British Columbia, | N/A | |||||||
(State or other jurisdiction of | (I.R.S. Employer | |||||||
incorporation or organization) | Identification No.) | |||||||
(Address of principal executive offices) | (Zip Code) |
N/A |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
x | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | o | Smaller reporting company | ||||||||||||
Emerging growth company |
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. |
(Exchange rates are shown as C$ per $) | As of | ||||||||||||||||
September 30, 2022 | September 30, 2021 | December 31, 2021 | |||||||||||||||
Quarter-to-date average rate | 1.3053 | 1.2593 | N/A | ||||||||||||||
Spot rate | 1.3829 | 1.2680 | 1.2746 | ||||||||||||||
Year-to-date average rate | 1.2829 | 1.2519 | 1.2541 |
Table of Contents | |||||
6 | |||||
Cronos Group Inc. | |||||
Condensed Consolidated Balance Sheets | |||||
(In thousands of U.S. dollars, except share amounts) |
As of September 30, 2022 | As of December 31, 2021 | ||||||||||
Assets | (Unaudited) | (Audited) | |||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Short-term investments | |||||||||||
Accounts receivable, net | |||||||||||
Other receivables | |||||||||||
Current portion of loans receivable, net | |||||||||||
Inventory, net | |||||||||||
Prepaids and other current assets | |||||||||||
Total current assets | |||||||||||
Equity method investments, net | |||||||||||
Other investments | |||||||||||
Non-current portion of loans receivable, net | |||||||||||
Property, plant and equipment, net | |||||||||||
Right-of-use assets | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Other | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued liabilities | |||||||||||
Current portion of lease obligation | |||||||||||
Derivative liabilities | |||||||||||
Current portion due to non-controlling interests | |||||||||||
Total current liabilities | |||||||||||
Non-current portion due to non-controlling interests | |||||||||||
Non-current portion of lease obligation | |||||||||||
Deferred income tax liability | |||||||||||
Total liabilities | |||||||||||
Shareholders’ equity | |||||||||||
Share capital (authorized for issue as of September 30, 2022 and December 31, 2021: unlimited; shares outstanding as of September 30, 2022 and December 31, 2021: | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive income (loss) | ( | ||||||||||
Total equity attributable to shareholders of Cronos Group | |||||||||||
Non-controlling interests | ( | ( | |||||||||
Total shareholders’ equity | |||||||||||
Total liabilities and shareholders’ equity | $ | $ |
Cronos Group Inc. | |||||
Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) | |||||
(In thousands of U.S dollars, except share and per share amounts, unaudited) | |||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net revenue, before excise taxes | $ | $ | $ | $ | |||||||||||||||||||
Excise taxes | ( | ( | ( | ( | |||||||||||||||||||
Net revenue | |||||||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Inventory write-down | |||||||||||||||||||||||
Gross profit | ( | ( | |||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Restructuring costs | |||||||||||||||||||||||
Share-based compensation | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Impairment loss on goodwill and indefinite-lived intangible assets | |||||||||||||||||||||||
Impairment loss on long-lived assets | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Operating loss | ( | ( | ( | ( | |||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||
Interest income, net | |||||||||||||||||||||||
Gain on revaluation of derivative liabilities | |||||||||||||||||||||||
Share of income (loss) from equity method investments | ( | ( | ( | ||||||||||||||||||||
Gain on revaluation of financial instruments | |||||||||||||||||||||||
Impairment loss on other investments | ( | ( | |||||||||||||||||||||
Foreign currency transaction gain (loss) | ( | ||||||||||||||||||||||
Other, net | ( | ( | |||||||||||||||||||||
Total other income (expense) | ( | ||||||||||||||||||||||
Income (loss) before income taxes | ( | ( | ( | ||||||||||||||||||||
Income tax expense (benefit) | ( | ( | |||||||||||||||||||||
Income (loss) from continuing operations | ( | ( | ( | ||||||||||||||||||||
Income (loss) from discontinued operations | ( | ||||||||||||||||||||||
Net income (loss) | ( | ( | ( | ||||||||||||||||||||
Net income (loss) attributable to non-controlling interest | ( | ( | ( | ||||||||||||||||||||
Net income (loss) attributable to Cronos Group | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Comprehensive income (loss) | |||||||||||||||||||||||
Net income (loss) | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Other comprehensive income (loss) | |||||||||||||||||||||||
Foreign exchange gain (loss) on translation | ( | ( | ( | ||||||||||||||||||||
Comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
Comprehensive income (loss) attributable to non-controlling interests | ( | ||||||||||||||||||||||
Comprehensive income (loss) attributable to Cronos Group | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Net income (loss) from continuing operations per share | |||||||||||||||||||||||
Basic - continuing operations | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Diluted - continuing operations | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Cronos Group Inc. | ||
Condensed Consolidated Statements of Changes in Equity | ||
For the three and nine months ended September 30, 2022 and 2021 | ||
(In thousands of U.S. dollars, except share amounts, unaudited) |
Number of shares | Share capital | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss) | Non-controlling interests | Total shareholders’ equity | |||||||||||||||||||||||||||||||||||
Balance as of January 1, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
Activities relating to share-based compensation | — | — | — | ||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||
Foreign exchange gain (loss) on translation | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
Activities relating to share-based compensation | ( | — | — | — | |||||||||||||||||||||||||||||||||||||
Share issuance pursuant to research and development milestones | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||
Foreign exchange gain (loss) on translation | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||
Balance as of June 30, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
Activities relating to share-based compensation | — | — | — | ||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
Foreign exchange gain (loss) on translation | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||
Balance as of September 30, 2022 | $ | $ | $ | $ | ( | $ | ( | $ |
Cronos Group Inc. | ||
Condensed Consolidated Statements of Changes in Equity | ||
For the three and nine months ended September 30, 2022 and 2021 | ||
(In thousands of U.S. dollars, except share amounts, unaudited) |
Number of shares | Share capital | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss) | Non-controlling interests | Total shareholders’ equity | |||||||||||||||||||||||||||||||||||
Balance as of January 1, 2021 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
Activities relating to share-based compensation | ( | ( | — | — | |||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||
Foreign exchange gain on translation | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2021 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
Activities relating to share-based compensation | ( | — | — | ||||||||||||||||||||||||||||||||||||||
Top-up rights out-of-period adjustment | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||
Foreign exchange gain (loss) on translation | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2021 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
Activities relating to share-based compensation | ( | ( | — | — | |||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||
Foreign exchange loss on translation | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Balance as of September 30, 2021 | $ | $ | $ | $ | $ | ( | $ |
Cronos Group Inc. | |||||
Condensed Consolidated Statements of Cash Flows | |||||
(In thousands of U.S. dollars, except share amounts, unaudited) |
Nine months ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Operating activities | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to cash used in operating activities: | |||||||||||
Share-based compensation | |||||||||||
Depreciation and amortization | |||||||||||
Impairment loss on goodwill and indefinite-lived intangible assets | |||||||||||
Impairment loss on long-lived assets | |||||||||||
Impairment loss on other investments | |||||||||||
(Income) loss from investments | ( | ||||||||||
Gain on revaluation of derivative liabilities | ( | ( | |||||||||
Changes in expected credit losses on long-term financial assets | ( | ||||||||||
Foreign currency transaction loss | |||||||||||
Other non-cash operating activities, net | ( | ||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable, net | ( | ||||||||||
Other receivables | |||||||||||
Prepaids and other current assets | ( | ||||||||||
Inventory | ( | ||||||||||
Accounts payable and accrued liabilities | ( | ( | |||||||||
Cash flows used in operating activities | ( | ( | |||||||||
Investing activities | |||||||||||
Purchase of short-term investments | ( | ( | |||||||||
Proceeds from short-term investments | |||||||||||
Purchase of other investments | ( | ||||||||||
(Advances) repayments on loan receivables | ( | ||||||||||
Purchase of property, plant and equipment | ( | ( | |||||||||
Purchase of intangible assets | ( | ( | |||||||||
Other investing activities | |||||||||||
Cash flows used in investing activities | ( | ( | |||||||||
Financing activities | |||||||||||
Withholding taxes paid on share-based awards | ( | ( | |||||||||
Other financing activities, net | ( | ||||||||||
Cash flows used in financing activities | ( | ( | |||||||||
Effect of foreign currency translation on cash and cash equivalents | ( | ||||||||||
Net change in cash and cash equivalents | ( | ( | |||||||||
Cash and cash equivalents, beginning of period | |||||||||||
Cash and cash equivalents, end of period | $ | $ | |||||||||
Supplemental cash flow information | |||||||||||
Interest paid | $ | $ | |||||||||
Interest received | |||||||||||
Income taxes paid |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
As of September 30, 2022 | As of December 31, 2021 | |||||||||||||
Raw materials | $ | $ | ||||||||||||
Work-in-progress | ||||||||||||||
Finished goods | ||||||||||||||
Supplies and consumables | ||||||||||||||
Total | $ | $ |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Ownership interest | As of September 30, 2022 | As of December 31, 2021 | |||||||||||||||
Cronos Growing Company Inc. (“Cronos GrowCo”) | $ | $ | |||||||||||||||
NatuEra S.à.r.l. (“Natuera”) | |||||||||||||||||
$ | $ |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Cronos GrowCo | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Natuera | ( | ( | |||||||||||||||||||||
$ | ( | $ | ( | $ | $ | ( |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
As of July 1, 2022 | Unrealized gain | Impairment charges | Foreign exchange effect | As of September 30, 2022 | |||||||||||||||||||||||||
PharmaCann | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Cronos Australia | ( | ||||||||||||||||||||||||||||
$ | $ | $ | ( | $ | ( | $ |
As of January 1, 2022 | Unrealized gain | Impairment charges | Foreign exchange effect | As of September 30, 2022 | |||||||||||||||||||||||||
PharmaCann | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Cronos Australia | ( | ||||||||||||||||||||||||||||
$ | $ | $ | ( | $ | ( | $ |
As of September 30, 2022 | As of December 31, 2021 | ||||||||||||||||
GrowCo Facility(i) | $ | $ | |||||||||||||||
Add: Current portion of accrued interest | |||||||||||||||||
Total current portion of loans receivable | |||||||||||||||||
GrowCo Facility(i) | |||||||||||||||||
Mucci Promissory Note(ii) | |||||||||||||||||
Cannasoul Collaboration Loan(iii) | |||||||||||||||||
Add: Long-term portion of accrued interest | |||||||||||||||||
Total long-term portion of loans receivable | |||||||||||||||||
Total loans receivable, net | $ | $ |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
As of July 1, 2022 | Increase (decrease)(i) | Foreign exchange effect | As of September 30, 2022 | ||||||||||||||||||||
GrowCo Facility | $ | $ | $ | ( | $ | ||||||||||||||||||
Mucci Promissory Note | ( | ||||||||||||||||||||||
Cannasoul Collaboration Loan | ( | ||||||||||||||||||||||
$ | $ | $ | ( | $ |
As of July 1, 2021 | Increase (decrease) | Foreign exchange effect | As of September 30, 2021 | ||||||||||||||||||||
GrowCo Facility | $ | $ | $ | ( | $ | ||||||||||||||||||
Mucci Promissory Note | ( | ( | |||||||||||||||||||||
Cannasoul Collaboration Loan | ( | ||||||||||||||||||||||
$ | $ | $ | ( | $ |
As of January 1, 2022 | Increase (decrease)(i) | Foreign exchange effect | As of September 30, 2022 | ||||||||||||||||||||
GrowCo Facility | $ | $ | ( | $ | ( | $ | |||||||||||||||||
Mucci Promissory Note | ( | ||||||||||||||||||||||
Cannasoul Collaboration Loan | ( | ||||||||||||||||||||||
$ | $ | ( | $ | ( | $ |
As of January 1, 2021 | Increase (decrease) | Foreign exchange effect | As of September 30, 2021 | ||||||||||||||||||||
GrowCo Facility | $ | $ | $ | ( | $ | ||||||||||||||||||
Natuera Series A Loan(ii) | ( | ||||||||||||||||||||||
Mucci Promissory Note | ( | ||||||||||||||||||||||
Cannasoul Collaboration Loan | |||||||||||||||||||||||
$ | $ | $ | ( | $ |
Useful life (in years) | As of September 30, 2022 | ||||||||||||||||||||||||||||
Cost | Accumulated amortization | Accumulated impairment charges | Net | ||||||||||||||||||||||||||
Software | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||
Health Canada licenses | ( | ( | |||||||||||||||||||||||||||
Ginkgo exclusive licenses(i) | ( | ( | |||||||||||||||||||||||||||
Israeli codes(ii) | ( | — | |||||||||||||||||||||||||||
Total definite-lived intangible assets | ( | ( | |||||||||||||||||||||||||||
Lord Jones® brand | N/A | — | |||||||||||||||||||||||||||
Total intangible assets | $ | $ | ( | $ | ( | $ |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Useful life (in years) | As of December 31, 2021 | ||||||||||||||||||||||||||||
Cost | Accumulated amortization | Accumulated impairment charges | Net | ||||||||||||||||||||||||||
Software | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||
Health Canada licenses | ( | ( | |||||||||||||||||||||||||||
Ginkgo exclusive licenses | ( | ( | |||||||||||||||||||||||||||
Israeli codes(ii) | ( | — | |||||||||||||||||||||||||||
Total definite-lived intangible assets | ( | ( | |||||||||||||||||||||||||||
Lord Jones® brand | N/A | — | ( | ||||||||||||||||||||||||||
Trademarks | N/A | — | ( | ||||||||||||||||||||||||||
Total intangible assets | $ | $ | ( | $ | ( | $ |
As of September 30, 2022 | ||||||||
Remainder of 2022 (3 months) | $ | |||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
$ |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
As of July 1, 2022 | Revaluation gain | Foreign exchange effect | As of September 30, 2022 | ||||||||||||||||||||
(a) Altria Warrant | $ | $ | ( | $ | ( | $ | |||||||||||||||||
(b) Pre-emptive Rights | ( | ||||||||||||||||||||||
(c) Top-up Rights | ( | ( | |||||||||||||||||||||
$ | $ | ( | $ | ( | $ |
As of July 1, 2021 | Revaluation gain | Foreign exchange effect | As of September 30, 2021 | ||||||||||||||||||||
(a) Altria Warrant | $ | $ | ( | $ | ( | $ | |||||||||||||||||
(b) Pre-emptive Rights | ( | ( | |||||||||||||||||||||
(c) Top-up Rights | ( | ( | |||||||||||||||||||||
$ | $ | ( | $ | ( | $ |
As of January 1, 2022 | Revaluation gain | Foreign exchange effect | As of September 30, 2022 | ||||||||||||||||||||
(a) Altria Warrant | $ | $ | ( | $ | ( | $ | |||||||||||||||||
(b) Pre-emptive Rights | ( | ||||||||||||||||||||||
(c) Top-up Rights | ( | ( | |||||||||||||||||||||
$ | $ | ( | $ | ( | $ |
As of January 1, 2021 | Revaluation gain | Foreign exchange effect | As of September 30, 2021 | ||||||||||||||||||||
(a) Altria Warrant | $ | $ | ( | $ | $ | ||||||||||||||||||
(b) Pre-emptive Rights | ( | ||||||||||||||||||||||
(c) Top-up Rights | ( | ( | |||||||||||||||||||||
$ | $ | ( | $ | $ |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
As of September 30, 2022 | |||||||||||||||||
Altria Warrant | Pre-emptive Rights | Top-up Rights | |||||||||||||||
Share price at valuation date (per share in C$) | $ | $ | $ | ||||||||||||||
Subscription price (per share in C$) | $ | $ | $ | ||||||||||||||
Weighted-average risk-free interest rate(i) | |||||||||||||||||
Weighted-average expected life (in years)(ii) | |||||||||||||||||
Expected annualized volatility(iii) | |||||||||||||||||
Expected dividend yield |
As of December 31, 2021 | |||||||||||||||||
Altria Warrant | Pre-emptive Rights | Top-up Rights | |||||||||||||||
Share price at valuation date (per share in C$) | $ | $ | $ | ||||||||||||||
Subscription price (per share in C$) | $ | $ | $ | ||||||||||||||
Weighted-average risk-free interest rate(i) | |||||||||||||||||
Weighted-average expected life (in years)(ii) | |||||||||||||||||
Expected annualized volatility(iii) | |||||||||||||||||
Expected dividend yield |
10% decrease as of September 30, 2022 | |||||||||||||||||
Altria Warrant | Pre-emptive Rights | Top-up Rights | |||||||||||||||
Share price | $ | $ | $ | ||||||||||||||
Weighted-average expected life | |||||||||||||||||
Expected annualized volatility |
10% decrease as of December 31, 2021 | |||||||||||||||||
Altria Warrant | Pre-emptive Rights | Top-up Rights | |||||||||||||||
Share price | $ | $ | $ | ||||||||||||||
Weighted-average expected life | |||||||||||||||||
Expected annualized volatility |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Rest of World | $ | $ | $ | $ | |||||||||||||||||||
United States | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Accrual as of July 1, 2022 | Expenses | Payments/Write-offs | Accrual as of September 30, 2022 | ||||||||||||||||||||
Employee termination benefits | $ | $ | $ | ( | $ | ||||||||||||||||||
Other restructuring costs | ( | ||||||||||||||||||||||
Total | $ | $ | $ | ( | $ |
Accrual as of January 1, 2022 | Expenses | Payments/Write-offs | Accrual as of September 30, 2022 | ||||||||||||||||||||
Employee termination benefits | $ | $ | $ | ( | $ | ||||||||||||||||||
Other restructuring costs | ( | ||||||||||||||||||||||
Total | $ | $ | $ | ( | $ |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Stock options | $ | $ | $ | $ | |||||||||||||||||||
RSUs | |||||||||||||||||||||||
Liability-classified awards(i) | |||||||||||||||||||||||
Total share-based compensation | $ | $ | $ | $ |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Weighted-average exercise price (C$) (i) | Number of options | Weighted-average remaining contractual term (years) | |||||||||||||||
Balance as of January 1, 2022 | $ | ||||||||||||||||
Exercise of options | ( | ||||||||||||||||
Cancellation, forfeiture and expiry of options | ( | ||||||||||||||||
Balance as of September 30, 2022 | $ | ||||||||||||||||
Exercisable as of September 30, 2022 | $ |
Weighted-average exercise price (C$) (i) | Number of options | Weighted-average remaining contractual term (years) | |||||||||||||||
Balance as of January 1, 2021 | $ | ||||||||||||||||
Issuance of options | |||||||||||||||||
Exercise of options | ( | ||||||||||||||||
Cancellation, forfeiture and expiry of options | ( | ||||||||||||||||
Balance as of September 30, 2021 | $ | ||||||||||||||||
Exercisable as of September 30, 2021 | $ |
As of September 30, 2022 | As of December 31, 2021 | ||||||||||
2020 Omnibus Plan | |||||||||||
2018 Stock Option Plan | |||||||||||
2015 Stock Option Plan | |||||||||||
Total stock options outstanding |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Weighted-average grant date fair value (C$)(iii) | Number of RSUs | ||||||||||
Balance as of January 1, 2022 | $ | ||||||||||
Granted(i)(ii) | |||||||||||
Vested and issued | ( | ||||||||||
Cancellation and forfeitures | ( | ||||||||||
Balance as of September 30, 2022 | $ |
Weighted-average grant date fair value (C$)(iii) | Number of RSUs | ||||||||||
Balance as of January 1, 2021 | $ | ||||||||||
Granted(i) | |||||||||||
Vested and issued | ( | ||||||||||
Cancellation and forfeitures | ( | ||||||||||
Balance as of September 30, 2021 | $ |
Financial liability | Number of DSUs | ||||||||||
Balance as of January 1, 2022 | $ | ||||||||||
Gain on revaluation | ( | — | |||||||||
Balance as of September 30, 2022 | $ |
Financial liability | Number of DSUs | ||||||||||
Balance as of January 1, 2021 | $ | ||||||||||
Granting and vesting of DSUs | |||||||||||
DSU liabilities settled | ( | ( | |||||||||
Gain on revaluation | ( | — | |||||||||
Balance as of September 30, 2021 | $ |
Weighted-average exercise price (C$) | Number of warrants | ||||||||||
Balance as of January 1, 2021 | $ | ||||||||||
Exercise of warrants | ( | ||||||||||
Balance as of September 30, 2021 | $ |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Financial liability | |||||
Balance as of January 1, 2022 | $ | ||||
Grants | |||||
Balance as of September 30, 2022 | $ |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Basic and diluted earnings (loss) per share computation | |||||||||||||||||||||||
Net income (loss) from continuing operations attributable to the shareholders of Cronos Group | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Weighted-average number of common shares outstanding for computation for basic earnings per share(i) | |||||||||||||||||||||||
Basic earnings (loss) from continuing operations per share | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Loss from discontinued operations attributable to the shareholders of Cronos Group | $ | $ | $ | $ | ( | ||||||||||||||||||
Weighted-average number of common shares outstanding from computation for basic earnings per share | |||||||||||||||||||||||
Basic earnings (loss) from discontinued operations per share | $ | $ | $ | $ | |||||||||||||||||||
Diluted earnings (loss) per share computation | |||||||||||||||||||||||
Net income (loss) used in the computation of basic earnings (loss) from continuing operations per share | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Adjustment for exercise of rights on derivative liabilities | |||||||||||||||||||||||
Net income (loss) used in the computation of diluted earnings (loss) from continuing operations per share | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Weighted-average number of common shares outstanding used in the computation of basic earnings (loss) per share | |||||||||||||||||||||||
Dilutive effect of stock options | |||||||||||||||||||||||
Dilutive effect of RSUs | |||||||||||||||||||||||
Dilutive effect of Top-up Rights – market price | |||||||||||||||||||||||
Weighted-average number of common shares for computation of diluted earnings (loss) from continuing operations per share(i) | |||||||||||||||||||||||
Diluted earnings (loss) per share from continuing operations | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Income (loss) from discontinued operations attributable to the shareholders of Cronos Group | $ | $ | $ | $ | ( | ||||||||||||||||||
Weighted-average number of common shares for computation of diluted earnings (loss) from discontinued operations per share | |||||||||||||||||||||||
Diluted loss from discontinued operations per share | $ | $ | $ | $ |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Three months ended September 30, 2022 | |||||||||||||||||||||||
United States | Rest of World | Corporate | Total | ||||||||||||||||||||
Cannabis flower | $ | $ | $ | $ | |||||||||||||||||||
Cannabis extracts | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Net revenue | $ | $ | $ | $ | |||||||||||||||||||
Share of loss from equity method investments | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Total assets | $ | $ | $ | $ | |||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Adjusted EBITDA | ( | ( | ( | ( | |||||||||||||||||||
Three months ended September 30, 2021 | |||||||||||||||||||||||
United States | Rest of World | Corporate | Total | ||||||||||||||||||||
Cannabis flower | $ | $ | $ | $ | |||||||||||||||||||
Cannabis extracts | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Net revenue | $ | $ | $ | $ | |||||||||||||||||||
Share of loss from equity method investments | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Total assets | $ | $ | $ | $ | |||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Adjusted EBITDA | ( | ( | ( | ( | |||||||||||||||||||
Nine months ended September 30, 2022 | |||||||||||||||||||||||
United States | Rest of World | Corporate | Total | ||||||||||||||||||||
Cannabis flower | $ | $ | $ | $ | |||||||||||||||||||
Cannabis extracts | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Net revenue | $ | $ | $ | $ | |||||||||||||||||||
Share of income from equity method investments | $ | $ | $ | $ | |||||||||||||||||||
Total assets | $ | $ | $ | $ | |||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Adjusted EBITDA | ( | ( | ( | ( | |||||||||||||||||||
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Nine months ended September 30, 2021 | |||||||||||||||||||||||
United States | Rest of World | Corporate | Total | ||||||||||||||||||||
Cannabis flower | $ | $ | $ | $ | |||||||||||||||||||
Cannabis extracts | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Net revenue | $ | $ | $ | $ | |||||||||||||||||||
Share of loss from equity method investments | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Total assets | $ | $ | $ | $ | |||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Adjusted EBITDA | ( | ( | ( | ( | |||||||||||||||||||
Three months ended September 30, 2022 | |||||||||||||||||||||||
United States | Rest of World | Corporate | Total | ||||||||||||||||||||
Net income (loss) | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Interest income, net | ( | ( | ( | ||||||||||||||||||||
Income tax expense | |||||||||||||||||||||||
Share of loss from equity method investments | |||||||||||||||||||||||
Gain on revaluation of derivative liabilities(iii) | ( | ( | |||||||||||||||||||||
Gain on revaluation of financial instruments(v) | ( | ( | |||||||||||||||||||||
Impairment loss on other investment(vi) | |||||||||||||||||||||||
Foreign currency transaction gain | ( | ( | |||||||||||||||||||||
Other, net(vii) | |||||||||||||||||||||||
Restructuring costs(ix) | |||||||||||||||||||||||
Share-based compensation(x) | |||||||||||||||||||||||
Financial statement review costs(xi) | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Adjusted EBITDA | $ | ( | $ | ( | $ | ( | $ | ( |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Three months ended September 30, 2021 | |||||||||||||||||||||||
United States | Rest of World | Corporate | Total | ||||||||||||||||||||
Net income (loss) | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Interest income, net | ( | ( | ( | ||||||||||||||||||||
Income tax benefit | ( | ( | |||||||||||||||||||||
Share of loss from equity method investments | |||||||||||||||||||||||
Impairment loss on goodwill and indefinite-lived intangible assets(i) | |||||||||||||||||||||||
Impairment loss on long-lived assets(ii) | |||||||||||||||||||||||
Gain on revaluation of derivative liabilities(iii) | ( | ( | |||||||||||||||||||||
Transaction costs(iv) | |||||||||||||||||||||||
Gain on revaluation of financial instruments(v) | ( | ( | |||||||||||||||||||||
Other, net(vii) | ( | ( | |||||||||||||||||||||
Income from discontinued operations(viii) | ( | ( | |||||||||||||||||||||
Share-based compensation(x) | |||||||||||||||||||||||
Financial statement review costs(xi) | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Adjusted EBITDA | $ | ( | $ | ( | $ | ( | $ | ( |
Nine months ended September 30, 2022 | |||||||||||||||||||||||
United States | Rest of World | Corporate | Total | ||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Interest income, net | ( | ( | ( | ||||||||||||||||||||
Income tax expense | |||||||||||||||||||||||
Share of income from equity method investments | ( | ( | |||||||||||||||||||||
Impairment loss on long-lived assets(ii) | |||||||||||||||||||||||
Gain on revaluation of derivative liabilities(iii) | ( | ( | |||||||||||||||||||||
Gain on revaluation of financial instruments(v) | ( | ( | |||||||||||||||||||||
Impairment loss on other investment(vi) | |||||||||||||||||||||||
Foreign currency transaction loss | |||||||||||||||||||||||
Other, net(vii) | |||||||||||||||||||||||
Restructuring costs(ix) | |||||||||||||||||||||||
Share-based compensation(x) | |||||||||||||||||||||||
Financial statement review costs(xi) | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Adjusted EBITDA | $ | ( | $ | ( | $ | ( | $ | ( |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Nine months ended September 30, 2021 | |||||||||||||||||||||||
United States | Rest of World | Corporate | Total | ||||||||||||||||||||
Net income (loss) | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Interest income, net | ( | ( | ( | ||||||||||||||||||||
Income tax benefit | ( | ( | |||||||||||||||||||||
Share of loss from equity method investments | |||||||||||||||||||||||
Impairment loss on goodwill and indefinite-lived intangible assets(i) | |||||||||||||||||||||||
Impairment loss on long-lived assets(ii) | |||||||||||||||||||||||
Gain on revaluation of derivative liabilities(iii) | ( | ( | |||||||||||||||||||||
Transaction costs(iv) | |||||||||||||||||||||||
Gain on revaluation of financial instruments(v) | ( | ( | |||||||||||||||||||||
Other, net(vii) | ( | ( | |||||||||||||||||||||
Loss from discontinued operations(viii) | |||||||||||||||||||||||
Share-based compensation(x) | |||||||||||||||||||||||
Financial statement review costs(xi) | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Adjusted EBITDA | $ | ( | $ | ( | $ | ( | $ | ( |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Canada | $ | $ | $ | $ | |||||||||||||||||||
Israel | |||||||||||||||||||||||
United States | |||||||||||||||||||||||
Other countries | |||||||||||||||||||||||
Net revenue | $ | $ | $ | $ |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
September 30, 2022 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Short-term investments | |||||||||||||||||||||||
Other investments(i) | |||||||||||||||||||||||
Derivative liabilities |
December 31, 2021 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Short-term investments | |||||||||||||||||||||||
Other investments(i) | |||||||||||||||||||||||
Derivative liabilities |
Cronos Group Inc. | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | |||||
(In thousands of U.S. dollars, except share amounts) |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Altria Pinnacle - expense | $ | $ | $ | $ |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Cronos GrowCo - purchases | $ | $ | $ | $ |
(Exchange rates are shown as C$ per $) | As of | ||||||||||||||||
September 30, 2022 | September 30, 2021 | December 31, 2021 | |||||||||||||||
Quarter-to-date average rate | 1.3053 | 1.2593 | N/A | ||||||||||||||
Spot rate | 1.3829 | 1.2680 | 1.2746 | ||||||||||||||
Year-to-date average rate | 1.2829 | 1.2519 | 1.2541 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net revenue, before excise taxes | $ | 26,584 | $ | 24,590 | $ | 84,544 | $ | 58,092 | |||||||||||||||
Excise taxes | (5,661) | (4,183) | (15,527) | (9,452) | |||||||||||||||||||
Net revenue | 20,923 | 20,407 | 69,017 | 48,640 | |||||||||||||||||||
Cost of sales | 19,766 | 21,137 | 56,814 | 56,156 | |||||||||||||||||||
Inventory write-down | — | — | — | 11,961 | |||||||||||||||||||
Gross profit | 1,157 | (730) | 12,203 | (19,477) | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Sales and marketing | 5,923 | 10,821 | 16,517 | 34,284 | |||||||||||||||||||
Research and development | 2,569 | 6,473 | 10,910 | 16,774 | |||||||||||||||||||
General and administrative | 17,167 | 32,546 | 56,540 | 76,869 | |||||||||||||||||||
Restructuring costs | 524 | — | 4,878 | — | |||||||||||||||||||
Share-based compensation | 4,265 | 2,667 | 10,567 | 7,731 | |||||||||||||||||||
Depreciation and amortization | 1,713 | 1,251 | 4,417 | 3,029 | |||||||||||||||||||
Impairment loss on goodwill and indefinite-lived intangible assets | — | 142 | — | 235,056 | |||||||||||||||||||
Impairment loss on long-lived assets | — | 1,784 | 3,493 | 4,739 | |||||||||||||||||||
Total operating expenses | 32,161 | 55,684 | 107,322 | 378,482 | |||||||||||||||||||
Operating loss | (31,004) | (56,414) | (95,119) | (397,959) | |||||||||||||||||||
Other income (expense) | (3,764) | 133,839 | 7,414 | 134,988 | |||||||||||||||||||
Income tax benefit (expense) | (2,118) | 159 | (2,172) | 159 | |||||||||||||||||||
Income (loss) from discontinued operations | — | 82 | — | (500) | |||||||||||||||||||
Net income (loss) | (36,886) | 77,666 | (89,877) | (263,312) | |||||||||||||||||||
Net income (loss) attributable to non-controlling interest | 105 | (250) | (27) | (842) | |||||||||||||||||||
Net income (loss) attributable to Cronos Group | $ | (36,991) | $ | 77,916 | $ | (89,850) | $ | (262,470) |
Three months ended September 30, | Change | Nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | 20,923 | $ | 20,407 | $ | 516 | 3 | % | $ | 69,017 | $ | 48,640 | $ | 20,377 | 42 | % | |||||||||||||||||||||||||||||||
Cost of sales | 19,766 | 21,137 | (1,371) | (6) | % | 56,814 | 56,156 | 658 | 1 | % | |||||||||||||||||||||||||||||||||||||
Inventory write-down | — | — | — | N/A | — | 11,961 | (11,961) | (100) | % | ||||||||||||||||||||||||||||||||||||||
Gross profit | 1,157 | (730) | 1,887 | 258 | % | 12,203 | (19,477) | 31,680 | 163 | % | |||||||||||||||||||||||||||||||||||||
Gross margin(i) | 6 | % | (4) | % | N/A | 10 | pp | 18 | % | (40) | % | N/A | 58 | pp |
Three months ended September 30, | Change | Nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
Sales and marketing | $ | 5,923 | $ | 10,821 | $ | (4,898) | (45) | % | $ | 16,517 | $ | 34,284 | $ | (17,767) | (52) | % | |||||||||||||||||||||||||||||||
Research and development | 2,569 | 6,473 | (3,904) | (60) | % | 10,910 | 16,774 | (5,864) | (35) | % | |||||||||||||||||||||||||||||||||||||
General and administrative | 17,167 | 32,546 | (15,379) | (47) | % | 56,540 | 76,869 | (20,329) | (26) | % | |||||||||||||||||||||||||||||||||||||
Restructuring costs | 524 | — | 524 | N/A | 4,878 | — | 4,878 | N/A | |||||||||||||||||||||||||||||||||||||||
Share-based compensation | 4,265 | 2,667 | 1,598 | 60 | % | 10,567 | 7,731 | 2,836 | 37 | % | |||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 1,713 | 1,251 | 462 | 37 | % | 4,417 | 3,029 | 1,388 | 46 | % | |||||||||||||||||||||||||||||||||||||
Impairment loss on goodwill and indefinite-lived intangible assets | — | 142 | (142) | (100) | % | — | 235,056 | (235,056) | (100) | % | |||||||||||||||||||||||||||||||||||||
Impairment loss on long-lived assets | — | 1,784 | (1,784) | (100) | % | 3,493 | 4,739 | (1,246) | (26) | % | |||||||||||||||||||||||||||||||||||||
Total operating expenses | $ | 32,161 | $ | 55,684 | $ | (23,523) | (42) | % | $ | 107,322 | $ | 378,482 | $ | (271,160) | (72) | % |
Three months ended September 30, | Change | Nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
Interest income, net | $ | 7,209 | $ | 2,064 | $ | 5,145 | 249 | % | $ | 13,030 | $ | 6,686 | $ | 6,344 | 95 | % | |||||||||||||||||||||||||||||||
Gain on revaluation of derivative liabilities | 375 | 132,916 | (132,541) | (100) | % | 14,204 | 131,290 | (117,086) | (89) | % | |||||||||||||||||||||||||||||||||||||
Share of income (loss) from equity method investments | (1,119) | (1,414) | 295 | 21 | % | 4,078 | (4,172) | 8,250 | 198 | % | |||||||||||||||||||||||||||||||||||||
Gain on revaluation of financial instruments | 17,049 | 266 | 16,783 | N/M | 19,205 | 143 | 19,062 | N/M | |||||||||||||||||||||||||||||||||||||||
Impairment loss on other investments | (28,972) | — | (28,972) | N/A | (40,210) | — | (40,210) | N/A | |||||||||||||||||||||||||||||||||||||||
Foreign currency transaction gain (loss) | 2,387 | — | 2,387 | N/A | (2,337) | — | (2,337) | N/A | |||||||||||||||||||||||||||||||||||||||
Other, net | (693) | 7 | (700) | N/M | (556) | 1,041 | (1,597) | (153) | % | ||||||||||||||||||||||||||||||||||||||
Total other income | (3,764) | 133,839 | (137,603) | (103) | % | 7,414 | 134,988 | (127,574) | (95) | % | |||||||||||||||||||||||||||||||||||||
Income tax benefit (expense) | (2,118) | 159 | (2,277) | N/A | (2,172) | 159 | (2,331) | N/A | |||||||||||||||||||||||||||||||||||||||
Income (loss) from discontinued operations | — | 82 | (82) | (100) | % | — | (500) | 500 | 100 | % | |||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (36,886) | $ | 77,666 | $ | (114,552) | (147) | % | $ | (89,877) | $ | (263,312) | $ | 173,435 | 66 | % |
Three months ended September 30, | Change | Nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | 20,409 | $ | 18,307 | $ | 2,102 | 11 | % | $ | 64,716 | $ | 41,872 | $ | 22,844 | 55 | % | |||||||||||||||||||||||||||||||
Cost of sales | 17,265 | 17,735 | (470) | (3) | % | 50,540 | 49,906 | 634 | 1 | % | |||||||||||||||||||||||||||||||||||||
Inventory write-down | — | — | — | N/A | — | 11,961 | (11,961) | (100) | % | ||||||||||||||||||||||||||||||||||||||
Gross profit | 3,144 | 572 | 2,572 | 450 | % | 14,176 | (19,995) | 34,171 | 171 | % | |||||||||||||||||||||||||||||||||||||
Gross margin | 15 | % | 3 | % | N/A | 12 | pp | 22 | % | (48) | % | N/A | 70 | pp |
Three months ended September 30, | Change | Nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
Cannabis flower | $ | 13,674 | $ | 15,306 | $ | (1,632) | (11) | % | $ | 48,038 | $ | 36,337 | $ | 11,701 | 32 | % | |||||||||||||||||||||||||||||||
Cannabis extracts | 6,627 | 2,786 | 3,841 | 138 | % | 16,197 | 5,020 | 11,177 | 223 | % | |||||||||||||||||||||||||||||||||||||
Other | 108 | 215 | (107) | (50) | % | 481 | 515 | (34) | (7) | % | |||||||||||||||||||||||||||||||||||||
Net revenue | $ | 20,409 | $ | 18,307 | $ | 2,102 | 11 | % | $ | 64,716 | $ | 41,872 | $ | 22,844 | 55 | % |
Three months ended September 30, | Change | Nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | 514 | $ | 2,100 | $ | (1,586) | (76) | % | $ | 4,301 | $ | 6,768 | $ | (2,467) | (36) | % | |||||||||||||||||||||||||||||||
Cost of sales | 2,501 | 3,402 | (901) | (26) | % | 6,274 | 6,250 | 24 | — | % | |||||||||||||||||||||||||||||||||||||
Gross profit | (1,987) | (1,302) | (685) | (53) | % | (1,973) | 518 | (2,491) | (481) | % | |||||||||||||||||||||||||||||||||||||
Gross margin | (387) | % | (62) | % | N/A | (325) | pp | (46) | % | 8 | % | N/A | (54) | pp |
(In thousands of U.S. dollars) | Three months ended September 30, 2022 | ||||||||||||||||||||||
United States | Rest of World | Corporate | Total | ||||||||||||||||||||
Net income (loss) | $ | (33,223) | $ | 2,817 | $ | (6,480) | $ | (36,886) | |||||||||||||||
Interest income, net | (1,418) | (5,791) | — | (7,209) | |||||||||||||||||||
Income tax expense | — | 2,118 | — | 2,118 | |||||||||||||||||||
Share of loss from equity method investments | — | 1,119 | — | 1,119 | |||||||||||||||||||
Gain on revaluation of derivative liabilities(iii) | — | (375) | — | (375) | |||||||||||||||||||
Gain on revaluation of financial instruments(v) | — | (17,049) | — | (17,049) | |||||||||||||||||||
Impairment loss on other investment(vi) | 28,972 | — | — | 28,972 | |||||||||||||||||||
Foreign currency transaction gain | — | (2,387) | — | (2,387) | |||||||||||||||||||
Other, net(vii) | 159 | 534 | — | 693 | |||||||||||||||||||
Restructuring costs(ix) | 137 | 387 | — | 524 | |||||||||||||||||||
Share-based compensation(x) | 8 | 4,257 | — | 4,265 | |||||||||||||||||||
Financial statement review costs(xi) | — | — | 1,070 | 1,070 | |||||||||||||||||||
Depreciation and amortization | 501 | 2,947 | — | 3,448 | |||||||||||||||||||
Adjusted EBITDA | $ | (4,864) | $ | (11,423) | $ | (5,410) | $ | (21,697) |
(In thousands of U.S. dollars) | Three months ended September 30, 2021 | ||||||||||||||||||||||
United States | Rest of World | Corporate | Total | ||||||||||||||||||||
Net income (loss) | $ | (13,499) | $ | 97,198 | $ | (6,033) | $ | 77,666 | |||||||||||||||
Interest income, net | (4) | (2,060) | — | (2,064) | |||||||||||||||||||
Income tax benefit | — | (159) | — | (159) | |||||||||||||||||||
Share of loss from equity method investments | — | 1,414 | — | 1,414 | |||||||||||||||||||
Impairment loss on goodwill and indefinite-lived intangible assets(i) | 105 | 37 | — | 142 | |||||||||||||||||||
Impairment loss on long-lived assets(ii) | — | 1,784 | — | 1,784 | |||||||||||||||||||
Gain on revaluation of derivative liabilities(iii) | — | (132,916) | — | (132,916) | |||||||||||||||||||
Transaction costs(iv) | — | — | 542 | 542 | |||||||||||||||||||
Gain on revaluation of financial instruments(v) | — | (266) | — | (266) | |||||||||||||||||||
Other, net(vii) | — | (7) | — | (7) | |||||||||||||||||||
Income from discontinued operations(viii) | — | (82) | — | (82) | |||||||||||||||||||
Share-based compensation(x) | 967 | 1,700 | — | 2,667 | |||||||||||||||||||
Financial statement review costs(xi) | — | — | 678 | 678 | |||||||||||||||||||
Depreciation and amortization | 231 | 3,597 | — | 3,828 | |||||||||||||||||||
Adjusted EBITDA | $ | (12,200) | $ | (29,760) | $ | (4,813) | $ | (46,773) |
(In thousands of U.S. dollars) | Nine months ended September 30, 2022 | ||||||||||||||||||||||
United States | Rest of World | Corporate | Total | ||||||||||||||||||||
Net loss | $ | (59,937) | $ | (3,928) | $ | (26,012) | $ | (89,877) | |||||||||||||||
Interest income, net | (1,873) | (11,157) | — | (13,030) | |||||||||||||||||||
Income tax expense | — | 2,172 | — | 2,172 | |||||||||||||||||||
Share of income from equity method investments | — | (4,078) | — | (4,078) | |||||||||||||||||||
Impairment loss on long-lived assets(ii) | — | 3,493 | — | 3,493 | |||||||||||||||||||
Gain on revaluation of derivative liabilities(iii) | — | (14,204) | — | (14,204) | |||||||||||||||||||
Gain on revaluation of financial instruments(v) | — | (19,205) | — | (19,205) | |||||||||||||||||||
Impairment loss on other investment(vi) | 40,210 | — | — | 40,210 | |||||||||||||||||||
Foreign currency transaction loss | — | 2,337 | — | 2,337 | |||||||||||||||||||
Other, net(vii) | 159 | 397 | — | 556 | |||||||||||||||||||
Restructuring costs(ix) | 1,482 | 3,396 | — | 4,878 | |||||||||||||||||||
Share-based compensation(x) | 2,917 | 7,650 | — | 10,567 | |||||||||||||||||||
Financial statement review costs(xi) | — | — | 6,286 | 6,286 | |||||||||||||||||||
Depreciation and amortization | 1,215 | 9,284 | — | 10,499 | |||||||||||||||||||
Adjusted EBITDA | $ | (15,827) | $ | (23,843) | $ | (19,726) | $ | (59,396) |
(In thousands of U.S. dollars) | Nine months ended September 30, 2021 | ||||||||||||||||||||||
United States | Rest of World | Corporate | Total | ||||||||||||||||||||
Net income (loss) | $ | (273,438) | $ | 34,678 | $ | (24,552) | $ | (263,312) | |||||||||||||||
Interest income, net | (27) | (6,659) | — | (6,686) | |||||||||||||||||||
Income tax benefit | — | (159) | — | (159) | |||||||||||||||||||
Share of loss from equity method investments | — | 4,172 | — | 4,172 | |||||||||||||||||||
Impairment loss on goodwill and indefinite-lived intangible assets(i) | 235,019 | 37 | — | 235,056 | |||||||||||||||||||
Impairment loss on long-lived assets(ii) | 2,955 | 1,784 | — | 4,739 | |||||||||||||||||||
Gain on revaluation of derivative liabilities(iii) | — | (131,290) | — | (131,290) | |||||||||||||||||||
Transaction costs(iv) | — | — | 3,801 | 3,801 | |||||||||||||||||||
Gain on revaluation of financial instruments(v) | — | (143) | — | (143) | |||||||||||||||||||
Other, net(vii) | — | (1,041) | — | (1,041) | |||||||||||||||||||
Loss from discontinued operations(viii) | — | 500 | — | 500 | |||||||||||||||||||
Share-based compensation(x) | 2,534 | 5,197 | — | 7,731 | |||||||||||||||||||
Financial statement review costs(xi) | — | — | 4,615 | 4,615 | |||||||||||||||||||
Depreciation and amortization | 536 | 8,375 | — | 8,911 | |||||||||||||||||||
Adjusted EBITDA | $ | (32,421) | $ | (84,549) | $ | (16,136) | $ | (133,106) |
As Reported | As Adjusted for Constant Currency | ||||||||||||||||||||||||||||||||||||||||
Three months ended September 30, | As Reported Change | Three months ended September 30, | Constant Currency Change | ||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | $ | % | |||||||||||||||||||||||||||||||||||
Net revenue | $ | 20,923 | $ | 20,407 | $ | 516 | 3 | % | $ | 21,817 | $ | 1,410 | 7 | % | |||||||||||||||||||||||||||
Gross profit | 1,157 | (730) | 1,887 | 258 | % | 1,341 | 2,071 | 284 | % | ||||||||||||||||||||||||||||||||
Gross margin | 6 | % | (4) | % | N/A | 10 | pp | 6 | % | N/A | 10 | pp | |||||||||||||||||||||||||||||
Operating expenses | 32,161 | 55,684 | (23,523) | (42) | % | 32,679 | (23,005) | (41) | % | ||||||||||||||||||||||||||||||||
Net income (loss) | (36,886) | 77,666 | (114,552) | (147) | % | (36,547) | (114,213) | (147) | % | ||||||||||||||||||||||||||||||||
Adjusted EBITDA | (21,697) | (46,773) | 25,076 | 54 | % | (22,008) | 24,765 | 53 | % | ||||||||||||||||||||||||||||||||
Nine months ended September 30, | As Reported Change | Nine months ended September 30, | Constant Currency Change | ||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | $ | % | |||||||||||||||||||||||||||||||||||
Net revenue | $ | 69,017 | $ | 48,640 | $ | 20,377 | 42 | % | $ | 70,426 | $ | 21,786 | 45 | % | |||||||||||||||||||||||||||
Gross profit | 12,203 | (19,477) | 31,680 | 163 | % | 12,475 | 31,952 | 164 | % | ||||||||||||||||||||||||||||||||
Gross margin | 18 | % | (40) | % | N/A | 58 | pp | 18 | % | N/A | 58 | pp | |||||||||||||||||||||||||||||
Operating expenses | 107,322 | 378,482 | (271,160) | (72) | % | 108,736 | (269,746) | (71) | % | ||||||||||||||||||||||||||||||||
Net loss | (89,877) | (263,312) | 173,435 | 66 | % | (89,934) | 173,378 | 66 | % | ||||||||||||||||||||||||||||||||
Adjusted EBITDA | (59,396) | (133,106) | 73,710 | 55 | % | (59,917) | 73,189 | 55 | % | ||||||||||||||||||||||||||||||||
As of September 30, | As of December 31, | As Reported Change | As of September 30, | Constant Currency Change | |||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | $ | % | |||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 633,296 | $ | 886,973 | $ | (253,677) | (29) | % | $ | 660,084 | $ | (226,889) | (26) | % | |||||||||||||||||||||||||||
Short-term investments | 255,452 | 117,684 | 137,768 | 117 | % | 277,158 | 159,474 | 136 | % | ||||||||||||||||||||||||||||||||
Total cash and cash equivalents and short-term investments | $ | 888,748 | $ | 1,004,657 | $ | (115,909) | (12) | % | $ | 937,242 | $ | (67,415) | (7) | % |
As Reported | As Adjusted for Constant Currency | ||||||||||||||||||||||||||||||||||||||||
Three months ended September 30, | As Reported Change | Three months ended September 30, | Constant Currency Change | ||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | $ | % | |||||||||||||||||||||||||||||||||||
Cannabis flower | $ | 13,674 | $ | 15,306 | $ | (1,632) | (11) | % | $ | 14,339 | $ | (967) | (6) | % | |||||||||||||||||||||||||||
Cannabis extracts | 7,141 | 4,886 | 2,255 | 46 | % | 7,365 | 2,479 | 51 | % | ||||||||||||||||||||||||||||||||
Other | 108 | 215 | (107) | (50) | % | 113 | (102) | (47) | % | ||||||||||||||||||||||||||||||||
Net revenue | $ | 20,923 | $ | 20,407 | $ | 516 | 3 | % | $ | 21,817 | $ | 1,410 | 7 | % |
Nine months ended September 30, | As Reported Change | Nine months ended September 30, | Constant Currency Change | ||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | $ | % | |||||||||||||||||||||||||||||||||||
Cannabis flower | $ | 48,038 | $ | 36,337 | $ | 11,701 | 32 | % | $ | 49,038 | $ | 12,701 | 35 | % | |||||||||||||||||||||||||||
Cannabis extracts | 20,498 | 11,788 | 8,710 | 74 | % | 20,895 | 9,107 | 77 | % | ||||||||||||||||||||||||||||||||
Other | 481 | 515 | (34) | (7) | % | 493 | (22) | (4) | % | ||||||||||||||||||||||||||||||||
Net revenue | $ | 69,017 | $ | 48,640 | $ | 20,377 | 42 | % | $ | 70,426 | $ | 21,786 | 45 | % |
As Reported | As Adjusted for Constant Currency | ||||||||||||||||||||||||||||||||||||||||
Three months ended September 30, | As Reported Change | Three months ended September 30, | Constant Currency Change | ||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | $ | % | |||||||||||||||||||||||||||||||||||
Canada | $ | 13,370 | $ | 14,186 | $ | (816) | (6) | % | $ | 13,868 | $ | (318) | (2) | % | |||||||||||||||||||||||||||
Israel | 7,039 | 3,752 | 3,287 | 88 | % | 7,435 | 3,683 | 98 | % | ||||||||||||||||||||||||||||||||
United States | 514 | 2,100 | (1,586) | (76) | % | 514 | (1,586) | (76) | % | ||||||||||||||||||||||||||||||||
Other countries | — | 369 | (369) | (100) | % | — | (369) | (100) | % | ||||||||||||||||||||||||||||||||
Net revenue | $ | 20,923 | $ | 20,407 | $ | 516 | 3 | % | $ | 21,817 | $ | 1,410 | 7 | % |
Nine months ended September 30, | As Reported Change | Nine months ended September 30, | Constant Currency Change | ||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | $ | % | |||||||||||||||||||||||||||||||||||
Canada | $ | 41,335 | $ | 32,432 | $ | 8,903 | 27 | % | $ | 42,358 | $ | 9,926 | 31 | % | |||||||||||||||||||||||||||
Israel | 23,381 | 8,580 | 14,801 | 173 | % | 23,767 | 15,187 | 177 | % | ||||||||||||||||||||||||||||||||
United States | 4,301 | 6,768 | (2,467) | (36) | % | 4,301 | (2,467) | (36) | % | ||||||||||||||||||||||||||||||||
Other countries | — | 860 | (860) | (100) | % | — | (860) | (100) | % | ||||||||||||||||||||||||||||||||
Net revenue | $ | 69,017 | $ | 48,640 | $ | 20,377 | 42 | % | $ | 70,426 | $ | 21,786 | 45 | % |
(In thousands of U.S. dollars) | Nine months ended September 30, | ||||||||||
2022 | 2021 | ||||||||||
Cash flows used in operating activities | $ | (64,576) | $ | (117,678) | |||||||
Cash flows used in investing activities | (160,300) | (110,236) | |||||||||
Cash flows used in financing activities | (2,277) | (13,164) | |||||||||
Effect of foreign currency translation on cash and cash equivalents | (26,524) | 5,622 | |||||||||
Net change in cash | $ | (253,677) | $ | (235,456) |
Material Weakness | Control, Control Enhancement or Mitigant | Implementation Status | Management Testing Status | Remediation Status | ||||||||||||||||||||||
Control Environment | •The Company’s Chief Executive Officer and Chief Financial Officer have reinforced and will continue to reinforce on an ongoing basis the importance of adherence to the Company’s policies, procedures and standards of conduct, including identifying misconduct and raising and communicating concerns; | Completed | In Progress | Not Remediated | ||||||||||||||||||||||
•All accounting personnel that engaged in unprofessional conduct have been terminated or resigned from the Company and are in the process of being replaced with qualified personnel; | Completed | In Progress | Not Remediated | |||||||||||||||||||||||
•We have enhanced our existing sub-certification process to include additional certifications regarding certain complex accounting topics and to include additional employees to increase accountability amongst Company personnel; | Completed | In Progress | Not Remediated | |||||||||||||||||||||||
•We have expanded our compensation claw back provisions to incorporate all personnel who are subject to our enhanced sub-certification process; | Completed | In Progress | Not Remediated | |||||||||||||||||||||||
•We have identified and are in the process of implementing organizational enhancements including (i) evaluating the sufficiency, experience and training of personnel within our accounting function and (ii) hiring accounting personnel with appropriate knowledge and experience in U.S. GAAP; | In Progress | In Progress | Not Remediated | |||||||||||||||||||||||
•We are in the process of developing and implementing a training program for accounting and finance personnel to enhance their knowledge of U.S. GAAP outlined in our accounting policies, which are used in the preparation of the Company’s consolidated financial statements; and | In Progress | In Progress | Not Remediated | |||||||||||||||||||||||
Asset Impairment Testing | •We have evaluated and will continue to regularly evaluate our policies and procedures relating to certain complex accounting topics and have begun implementing improvements in those policies and procedures. | Completed | In Progress | Not Remediated |
Exhibit Number | Exhibit Index | |||||||
3.1 | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
10.01 | ||||||||
10.02 | ||||||||
101.INS* | XBRL Instance Document. | |||||||
101.SCH* | XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. |
CRONOS GROUP INC. | ||||||||
By: | /s/ Robert Madore | |||||||
Robert Madore Chief Financial Officer | ||||||||
November 7, 2022 |
By: | /s/ Carlos Cortez | |||||||
Carlos Cortez Vice President, Controller, and Principal Accounting Officer | ||||||||
November 7, 2022 |
SIGNED AND DELIVERED in the presence of: Witness Signature Print Name of Witness Address of Witness | JOHN GRIESE |
/s/ Michael Gorenstein | |||||
Michael Gorenstein | |||||
President and Chief Executive Officer | |||||
(Principal Executive Officer) |
/s/ Robert Madore | |||||
Robert Madore | |||||
Chief Financial Officer | |||||
(Principal Financial Officer) |
/s/ Michael Gorenstein | |||||
Michael Gorenstein | |||||
President and Chief Executive Officer | |||||
(Principal Executive Officer) |
/s/ Robert Madore | |||||
Robert Madore | |||||
Chief Financial Officer | |||||
(Principal Financial Officer) |
Condensed Consolidated Balance Sheets (Parenthetical) - shares |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, shares issued (in shares) | 378,346,260 | 374,952,693 |
Common stock, shares outstanding (in shares) | 378,346,260 | 374,952,693 |
Background, Basis of Presentation and Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background, Basis of Presentation and Accounting Policies | Background, Basis of Presentation and Accounting Policies (a)Background Cronos Group Inc. (“Cronos Group” or the “Company”) is incorporated in the province of British Columbia and under the Business Corporations Act (British Columbia) with principal executive offices at 111 Peter St., Suite 300, Toronto, Ontario, M5V 2H1. The Company’s common shares are currently listed on the Toronto Stock Exchange (“TSX”) and Nasdaq Global Market (“Nasdaq”) under the ticker symbol “CRON.” Cronos Group is an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology and product development and is seeking to build an iconic brand portfolio. Cronos Group’s diverse international brand portfolio includes Spinach®, PEACE NATURALS®, Lord Jones®, Happy Dance® and PEACE+®. (b)Basis of presentation The condensed consolidated interim financial statements of Cronos Group are unaudited. They have been prepared in accordance with Generally Accepted Accounting Principles in the United States (“U.S. GAAP”) for interim financial information and with applicable rules and regulations of the U.S. Securities and Exchange Commission relating to interim financial statements. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for any other reporting period. These condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”). Certain prior year amounts have been reclassified to conform to the current year presentation of our condensed consolidated interim financial statements. These reclassifications had no effect on the reported results of operations and ending shareholders’ equity. (c)Segment information Segment reporting is prepared on the same basis that the Company’s chief operating decision maker (the “CODM”) manages the business, makes operating decisions and assesses the Company’s performance. The Company determined that it has the following two reportable segments: U.S. (the “U.S. segment”) and ROW (the “ROW segment”). The U.S. operating segment consists of the manufacture and distribution of U.S. hemp-derived cannabinoid infused products. The ROW operating segment is involved in the cultivation, manufacture, and marketing of cannabis and cannabis-derived products for the medical and adult-use markets. These two segments represent the geographic regions in which the Company operates and the different product offerings within each geographic region. The results of each segment are regularly reviewed by the CODM to assess the performance of the segment and make decisions regarding the allocation of resources using Adjusted EBITDA (as defined below) as the measure of segment profit or loss. Adjusted EBITDA is defined as earnings before interest, tax, depreciation, non-cash items and items that do not reflect management’s assessment of ongoing business performance. (d)Concentration of risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company is exposed to credit risk from its operating activities, primarily accounts receivable and other receivables, and its investing activities, including cash held with banks and financial institutions, short-term investments, loans receivable, and advances to joint ventures. The Company’s maximum exposure to this risk is equal to the carrying amount of these financial assets, which amounted to $992,385 and $1,118,684 as of September 30, 2022 and December 31, 2021, respectively. An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on the days past due for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Accounts receivable are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan and a failure to make contractual payments for a period of greater than 120 days past due. As of September 30, 2022 and December 31, 2021, the Company had $2 and $8, respectively, in expected credit losses that have been recognized on receivables from contracts with customers in the ROW segment. As of September 30, 2022 and December 31, 2021, the Company had $457 and $104, respectively, in expected credit losses that have been recognized on receivables from contracts with customers in the U.S. segment. As of September 30, 2022, the Company assessed that there is a concentration of credit risk, as 68% of the Company’s accounts receivable were due from three customers with an established credit history with the Company. As of December 31, 2021, 88% of the Company’s accounts receivable were due from four customers with an established credit history with the Company. The Company sells products to a limited number of major customers. Major customers are defined as customers that each individually accounted for greater than 10% of the Company’s revenue. During the three months ended September 30, 2022, the Company earned a total net revenue before excise taxes of $12,094 from three major customers in the ROW segment, together accounting for 56% of the Company’s total net revenues before excise taxes. During the three months ended September 30, 2021, the ROW segment earned a total net revenue before excise taxes of $12,256 from three major customers, together accounting for 60% of the Company’s total net revenues before excise taxes. During the nine months ended September 30, 2022, the Company earned a total net revenue before excise taxes of $36,564 from three major customers in the ROW segment, together accounting for 54% of the Company’s total net revenue before excise taxes. During the nine months ended September 30, 2021, the ROW segment earned a total net revenue before excise taxes of $25,667 from three major customers, together accounting for 53% of the Company’s total net revenues before excise taxes. During the three and nine months ended September 30, 2022 and 2021, the U.S. segment had no major customers. (e)Adoption of new accounting pronouncements On January 1, 2022, the Company adopted ASU No. 2020-06, Debt –Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815–40) (“ASU No. 2020-06”). ASU No. 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. ASU No. 2020-06 is part of the Financial Accounting Standards Board’s (“FASB”) simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. The adoption of ASU No. 2020-06 did not have an impact on the Company’s condensed consolidated interim financial statements. (f)New accounting pronouncements not yet adopted In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU No. 2022-02”). ASU No. 2022-02 eliminates the existing troubled debt restructuring recognition and measurement guidance, and instead aligns the accounting treatment to that of other loan modifications. The amendments enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. ASU No. 2022-02 also requires that entities disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases. ASU No. 2022-02 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, and is to be adopted prospectively. The Company does not expect the adoption of ASU No. 2022-02 to have a material impact on its condensed consolidated interim financial statements. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU No. 2022-03”). ASU No. 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered in measuring fair value. The amendments also require additional disclosures for equity securities subject to contractual sale restrictions. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, and is to be adopted prospectively. The Company does not expect the adoption of ASU No. 2022-03 to have a material impact on its condensed consolidated interim financial statements.
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Inventory, net |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory, net | Inventory, net Inventory, net is comprised of the following items:
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Investments |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments (a)Variable interest entities and equity method investments, net A reconciliation of the carrying amount of the investments in equity method investees, net is as follows:
The following is a summary of the Company’s share of net income (loss) from equity method investments:
(b)Other investments Other investments consist of investments in common shares and options of two companies in the cannabis industry. PharmaCann, Inc. In 2021, the Company purchased an option (the “PharmaCann Option”) to acquire 473,787 shares of Class A Common Stock of PharmaCann Inc. (“PharmaCann”), a vertically integrated cannabis company in the United States, which represented an ownership interest of approximately 10.5% as of December 31, 2021. The PharmaCann Option is classified as an equity security without a readily determinable fair value. The Company has elected to measure the fair value of the PharmaCann Option at cost less impairment, if any, and subsequently adjusted for observable price changes in orderly transactions for the identical or a similar investment of the same issuer. On February 28, 2022, PharmaCann closed the previously announced transaction with LivWell Holdings, Inc. (“LivWell”) pursuant to which PharmaCann acquired LivWell (the “LivWell Transaction”). LivWell is a multi-state cannabis cultivation and retail leader based in Colorado. As a result of the LivWell Transaction, the Company’s ownership percentage in PharmaCann on a fully-diluted basis decreased to approximately 6.4%. As of September 30, 2022, the Company’s ownership percentage in PharmaCann on a fully-diluted basis was approximately 6.3%. The decrease in the Company’s ownership percentage since acquisition does not materially affect the Company’s rights under the PharmaCann Option. Cronos Australia Limited The Company owns approximately 10% of the outstanding common shares of Cronos Australia Limited (“Cronos Australia”). The investment is considered an equity security with a readily determinable fair value. Changes in the fair value of the investment are recorded as gain (loss) on revaluation of financial instruments on the condensed consolidated statements of net income (loss) and comprehensive income (loss). During the three months ended September 30, 2022, Cronos Australia declared a dividend of AUD $0.01 per ordinary share. Based on the Company’s holding of 55,176,065 ordinary shares in the capital of Cronos Australia, the Company recorded dividend income of $390 within other, net on the condensed consolidated statements of net income (loss) and comprehensive income (loss). The following table summarizes the Company’s other investments activity:
During both the three months ended March 31, 2022 and the three months ended September 30, 2022, the Company identified adverse forecast changes in the financial performance of PharmaCann as indicators of impairment related to the PharmaCann Option and conducted analyses comparing the PharmaCann Option’s carrying amount to its estimated fair value. The fair value for the three months ended March 31, 2022 was estimated using a combination of the market and income approaches, and the fair value for the three months ended September 30, 2022 was estimated using the income approach. Under the income approach, significant inputs used in the discounted cash flow method include discount rate, growth rates, and cash flow projections. As a result of these analyses, the Company recorded non-cash impairment charges of $11,238 and $28,972 during the three months ended March 31, 2022 and September 30, 2022, respectively, as the difference between the carrying amount of the PharmaCann Option and its estimated fair value in the condensed consolidated statements of net income (loss) and comprehensive income (loss). During the three and nine months ended September 30, 2021, the Company had no gain or loss on revaluation of other investments. As of September 30, 2022 and December 31, 2021, the Company did not hold any additional other investments.
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Loans Receivable, net |
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Loans Receivable, net | Loans Receivable, net Loans receivable, net consists of the following:
(i)On August 23, 2019, the Company, as lender, and Cronos GrowCo, as borrower, entered into a senior secured credit agreement for an aggregate principal amount of C$100,000 (the “GrowCo Facility”). In August 2021, the GrowCo Facility was amended to increase the aggregate principal amount available to C$105,000. As of September 30, 2022 and December 31, 2021, Cronos GrowCo had outstanding borrowings of C$101,000 ($73,035) and C$104,000 ($81,598), respectively, from the GrowCo Facility. As of September 30, 2022, Cronos GrowCo had repaid C$3,000 ($2,169) under the terms of the GrowCo Facility. The available borrowing capacity under the GrowCo Facility was C$1,000 ($723) at both September 30, 2022 and December 31, 2021. (ii)On June 26, 2019, the Company, and the Cronos GrowCo joint venture partner (“Mucci”), entered into a demand promissory note agreement for an aggregate principal amount of C$16,350 (the “Mucci Promissory Note”). On September 30, 2022, the Mucci Promissory Note was amended and restated to increase the interest rate from 3.95% to the Canadian Prime Rate plus 1.25%, changed the interest payments from quarterly to annual, and deferred Mucci’s initial cash interest payment from September 30, 2022 to July 1, 2023. This debt modification resulted in an increase of approximately C$180 ($140) in interest income. (iii)As of September 30, 2022 and December 31, 2021, Cannasoul Lab Services Ltd. has received ILS 8,297 ($2,327) and ILS 8,297 ($2,664), respectively, from the Cannasoul Collaboration Loan. Expected credit loss allowances on the Company’s long-term financial assets for the three and nine months ended September 30, 2022 and 2021 were comprised of the following items:
(i)During the three months ended September 30, 2022, $78 was recorded as an increase to general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss) as a result of adjustments to our expected credit losses. During the nine months ended September 30, 2022, $577 was recorded as a decrease to general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss) as a result of adjustments to our expected credit losses. During the three and nine months ended September 30, 2021, $13,162 and $12,425, respectively, were recorded as an increase to general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss) as a result of adjustments to our expected credit losses. (ii)On April 1, 2021, the Company and an affiliate of Agroidea, the other joint venture partner of Natuera, converted all advances made to Natuera under the master loan agreement entered into with Natuera on September 27, 2019, plus accrued interest, into equity of Natuera. As a result, the Company decreased its credit loss allowances by $737 for the nine months ended September 30, 2021. As of September 30, 2022 and December 31, 2021, loans receivable, net for the Natuera Series A Loan was $nil.
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Intangible Assets, net |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, net | Intangible Assets, net Intangible assets, net are comprised of the following items as of September 30, 2022 and December 31, 2021:
(i)In June 2022, the Company announced the achievement of the final productivity target in respect of tetrahydrocannabivarin (“THCV”) under its collaboration and license agreement (the “Ginkgo Collaboration Agreement”) with Ginkgo Bioworks Holdings, Inc. (“Ginkgo”). As a result of the achievement of the final productivity target for THCV, the Company issued 2,201,236 common shares at a share price of C$3.47, and made a cash payment of $600, for total consideration of C$8,412 ($6,522) to Ginkgo through the Ginkgo Collaboration Agreement. The definite-lived intangible asset is being amortized using the straight-line method over its estimated useful life of ten years. (ii)The Israeli codes were transferred by non-controlling interests to Cronos Israel in exchange for their equity interests in the Cronos Israel entities. Amortization expense was $893 and $641 for the three months ended September 30, 2022 and 2021, respectively and $2,014 and $1,084 for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, the estimated future amortization of definite-lived intangible assets is as follows:
For the three and nine months ended September 30, 2021, the Company recorded an impairment charge of $1,784 related to the Ginkgo exclusive licenses intangible assets. Additionally, for the nine months ended September 30, 2021, the Company recorded an impairment charge of $56,500 on its Lord Jones® brand intangible asset. There were no impairment charges on intangible assets for the three and nine months ended September 30, 2022.
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Derivative Liabilities |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Liabilities | Derivative LiabilitiesAs of September 30, 2022, Altria Group Inc. (“Altria”) beneficially held 156,573,537 of the Company’s common shares, an approximate 41% ownership interest in the Company (calculated on a non-diluted basis) and one warrant of the Company (the “Altria Warrant”). As summarized in this note, if exercised in full on such date, the exercise of the Altria Warrant would have resulted in Altria holding a total ownership interest in the Company of approximately 52% (calculated on a non-diluted basis). Pursuant to the investor rights agreement between the Company and Altria (the “Investor Rights Agreement”), entered into in connection with the closing of Altria’s investment in the Company (the “Altria Investment”) pursuant to a subscription agreement dated December 7, 2018, the Company granted Altria certain rights, among others, summarized in this note. The summaries below are qualified entirely by the terms and conditions fully set out in the Investor Rights Agreement and the Altria Warrant, as applicable. a.The Altria Warrant entitles the holder, subject to certain qualifications and limitations, to subscribe for and purchase up to approximately an additional 10% of the common shares of Cronos (84,076,946 common shares as of September 30, 2022) at a per share exercise price of C$19.00, which expires on March 8, 2023. b.The Company granted to Altria, subject to certain qualifications and limitations, upon the occurrence of certain issuances of common shares of the Company executed by the Company (including issuances pursuant to the research and development (“R&D”) partnership (the “Ginkgo Strategic Partnership”) with Ginkgo), the right to purchase up to such number of common shares of the Company in order to maintain their ownership percentage of issued and outstanding common shares of the Company immediately preceding any issuance of shares by the Company (“Pre-emptive Rights”), at the same price per common share of the Company at which the common shares are sold in the relevant issuance; provided that if the consideration paid in connection with any such issuance is non-cash, the price per common share of the Company that would have been received had such common shares been issued for cash consideration will be determined by an independent committee (acting reasonably and in good faith); provided further that the price per common share of the Company to be paid by Altria pursuant to its exercise of its Pre-emptive Rights related to the Ginkgo Strategic Partnership will be C$16.25 per common share. These rights may not be exercised if Altria’s ownership percentage of the issued and outstanding shares of the Company falls below 20%. c.In addition to (and without duplication of) the Pre-emptive Rights, the Company granted to Altria, subject to certain qualifications and limitations, the right to subscribe for common shares of the Company issuable in connection with the exercise, conversion or exchange of convertible securities of the Company issued prior to March 8, 2019 or thereafter (excluding any convertible securities of the Company owned by Altria or any of its subsidiaries), a share incentive plan of the Company, the exercise of any right granted by the Company pro rata to all shareholders of the Company to purchase additional common shares and/or securities of the Company, bona fide bank debt, equipment financing or non-equity interim financing transactions that contemplate an equity component or bona fide acquisitions (including acquisitions of assets or rights under a license or otherwise), mergers or similar business combination transactions or joint ventures involving the Company in order to maintain their ownership percentage of issued and outstanding common shares of the Company immediately preceding any such transactions (“Top-up Rights”). Reconciliation of the Company’s derivative liabilities activity are as follows:
Fluctuations in the expected life of the derivative instruments and the Company’s share price are primary drivers for the changes in the derivative valuations during each reporting period. As the expected period of time the derivative liability is expected to be outstanding decreases and the share price decreases, the fair value typically decreases for each related derivative instrument. Weighted-average expected life and share price are two of the significant observable inputs used in the fair value measurement of each of the Company’s derivative instruments. The fair values of the derivative liabilities were determined using the Black-Scholes pricing model using the following inputs:
(i)The risk-free interest rate was based on Bank of Canada government treasury bills and bonds with a remaining term equal to the expected life of the derivative liabilities. As of September 30, 2022 and December 31, 2021, the risk-free interest rate uses a range of approximately 3.52% to 3.80% and 0.16% to 1.10%, respectively, for the Pre-emptive Rights and Top-up Rights. (ii)The expected life represents the period of time, in years, that the derivative liabilities are expected to be outstanding. The expected life of the Pre-emptive Rights and Top-up Rights is determined based on the expected term of the underlying options, warrants, and shares, to which the Pre-emptive Rights and Top-up Rights are linked. As of September 30, 2022 and December 31, 2021, the expected life uses a range of approximately 0.25 years to 3.00 years and 0.25 years to 3.75 years, respectively, for the Pre-emptive Rights and Top-up Rights. (iii)Volatility was based on an equally weighted blended historical and implied volatility level of the underlying equity securities of the Company. The following table quantifies each of the significant inputs described above and provides a sensitivity analysis of the impact on the reported values of the derivative liabilities. The sensitivity analysis for each significant input is performed by assuming a 10% decrease in the input while other significant inputs remain constant at management’s best estimate as of the respective dates. While a decrease in the inputs noted below would cause a decrease in the carrying amount of the derivative liability, there would also be an equal and opposite impact on net income (loss).
These inputs are classified as Level 3 on the fair value hierarchy and are subject to volatility and several factors outside the Company’s control, which could significantly affect the fair value of these derivative liabilities in future periods.
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Restructuring |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring | Restructuring In the first quarter of 2022, the Company initiated a strategic plan to realign the business around its brands, centralize functions and evaluate the Company’s supply chain (the “Realignment”). As part of the Realignment, on February 28, 2022, the Company’s Board of Directors (the “Board”) approved plans to leverage the Company’s strategic partnerships to improve supply chain efficiencies and reduce manufacturing overhead by exiting its production facility in Stayner, Ontario, Canada (the “Stayner Facility”). The Realignment initiatives being undertaken are intended to position the Company to drive profitable and sustainable growth over time. The Company expects to incur approximately $6,100 in connection with the Realignment, including the planned exit of the Stayner Facility, of which $4,878 has been incurred as of September 30, 2022. Estimated charges related to the exit of the Stayner Facility include employee-related costs such as severance, relocation and other termination benefits, as well as contract termination and other related costs. The Company expects to incur approximately $1,200 in additional charges related to the Realignment, including the planned exit of the Stayner Facility. The Company incurred the following restructuring costs by reportable segment:
The following table summarizes the Company’s restructuring activity for the three and nine months ended September 30, 2022:
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Share-based Compensation |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation | Share-based Compensation (a)Share-based award plans The Company has granted stock options, restricted share units (“RSUs”) and deferred share units (“DSUs”) to employees and non-employee directors under the Stock Option Plan dated May 26, 2015 (the “2015 Stock Option Plan”), the 2018 Stock Option Plan dated June 28, 2018 (the “2018 Stock Option Plan” and, together with the 2015 Stock Option Plan, the “Prior Option Plans”), the Employment Inducement Award Plan #1 (the “Employment Inducement Award Plan”), the 2020 Omnibus Equity Incentive Plan dated March 29, 2020 (the “2020 Omnibus Plan”) and the DSU Plan dated August 10, 2019 (the “DSU Plan”). The Company can no longer make grants under the Prior Option Plans or the Employment Inducement Award Plan. The following table summarizes the total share-based compensation expense associated with the Company’s stock options, RSUs and liability-classified awards for the three and nine months ended September 30, 2022 and 2021:
(i)Represents share-based payment awards conditionally approved for grant in the three months ended September 30, 2022 to one of the Company’s former executives for a fixed monetary value, but a variable number of shares. These awards are liability-classified until the number of shares is determined. (b)Stock options Vesting conditions for grants of options are determined by the Compensation Committee. The typical vesting for stock option grants made under the 2020 Omnibus Plan is annual vesting over to five years with a maximum term of ten years. The typical vesting for stock option grants made under the Prior Option Plans is quarterly vesting over to five years with a maximum term of seven years. The Prior Option Plans did not, and the 2020 Omnibus Plan does not, authorize grants of options with an exercise price below fair market value. The following is a summary of the changes in stock options for the nine months ended September 30, 2022 and 2021:
(i)The weighted-average exercise price reflects the conversion of foreign currency-denominated stock options translated into C$ using the average foreign exchange rate as of the date of issuance. The following table summarizes stock options outstanding:
(c)Restricted share units The following is a summary of the changes in RSUs for the nine months ended September 30, 2022 and 2021:
(i)Except as noted below, RSUs granted in the period vest annually in equal installments over a three-year period from the grant date or vest after a or five year “cliff-period.” All RSUs are subject to such holder’s continued employment through each vesting date. The vesting of such RSUs is not subject to the achievement of any performance criteria. (ii)Equity grants for 2020, 2021, and 2022 were held back for certain executives of the Company in connection with ongoing investigations by the Securities and Exchange Commission (the “SEC”) and the Ontario Securities Commission (the “OSC”), which were subsequently settled on October 24, 2022. On August 5, 2022, the Compensation Committee approved the release of these held-back equity grants upon the settlement of the SEC and OSC investigations. These RSUs vest in equal installments over a period of three-years from what would have been their original grant dates had the grants not been withheld. (iii)The weighted-average grant date fair value reflects the conversion of foreign currency-denominated RSUs translated into C$ using the foreign exchange rate as of the date of issuance. (d)Deferred share units The following is a summary of the changes in DSUs for the nine months ended September 30, 2022 and 2021:
(e)Warrants The following is a summary of the changes in warrants for the nine months ended September 30, 2021:
As of September 30, 2022, there are no warrants outstanding other than the Altria Warrant. See Note 6 “Derivative Liabilities” for further description of the Altria Warrant. (f)Liability-classified awards During the three months ended September 30, 2022, the Compensation Committee conditionally approved the grant to one of the Company’s former executives of share-based compensation awards for a fixed monetary amount, but a variable number of shares. These awards are liability-classified until the number of shares is determined.
As of September 30, 2021, there were no liability-classified awards outstanding.
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Earnings (Loss) per Share |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Share | Earnings (Loss) per Share Basic and diluted earnings (loss) per share from continuing and discontinued operations are calculated as follows (in thousands, except share and per share amounts):
(i)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. For the three months ended September 30, 2022 and 2021, total securities of 117,100,621 and 118,255,677, respectively, and for the nine months ended September 30, 2022 and 2021, total securities of 118,304,608 and 127,137,014, respectively, were not included in the computation of diluted shares outstanding, because the effect would be anti-dilutive.
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The tables below set forth our condensed consolidated results of operations by segment. The Company’s condensed consolidated financial results for these periods are not necessarily indicative of the consolidated financial results that the Company will achieve in future periods. Segment data was as follows for the three and nine months ended September 30, 2022 and 2021:
The following tables set forth a reconciliation of net income (loss) as determined in accordance with U.S. GAAP to Adjusted EBITDA for the periods indicated:
(i)For the three and nine months ended September 30, 2021, impairment on goodwill and indefinite-lived intangible assets relates to impairment on goodwill and indefinite-lived intangible assets related to the Company’s U.S. segment. (ii)For the nine months ended September 30, 2022, impairment loss on long-lived assets related to the Company’s decision to seek a sublease for leased office space in Toronto, Ontario, Canada during the first quarter of 2022. For the three months ended September 30, 2021, impairment loss on long-lived assets relates to an impairment on property, plant and equipment in the U.S. segment. For the nine months ended September 30, 2021, impairment loss on long-lived assets relates to the aforementioned impairment loss on property, plant and equipment as well as an impairment loss on leased premises in the U.S. segment from the first quarter of 2021. See Note 13 “Impairment Loss on Long-lived Assets.” (iii)For the three and nine months ended September 30, 2022 and 2021, gain on revaluation of derivative liabilities represents the fair value changes on the derivative liabilities. See Note 6 “Derivative Liabilities.” (iv)For the three and nine months ended September 30, 2021, transaction costs represent legal, financial and other advisory fees and expenses incurred in connection with various strategic investments. These costs are included in general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss). (v)For the three and nine months ended September 30, 2022, gain on revaluation of financial instruments related primarily to the Company’s equity securities in Cronos Australia. For three and nine months ended September 30, 2021, gain on revaluation of financial instruments related primarily to revaluations of financial liabilities resulting from DSUs. (vi)For the three and nine months ended September 30, 2022, impairment loss on other investments related to the PharmaCann Option for the difference between its fair value and carrying amount. See Note 3 “Investments.” (vii)For the three months ended September 30, 2022, other, net related to $1,083 loss on disposal of assets and $390 of dividends declared by Cronos Australia on the Company’s 55,176,065 ordinary shares in the capital of Cronos Australia. For the nine months ended September 30, 2022, other, net related to $946 loss on disposal of assets and $390 of dividends declared by Cronos Australia on the Company’s 55,176,065 ordinary shares in the capital of Cronos Australia. For the three and nine months ended September 30, 2021, other, net primarily related to gain recorded on sale of an asset previously designated as held-for-sale in the first quarter of 2021. (viii)For the three and nine months ended September 30, 2021, loss (income) from discontinued operations related to the discontinuance of Original B.C. Ltd. (“OGBC”). (ix)For the three and nine months ended September 30, 2022, restructuring costs related to the employee-related severance costs and other restructuring costs associated with the Realignment, including the planned exit of the Stayner Facility. See Note 7 “Restructuring.” (x)For the three and nine months ended September 30, 2022 and 2021, share-based compensation related to the vesting expenses of share-based compensation awarded to employees under the Company’s share-based award plans as described in Note 8 “Share-based Compensation.” (xi)For the three and nine months ended September 30, 2022 and 2021, financial statement review costs include costs and reserves taken related to the restatements of the Company’s 2019 and second quarter 2021 interim financial statements, costs related to the Company’s responses to requests for information from various regulatory authorities relating to such restatements and legal costs defending shareholder class action complaints brought against the Company as a result of the 2019 restatement. Net revenue attributed to a geographic region based on the location of the customer were as follows:
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2022 | |
Loss Contingency [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies (a)Commitments There have been no material changes in the information regarding commitments as disclosed in the Company’s Annual Report. (b)Contingencies The Company is subject to various legal proceedings in the ordinary course of its business and in connection with its marketing, distribution and sale of its products. Many of these legal proceedings are in the early stages of litigation and seek damages that are unspecified or not quantified. Although the outcome of these matters cannot be predicted with certainty, the Company does not believe these legal proceedings, individually or in the aggregate, will have a material adverse effect on its financial condition but could be material to its results of operations for a quarterly period depending, in part, on its results for that quarter. (i)Class action complaints relating to restatement of 2019 interim financial statements On March 11 and 12, 2020, two alleged shareholders of the Company separately filed two putative class action complaints in the U.S. District Court for the Eastern District of New York against the Company and its Chief Executive Officer and now former Chief Financial Officer. The court has consolidated the cases, and the consolidated amended complaint alleges violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder against all defendants, and Section 20(a) of the Exchange Act against the individual defendants. The consolidated amended complaint generally alleges that certain of the Company’s prior public statements about revenues and internal control were incorrect based on the Company’s disclosures relating to the Audit Committee of the Board’s review of the appropriateness of revenue recognized in connection with certain bulk resin purchases and sales of products through the wholesale channel. The consolidated amended complaint does not quantify a damage request. Defendants moved to dismiss on February 8, 2021. On June 3, 2020, an alleged shareholder filed a Statement of Claim, as amended on August 12, 2020, in the Ontario Superior Court of Justice in Toronto, Ontario, Canada, seeking, among other things, an order certifying the action as a class action on behalf of a putative class of shareholders and damages of an unspecified amount. The Amended Statement of Claim names (i) the Company, (ii) its Chief Executive Officer, (iii) now former Chief Financial Officer, (iv) former Chief Financial Officer and Chief Commercial Officer, and (v) current and former members of the Board as defendants and alleges breaches of the Ontario Securities Act, oppression under the Ontario Business Corporations Act and common law misrepresentation. The Amended Statement of Claim generally alleges that certain of the Company’s prior public statements about revenues and internal control were misrepresentations based on the Company’s March 2, 2020 disclosure that the Audit Committee of the Board was conducting a review of the appropriateness of revenue recognized in connection with certain bulk resin purchases and sales of products through the wholesale channel, and the Company’s subsequent restatement. The Amended Statement of Claim does not quantify a damage request. On June 28, 2021, the Court dismissed motions brought by the plaintiff for leave to commence a claim for misrepresentation under the Ontario Securities Act and for certification of the action as a class action. The plaintiff appealed the Court’s dismissal of the motions only with respect to the Company, the Chief Executive Officer, and the now former Chief Financial Officer; the remaining defendants were dismissed from the matter with prejudice, and the Company and all individual defendants agreed not to seek costs from plaintiff in connection with the dismissal of the motions. On September 26, 2022, the Court of Appeal for Ontario reversed the Superior Court’s dismissal of the leave and certification motions, granted the plaintiff leave to proceed to bring a claim for misrepresentation under the Ontario Securities Act, and remitted the certification motion back to the Superior Court. (ii)Regulatory reviews relating to restatements The Company has been responding to requests for information from various regulatory authorities relating to its previously disclosed restatement of its financial statements for the first three quarters of 2019 as well as the previously disclosed restatement of the second quarter of 2021 interim financial statements (collectively, the “Restatements”). The Company has been responding to all such requests for information and cooperating with all regulatory authorities. SEC Settlement On October 24, 2022, the SEC issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8(a) of the Securities Act of 1933 (the “Securities Act”) and Section 21(c) of the Exchange Act, Making Findings, and Imposing a Cease-and-Desist Order (the “Settlement Order”) resolving the Restatements. The Company has agreed to settle with the SEC, without admitting or denying the allegations described in the Settlement Order. The Settlement Order fully and finally disposes of the investigation of the Company by the SEC into the Restatements without the payment of any civil penalty or other amount. The Settlement Order required the Company to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act, Sections 10(b), 13(a), 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 13a-13, 13a-15(a), 13a-16 and 12b-20 thereunder. Additionally, the Company agreed to certain undertakings, which include, among other things, retaining a qualified independent consultant (the “Consultant”) to engage in a review of, and make recommendations with respect to, certain of the Company’s internal accounting controls and internal control over financing reporting. As a result of the Settlement Order, the Company will (i) lose its status as a well-known seasoned issuer for a period of three years, (ii) be unable to rely on the private offering exemptions provided by Regulations A and D under the Securities Act for a period of five years and (iii) be unable to rely on the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 for a period of three years. OSC Settlement On October 24, 2022, the Ontario Capital Markets Tribunal approved a settlement agreement (the “Settlement Agreement”) between the Company and the staff of the OSC, resolving the Restatements. Pursuant to the terms of the Settlement Agreement, which fully and finally disposes the investigation of the Company by the OSC, Cronos agreed to pay a total of C$1.34 million to fully settle the matter, and acknowledged that it had failed to comply with the requirement under Section 77 of the Securities Act (Ontario) to file interim financial reports in the manner set out therein and had acted in a manner contrary to the public interest. Additionally, the Company agreed to retain the Consultant to engage in a review of, and make recommendations with respect to, certain of the Company’s internal accounting controls and internal control over financing reporting, on substantially the same terms as were required by the SEC pursuant the Settlement Order. (iii)Litigation relating to marketing, distribution and sale of products On June 16, 2020, an alleged consumer filed a Statement of Claim on behalf of a class in the Court of Queen’s Bench of Alberta in Alberta, Canada, against the Company and other Canadian cannabis manufacturers and/or distributors. On December 4, 2020, a Third Amended Statement of Claim was filed, which added a second alleged consumer. The Third Amended Statement of Claim alleges claims related to the defendants’ advertised content of cannabinoids in cannabis products for medicinal use on or after June 16, 2010 and cannabis products for adult use on or after October 17, 2018. The Third Amended Statement of Claim seeks a total of C$500 million for breach of contract, compensatory damages, and unjust enrichment or such other amount as may be proven in trial and C$5 million in punitive damages against each defendant, including the Company. The Third Amended Statement of Claim also seeks interest and costs associated with the action. The Company has not responded to the Third Amended Statement of Claim. On January 31, 2022, upon consent of the Company and the plaintiffs, the court dismissed the case in its entirety as to the Company. A number of claims, including purported class actions, have been brought in the U.S. against companies engaged in the U.S. hemp business alleging, among other things, violations of state consumer protection, health and advertising laws. On April 8, 2020, a putative class action complaint was filed in the U.S. District Court for the Central District of California against Redwood Holding Group, LLC (“Redwood”), alleging violations of California’s Unfair Competition Law, False Advertising Law, Consumers Legal Remedies Act, and breaches of the California Commercial Code for breach of express warranties and implied warranty of merchantability with respect to Redwood’s marketing and sale of U.S. hemp products. The complaint did not quantify a damage request. On April 10, 2020, the class action complaint was dismissed for certain pleading deficiencies and the plaintiff was granted leave until April 24, 2020 to amend the complaint to establish federal subject matter jurisdiction. On April 28, 2020, the action was dismissed without prejudice for failure to prosecute and for failure to comply with a court order. As of the date of this Quarterly Report, the plaintiff has not refiled the complaint. The Company expects litigation and regulatory proceedings relating to the marketing, distribution and sale of its products to increase.
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Fair Value Measurements |
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Fair Value Measurements | Fair Value Measurements The Company complies with ASC 820 Fair Value Measurements for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. In general, fair values are determined by: •Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. •Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. •Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability. The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis:
(i)As of September 30, 2022 and December 31, 2021, the Company’s influence on Cronos Australia is deemed non-significant and the investment is considered an equity security with a readily determinable fair value. See Note 3 “Investments” for additional information. There were no transfers between fair value categories during the periods presented.
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Impairment Loss on Long-lived Assets |
9 Months Ended |
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Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Impairment Loss on Long-lived Assets | Impairment Loss on Long-lived Assets (a)Right-of-use assets and property, plant, and equipment, net During the nine months ended September 30, 2022, the Company recognized an impairment charge of $1,986 related to the right-of-use lease asset associated with the Company’s corporate headquarters, encompassing approximately 29,000 square feet, in Toronto, Ontario, Canada, for which the Company determined it would seek a sublease. In addition, the Company recognized an impairment charge of $1,507 during the nine months ended September 30, 2022 related to leasehold improvements and other office equipment that it plans to include in any potential sublease agreement. The determination to seek a sublease of the property and include leasehold improvements and other office equipment in any potential sublease agreement triggered the impairment charges. Both of the impairment charges are recognized as impairment loss on long-lived assets on the condensed consolidated statements of net income (loss) and comprehensive income (loss). During the nine months ended September 30, 2021, the Company recognized an impairment charge of $1,039 related to leasehold improvements located within leased premises, encompassing approximately 6,000 square feet, in Los Angeles, California, which the Company determined it no longer had plans to use. The significant change in the extent and manner in which the leasehold improvements are being used and the expectation that, more likely than not, the leasehold improvements will be disposed of before the end of their useful life triggered an impairment. The right-of-use lease asset associated with the leasehold improvements was also written down as a result of the Company’s decision to no longer use the leased premises. The Company recognized an impairment charge on the de-recognition of the right-of-use asset of $702 during the nine months ended September 30, 2021. Both of the impairment charges are recognized as impairment loss on long-lived assets on the condensed consolidated statements of net income (loss) and comprehensive income (loss). Additionally, during the nine months ended September 30, 2021, the Company reassessed the existence of impairment indicators on property, plant and equipment associated with sales channels in the U.S. segment. The Company determined that slower actual revenue growth as compared to previous growth forecasts and significant pricing pressures brought about by increased competition and aggressive discounting in sales channels in the U.S. segment represented indicators of impairment. As a result, a quantitative impairment analysis was required as of June 30, 2021. As such, the Company reassessed its estimates and forecasts as of June 30, 2021, to determine the fair values of the property, plant and equipment using an undiscounted cash flow methodology. Significant inputs include growth rates and cash flow projections. As a result of the analysis as of June 30, 2021, the Company concluded the carrying amount of the property, plant and equipment associated with sales channels in the U.S. segment exceeded its fair value, which resulted in impairment charges of $1,214 on the condensed consolidated statements of net income (loss) and comprehensive income (loss) for the nine months ended September 30, 2021. No impairment charges were recorded during the three months ended September 30, 2022 and 2021 on property, plant and equipment and right-of-use assets. (b)Intangible assets, net During the three and nine months ended September 30, 2021, the Company recognized an impairment charge of $1,784 on definite-lived intangible assets for the difference between the consideration paid to Ginkgo for the achievement of certain milestones in connection with the Ginkgo Collaboration Agreement and the fair value of the Ginkgo exclusive license intellectual property. See Note 5 “Intangible Assets, net” for additional information. The impairment charge is recognized as impairment loss on long-lived assets on the condensed consolidated statements of net income (loss) and comprehensive income (loss). No impairment charges were recorded during the three and nine months ended September 30, 2022 on definite-lived intangible assets.
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Related Party Transactions |
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Related Party Transactions | Related Party Transactions (a)Altria On March 8, 2019, in connection with the Altria Investment, Altria, through certain of its wholly owned subsidiaries, purchased a 45% equity interest in the Company. As of September 30, 2022, Altria beneficially held an approximately 41% ownership interest in the Company (calculated on a non-diluted basis). The Company incurred the following expenses for consulting services from Altria Pinnacle LLC, a subsidiary of Altria (“Altria Pinnacle”):
As of both September 30, 2022 and December 31, 2021, the Company had no payables outstanding to Altria Pinnacle. (b)Cronos GrowCo The Company holds a variable interest in Cronos GrowCo through its ownership of 50% of Cronos GrowCo’s common shares and senior secured debt in Cronos GrowCo. See Note 3 “Investments” for additional information. The Company made the following purchases of cannabis products from Cronos GrowCo:
As of September 30, 2022 and December 31, 2021, the Company had payables outstanding to Cronos GrowCo of $972 and $82, respectively. Additionally, on August 23, 2019, the Company, as lender, and Cronos GrowCo, as borrower, entered into the GrowCo Facility. See Note 4 “Loans Receivable, net” for additional information.
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Background, Basis of Presentation and Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | Basis of presentation The condensed consolidated interim financial statements of Cronos Group are unaudited. They have been prepared in accordance with Generally Accepted Accounting Principles in the United States (“U.S. GAAP”) for interim financial information and with applicable rules and regulations of the U.S. Securities and Exchange Commission relating to interim financial statements. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for any other reporting period. These condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”). Certain prior year amounts have been reclassified to conform to the current year presentation of our condensed consolidated interim financial statements. These reclassifications had no effect on the reported results of operations and ending shareholders’ equity.
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Segment information | Segment informationSegment reporting is prepared on the same basis that the Company’s chief operating decision maker (the “CODM”) manages the business, makes operating decisions and assesses the Company’s performance. The Company determined that it has the following two reportable segments: U.S. (the “U.S. segment”) and ROW (the “ROW segment”). The U.S. operating segment consists of the manufacture and distribution of U.S. hemp-derived cannabinoid infused products. The ROW operating segment is involved in the cultivation, manufacture, and marketing of cannabis and cannabis-derived products for the medical and adult-use markets. These two segments represent the geographic regions in which the Company operates and the different product offerings within each geographic region. The results of each segment are regularly reviewed by the CODM to assess the performance of the segment and make decisions regarding the allocation of resources using Adjusted EBITDA (as defined below) as the measure of segment profit or loss. Adjusted EBITDA is defined as earnings before interest, tax, depreciation, non-cash items and items that do not reflect management’s assessment of ongoing business performance. |
Concentration of risk | Concentration of risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company is exposed to credit risk from its operating activities, primarily accounts receivable and other receivables, and its investing activities, including cash held with banks and financial institutions, short-term investments, loans receivable, and advances to joint ventures. The Company’s maximum exposure to this risk is equal to the carrying amount of these financial assets, which amounted to $992,385 and $1,118,684 as of September 30, 2022 and December 31, 2021, respectively. An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on the days past due for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Accounts receivable are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan and a failure to make contractual payments for a period of greater than 120 days past due. As of September 30, 2022 and December 31, 2021, the Company had $2 and $8, respectively, in expected credit losses that have been recognized on receivables from contracts with customers in the ROW segment. As of September 30, 2022 and December 31, 2021, the Company had $457 and $104, respectively, in expected credit losses that have been recognized on receivables from contracts with customers in the U.S. segment.
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Adoption of new accounting pronouncements and New accounting pronouncements not yet adopted | Adoption of new accounting pronouncements On January 1, 2022, the Company adopted ASU No. 2020-06, Debt –Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815–40) (“ASU No. 2020-06”). ASU No. 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. ASU No. 2020-06 is part of the Financial Accounting Standards Board’s (“FASB”) simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. The adoption of ASU No. 2020-06 did not have an impact on the Company’s condensed consolidated interim financial statements. (f)New accounting pronouncements not yet adopted In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU No. 2022-02”). ASU No. 2022-02 eliminates the existing troubled debt restructuring recognition and measurement guidance, and instead aligns the accounting treatment to that of other loan modifications. The amendments enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. ASU No. 2022-02 also requires that entities disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases. ASU No. 2022-02 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, and is to be adopted prospectively. The Company does not expect the adoption of ASU No. 2022-02 to have a material impact on its condensed consolidated interim financial statements. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU No. 2022-03”). ASU No. 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered in measuring fair value. The amendments also require additional disclosures for equity securities subject to contractual sale restrictions. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, and is to be adopted prospectively. The Company does not expect the adoption of ASU No. 2022-03 to have a material impact on its condensed consolidated interim financial statements.
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Inventory, net (Tables) |
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Schedule of Inventory, net | Inventory, net is comprised of the following items:
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Investments (Tables) |
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investments in Associates and Joint Ventures | A reconciliation of the carrying amount of the investments in equity method investees, net is as follows:
The following is a summary of the Company’s share of net income (loss) from equity method investments:
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Summary of Gain on Revaluation of Other Investments | The following table summarizes the Company’s other investments activity:
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Loans Receivable, net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loan Receivable | Loans receivable, net consists of the following:
(i)On August 23, 2019, the Company, as lender, and Cronos GrowCo, as borrower, entered into a senior secured credit agreement for an aggregate principal amount of C$100,000 (the “GrowCo Facility”). In August 2021, the GrowCo Facility was amended to increase the aggregate principal amount available to C$105,000. As of September 30, 2022 and December 31, 2021, Cronos GrowCo had outstanding borrowings of C$101,000 ($73,035) and C$104,000 ($81,598), respectively, from the GrowCo Facility. As of September 30, 2022, Cronos GrowCo had repaid C$3,000 ($2,169) under the terms of the GrowCo Facility. The available borrowing capacity under the GrowCo Facility was C$1,000 ($723) at both September 30, 2022 and December 31, 2021. (ii)On June 26, 2019, the Company, and the Cronos GrowCo joint venture partner (“Mucci”), entered into a demand promissory note agreement for an aggregate principal amount of C$16,350 (the “Mucci Promissory Note”). On September 30, 2022, the Mucci Promissory Note was amended and restated to increase the interest rate from 3.95% to the Canadian Prime Rate plus 1.25%, changed the interest payments from quarterly to annual, and deferred Mucci’s initial cash interest payment from September 30, 2022 to July 1, 2023. This debt modification resulted in an increase of approximately C$180 ($140) in interest income. (iii)As of September 30, 2022 and December 31, 2021, Cannasoul Lab Services Ltd. has received ILS 8,297 ($2,327) and ILS 8,297 ($2,664), respectively, from the Cannasoul Collaboration Loan.
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Schedule of Expected Credit Loss Allowances | Expected credit loss allowances on the Company’s long-term financial assets for the three and nine months ended September 30, 2022 and 2021 were comprised of the following items:
(i)During the three months ended September 30, 2022, $78 was recorded as an increase to general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss) as a result of adjustments to our expected credit losses. During the nine months ended September 30, 2022, $577 was recorded as a decrease to general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss) as a result of adjustments to our expected credit losses. During the three and nine months ended September 30, 2021, $13,162 and $12,425, respectively, were recorded as an increase to general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss) as a result of adjustments to our expected credit losses. (ii)On April 1, 2021, the Company and an affiliate of Agroidea, the other joint venture partner of Natuera, converted all advances made to Natuera under the master loan agreement entered into with Natuera on September 27, 2019, plus accrued interest, into equity of Natuera. As a result, the Company decreased its credit loss allowances by $737 for the nine months ended September 30, 2021. As of September 30, 2022 and December 31, 2021, loans receivable, net for the Natuera Series A Loan was $nil.
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Intangible Assets, net (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Definite-Lived Intangible Assets | Intangible assets, net are comprised of the following items as of September 30, 2022 and December 31, 2021:
(i)In June 2022, the Company announced the achievement of the final productivity target in respect of tetrahydrocannabivarin (“THCV”) under its collaboration and license agreement (the “Ginkgo Collaboration Agreement”) with Ginkgo Bioworks Holdings, Inc. (“Ginkgo”). As a result of the achievement of the final productivity target for THCV, the Company issued 2,201,236 common shares at a share price of C$3.47, and made a cash payment of $600, for total consideration of C$8,412 ($6,522) to Ginkgo through the Ginkgo Collaboration Agreement. The definite-lived intangible asset is being amortized using the straight-line method over its estimated useful life of ten years. (ii)The Israeli codes were transferred by non-controlling interests to Cronos Israel in exchange for their equity interests in the Cronos Israel entities.
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Schedule of Indefinite-Lived Intangible Assets | Intangible assets, net are comprised of the following items as of September 30, 2022 and December 31, 2021:
(i)In June 2022, the Company announced the achievement of the final productivity target in respect of tetrahydrocannabivarin (“THCV”) under its collaboration and license agreement (the “Ginkgo Collaboration Agreement”) with Ginkgo Bioworks Holdings, Inc. (“Ginkgo”). As a result of the achievement of the final productivity target for THCV, the Company issued 2,201,236 common shares at a share price of C$3.47, and made a cash payment of $600, for total consideration of C$8,412 ($6,522) to Ginkgo through the Ginkgo Collaboration Agreement. The definite-lived intangible asset is being amortized using the straight-line method over its estimated useful life of ten years. (ii)The Israeli codes were transferred by non-controlling interests to Cronos Israel in exchange for their equity interests in the Cronos Israel entities.
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Schedule of Estimated Future Amortization of Definite-Lived Intangible Assets | As of September 30, 2022, the estimated future amortization of definite-lived intangible assets is as follows:
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Derivative Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Carrying Amounts | Reconciliation of the Company’s derivative liabilities activity are as follows:
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Schedule of Fair Values of Derivative Liabilities | The fair values of the derivative liabilities were determined using the Black-Scholes pricing model using the following inputs:
(i)The risk-free interest rate was based on Bank of Canada government treasury bills and bonds with a remaining term equal to the expected life of the derivative liabilities. As of September 30, 2022 and December 31, 2021, the risk-free interest rate uses a range of approximately 3.52% to 3.80% and 0.16% to 1.10%, respectively, for the Pre-emptive Rights and Top-up Rights. (ii)The expected life represents the period of time, in years, that the derivative liabilities are expected to be outstanding. The expected life of the Pre-emptive Rights and Top-up Rights is determined based on the expected term of the underlying options, warrants, and shares, to which the Pre-emptive Rights and Top-up Rights are linked. As of September 30, 2022 and December 31, 2021, the expected life uses a range of approximately 0.25 years to 3.00 years and 0.25 years to 3.75 years, respectively, for the Pre-emptive Rights and Top-up Rights. (iii)Volatility was based on an equally weighted blended historical and implied volatility level of the underlying equity securities of the Company.
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Schedule of Sensitivity Analysis | The following table quantifies each of the significant inputs described above and provides a sensitivity analysis of the impact on the reported values of the derivative liabilities. The sensitivity analysis for each significant input is performed by assuming a 10% decrease in the input while other significant inputs remain constant at management’s best estimate as of the respective dates. While a decrease in the inputs noted below would cause a decrease in the carrying amount of the derivative liability, there would also be an equal and opposite impact on net income (loss).
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Restructuring (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Plan Information and Restructuring-Related Costs | The Company incurred the following restructuring costs by reportable segment:
The following table summarizes the Company’s restructuring activity for the three and nine months ended September 30, 2022:
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Share-based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock-based Compensation Expense | The following table summarizes the total share-based compensation expense associated with the Company’s stock options, RSUs and liability-classified awards for the three and nine months ended September 30, 2022 and 2021:
(i)Represents share-based payment awards conditionally approved for grant in the three months ended September 30, 2022 to one of the Company’s former executives for a fixed monetary value, but a variable number of shares. These awards are liability-classified until the number of shares is determined.
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Summary of the Changes in Options and Options Outstanding | The following is a summary of the changes in stock options for the nine months ended September 30, 2022 and 2021:
(i)The weighted-average exercise price reflects the conversion of foreign currency-denominated stock options translated into C$ using the average foreign exchange rate as of the date of issuance. The following table summarizes stock options outstanding:
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Summary of Changes in RSUs | The following is a summary of the changes in RSUs for the nine months ended September 30, 2022 and 2021:
(i)Except as noted below, RSUs granted in the period vest annually in equal installments over a three-year period from the grant date or vest after a or five year “cliff-period.” All RSUs are subject to such holder’s continued employment through each vesting date. The vesting of such RSUs is not subject to the achievement of any performance criteria. (ii)Equity grants for 2020, 2021, and 2022 were held back for certain executives of the Company in connection with ongoing investigations by the Securities and Exchange Commission (the “SEC”) and the Ontario Securities Commission (the “OSC”), which were subsequently settled on October 24, 2022. On August 5, 2022, the Compensation Committee approved the release of these held-back equity grants upon the settlement of the SEC and OSC investigations. These RSUs vest in equal installments over a period of three-years from what would have been their original grant dates had the grants not been withheld. (iii)The weighted-average grant date fair value reflects the conversion of foreign currency-denominated RSUs translated into C$ using the foreign exchange rate as of the date of issuance.
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Summary of Changes in DSUs and Warrants | The following is a summary of the changes in DSUs for the nine months ended September 30, 2022 and 2021:
(e)Warrants The following is a summary of the changes in warrants for the nine months ended September 30, 2021:
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Summary of Liability-Classified Awards |
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Earnings (Loss) per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings (Loss) Per Share | Basic and diluted earnings (loss) per share from continuing and discontinued operations are calculated as follows (in thousands, except share and per share amounts):
(i)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.
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Data and Adjusted EBITDA | Segment data was as follows for the three and nine months ended September 30, 2022 and 2021:
The following tables set forth a reconciliation of net income (loss) as determined in accordance with U.S. GAAP to Adjusted EBITDA for the periods indicated:
(i)For the three and nine months ended September 30, 2021, impairment on goodwill and indefinite-lived intangible assets relates to impairment on goodwill and indefinite-lived intangible assets related to the Company’s U.S. segment. (ii)For the nine months ended September 30, 2022, impairment loss on long-lived assets related to the Company’s decision to seek a sublease for leased office space in Toronto, Ontario, Canada during the first quarter of 2022. For the three months ended September 30, 2021, impairment loss on long-lived assets relates to an impairment on property, plant and equipment in the U.S. segment. For the nine months ended September 30, 2021, impairment loss on long-lived assets relates to the aforementioned impairment loss on property, plant and equipment as well as an impairment loss on leased premises in the U.S. segment from the first quarter of 2021. See Note 13 “Impairment Loss on Long-lived Assets.” (iii)For the three and nine months ended September 30, 2022 and 2021, gain on revaluation of derivative liabilities represents the fair value changes on the derivative liabilities. See Note 6 “Derivative Liabilities.” (iv)For the three and nine months ended September 30, 2021, transaction costs represent legal, financial and other advisory fees and expenses incurred in connection with various strategic investments. These costs are included in general and administrative expenses on the condensed consolidated statements of net income (loss) and comprehensive income (loss). (v)For the three and nine months ended September 30, 2022, gain on revaluation of financial instruments related primarily to the Company’s equity securities in Cronos Australia. For three and nine months ended September 30, 2021, gain on revaluation of financial instruments related primarily to revaluations of financial liabilities resulting from DSUs. (vi)For the three and nine months ended September 30, 2022, impairment loss on other investments related to the PharmaCann Option for the difference between its fair value and carrying amount. See Note 3 “Investments.” (vii)For the three months ended September 30, 2022, other, net related to $1,083 loss on disposal of assets and $390 of dividends declared by Cronos Australia on the Company’s 55,176,065 ordinary shares in the capital of Cronos Australia. For the nine months ended September 30, 2022, other, net related to $946 loss on disposal of assets and $390 of dividends declared by Cronos Australia on the Company’s 55,176,065 ordinary shares in the capital of Cronos Australia. For the three and nine months ended September 30, 2021, other, net primarily related to gain recorded on sale of an asset previously designated as held-for-sale in the first quarter of 2021. (viii)For the three and nine months ended September 30, 2021, loss (income) from discontinued operations related to the discontinuance of Original B.C. Ltd. (“OGBC”). (ix)For the three and nine months ended September 30, 2022, restructuring costs related to the employee-related severance costs and other restructuring costs associated with the Realignment, including the planned exit of the Stayner Facility. See Note 7 “Restructuring.” (x)For the three and nine months ended September 30, 2022 and 2021, share-based compensation related to the vesting expenses of share-based compensation awarded to employees under the Company’s share-based award plans as described in Note 8 “Share-based Compensation.” (xi)For the three and nine months ended September 30, 2022 and 2021, financial statement review costs include costs and reserves taken related to the restatements of the Company’s 2019 and second quarter 2021 interim financial statements, costs related to the Company’s responses to requests for information from various regulatory authorities relating to such restatements and legal costs defending shareholder class action complaints brought against the Company as a result of the 2019 restatement.
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Schedule of Revenue from External Customers by Geographic Areas | Net revenue attributed to a geographic region based on the location of the customer were as follows:
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Assets Measured on Recurring Basis | The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis:
(i)As of September 30, 2022 and December 31, 2021, the Company’s influence on Cronos Australia is deemed non-significant and the investment is considered an equity security with a readily determinable fair value. See Note 3 “Investments” for additional information.
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Related Party Transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | The Company incurred the following expenses for consulting services from Altria Pinnacle LLC, a subsidiary of Altria (“Altria Pinnacle”):
The Company made the following purchases of cannabis products from Cronos GrowCo:
|
Inventory, net (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 7,863 | $ 9,211 |
Work-in-progress | 11,021 | 12,405 |
Finished goods | 14,205 | 10,778 |
Supplies and consumables | 1,005 | 408 |
Inventory, net | $ 34,094 | $ 32,802 |
Investments - Schedule of Investments in Associates and Joint Ventures (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investments, net | $ 19,234 | $ 19,234 | $ 16,764 | ||
Share of loss from investments in equity accounted investees | $ (1,119) | $ (1,414) | $ 4,078 | $ (4,172) | |
Cronos GrowCo | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership interest | 50.00% | 50.00% | |||
Equity method investments, net | $ 19,234 | $ 19,234 | 16,764 | ||
Share of loss from investments in equity accounted investees | $ (1,119) | (1,214) | $ 4,078 | (1,972) | |
Natuera | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership interest | 50.00% | 50.00% | |||
Equity method investments, net | $ 0 | $ 0 | $ 0 | ||
Share of loss from investments in equity accounted investees | $ 0 | $ (200) | $ 0 | $ (2,200) |
Investments - Revaluation of Other Investments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Other Investments [Roll Forward] | |||||
Other investments, beginning balance | $ 108,669 | $ 118,392 | $ 118,392 | ||
Unrealized gain (loss) | 17,118 | 19,114 | |||
Impairment charges | (28,972) | $ 0 | (40,210) | $ 0 | |
Foreign exchange effect | (2,258) | (2,739) | |||
Other investments, ending balance | 94,557 | 94,557 | |||
PharmaCann | |||||
Other Investments [Roll Forward] | |||||
Other investments, beginning balance | 99,154 | 110,392 | 110,392 | ||
Unrealized gain (loss) | 0 | 0 | |||
Impairment charges | (28,972) | (11,238) | (40,210) | ||
Foreign exchange effect | 0 | 0 | |||
Other investments, ending balance | 70,182 | 70,182 | |||
Cronos Australia | |||||
Other Investments [Roll Forward] | |||||
Other investments, beginning balance | 9,515 | $ 8,000 | 8,000 | ||
Unrealized gain (loss) | 17,118 | 19,114 | |||
Impairment charges | 0 | 0 | |||
Foreign exchange effect | (2,258) | (2,739) | |||
Other investments, ending balance | $ 24,375 | $ 24,375 |
Loans Receivable, net - Schedule of Expected Credit Loss Allowances (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Allowance for Loan and Lease Losses [Roll Forward] | ||||
Beginning balance | $ 13,761,000 | $ 1,907,000 | $ 14,594,000 | $ 2,563,000 |
Increase (decrease) | 78,000 | 13,162,000 | (577,000) | |
Foreign exchange effect | (943,000) | (215,000) | (1,121,000) | (134,000) |
Ending balance | 12,896,000 | 14,854,000 | 12,896,000 | 14,854,000 |
Financing receivable, credit loss, expense, including transferred into investment | 78,000 | 13,162,000 | (577,000) | 12,425,000 |
GrowCo Facility | Loans Receivable | ||||
Allowance for Loan and Lease Losses [Roll Forward] | ||||
Beginning balance | 13,293,000 | 1,590,000 | 14,089,000 | 1,546,000 |
Increase (decrease) | 74,000 | 13,074,000 | (590,000) | 13,074,000 |
Foreign exchange effect | (929,000) | (202,000) | (1,061,000) | (158,000) |
Ending balance | 12,438,000 | 14,462,000 | 12,438,000 | 14,462,000 |
Natuera Series A Loan | Loans Receivable | ||||
Allowance for Loan and Lease Losses [Roll Forward] | ||||
Beginning balance | 0 | 721,000 | ||
Increase (decrease) | (737,000) | |||
Foreign exchange effect | 16,000 | |||
Ending balance | 0 | 0 | 0 | 0 |
Mucci Promissory Note | Loans Receivable | ||||
Allowance for Loan and Lease Losses [Roll Forward] | ||||
Beginning balance | 91,000 | 278,000 | 90,000 | 270,000 |
Increase (decrease) | 1,000 | (184,000) | 3,000 | (184,000) |
Foreign exchange effect | (6,000) | (4,000) | (7,000) | 4,000 |
Ending balance | 86,000 | 90,000 | 86,000 | 90,000 |
Cannasoul Collaboration Loan | Loans Receivable | ||||
Allowance for Loan and Lease Losses [Roll Forward] | ||||
Beginning balance | 377,000 | 39,000 | 415,000 | 26,000 |
Increase (decrease) | 3,000 | 272,000 | 10,000 | 272,000 |
Foreign exchange effect | (8,000) | (9,000) | (53,000) | 4,000 |
Ending balance | $ 372,000 | $ 302,000 | $ 372,000 | $ 302,000 |
Intangible Assets, net - Schedule of Intangible Assets Footnote (Details) $ / shares in Units, $ in Thousands, $ in Thousands |
1 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2022
USD ($)
shares
|
Jun. 30, 2022
CAD ($)
$ / shares
shares
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2021
USD ($)
|
Dec. 31, 2021 |
|
Finite-Lived Intangible Assets [Line Items] | |||||
Purchase of intangible assets | $ 1,177 | $ 1,044 | |||
Ginkgo exclusive licenses | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Sale of stock, price per share (in dollars per share) | $ / shares | $ 3.47 | ||||
Shares issued | $ 6,522 | $ 8,412 | |||
Purchase of intangible assets | $ 600 | ||||
Useful life | 10 years | 10 years | 10 years | 10 years | |
Common Shares | Ginkgo exclusive licenses | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Shares issued (in shares) | shares | 2,201,236 | 2,201,236 |
Intangible Assets, net - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 893,000 | $ 641,000 | $ 2,014,000 | $ 1,084,000 |
Impairment of intangible assets, finite-lived | 0 | 0 | ||
Impairment charges on intangible assets | $ 0 | $ 0 | ||
Ginkgo exclusive licenses | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Impairment of intangible assets, finite-lived | 1,784,000 | 1,784,000 | ||
Lord Jones brand | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Impairment of intangible assets, indefinite-lived (excluding goodwill) | $ 56,500,000 | $ 56,500,000 |
Intangible Assets, net - Schedule of Estimated Future Amortization of Definite-Lived Intangible Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Remainder of 2022 (3 months) | $ 751 | |
2023 | 2,843 | |
2024 | 2,830 | |
2025 | 2,545 | |
2026 | 1,981 | |
2027 | 1,811 | |
Thereafter | 7,167 | |
Net | $ 19,928 | $ 16,579 |
Derivative Liabilities - Narrative (Details) |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2022
warrant
$ / shares
shares
|
Dec. 31, 2021
shares
|
Mar. 08, 2019 |
|
Derivative [Line Items] | |||
Common stock, shares issued (in shares) | 378,346,260 | 374,952,693 | |
Altria Warrant | |||
Derivative [Line Items] | |||
Number of warrants issued | warrant | 1 | ||
Exercise price (in dollars per share) | $ / shares | $ 19.00 | ||
Altria Investment | |||
Derivative [Line Items] | |||
Maximum additional subscription percentage | 10.00% | ||
Derivative liability, additional subscription (in shares) | 84,076,946 | ||
Pre-emptive Rights | |||
Derivative [Line Items] | |||
Exercise price (in dollars per share) | $ / shares | $ 16.25 | ||
Exercise rights, minimum ownership percentage | 20.00% | ||
Altria Group, Inc. | Cronos Group, Inc. | |||
Derivative [Line Items] | |||
Ownership percentage, if warrant exercised | 52.00% | ||
Altria Group, Inc. | Cronos Group, Inc. | |||
Derivative [Line Items] | |||
Common stock, shares issued (in shares) | 156,573,537 | ||
Ownership interest | 41.00% | 45.00% |
Derivative Liabilities - Schedule of Reconciliation of Carrying Amounts (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Derivative Instruments [Roll Forward] | ||||
Beginning balance | $ 574 | $ 169,563 | $ 14,375 | $ 163,410 |
Revaluation gain | (375) | (132,916) | (14,204) | (131,290) |
Foreign exchange effect | (126) | (2,119) | (98) | 2,408 |
Ending balance | 73 | 34,528 | 73 | 34,528 |
Altria Warrant | ||||
Derivative Instruments [Roll Forward] | ||||
Beginning balance | 491 | 150,083 | 13,720 | 138,858 |
Revaluation gain | (336) | (116,285) | (13,592) | (109,099) |
Foreign exchange effect | (121) | (1,736) | (94) | 2,303 |
Ending balance | 34 | 32,062 | 34 | 32,062 |
Pre-emptive Rights | ||||
Derivative Instruments [Roll Forward] | ||||
Beginning balance | 16 | 13,926 | 180 | 12,095 |
Revaluation gain | (18) | (12,430) | (182) | (10,957) |
Foreign exchange effect | 2 | (148) | 2 | 210 |
Ending balance | 0 | 1,348 | 0 | 1,348 |
Top-up Rights | ||||
Derivative Instruments [Roll Forward] | ||||
Beginning balance | 67 | 5,554 | 475 | 12,457 |
Revaluation gain | (21) | (4,201) | (430) | (11,234) |
Foreign exchange effect | (7) | (235) | (6) | (105) |
Ending balance | $ 39 | $ 1,118 | $ 39 | $ 1,118 |
Derivative Liabilities - Schedule of Sensitivity Analysis (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Altria Warrant | ||
Sensitivity Analysis, Impact of 10 Percent Decrease (Increase) on Net Income (Loss) [Abstract] | ||
Share price | $ 20 | $ 3,970 |
Weighted-average expected life | 18 | 2,971 |
Expected annualized volatility | 27 | 5,402 |
Pre-emptive Rights | ||
Sensitivity Analysis, Impact of 10 Percent Decrease (Increase) on Net Income (Loss) [Abstract] | ||
Share price | 0 | 80 |
Weighted-average expected life | 0 | 171 |
Expected annualized volatility | 0 | 96 |
Top-up Rights | ||
Sensitivity Analysis, Impact of 10 Percent Decrease (Increase) on Net Income (Loss) [Abstract] | ||
Share price | 12 | 123 |
Weighted-average expected life | 15 | 133 |
Expected annualized volatility | $ 15 | $ 155 |
Restructuring - Narrative (Details) - Realignment - USD ($) $ in Thousands |
Sep. 30, 2022 |
Feb. 28, 2022 |
---|---|---|
Restructuring Cost and Reserve [Line Items] | ||
Expected restructuring charges | $ 6,100 | |
Restructuring costs incurred to date | $ 4,878 | |
Facility Closing | ||
Restructuring Cost and Reserve [Line Items] | ||
Expected restructuring charges | $ 1,200 |
Restructuring - Costs by Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | $ 524 | $ 0 | $ 4,878 | $ 0 |
Realignment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 524 | 0 | 4,878 | 0 |
Rest of World | Realignment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 387 | 0 | 3,396 | 0 |
United States | Realignment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | $ 137 | $ 0 | $ 1,482 | $ 0 |
Restructuring - Restructuring Activity (Details) - Realignment - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2022 |
|
Restructuring Reserve [Roll Forward] | ||
Accrual, Beginning Balance | $ 909 | $ 0 |
Expenses | 524 | 4,878 |
Payments/Write-offs | (854) | (4,299) |
Accrual, Ending Balance | 579 | 579 |
Employee termination benefits | ||
Restructuring Reserve [Roll Forward] | ||
Accrual, Beginning Balance | 888 | 0 |
Expenses | 332 | 3,267 |
Payments/Write-offs | (662) | (2,709) |
Accrual, Ending Balance | 558 | 558 |
Other restructuring costs | ||
Restructuring Reserve [Roll Forward] | ||
Accrual, Beginning Balance | 21 | 0 |
Expenses | 192 | 1,611 |
Payments/Write-offs | (192) | (1,590) |
Accrual, Ending Balance | $ 21 | $ 21 |
Share-based Compensation - Summary of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | $ 4,265 | $ 2,667 | $ 10,567 | $ 7,731 |
Stock options | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | 1,077 | 1,886 | 3,947 | 5,814 |
Restricted share units | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | 2,591 | 781 | 6,023 | 1,917 |
Liability-classified awards | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation | $ 597 | $ 0 | $ 597 | $ 0 |
Share-based Compensation - Stock Options Narrative (Details) - Stock options |
9 Months Ended |
---|---|
Sep. 30, 2022 | |
2020 Omnibus Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration period | 10 years |
Prior Option Plans | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration period | 7 years |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 3 years |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 5 years |
Share-based Compensation - Schedule of Stock Options Outstanding (Details) - shares |
Sep. 30, 2022 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of options outstanding (in shares) | 6,168,646 | 8,939,330 | 9,204,824 | 13,755,148 |
2020 Omnibus Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of options outstanding (in shares) | 2,900,000 | 2,900,000 | ||
2018 Stock Option Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of options outstanding (in shares) | 1,464,269 | 1,550,074 | ||
2015 Stock Option Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of options outstanding (in shares) | 1,804,377 | 4,489,256 |
Share-based Compensation - Summary of Changes in RSUs (Details) - Restricted share units - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Weighted-average grant date fair value | ||
Balance at beginning of period (in dollars per share) | $ 9.22 | $ 7.66 |
Granted (in dollars per share) | 4.34 | 11.06 |
Vested and issued (in dollars per share) | 8.56 | 7.11 |
Cancellation and forfeitures (in dollars per share) | 6.91 | 8.04 |
Balance at end of period (in dollars per share) | $ 4.77 | $ 9.12 |
Number of awards | ||
Balance at beginning of period (in shares) | 1,225,870 | 948,357 |
Granted (in shares) | 5,042,316 | 576,718 |
Vested and issued (in shares) | (771,682) | (115,500) |
Cancellation and forfeitures (in shares) | (168,610) | (36,971) |
Balance at end of period (in shares) | 5,327,894 | 1,372,604 |
Vesting period | 3 years | |
Minimum | ||
Number of awards | ||
Cliff period | 3 years | |
Maximum | ||
Number of awards | ||
Cliff period | 5 years |
Share-based Compensation - Summary of DSU Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Financial liability | ||||
Grants | $ 4,265 | $ 2,667 | $ 10,567 | $ 7,731 |
Deferred Share Units (DSUs) | ||||
Financial liability | ||||
Balance at beginning of period | 408 | 577 | ||
Grants | 354 | |||
DSU liabilities settled | (203) | |||
Gain on revaluation | (116) | (139) | ||
Balance at end of period | $ 292 | $ 589 | $ 292 | $ 589 |
Number of awards | ||||
Balance at beginning of period (in shares) | 104,442 | 83,293 | ||
Granting and vesting of DSUs (in shares) | 48,913 | |||
DSU liabilities settled (in shares) | (27,764) | |||
Balance at end of period (in shares) | 104,442 | 104,442 | 104,442 | 104,442 |
Share-based Compensation - Summary of Changes in Warrants (Details) - Warrants |
9 Months Ended |
---|---|
Sep. 30, 2021
$ / shares
shares
| |
Weighted-average exercise price (C$) | |
Balance at beginning of period (in dollars per share) | $ / shares | $ 0.25 |
Exercise of warrants (in dollars per share) | $ / shares | 0.25 |
Balance at end of period (in dollars per share) | $ / shares | $ 0 |
Number of awards | |
Balance at beginning of period (in shares) | shares | 7,987,349 |
Exercise of warrants (in shares) | shares | (7,987,349) |
Balance at end of period (in shares) | shares | 0 |
Share-based Compensation - Liability-Classified Awards (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Share-Based Payment Arrangement [Abstract] | ||||
Grants | $ 4,265 | $ 2,667 | $ 10,567 | $ 7,731 |
Liability-classified awards | ||||
Share-Based Payment Arrangement [Abstract] | ||||
Balance at beginning of period | 0 | |||
Grants | 597 | $ 0 | 597 | $ 0 |
Balance at end of period | $ 597 | $ 597 |
Segment Information - Schedule of Revenue from External Customers by Geographic Areas (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net revenue | $ 20,923 | $ 20,407 | $ 69,017 | $ 48,640 |
Canada | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net revenue | 13,370 | 14,186 | 41,335 | 32,432 |
Israel | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net revenue | 7,039 | 3,752 | 23,381 | 8,580 |
United States | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net revenue | 514 | 2,100 | 4,301 | 6,768 |
Other countries | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net revenue | $ 0 | $ 369 | $ 0 | $ 860 |
Commitments and Contingencies (Details) $ in Thousands |
Oct. 24, 2022
CAD ($)
|
Jun. 16, 2020
CAD ($)
|
Mar. 12, 2020
complaint
shareholder
|
---|---|---|---|
Pending Litigation | Litigation Relating to Marketing, Distribution and Sale of Products | |||
Loss Contingencies [Line Items] | |||
Damages sought | $ 500,000 | ||
Punitive damages sought | $ 5,000 | ||
U.S. District Court of Eastern District of New York Vs. Cronos | Pending Litigation | |||
Loss Contingencies [Line Items] | |||
Number of alleged shareholders | shareholder | 2 | ||
Number of putative class action complaints | complaint | 2 | ||
OSC Settlement | Settled Litigation | Subsequent Event | |||
Loss Contingencies [Line Items] | |||
Payments for legal settlements | $ 1,340 |
Related Party Transactions (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
Mar. 08, 2019 |
|
Consulting Services Arrangement | Altria Pinnacle | ||||||
Related Party Transaction [Line Items] | ||||||
Expense | $ 0 | $ 424,000 | $ 28,000 | $ 436,000 | ||
Amounts payable | 0 | 0 | $ 0 | |||
Cannabis Purchases | Cronos GrowCo | ||||||
Related Party Transaction [Line Items] | ||||||
Amounts payable | 972,000 | 972,000 | $ 82,000 | |||
Purchases | $ 2,158,000 | $ 278,000 | $ 10,973,000 | $ 812,000 | ||
Cronos Group, Inc. | Altria Group, Inc. | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership interest | 41.00% | 41.00% | 45.00% | |||
Cronos GrowCo | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership interest | 50.00% | 50.00% |
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