PR Newswire
TORONTO, Nov. 13, 2018
Increased Revenues 186% and Kilograms Sold 213% Year-over-Year
Licensed and Commenced Cultivation in Building 4
Announced Landmark Partnership with Ginkgo Bioworks to Produce Cultured Cannabinoids
Launched Mainstream Recreational Brand Spinach™
Created NatuEra, the First Cannabis CMO in Latin America and Received Non-Psychoactive Plant License
TORONTO, Nov. 13, 2018 /PRNewswire/ - Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) ("Cronos Group" or the "Company"), today announced financial results for the third quarter ended September 30, 2018.
"We are encouraged with our third quarter results, which reflect the meaningful progress we are making on our strategic initiatives. In the quarter, we announced a number of landmark partnerships to expand our reach beyond the flower and beyond Canada and launched our second differentiated recreational cannabis brand," said Mike Gorenstein, CEO of Cronos Group. "The recent legalization of cannabis sales for adult recreational use in Canada was a watershed moment for our industry and our Company. We are energized by the opportunities this creates for Cronos Group in Canada and look forward to leading the industry forward responsibly."
"As excited as we are about this milestone and our participation in this new market, it's truly just the beginning. Cronos Group is building an innovative global cannabinoid company. The opportunities for our Company extend across the globe as regulations evolve and markets open. The recent initiatives we launched with Gingko Bioworks and Technion are great examples of how we intend to use innovation and our growing intellectual property portfolio to develop new applications for cannabinoids across a range of categories. We are proud of all that we accomplished this quarter, and we are focused on executing on our strategic plan to drive growth and value creation for our shareholders, partners and consumers," concluded Mike Gorenstein.
Third Quarter 2018 Business Highlights
Business Highlights Subsequent to Third Quarter 2018
Third Quarter 2018 Financial Highlights
Conference Call
The Company will host a conference call and live audio webcast on Tuesday, November 13, 2018 at 8:30 a.m. EST to discuss third quarter 2018 results. The call will last approximately one hour. Instructions for the conference call are provided below:
Live Audio Webcast: https://thecronosgroup.com/investor-relations
Toll-free dial-in number: (888) 231-8191
International dial-in number: (647) 427-7450
Conference ID: 8084817
Additionally, an audio replay of the conference call will be available two hours after the call's completion and until 11:59 p.m. EST on November 27, 2018. Instructions for the audio replay are provided below:
Toll-free dial-in number: (855) 859-2056
Passcode: 8084817
About Cronos Group
Cronos Group is a globally diversified and vertically integrated cannabis company with a presence across five continents. Cronos Group operates two wholly-owned Canadian license holders: Peace Naturals Project Inc., which was the first non-incumbent medical cannabis license granted by Health Canada, and Original BC Ltd., which is based in the Okanagan Valley, British Columbia. Cronos Group has multiple international production and distribution platforms and intends to continue to rapidly expand its global footprint as it focuses on building an international iconic brand portfolio and developing disruptive intellectual property. Cronos Group is committed to building industry leading companies that transform the perception of cannabis and responsibly elevate the consumer experience.
Forward-looking statements
This news release contains "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws (collectively, "forward-looking statements"). All statements contained herein that are not clearly historical in nature may constitute forward-looking statements. In some cases, forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "likely", "should", "would", "plan", "anticipate", "intend", "potential", "proposed", "estimate", "believe" or the negative of these terms, or other similar words, expressions and grammatical variations thereof, or statements that certain events or conditions "may" or "will" happen, or by discussions of strategy. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of historical fact. Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as at and for periods ended on certain dates and to present information about management's current expectations and plans relating to the future and the reader is cautioned that such information may not be appropriate for any other purpose. Some of the forward-looking statements contained in this press release, include, but are not limited to, statements with respect to: our business and operations, our strategy for future growth, growing our global footprint, establishing partnerships and distribution relationships, the expansion of the Company's growing and production capacities, the construction of our facilities and our intention to build an international iconic brand portfolio and develop disruptive intellectual property. Forward-looking statements are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances. While we consider these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct. By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release. Such factors include, without limitation, those discussed in the Company's current MD&A and Annual Information Form, both of which have been filed on SEDAR and can be accessed at www.sedar.com. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release and are based on the beliefs, estimates, expectations and opinions of management on the date such forward-looking statements are made. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by applicable law.
Cronos Group Inc. |
Unaudited Condensed Interim Consolidated Statements of Financial Position |
As at September 30, 2018 and December 31, 2017 |
(in thousands of CDN $) |
Notes | As at September 30, 2018 | As at December 31, 2017 | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash | $ | 41,482 | $ | 9,208 | ||||
Accounts receivable | 23(i) | 3,278 | 1,140 | |||||
Sales taxes receivable | 9,953 | 3,114 | ||||||
Prepaids and other receivables | 23(i) | 10,246 | 790 | |||||
Biological assets | 6 | 5,632 | 3,722 | |||||
Inventory | 6 | 15,073 | 8,416 | |||||
Loan receivable | 7,23(i) | 314 | 314 | |||||
Total current assets | 85,978 | 26,704 | ||||||
Advances to related corporations | 8,23(i) | 2,674 | - | |||||
Investments in equity accounted investees | 9 | 4,072 | 3,807 | |||||
Other investments | 10,23(iii) | 994 | 1,347 | |||||
Property, plant and equipment | 11 | 127,595 | 56,172 | |||||
Intangible assets | 12 | 11,345 | 11,207 | |||||
Goodwill | 13 | 1,792 | 1,792 | |||||
Total assets | $ | 234,450 | $ | 101,029 | ||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable and other liabilities | 23(ii) | $ | 3,066 | $ | 7,878 | |||
Government remittances payable | 739 | - | ||||||
Construction loan payable | 15 | 5,724 | - | |||||
Total current liabilities | 9,529 | 7,878 | ||||||
Construction loan payable | 15 | - | 5,367 | |||||
Deferred income tax liability | 22 | 2,656 | 1,416 | |||||
Total liabilities | 12,185 | 14,661 | ||||||
Shareholders' equity | ||||||||
Share capital | 16(a) | 225,549 | 83,559 | |||||
Shares to be issued | 16(b) | 17 | - | |||||
Warrants | 17(a) | 1,548 | 3,364 | |||||
Stock options | 17(b) | 4,982 | 2,289 | |||||
Accumulated deficit | (11,261) | (3,724) | ||||||
Accumulated other comprehensive income | 1,119 | 880 | ||||||
Total equity attributable to shareholders of Cronos | 221,954 | 86,368 | ||||||
Non-controlling interests | 14 | 311 | - | |||||
Total shareholders' equity | 222,265 | 86,368 | ||||||
Total liabilities and shareholders' equity | $ | 234,450 | $ | 101,029 |
Cronos Group Inc. | ||||||||||||||
Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||||||||||||
For the three and nine months ended September 30, 2018 and September 30, 2017 | ||||||||||||||
(in thousands of CDN $, except share and per share amounts) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Notes | 2018 | 2017 | 2018 | 2017 | ||||||||||
Revenue | 18 | $ | 3,760 | $ | 1,314 | $ | 10,099 | $ | 2,471 | |||||
Cost of sales before fair value adjustments | 5,6 | 1,688 | 464 | 4,509 | 877 | |||||||||
Gross profit before fair value adjustments | 2,072 | 850 | 5,590 | 1,594 | ||||||||||
Fair value adjustments | ||||||||||||||
Unrealized change in fair value of biological assets | 5,6 | (1,533) | (2,478) | (11,108) | (5,179) | |||||||||
Realized fair value adjustments on inventory sold in the period | 5,6 | 1,511 | 1,324 | 6,330 | 2,612 | |||||||||
Total fair value adjustments | (22) | (1,154) | (4,778) | (2,567) | ||||||||||
Gross profit | 2,094 | 2,004 | 10,368 | 4,161 | ||||||||||
Operating expenses | ||||||||||||||
Sales and marketing | 598 | 176 | 1,548 | 306 | ||||||||||
General and administrative | 4,820 | 1,066 | 11,500 | 4,274 | ||||||||||
Share-based payments | 17(b),20 | 1,223 | 539 | 2,947 | 1,170 | |||||||||
Depreciation and amortization | 11,12 | 330 | 255 | 938 | 684 | |||||||||
Total operating expenses | 6,971 | 2,036 | 16,933 | 6,434 | ||||||||||
Operating loss | (4,877) | (32) | (6,565) | (2,273) | ||||||||||
Other income (expense) | ||||||||||||||
Interest expense | (62) | (22) | (121) | (159) | ||||||||||
Share of income (loss) from investment in associate | 9 | 20 | (53) | 64 | 363 | |||||||||
Gain on other investments | 10 | - | 1,128 | 221 | 2,399 | |||||||||
Total other income (expense) | (42) | 1,053 | 164 | 2,603 | ||||||||||
Income (loss) before income taxes | (4,919) | 1,021 | (6,401) | 330 | ||||||||||
Income tax expense (recovery) | 22 | 2,352 | (76) | 1,197 | (98) | |||||||||
Net income (loss) | $ | (7,271) | $ | 1,097 | $ | (7,598) | $ | 428 | ||||||
Net income (loss) attributable to: | ||||||||||||||
Cronos Group | (7,210) | 1,097 | (7,537) | 428 | ||||||||||
Non-controlling interests | 14 | (61) | - | (61) | - | |||||||||
$ | (7,271) | $ | 1,097 | $ | (7,598) | $ | 428 | |||||||
Other comprehensive income (loss) | ||||||||||||||
Gain (loss) on revaluation and disposal of other investments, net of tax | 10,22 | 233 | (2) | 237 | 692 | |||||||||
Foreign exchange gain on translation of foreign operations | 2(c) | 3 | - | 3 | - | |||||||||
Total other comprehensive income (loss) | 236 | (2) | 240 | 692 | ||||||||||
Comprehensive income (loss) | $ | (7,035) | $ | 1,095 | $ | (7,358) | $ | 1,120 | ||||||
Comprehensive income (loss) attributable to: | ||||||||||||||
Cronos Group | (6,975) | 1,095 | (7,298) | 1,120 | ||||||||||
Non-controlling interests | 14 | (60) | - | (60) | - | |||||||||
$ | (7,035) | $ | 1,095 | $ | (7,358) | $ | 1,120 | |||||||
Net income (loss) per share | ||||||||||||||
Basic and diluted | 19 | $ | (0.04) | $ | 0.01 | $ | (0.04) | $ | 0.00 | |||||
Weighted average number of outstanding shares | ||||||||||||||
Basic | 19 | 177,483,122 | 134,913,931 | 170,097,232 | 130,782,161 | |||||||||
Diluted | 19 | 177,483,122 | 143,592,860 | 170,097,232 | 139,461,090 |
Cronos Group Inc. |
Unaudited Condensed Interim Consolidated Statements of Cash Flows |
For the three and nine months ended September 30, 2018 and September 30, 2017 |
(in thousands of CDN $) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Notes | 2018 | 2017 | 2018 | 2017 | ||||||||||
Operating activities | ||||||||||||||
Net income (loss) | $ | (6,392) | $ | 1,097 | $ | (6,719) | $ | 428 | ||||||
Items not affecting cash: | ||||||||||||||
Unrealized change in fair value of biological assets | 5,6 | (1,533) | (2,478) | (11,108) | (5,179) | |||||||||
Realized fair value adjustments on inventory sold in the period | 5,6 | 1,511 | 1,324 | 6,330 | 2,612 | |||||||||
Share-based payments | 17(b),20 | 1,223 | 539 | 2,947 | 1,170 | |||||||||
Depreciation and amortization | 11,12 | 645 | 255 | 1,760 | 684 | |||||||||
Share of income (loss) from investment in associate | 9 | (20) | 53 | (64) | (363) | |||||||||
Gain on other investments | 10 | - | (1,128) | (221) | (2,399) | |||||||||
Deferred income tax expense (recovery) | 22 | 1,473 | (76) | 318 | (98) | |||||||||
Foreign exchange loss (gain) | 2 | - | (10) | - | ||||||||||
(3,091) | (414) | (6,767) | (3,145) | |||||||||||
Net changes in non-cash working capital: | ||||||||||||||
Accounts receivable | 23(i) | (434) | (102) | (2,138) | (293) | |||||||||
Sales taxes receivable | (3,001) | - | (6,839) | - | ||||||||||
Prepaids and other receivables | 23(i) | (6,134) | 452 | (9,456) | (1,700) | |||||||||
Biological assets | 5,6 | 2,800 | 2,452 | 9,198 | 4,162 | |||||||||
Inventory | 5,6 | (4,250) | (3,408) | (12,987) | (5,502) | |||||||||
Accrued interest on loan receivable | - | - | - | (5) | ||||||||||
Accounts payable and other liabilities | 733 | 3,261 | (5,017) | 3,470 | ||||||||||
Government remittances payable | 739 | - | 739 | - | ||||||||||
Cash flows provided by (used in) operating activities | (12,638) | 2,241 | (33,267) | (3,013) | ||||||||||
Investing activities | ||||||||||||||
Repayment of purchase price liability | - | (1,291) | - | (2,590) | ||||||||||
Investments in equity accounted investees | 9 | (201) | - | (201) | (1,076) | |||||||||
Investment in ABcann Global Corporation | 10 | - | - | - | (1,016) | |||||||||
Proceeds from sale of other investments | 10 | - | 3,383 | 967 | 5,154 | |||||||||
Payment to exercise ABcann Global Corporation warrants | 10 | - | (2,268) | (113) | (2,268) | |||||||||
Advances to related corporations | 8 | (2,674) | - | (2,674) | - | |||||||||
Cash assumed on acquisition of Cronos Israel | 14 | 1,304 | - | - | - | |||||||||
Purchase of property, plant and equipment | 11 | (34,229) | (11,571) | (71,896) | (17,101) | |||||||||
Purchase of intangible assets | 12 | (125) | - | (294) | - | |||||||||
Cash flows used in investing activities | (35,925) | (11,747) | (74,211) | (18,897) | ||||||||||
Financing activities | ||||||||||||||
Proceeds from exercise of warrants | 17(a) | 444 | 720 | 1,856 | 1,533 | |||||||||
Proceeds received for shares to be issued | 16(b) | - | - | 961 | 76 | |||||||||
Proceeds from exercise of options | 17(b) | 27 | 43 | 567 | 485 | |||||||||
Proceeds from share issuance | 16(a) | - | 15,010 | 146,032 | 32,346 | |||||||||
Share issuance costs | (35) | (29) | (9,479) | (1,350) | ||||||||||
Increase in indebtedness | - | 869 | - | 869 | ||||||||||
Proceeds from construction loan payable | 15 | - | 5,022 | - | 5,022 | |||||||||
Payment of accrued interest on construction loan | 15 | - | - | (185) | - | |||||||||
Repayment of mortgage payable | - | - | - | (4,000) | ||||||||||
Cash flows provided by financing activities | 436 | 21,635 | 139,752 | 34,981 | ||||||||||
Net change in cash | (48,127) | 12,129 | 32,274 | 13,071 | ||||||||||
Cash - beginning of period | 89,609 | 4,406 | 9,208 | 3,464 | ||||||||||
Cash - end of period | $ | 41,482 | $ | 16,535 | $ | 41,482 | $ | 16,535 | ||||||
Supplemental cash flow information | ||||||||||||||
Interest paid | $ | 189 | $ | 22 | $ | 684 | $ | 222 |
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SOURCE Cronos Group Inc.