

 

Share appreciation rights exercised

 

16(b)

 

 

161,870

 

 

 

439

 

 

 

-

 

 

 

-

 

 

 

(439

)

 

 

-

 

 

 

(1,149

)

 

 

-

 

 

 

-

 

 

 

(1,149

)

Vesting of restricted stock units

 

16(c)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

246

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

246

 

Top-up Rights exercised

 

14(c),15(c)

 

 

2,565,397

 

 

 

61,427

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

61,427

 

Net income (loss)

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,467,314

 

 

 

-

 

 

 

(657

)

 

 

1,466,657

 

Other comprehensive income (loss)

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,028

)

 

 

(12

)

 

 

(1,040

)

Balance at September 30, 2019

 

 

 

 

343,764,207

 

 

$

693,620

 

 

$

-

 

 

$

754

 

 

$

10,808

 

 

$

246

 

 

$

1,443,382

 

 

$

(98

)

 

$

(537

)

 

$

2,148,175

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2018

 

 

 

 

149,360,603

 

 

$

83,559

 

 

$

-

 

 

$

3,364

 

 

$

2,289

 

 

$

-

 

 

$

(3,724

)

 

$

880

 

 

$

-

 

 

$

86,368

 

Shares issued

 

15(a)

 

 

15,677,143

 

 

 

146,032

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

146,032

 

Share issuance costs

 

 

 

 

-

 

 

 

(9,479

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(9,479

)

Shares to be issued

 

 

 

 

-

 

 

 

-

 

 

 

17

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

17

 

Warrants exercised

 

16(a)

 

 

13,114,336

 

 

 

4,616

 

 

 

-

 

 

 

(1,816

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,800

 

Vesting of options

 

16(b)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,947

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,947

 

Options exercised

 

16(b)

 

 

366,638

 

 

 

721

 

 

 

-

 

 

 

-