UNITED STATES
証券取引委員会
ワシントンDC 20549
フォーム
（表1）
証券取引法第13条または15(d)条に基づく四半期報告書 |
四半期間
OR
移行期間： から まで |
遷移期間はからです
報告書番号：
（会社設立時の指定名）
（設立または組織の州またはその他の管轄区域） （I.R.S.雇用者識別番号） |
（I.R.S. 雇用主識別番号） |
(主要執行オフィスの住所) |
（郵便番号） |
登録者の電話番号（地域コードを含む）: (
法第12条（b）に基づく登録証券
各クラスの名称 |
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取引 シンボル |
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登録されている各取引所の名称 |
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登録者(1)は、前の12ヶ月間（または登録者がそのような報告書を提出することが必要だった期間が短い場合はそれ以下の期間）に、証券取引法第13条または15(d)条によって提出する必要があったすべての報告書を提出したかどうか、および(2)は過去90日間にわたってそのような報告書の提出要件を受けていたかどうかをチェックマークで示します。
規定の不動産市場規制 (本章の§232.405) に従い、過去12か月間のすべてのインタラクティブデータファイルを電子提出したかをチェックマークで示してください。
申請者が大型加速装置、加速装置、ノンアクセル装置、小規模報告会社、または新興グロース会社である場合は、註記欄にチェックマークを付けてください。規則120億2に記載されている「大型加速装置」、「加速装置」、「小規模報告会社」、「新興グロース会社」の定義を参照してください。
大型加速フィルター |
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☒ |
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非加速ファイラー |
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小規模な報告会社 |
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新興成長企業 |
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新興成長企業の場合は、証券取引法第13条（a）に基づく新しいまたは改訂された財務会計基準の遵守に対する延長移行期間を使用しないことを選択したかどうかにチェックマークをつけてください。 ☐
本登録者が上場会社規程12b-2に定義されるシェル企業であるかどうかをチェックマークで示してください。 はい
2024年11月7日現在、登録者の普通株式が発行されています株
目次
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ページ |
第一部。 |
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アイテム 1. |
1 |
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1 |
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2 |
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3 |
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5 |
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7 |
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アイテム 2. |
32 |
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アイテム 3. |
59 |
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アイテム 4. |
61 |
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第二部 |
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アイテム 1. |
62 |
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アイテム 1A. |
63 |
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アイテム 2. |
64 |
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アイテム 3. |
64 |
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アイテム 4. |
64 |
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アイテム 5. |
64 |
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アイテム 6. |
64 |
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66 |
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本四半期報告書（“四半期報告書”）において、特に断りがない場合または文脈が示している場合を除き、言及されている文中の「会社」、「キャノピーグロース」、「私たち」、「我々」、「弊社」は、キャノピーグローセラピーコーポレーションおよびその直接および間接の完全子会社、持分法により会計処理される投資物を指します。また、「大麻」という用語は、植物のどの種または亜種であれ、属のものを指し、その植物のすべての誘導体、エキス、カンナビノイド、異性体、酸、塩、および酸の塩を含みます。」 大麻関連株 そして、「麻」という用語は、2018年の米国農業改良法でこれらの用語に与えられた意味を持ち、ヘンプ由来のカンナビジオール（CBD）を含みます。」
この四半期報告書には、当社の商標や商号、および他の企業の商標や商号への言及が含まれています。この四半期報告書で言及される商標や商号は、単に便宜上の理由で®または™の記号なしで表示される場合がありますが、これらの言及は、各所有者が、適用法の下で可能な限りその権利を主張しない意図ではないことを示すものではありません。私たちは、他の企業の商標や商号の使用や表示が、当社または当社のビジネスとの関係、または当社の製品やビジネスの支持やスポンサーシップを暗示するものではないことを意図しています。
四半期報告書の全セクターの通貨金額は、特に記載がない限り、報告通貨であるカナダドルで記載されています。 「ドル」または「CDN$」という言及は、カナダドルを指し、「US$」という言及は米ドルを指します。
i
P第I部—財務情報
アイテム1. 財務諸表。財務諸表。
キャノピーグロース
コンデンスされた仮のCO集約された貸借対照表
（千カナダドル、株式数と1株当たりのデータを除く、未監査）
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9月30日, |
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3月31日 |
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資産 |
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流動資産: |
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現金及び現金同等物 |
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$ |
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$ |
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新規売投資 |
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短期制限付売掛債権 |
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エーカレージアレンジメントに起因する負債 |
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在庫 |
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中止営業の資産 |
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- |
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前払費用およびその他の資産 |
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流動資産合計 |
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エクイティメソッド投資 |
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- |
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その他の金融資産 |
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固定資産 |
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無形資産 |
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のれん |
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その他の資産 |
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総資産 |
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$ |
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$ |
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負債および株主資本 |
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流動負債： |
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支払調整 |
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$ |
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$ |
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その他の未払費用および負債 |
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長期借入金の短期部分 |
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その他の負債 |
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流動負債合計 |
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新規買債務 |
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その他の負債 |
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負債合計 |
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キャノピーグロース法人株主資本: |
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シェア・キャピタル |
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追加の資本金 |
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その他の総合損失 |
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赤字 |
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キャノピーグロース法人株主資産合計 |
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非支配株主持分 |
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- |
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株主資本の合計 |
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負債及び株主資本の合計 |
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$ |
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$ |
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これらの要約中間連結財務諸表に付属する注釈は、これらの要約中間連結財務諸表の重要な部分である。
1
キャノピーグロース
縮小暫定連結財務諸表
運営と包括損失
（千カナダドル、株式数と1株当たりのデータを除く、未監査）
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2023年9月30日終了の3か月間期間 |
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9月30日をもって6か月が経過しました |
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2024 |
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2023 |
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2024 |
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2023 |
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売上高 |
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$ |
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$ |
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$ |
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$ |
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消費税 |
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純売上高 |
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売上原価（cogs） |
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粗利率 |
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66.8 |
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販売、一般および管理費用 |
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株式報酬費用 |
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資産減損およびリストラクチャリングに伴う損失（利益） |
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( |
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( |
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営業費用合計 |
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継続する事業からの営業損失 |
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( |
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( |
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( |
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その他の収益（費用）、純額 |
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( |
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( |
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( |
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税引き前継続事業の損失 |
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( |
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( |
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( |
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法人税等課税当期純利益 |
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( |
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( |
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( |
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( |
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持続する事業からの純損失 |
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( |
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( |
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( |
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( |
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法人税調整前の事業譲渡損益 |
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( |
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( |
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最終損失 |
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( |
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( |
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( |
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( |
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非支配株主に帰属する事業譲渡 |
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- |
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( |
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- |
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( |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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基本的および希薄化後の1株当たりの損失1 |
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持続する事業 |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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中止された業務 |
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( |
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( |
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基本的および希薄化後の1株当たりの損失 |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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希薄化後および希薄化の重み付き平均普通株 |
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総合所得（損失）： |
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持続する事業からの純損失 |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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その他の包括利益（損失）、所得税相当額を差し引いた純額 |
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金融負債の自己信用リスクの公正価値変動 |
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- |
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( |
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- |
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( |
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外貨換算 |
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( |
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( |
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法人税の影響を受けない総合利益（損失）合計 |
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( |
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( |
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継続する業務からの包括的な損失 |
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( |
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( |
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( |
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( |
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中断された事業による総合利益（損失） |
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( |
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包括的損失 |
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( |
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( |
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( |
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( |
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中止された業務からの包括的な損失 |
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- |
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( |
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- |
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( |
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キャノピーグロースに帰属する包括損失 |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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1
これらの要約中間連結財務諸表に付属する注釈は、これらの要約中間連結財務諸表の重要な部分である。
2
株主資本の短縮中間連結株主資本計算書
（千カナダドル、未監査）
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2024年9月30日までの6か月間 |
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追加の資本金 |
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累積 |
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シェア・キャピタル |
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シェアベースの準備金 |
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warrants |
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所有権の変更 |
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その他包括利益（損失） |
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赤字 |
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非支配株主持分 |
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総計 |
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2024年3月31日の残高 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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$ |
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ATmプログラムから発行された普通株式 |
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- |
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- |
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- |
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- |
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その他の普通株式の発行および株式発行費用 |
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( |
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- |
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- |
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- |
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- |
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- |
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- |
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新規売の行使 |
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- |
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- |
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- |
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- |
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株式報酬費用 |
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- |
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- |
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- |
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- |
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制限付きシェアユニットの発行およびベスティングと |
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( |
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- |
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- |
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- |
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- |
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- |
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約束手形の帳消しと交換可能株の発行 |
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- |
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- |
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- |
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Canopy 米国取引 |
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- |
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シュプリームの債務解決 |
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- |
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- |
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- |
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- |
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包括的損失 |
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- |
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- |
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- |
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- |
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( |
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( |
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- |
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( |
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2024年6月30日の残高 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
- |
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$ |
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ATmプログラムから発行された普通株 |
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- |
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- |
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- |
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- |
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- |
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- |
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その他の普通株および株式発行費用 |
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( |
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- |
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- |
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- |
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- |
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- |
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- |
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( |
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新規売の行使 |
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- |
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( |
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- |
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- |
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- |
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以前の株式報酬プランの株式オプションの行使 |
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( |
) |
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- |
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- |
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- |
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- |
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- |
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株式報酬費用 |
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- |
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- |
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- |
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- |
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- |
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- |
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制限付き株式付与および引き受け |
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( |
) |
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- |
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- |
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- |
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- |
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- |
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- |
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シュプリーム債務解決 |
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- |
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- |
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- |
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- |
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- |
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- |
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包括的損失 |
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- |
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- |
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- |
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- |
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( |
) |
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- |
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( |
) |
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2024年9月30日の残高 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
- |
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$ |
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||||
これらの要約中間連結財務諸表に付属する注釈は、これらの要約中間連結財務諸表の重要な部分である。
3
キャノピーグロース
株主資本の短縮中間連結株主資本計算書
（千カナダドル、未監査）
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2023年9月30日までの6か月間 |
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追加の資本金 |
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累積 |
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シェア・キャピタル |
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シェアベースの準備金 |
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warrants |
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所有権の変更 |
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交換可能な非支配株式 |
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その他包括利益（損失） |
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赤字 |
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非支配株主持分 |
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総計 |
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2023年3月31日の残高 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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$ |
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その他の普通株式の発行と |
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- |
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- |
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( |
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- |
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- |
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株式報酬費用 |
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- |
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制限付き株の発行と取得 |
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( |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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交換可能な非支配変更 |
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- |
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- |
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- |
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( |
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交換可能な償却 |
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- |
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( |
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- |
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- |
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- |
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( |
) |
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( |
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包括利益（損失） |
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- |
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- |
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- |
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- |
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- |
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( |
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( |
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( |
) |
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2023年6月30日の残高 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
|
$ |
( |
) |
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$ |
( |
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$ |
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$ |
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|||||
非公募発行、発行コストを除く |
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- |
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- |
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その他の普通株の発行と |
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( |
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- |
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- |
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- |
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- |
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以前の株式報酬計画オプションの行使 |
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( |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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株式報酬費用 |
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- |
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- |
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- |
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- |
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- |
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- |
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発行および制限株の付与と |
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( |
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- |
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- |
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- |
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償還可能な非支配株の変動 |
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- |
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( |
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関連する所有権の変更 |
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償還 |
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- |
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包括利益（損失） |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
|
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( |
) |
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( |
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2023年9月30日の残高 |
|
$ |
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|
$ |
|
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$ |
|
|
$ |
( |
) |
|
$ |
- |
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$ |
( |
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$ |
( |
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$ |
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$ |
|
|||||
これらの要約中間連結財務諸表に付属する注釈は、これらの要約中間連結財務諸表の重要な部分である。
4
キャノピーグロース
簡略化された中間連結決算表現金の流れのノート
（千カナダドル、未監査）
|
|
9月30日をもって6か月が経過しました |
|
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2024 |
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2023 |
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営業活動によるキャッシュフロー: |
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最終損失 |
|
$ |
( |
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$ |
( |
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中断された運用による利益（損失）は、法人税を控除した額 |
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( |
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持続する事業からの純損失 |
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( |
) |
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( |
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営業活動からの純キャッシュ流入に調整するための調整： |
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有形固定資産の減価償却 |
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無形資産の摘早償却 |
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株式報酬費用 |
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資産減損およびリストラによる損失（利益） |
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( |
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法人税等課税当期純利益 |
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非現金の公正価値の調整および関連する費用 |
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運転資産および負債の変動、企業の買収に伴う影響を差し引いた純変動 |
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債権 |
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( |
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在庫 |
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( |
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( |
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前払費用およびその他の資産 |
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( |
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( |
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支払手形および未払費用 |
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( |
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( |
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その他、現金以外の外国通貨 |
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( |
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( |
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継続するオペレーティング活動における現金流出額 |
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( |
) |
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( |
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営業活動からの純現金使用額-中断された業務 |
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- |
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( |
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営業によるキャッシュフローの純流出 |
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( |
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( |
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投資活動によるキャッシュフロー： |
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有形固定資産の購入と保証金の支払い |
|
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( |
) |
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( |
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無形資産の取得 |
|
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( |
) |
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( |
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有形固定資産の売却益 |
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短期投資の償還 |
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子会社の売却または除却によるネット現金流出 |
|
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( |
) |
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- |
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貸倒引当金増加によるネット現金流入 |
|
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その他の金融資産への投資 |
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( |
) |
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( |
) |
その他の投資活動 |
|
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- |
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( |
) |
継続する運用活動における投資活動に係る純現金（使用された）提供払い |
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( |
) |
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中止された運用活動による提供（使用）される純現金 |
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( |
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投資活動による純現金流出入 |
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( |
) |
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財務活動からのキャッシュフロー: |
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普通株式およびワラントの発行による収益 |
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ストックオプションの行使からの資金調達 |
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- |
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ワラントの行使による収益 |
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- |
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長期債務および転換社債の発行 |
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- |
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長期借入金の返済 |
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( |
) |
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( |
) |
その他の融資活動 |
|
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( |
) |
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( |
) |
財務活動による純現金提供（使用） |
|
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( |
) |
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現金及び現金同等物の為替レート変動の影響 |
|
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( |
) |
|
現金及び現金同等物の増加（減少） |
|
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( |
) |
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現金及び現金同等物期首残高1 |
|
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期末現金及び現金同等物2 |
|
$ |
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|
$ |
|
||
1その他の中には、廃止された業務の現金を含みます $ |
|
|||||||
2現金を含む、中止された運営の現金$ |
|
|||||||
これらの要約中間連結財務諸表に付属する注釈は、これらの要約中間連結財務諸表の重要な部分である。
5
キャノピーグロース
キャッシュ・フローの簡易な暫定合算表
（千カナダドル、未監査）
|
|
9月30日に終了した6か月間 |
|
|||||
|
|
2024 |
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2023 |
|
||
キャッシュフロー情報の補足開示 |
|
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||
期間中に受け取った現金： |
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|
||
所得税 |
|
$ |
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|
$ |
|
||
利息 |
|
$ |
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|
$ |
|
||
期間中に支払われた現金： |
|
|
|
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|
||
所得税 |
|
$ |
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|
$ |
|
||
利息 |
|
$ |
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|
$ |
|
||
非現金投資と資金調達活動 |
|
|
|
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|
||
資産、プラント、設備への追加 |
|
$ |
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|
$ |
|
||
これらの要約中間連結財務諸表に付属する注釈は、これらの要約中間連結財務諸表の重要な部分である。
6
CANOPY GROWTH CORPORATION
簡易連結中間財務諸表の注記連結財務諸表
（千カナダドル単位、未確認、特記がない限り）
1ビジネスの説明
キャノピーグロース株式会社は、カナダに設立された公開会社であり、本社はオンタリオ州スミスフォールズの1 Hershey Driveにあります。ここでの「キャノピーグロース」または「会社」とは、キャノピーグロース株式会社及びその子会社を指します。
会社の主な活動は、カナダにおいて成人向けと医療目的の多様な大麻およびカンナビノイド製品の生産、流通、販売を、一連の独自ブランドのポートフォリオを通じて行うことです。 大麻法SC 2018, c 16（以下、"法"）に基づいて、2018年10月17日に発効した製品を規制する法律で、カナダの医療および成人向け大麻市場を規制します。大麻法その他、カナダ国外の大麻および/またはヘンプが連邦法で合法で許可され、規制されている地域にも展開しており、子会社を通じて豪州、ドイツ、およびその他の一部のグローバル市場で事業を展開しています。さらに、同社は、アメリカを含む様々なグローバル市場でベイパライザーおよび同様の大麻アクセサリーの生産、流通、販売も行っています。
2。プレゼンテーションの基本
これらの要約された中間連結財務諸表はカナダドルで表示されており、米国で一般に認められている会計原則（「米国会計基準」）に従って作成されています。Canopy Growthは、カナダドルが最も適切で適切な報告通貨であると判断しました。複数の地域で会社の事業規模の相対的な変化が続いているにもかかわらず、事業の大部分はカナダドルで行われ、財務結果はカナダドルで経営陣によって内部で作成およびレビューされているからです。当社の要約中間連結財務諸表、およびここに含まれる財務情報は、1株あたりの金額、1株あたりの金額、または別段の記載がある場合を除き、数千カナダドルで報告されています。
米国会計基準に従って作成された監査済み年次連結財務諸表に通常含まれる特定の情報や脚注の開示は、省略または要約されています。これらの要約された中間連結財務諸表は、2024年3月31日に終了した会計年度のフォーム10-kの当社の年次報告書（「年次報告書」）に含まれる監査済み連結財務諸表と併せて読む必要があり、年次報告書に記載されている会計方針に従って作成されています。
これらの要約された中間連結財務諸表は未監査であり、米国会計基準に従って中間期間の公正な業績報告を提供するために必要であると経営陣が考える調整（通常の定期的な調整からなる）を反映しています。
これらの要約された中間連結財務諸表で報告されている結果は、必ずしも会計年度全体で予想される結果を示していると見なすべきではありません。以下のポリシーは、特に明記されていない限り、提示されたすべての期間に一貫して適用されます。
ゴーイング・コンサー
これらの要約された中間連結財務諸表は、通常の事業過程における資産の実現と負債の履行を考慮した継続企業ベースの米国会計基準に従って作成されています。
2023年12月31日に終了した期間の当社の要約された中間連結財務諸表で、当社は、短期的に期限が到来する特定の重要な債務、事業からの定期的な損失、および事業と事業運営の資金を調達するための追加の必要な資金調達のため、要約された中間連結財務諸表の発行から少なくとも12か月間、継続企業として存続できるかどうかについて大きな疑問を投げかけました。
年次報告書の提出時点で、当社は、年次報告書にさらに記載されているように、いくつかの貸借対照表処理を完了することで、実質的な疑念を首尾よく和らげることができました。2024年9月30日に終了した6か月間に、当社は追加のアクションを完了し、AtMプログラム（以下に定義）を設立し、総額を発行および販売しました
7
当社と子会社の財務諸表が連結された簡略化された連結財務諸表に含まれています。当社と子会社間のすべての重要な取引は、統合に際して除去されています。
These condensed interim consolidated financial statements include the accounts of the Company and all entities in which the Company either has a controlling voting interest or is the primary beneficiary of a variable interest entity. All intercompany accounts and transactions have been eliminated on consolidation.
可変利益のエンティティ
A variable interest entity (“VIE”) is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to control the entity’s activities or do not substantially participate in the gains and losses of the entity. Upon inception of a contractual agreement, and thereafter, if a reconsideration event occurs, the Company performs an assessment to determine whether the arrangement contains a variable interest in an entity and whether that entity is a VIE. The primary beneficiary of a VIE is the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Under ASC 810 – コンソリデーション, where the Company concludes that it is the primary beneficiary of a VIE, the Company consolidates the accounts of that VIE.
エクイティメソッド投資
Equity method investments include those investments where the Company: (i) can exercise significant influence over the other entity and (ii) holds common stock and/or in-substance common stock of the other entity. Unless the fair value method is elected, equity method investments are accounted for under the equity method. Under the equity method, investments are carried at cost, and subsequently adjusted for the Company’s share of net income (loss), comprehensive income (loss) and distributions received from the investee. If the current fair value of an investment falls below its carrying amount, this may indicate that an impairment loss should be recorded. Any impairment losses recognized are not reversed in subsequent periods.
米国一般に受け入れられている会計原則（「米国GAAP」）に従う簡易連結財務諸表の作成には、管理陣が報告された金額およびイベントに影響を与える財務情報および関連する注記開示に基づいて、収益年の収益を見積もる必要があります。これらの見積りは、現在の経済環境を含む適切な見解に基づいており、正確であると信じられていますが、一部の見積りには不確実性が伴う可能性があります。実際の結果は、これらの見積もりと異なる場合があります。主要な見積もりと仮定は、無形資産の有用寿命、無形資産と資本金の評価、および所得税に関するものです。
これらの簡易中間連結財務諸表および添付注釈の準拠は、米国会計基準（U.S. GAAP）に従うため、経営陣が金額に影響を与える見積りや仮説を行う必要があります。実際の結果はその見積と異なる可能性があります。重要な判断と見積もりが必要な財務諸表の領域は以下の通りです。
貸倒れ引当金評価には判断が伴い、回収可能性を考慮するために利用可能な情報に基づく損失の見積もりを含み、経済状況やビジネス条件、デフォルトトレンド、その他の内部および外部要因を考慮に入れます。この金額は経験や新しい情報に基づき変更される可能性があり、将来の期間に影響を及ぼし、帳簿価額を調整する必要のある結果をもたらす可能性があります。
在庫減価償却 会社は、製品需要の見積もり予測、生産要件、市場状況、規制環境に基づいて在庫引当金を記録しています。実際の損失は経営陣の見積から異なる場合があります。
見積の寿命、減損の考慮事項、有形固定資産および無形資産の償却 固定資産および無形資産の償却は、経営陣の判断に基づく寿命の見積に依存しています。
資産の希薄化テストには、経営陣による希薄化テストモデルでの見積もりが必要です。少なくとも年次を基準に、会社は、無形資産が希薄化されていないかどうかをテストします。報告単位の公正価値は、ディスカウント未来キャッシュフローモデルを使用して決定され、将来の事象に関する仮定が組み込まれます。具体的には、将来のキャッシュフロー、成長率、ディスカウント率が含まれます。
長期資産の希薄化は、資産グループの定義と希薄化の指標の決定における判断に影響を受け、希薄化損失を測定するために使用される見積もりによって左右されます。
法的手続き 損失発生の確率を決定する際に判断が使用される他、見積もり金額の決定にも関与します。記録される金額は経営陣の判断に基づいており、実際の記録金額が実現しない可能性があります。
金融商品の公正価値測定 ノート23に記載されたさまざまな評価手法の使用には、不確実性が伴い、会社の判断に基づいて決定された見積もりが実現しない可能性があります。また、これらの技術から推定される価値は実現可能であるとは限りません。
変数利益法主体の連結 会社が変数利益法主体の主要利益者であるかどうかを決定するには大きな判断力が必要です。その評価には、変数利益法主体の権限と利益の質的分析が必要です。
シェア統合
8
シェア調整は、2023年9月25日に開催された会社の株主総会および臨時株主総会で株主の承認を得ました。シェア調整は、2023年12月15日に有効となりました。シェア調整に関連して少数の普通株が発行されませんでした。シェア調整から生じる少数の普通株は、その名義人によって会社に無償で取り消しのために提出されたものとみなされました。さらに、会社の発行中の普通株と出資金額、および会社が発行可能な優先株式から引き続き調整されている変換価格および/または普通株式の数は、シェア調整に関連して均等に調整されました。
会社の連結中間財務諸表およびその注釈に記載されている発行済および未発行の普通株、株式当たり金額、および普通株に行使できる未発行の株式と表彰金、さらには、Fixed Shares（以下定義）およびFloating Shares（以下定義）の取引比率、および修正前のShare Amendment Arrangement（以下定義）とFloating Share Arrangement（以下定義）に関連して、この表題に記載されているすべての先行期間について、シェア調整が反映されるように後方調整されています。
新しい会計方針
まだ適用されていない会計ガイダンス
セグメントレポーティング
2023年11月、財務会計基準委員会（「FASB」）がASU 2023-07、セグメント・レポーティング（第280号）: レポータブルセグメント開示の改善（「ASU 2023-07」）を発行し、主に最高執行責任者に提供される重要なセグメント経費に関する開示を拡大し、報告される各セグメントの損益の指標に含まれる。ASU 2023-07は2023年12月15日以降開始する会計年度および2024年12月15日以降開始する会計年度内の四半期に適用される。企業は連結財務諸表への影響を評価中であり、2025年3月31日を締め切りとする会計年度にASU 2023-07の規定を実施することを予定しています。
所得税
2023年12月、FASBはASU 2023-09、所得税（第740号）: 所得税開示の改善（「ASU 2023-09」）を発行し、所得税開示を強化し、主に税率調整および支払われる所得税の分解を変更します。ASU 2023-09は2024年12月15日以降開始する年度に適用され、早期適用が許可されます。企業は連結財務諸表への影響を評価中であり、2026年3月31日を締め切りとする会計年度にASU 2023-09の規定を実施することを予定しています。
3米国キャノピーグロース
キャノピーグロース米国（Canopy USA）の設立に関連して、2022年10月24日にキャノピーグロースが戦略的取引（「再編」）をいくつか完了し、米国法人の持株会社である米国キャノピー株式会社（Canopy USA）が設立されました。2022年10月24日現在、キャノピーグロースが以前に保有していた米国大麻投資を保有しています。
米国キャノピーの設立後、ナスダック・ストック・マーケットLLC（「ナスダック」）は、連邦法に違反する活動から生じる資産と収益を統合する企業はナスダックにリストされ続けることはできないと会社に伝えました。会社はナスダックの上場要件の遵守を確約しているため、会社と米国キャノピーは、Canopy USAの財務諸表でのキャノピーUSAの除却を容易にするための一部の変更を実施しました。これらの変更には、会社、その完全子会社、およびCanopy USAの間の保護協定（以下定義）の条項を変更すること、Canopy USAの有限責任会社契約の条項を変更すること、およびCanopy USAの第三者投資家との一部の契約条件を変更して保証付きリターンの権利を排除すること等が含まれています（「再編修正」）。2023年5月19日に会社と米国キャノピーは再編修正を実施し、最初の修正及び再編保護協定（以下定義）を締結し、Canopy USAの有限責任会社契約を修正して再締結しました。目的は以下のとおりです：（i）以前にCanopy USAが会社に付与していた一部の否定的契約を廃止し、キャノピーグロースに任命されなかったCanopy USA取締役会のマネージャーにCanopy USAの次の重要な決定（総称して「キー決定」）を承認する権限を付与すること：（a）Canopy USAの年次ビジネス計画；（b）Canopy USAおよびその子会社の重役に関する決定；（c）Canopy USAまたはその子会社の現在の、過去の、または将来の従業員やマネージャーへの報酬、ボーナス、またはその他の給付の増額；（d）Canopy USAまたはその子会社の他の役員報酬計画の問題等；および（e）Wanaオプション（以下定義）またはJettyオプション（以下定義）の行使。これにより、会社のCanopy USA取締役会の指名された議決権行使権は、キー決定について投票を行うことが許可されないことを明確にします。
転換後Canopy USAの設立に関して、ナスダック・ストック・マーケットLLC（「ナスダック」）は、合衆国連邦法に違反する活動から生じる資産及び収益を統合する企業がナスダックにリストされ続けることはできない旨を会社に通知しました。会社はナスダックの上場要件を遵守することを約束しているため、会社とCanopy USAは、Canopy USAの財務諸表内でのCanopy USAの財務結果の除却を可能にするための変更を実施しました。これらの変更には、会社、その完全子会社、およびCanopy USAとの保護協定（以下定義）の条項の変更、Canopy USAの有限責任会社契約の条項の変更、Canopy USAの第三者投資家との一部の契約の条項を変更して保証されたリターン権利を排除することなどが含まれました（総称して「再編修正」）。2023年5月19日、会社とCanopy USAは再編修正を実施し、第一次A&R保護協定（以下定義）を締結し、Canopy USAの有限責任会社契約を修正再締結することを含んでいます。これは以下を実行するためです：（i）以前にCanopy USAが会社に対して付与した一部の負債条件を削除し、Canopy USA取締役会のキャノピーグロースに指名されていないマネージャーにキー決定（総称して「キー決定」）を承認する権限を委任すること：（a）Canopy USAの年間ビジネス計画；（b）Canopy USAおよびその子会社の役員に関する決定；（c）Canopy USAまたはその子会社の従業員やマネージャーへの報酬、ボーナスレベル、またはその他の給付の増額；（d）Canopy USAまたはその子会社のその他の幹部報酬計画に関する事項；および（e）Wana Options（以下定義）またはJetty Options（以下定義）の行使。これにより、会社のCanopy USA取締役会の指名された議決権行使権は、キー決定を行う際には投票を行うことが許可されないことを明確にします。
9
企業大量の非議決権株を保有(以下で定義される); (ii) キャノピーアメリカ取締役会のマネージャーを4人から3人に減らし、会社の指名権を1人のマネージャーに減らすこと、キャノピーアメリカの株式資本を修正して、(a) 新しいクラスのキャノピーアメリカクラスb株式(以下で定義される)を作成すること、(b) 非議決権株またはキャノピーアメリカ普通株式(以下で定義される)をキャノピーアメリカクラスb株式に換金する前に発行されることを除いて、非議決権株の条件を修正して、非議決権株をキャノピーアメリカクラスb株式に換金可能にすること(キャノピーアメリカ普通株式とは異なります); および(c) キャノピーアメリカ普通株式の条件を修正して、非議決権株を全てキャノピーアメリカクラスb株式に換金すると、キャノピーアメリカ普通株式はその条件に基づき、かつ、キャノピーアメリカクラスb 株式に自動的に換金されるが、キャノピーアメリカ普通株式の元株主に発行されるキャノピーアメリカクラスb 株式の数は、発行後の総発行済み株式数のうち少なくとも の等しい数です。したがって、再編修正の結果、変換時に会社がキャノピーアメリカクラスb 株式の%より多くを保有することは絶対的にありません。
再編修正に基づき、2023年5月19日、キャノピーアメリカとHuneeus 2017 Irrevocable Trust(以下「信託」)は、キャノピーアメリカへの投資条件を定めたキャノピーアメリカ普通株式（以下「キャノピーアメリカ普通株式）を、最大米ドル の合計額でキャノピーアメリカに投資することを提供する株式購入契約書（以下「信託SPA」という）を締結した。Agustin Huneeus, Jr.は信託の受託者であり、Jettyの株主の関係会社です。信託SPAの条件に基づき、信託は、信託SPAに含まれる特定の条件に従って、キャノピーアメリカの普通株式（以下「キャノピーアメリカ普通株式」）を、合計額 米ドルまでの２回に分かれて発行される、キャノピーアメリカの普通株式を受け取る予定です。
その他、下記の条項に基づき、Canopy GrowthはWanaおよびJettyの株主に対する一部の先延および/またはオプション行使支払いを満たすために、追加の普通株式を発行する義務を負う場合があります。将来、WanaおよびJettyの株主に対して発行される会社の普通株式に対する対価として、Canopy GrowthはCanopy USAから追加の非議決権株式を受け取ります。
2023年11月3日、会社はSEC（証券取引委員会）のスタッフから通知を受け、再編修正にもかかわらず、Canopy USAがWana、Jetty、またはAcreage Holdings, Inc.（「Acreage」）の固定株式を取得した場合、米国会計基準（GAAP）に従って、Canopy USAの財務結果を会社の財務諸表から除外することを妨げると述べました。その後、会社はSECの最高会計責任者と協議し、Canopy USAの財務結果をGAAPに従ってCanopy Growthの財務結果から除外するための構造に特定の追加修正（「追加再編修正」）を行うことを決定しました。追加再編修正に応じて、Canopy USAおよびそのメンバーは第2の修正されたおよび再締結された有限責任会社契約（「第2のA＆R LLC契約」）を締結しました。第2のA＆R LLC契約に従い、非議決権株式の条件が変更され、非議決権株式は米国内で大麻の栽培、流通、または所持を行う会社の財務諸表を統合する会社の上場が、ニューヨーク証券取引所やNASDAQ証券取引所が許可する日（「株式取引許容日」）以降にキャノピーグロース米国株式bに換算可能となります。会社はOCAとの協議に基づき、追加再編修正を実施すると、スタッフがGAAPに従ってCanopy USAの財務結果を会社の財務諸表から除外することに異議を唱えないと考えています。
再編成、再編成修正および追加再編成修正を行った後の2024年5月6日、Canopy USAはオプション（「ワナオプション」）を行使して、北米の大麻関連株部門のリーディングブランドであるMountain High Products, LLC、Wana Wellness, LLC、The Cima Group, LLC（以下「Wana」という）を取得し、その後、Wana Wellness, LLC、The Cima Group, LLCの取引を完了しました。2024年10月8日、Canopy USAはMountain High Products, LLCの買収を完了しました。さらに、Canopy USAはオプション（「ジェッティオプション」）を行使して、高品質の大麻エキスを生産するカリフォルニア拠点のJetty（「ジェティー」）を取得し、クリーンベイプテクノロジーの先駆者でありました。その後、Jettyを取得するための最初のトランシェクロージングを完了しました。2024年6月4日、Acreage（「Acreageオプション」という）の発行済み株式の取得オプションが行使されました。Canopy USAは、直接および間接的に、北米で主導的な大麻オペレーターであり、ペンシルベニア、ニュージャージー、ミシガンおよびカリフォルニアに事業を展開し、メリーランドでのライセンスを取得した栽培および加工施設を有するTerrAscend Corp.（「TerrAscend」という）の資本にも関心を持っています。
Canopy USAは、その他の資産の中で、以下の資産に対する所有権を保持しています。
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（「ASC 810」という）およびリオーガニゼーション契約改定および追加リオーガニゼーション契約改定の完了前、Canopy USAはASC 810に基づく可変利益実体として決定された コンソリデーション およびASC 810に従って、そのような決定の結果として、Canopy Growthは2024年4月30日までCanopy USAの財務結果を連結財務諸表に含めた
米国大麻関連投資の所有
リオーガニゼーションの実施後、Acreage、Wana、Jetty、およびTerrAscendの株および権利は、Canopy USAが直接または間接的に保有し、Canopy Growthはこれらの実体の株または権益に直接的な利益を保有していない。ただし、Acreageオプションについては、2024年6月4日に行使された。Canopy GrowthはCanopy USAの資本において非投票および非参画株式（「Non-Voting Shares」という）を保有している。Non-Voting Sharesには権利投票権や配当金受領権、Canopy USAの解散に際するその他の権利を有しない。リオーガニゼーション契約改定後、Non-Voting SharesはCanopy USAのbクラス株式（「Canopy USA Class b Shares」という）に換算可能であり、その換算はストック取引許容日を経てのみ許可される。また、同社には（非投票および非参画であるNon-Voting Sharesにかかわらず）Canopy USAの取締役会（「Canopy USA取締役会」）にメンバーを1名指名する権利がある
2022年10月24日、Canopy USAおよび同社は、Wanaの支配株主であるナンシー・ホワイトマンを含む他者と、2023年5月19日、2024年4月30日に改訂された合意に調印した。Canopy USAの子会社は、Wanaオプションを取得するために追加の対価を支払うことに同意し、Wanaオプションの行使に伴う将来の支払い額がUS$に削減された
2024年11月7日現在、trustは
Canopy GrowthおよびCanopy USAはNon-Voting Sharesの価値を維持するための一部の規約を提供するために保護契約（"Protection Agreement"）の当事者でもあります。非投票株を保有するCanopy Growthが非投票株を規定に従って変換するまでの価値を守るために、非投票株がその条件に従って変換されるまでの期間まで、Stock Exchange Permissibility Dateの後で変換のみ許可されますが、Canopy GrowthにCanopy USAの事業、運営、活動を指揮する権限は与えられません。保護契約は再編修正（「第1A&R Protection Agreement」として）、Additional Reorganization Amendments（「第2A&R Protection Agreement」および第1A&R Protection Agreementと合わせて、「A&R Protection Agreement」）に関連して修正および再発行されました。
11
Canopy USAによるAcreageの買収が完了すると、Canopy Growthは、Acreageの株主が既存のエーカーアレンジメント契約およびフローティング株式アレンジメント契約（以下に定義）の条件に従って受け取る当社の普通株式の発行と引き換えに、キャノピーUSAから議決権のない株式を追加で受け取ります。
キャノピー・グロースが証券取引所の許可日後に議決権のない株式をキャノピーUSAのクラスB株に転換するまで、キャノピー・グロースはキャノピーUSA、ワナ、ジェッティ、テラセンド、またはエーカーに経済的または議決権を持ちません。キャノピーUSA、Wana、Jetty、TerraScend、Acreageは、引き続きキャノピー・グロースとは独立して運営されます。
作付面積契約
2022年10月24日、Canopy GrowthはCanopy USAおよびAcreageと修正後のアレンジメント契約（「フローティング株式アレンジメント契約」）を締結しました。これに従い、フローティング株式の保有者の承認とフローティング株式アレンジメント契約の条件を条件として、Canopy USAは、フローティング株式アレンジメントを通じて発行済みおよび発行済みのフローティング株式をすべて取得し、引き換えにフローティングシェアアレンジメントを通じて発行済みおよび発行済みのフローティング株式をすべて取得します。
2022年10月24日、当社とCanopy USAは、HSCPの修正売掛金契約（「TRA」）に従い、Acreageの子会社であるハイストリート・キャピタル・パートナーズLLCの現在または以前の特定の投資主（「保有者」）などと、売掛金契約の第3次修正（「修正TRA」）を締結しました。およびAcreageに関連する売掛金ボーナスプラン。修正されたTRAに従い、当社はCanopy USAを代表して、米ドル相当の当社の普通株式を発行することに合意しました
株主および裁判所の承認に加えて、フローティング・シェア・アレンジメントは、トロント証券取引所（「TSX」）の承認、およびエーカー数修正アレンジメントに定められた条件を含むその他の特定のクロージング条件の充足を含むがこれらに限定されない、該当する規制当局の承認の対象となります。フローティング・シェア・アレンジメントは、2023年3月15日に開催されたAcreage株主特別総会でフローティング・シェアの保有者から必要な承認を受け、2023年3月20日に、Acreageはブリティッシュコロンビア州最高裁判所からフローティング・シェア・アレンジメントを承認する最終命令を受けました。
2024年6月4日、作付面積オプションは、2019年5月15日、2020年9月23日および2020年11月17日に改正された2019年4月18日付けのアレンジ契約（「既存の作付アレンジ契約」）の条件に従って行使されました。Acreage Optionの行使に基づく固定株式の取得の完了と同時に、固定株式はCanopy USAに発行されます。したがって、Canopy Growthは固定株式や変動株式を保有しません。固定株式の取得の完了は、既存の作付面積調整契約に定められた特定の条件を満たすことを条件としています。フローティング・シェア・アレンジメントに基づくフローティング・シェアの取得は、次のような既存面積アレンジメント契約に基づく固定株式の取得の直前に行われる予定です。
2024年6月3日、当社は、Canopy Growthの完全子会社（「オプション者」）と2021年12月16日付けのAcreageの信用契約の当事者である貸し手（「貸し手」）との間の2022年11月15日付けのオプション契約（「オプション契約」）に関連して、Acreageの特定の未払い債務を取得（「債務取得」）するオプションを行使しました。、2022年10月24日付けのクレジット契約の第1修正と、2023年4月28日付けのクレジット契約の第2修正によって修正されました。
オプション人は、約$を取得するために、債務の取得に関連してさまざまな契約を締結しました
その後、オプションまたはは約$を送金しました
12
2024年9月13日、Optionorは、Acreage、ローリング・レンダー、および独立系の第三者貸し手（「その他の貸し手」）などと一連の取引を開始しました。このような取引に基づき、ローリング・レンダーが保有していたAcreageの負債はすべて、他の貸し手に買収されました。その他の貸し手による買収に続いて、オプションナー、その他の貸し手、およびAcreageなどは、2024年9月13日付けの第2の修正および再記載された信用契約（「第2のARCA」）に従って、第1ARCAを修正および再表示しました。第2ARCAおよび2024年9月13日にオプション保有者とその他の貸し手との間で締結された貸し手間の契約に従い、第2ARCAに基づいてオプション提供者に支払うべきすべての利息は、他の貸し手の同意を条件として、現金ではなく現物で支払う必要があります。第2次ARCAに基づき、2024年9月13日現在、オプション保有者には元本の総額が約$に相当します
キャノピーUSAの統合解除
2024年4月30日現在、上記の追加組織再編修正に関連する一連の取引（「キャノピーUSA取引」）の結果、Canopy GrowthはCanopy USAの財務結果を連結解除し、その日時点でCanopy USAに非支配権を持っています。キャノピーUSAの連結解除は、(i) 第2次A&R LLC契約の締結、(ii) 第2次A&R保護協定の締結、(iii) 信託取引の最初のトランシェクロージングの完了、(iii) キャノピーUSA理事会が被任命者で構成されるようキャノピーUSA理事会への3人目のメンバーの選任を含む信託取引の最初の完了後に行われました。トラスト、ホワイトマンさん、そして会社の。
Canopy GrowthがCanopy USAを連結解除した結果、持分法投資（注記11を参照）と公正価値で記録された売掛金（注記12を参照）が承認されました).
現金 |
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$ |
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その他の金融資産 |
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その他の資産 |
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その他の負債 |
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( |
) |
累積翻訳調整 |
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処分された純資産 |
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$ |
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キャノピーUSAにおける非支配持分の認識解除 |
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$ |
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持分法投資 |
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$ |
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ローンの売掛金を上げてください |
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以前の子会社の保有する非支配持分の総額 |
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$ |
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普通株式の発行 |
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$ |
( |
) |
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対価は現金で受け取りました |
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$ |
- |
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総対価額 |
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$ |
- |
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連結事業体の処分による利益 |
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$ |
|
|
Canopy USAの認識解除による利益は、認識されなくなった資産、負債、非支配持分の帳簿価額、発行された普通株式の価値、および持分法投資であるCanopy Elevate I LLC、Canopy Elevate II LLC、Canopy Elevate III LLC（総称して「Elevate」）であるキャノピーUSAの保有非支配持分の公正価値との差です。) ローン売掛金。認識解除による利益は、その他の収益（費用）、純額に反映されます。
4。バイオスチール
2023年9月14日、バイオスチールビジネスユニットの戦略的オプションを検討した結果、キャノピー・グロースはバイオスティール・スポーツ・ニュートリション社（「バイオスティール・カナダ」）の事業への資金提供を停止しました。BioSteel Canadaは、以下に基づいて手続き（「CCAA手続き」）を開始しました 企業債権者整理法 （「CCAA」）をオンタリオ州上級裁判所（商業リスト）（「CCAA裁判所」）に提訴し、米国破産法第15章に基づいてその手続きの承認を求め、取得しました。売却手続きを支援するために、CCAA裁判所はCCAAで義務付けられているモニターの任命を承認しました。
13
バイオスチール ビジネス部門全セクター、バイオスチールカナダを含むすべての運営を包括した戦略的意思決定が行われ、そのため、バイオスチールカナダの2023年9月14日除籍までのすべての期間のバイオスチール部門の結果、退出にかかるコストを含めたものが中断された運用として分類されました。
上記の理由により、キャノピーグロースはバイオスチール米国およびバイオスチール製造に対する支配的権益を持たず、2023年11月16日に効力を発する形で両社の除籍が行われました。バイオスチール米国およびバイオスチール製造の除籍および関連する減損損失は中断された運用からの損失として分類されました。
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期間は3ヶ月間 |
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終了した6ヶ月間 |
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9月30日, |
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9月30日, |
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9月30日, |
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9月30日, |
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2024 |
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2023 |
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2024 |
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2023 |
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純売上高 |
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$ |
- |
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$ |
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$ |
- |
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$ |
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売上原価（cogs） |
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- |
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- |
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66.8 |
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- |
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- |
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営業損失 |
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- |
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( |
) |
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- |
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( |
) |
その他の収益（費用）、純額1 |
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( |
) |
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( |
) |
||
所得税(費用)回復 |
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- |
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- |
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その他の当期純利益（損失） 、税引後 |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
||
1
バイオスチール企業への投資
バイオスチールカナダのCCAA手続きが完了しました。キャノピーグロースは、その他のバイオスチール米国およびバイオスチール製造の各々に
キャノピーグロースがバイオスチール企業から受け取る金額
バイオスチールカナダの除外処理の前、キャノピーグロースはバイオスチールカナダに対して主要な担保付きローンを提供しました。主要な担保付きローンとそれに対応する利子は、キャノピーグロースの合算財務諸表で2023年9月14日の除外日までには、企業間取引と見なされて除去されました。除外日時点では、主要な担保付きローンとそれに対応する利子は関連当事者取引と見なされ、キャノピーグロースの合算財務諸表でそれらの見積公正価値で認識されています。
バイオスチール米国およびバイオスチール製造の除外日時点で、キャノピーグロースはバイオスチール米国およびバイオスチール製造から法的に受領可能な残高を見積もられた公正価値で計上しています。
バイオスチール企業から法的に受領可能な残高は、その回収見込み額で測定されます。2024年9月30日時点ではバランスシートの受取残高は、BioSteel Entitiesから$です
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9月30日, |
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3月31日 |
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2024 |
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2024 |
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BioSteel Entitiesからの売掛金 |
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$ |
- |
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$ |
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中止された運営の総資産 |
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$ |
- |
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$ |
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中止された業務の負債合計 |
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$ |
- |
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$ |
- |
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14
5. 資産減損および再編による損失
2024年9月30日までの3か月間に、会社は資産減損および再編による損失を計上しました。これは、売却に関連する資産の非現金減損、従業員再編成コスト、および以前の再編成措置に関連するその他のコストに主に関連しています。
2024年9月30日までの6か月間に、会社は資産減損および再編による損失を計上しました。これは、売却に関連する資産の非現金減損、従業員再編成コスト、および以前の再編成措置に関連するその他のコストに主に関連しています。これは、関連退去契約の実行時に再構築リース施設の再計測に関連する利益によって部分的に相殺されました。
したがって、2024年9月30日までの3か月および6か月間に、会社は資産減損および再編による損失を認識しました $
6現金及び現金同等物
現金及び現金同等物の部品は以下の通りです：
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9月30日, |
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3月31日 |
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2024 |
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2024 |
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現金 |
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$ |
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$ |
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現預金 |
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$ |
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$ |
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7. 新規売テスト投資
短期投資の部品は次のようになります：
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9月30日, |
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3月31日 |
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||
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2024 |
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2024 |
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定期預金 |
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$ |
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$ |
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$ |
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$ |
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2024年9月30日時点の新規売投資の償却原価は $
8その他の債権、純額
売掛金の部品、正味は以下のとおりです：
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9月30日, |
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3月31日 |
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2024 |
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2024 |
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売掛金の純額 |
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$ |
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$ |
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消費税債権 |
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利息受取債権 |
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その他の債権 |
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$ |
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$ |
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2024年9月30日の売上債権には、貸倒引当金が含まれています $
9棚卸
在庫の構成は以下のとおりです:
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9月30日, |
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3月31日 |
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2024 |
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2024 |
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原材料、包装資材、消耗品 |
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$ |
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$ |
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作業中 |
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製品 |
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$ |
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$ |
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2024年9月30日終了の3か月および6か月間に、会社は売上原価に関連する棚卸の減損を計上しました $
15
10前払費用およびその他の資産
前払い経費とその他資産の部品は次の通りです:
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9月30日, |
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3月31日 |
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2024 |
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2024 |
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前払費用 |
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$ |
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$ |
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預金 |
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その他の資産 |
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$ |
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$ |
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11. 資本法投資
資本法投資の構成要素は次の通りです:
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9月30日, |
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3月31日 |
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2024 |
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2024 |
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Canopy 米国 |
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$ |
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$ |
- |
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$ |
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$ |
- |
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非議決権株式の所有を通じ、当社は Canopy 米国における出資を行っており、その出資は資本法投資として分類されます。当社は Canopy 米国への出資を公正値で処理することを選択しています。詳細はノート23を参照してください。 Canopy 米国の投資の公正値を決定する際に使用される評価手法と入力については、記載23を参照してください。
16
次の表は、その他の金融資産の変化を概説しています。重要な投資の公正価値がどのように計算されるかの詳細は、注釈に含まれています。 23.
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外国 |
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期初残高 |
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通貨 |
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期初残高 |
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3月31日 |
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公正な価値 |
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翻訳 |
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9月30日, |
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事業体 |
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インストゥルメント |
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2024 |
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追加 |
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変更 |
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調整後 |
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他 |
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2024 |
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敷地面積1 |
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固定株式オプションと浮動株式契約 |
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$ |
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$ |
- |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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$ |
- |
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TerrAscend 可交換株 |
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交換可能株式 |
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- |
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( |
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- |
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TerrAscend - 2022年12月 |
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warrants |
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( |
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テラアセンド |
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オプション |
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- |
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( |
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Wana |
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オプション |
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- |
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- |
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( |
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- |
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ジェティ |
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オプション |
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- |
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- |
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( |
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- |
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||
エーカレッジ・ヘンプコ1 |
|
社債 |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
- |
|
||
アクリッジ債オプションプレミアム |
|
オプション |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
- |
|
|||
アクリッジ税金受取契約 |
|
他 |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
- |
|
||
Acreage Debt |
|
貸付金 |
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
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|
||
Elevate loan receivable2 |
|
貸付金 |
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
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|
||
その他 - 当期純利益での公正価値による評価（損失） |
|
その他 |
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- |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|||
その他 - 投資目的で保有されると分類されます |
|
貸付金 |
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|
|
|
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- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
1 Acreage修正取引およびAcreage Hempcoに関する情報については、ノート27を参照してください。
2 米国Canopyの財務諸表の除外に伴い、前述の償却原価計上だったElevate貸し倒れ債権は現在公正価値で計上されています。米国Canopyの除外からの保有非支配持分の再計測は、ノート3で説明されている連結会社の譲渡利益の一部です。.
会社の財務諸表内で米国Canopyの財務結果の除外に関する情報については、ノート3を参照してください。2024年4月30日に米国Canopyの財務結果の除外が行われ、Acreage、Wana、Jetty、TerrAscendの浮動株などを含む特定の米国大麻投資を会社が除去しました。
Acreage債務
2024年6月3日、会社は、2021年12月16日付与信契約を策定者およびAcreageの与信契約当事者とのオプション契約に基づいて、2024年10月24日付与信契約の第1次修正および2023年4月28日付与信契約の第2次修正により修正されたものに連動する債務取得を完了しました。
策定者は、債権取得に関するさまざまな契約を締結し、2024年4月28日、特定の貸し手から取得債務を取得するためにDollarsの引き換えとしていくつかのLendersより取得債権を取得しました。
The Optionor subsequently transferred approximately $
On September 13, 2024, the Optionor entered into a series of transactions with, among others, Acreage, the Rolling Lender and the Other Lender. Pursuant to such transactions, all of Acreage's indebtedness held by the Rolling Lender was acquired by the Other Lender. Following the acquisition by the Other Lender, the Optionor, the Other Lender and Acreage, among others, entered into the Second ARCA. Pursuant to the Second ARCA and an agreement among lenders entered into on September 13, 2024 between, among others, the Optionor and the Other Lender, all interest owing to the Optionor under the Second ARCA is, subject to the consent of the Other Lender, to be paid-in-kind and not in cash. Under the Second ARCA, as of September 13, 2024, the Optionor was owed an aggregate principal amount equal to approximately $
17
13資産、設備、および施設
不動産、プラントおよび機械の構成は以下の通りです：
|
|
9月30日, |
|
|
3月31日 |
|
||
|
|
2024 |
|
|
2024 |
|
||
建物と温室 |
|
$ |
|
|
$ |
|
||
製造および倉庫設備 |
|
|
|
|
|
|
||
借地改良費 |
|
|
|
|
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|
||
オフィスおよび実験室の機器 |
|
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|
||
コンピューター機器 |
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||
土地 |
|
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|
||
リース資産 |
|
|
|
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|
||
建物と温室 |
|
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|
||
資産処理中 |
|
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|
|
|
|
||
|
|
|
|
|
|
|
||
減価償却累計額より |
|
|
( |
) |
|
|
( |
) |
|
|
$ |
|
|
$ |
|
||
2024年9月30日終了の3か月と6か月に含まれる売上原価（cogs）に含まれる減価償却費は $
14無形資産
無形資産の部品は以下の通りです：
|
|
2024年9月30日 |
|
|
2024年3月31日 |
|
||||||||||
|
|
手数料 |
|
|
収益 |
|
|
手数料 |
|
|
収益 |
|
||||
|
|
帳簿価額 |
|
|
帳簿価額 |
|
|
帳簿価額 |
|
|
帳簿価額 |
|
||||
|
|
数量 |
|
|
数量 |
|
|
数量 |
|
|
数量 |
|
||||
Intellectual property |
|
|
|
|
|
|
|
|
|
|
|
|
||||
知的財産 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
$ |
|
|
|
|
|
|
|
|
|
|
|
|
||||
運転免許証 |
|
|
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|
|
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|
|
|
|
||||
Total intangible assets |
|
|
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|
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|
|
|
|
|
|
||||
ブランド |
|
|
|
|
|
|
|
|
|
|
|
|
||||
処理中の償却可能な無形資産 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
総計 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
不定期使用の無形資産 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
取得ブランド |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
無形資産合計 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
2024年9月30日終了の3か月および6か月に含まれる売上原価（cogs）に含まれる償却費は $
15. GOODWILL
善意の持分の金額の変動は次の通りです：
残高、2023年3月31日 |
|
$ |
|
|
減損損失 |
|
|
( |
) |
外貨翻訳調整 |
|
|
( |
) |
2024年3月31日のバランスシート |
|
$ |
|
|
外貨翻訳調整 |
|
|
|
|
2024年9月30日の残高 |
|
$ |
|
18
会社は2024年9月30日までの6ヶ月間にイベントが発生したか状況が変化したとは信じていません。これにより、Storz＆Bickel®（「Storz＆Bickel」）の帳簿価額を下回る可能性の方が高いとは思われませんでした。したがって、会社は、2024年9月30日時点でのStorz＆Bickel報告部門に対する定量的な商標インペアメントアセスメントが必要ないと結論づけました。Storz＆Bickel報告部門に関連する商標の帳簿価値は $
会社は、次回の年次商標インペアメント分析を2025年3月31日に実施する義務があります。これは、報告部門の公正価値が帳簿価額を下回る可能性が高いと思われるイベントが発生した場合、または状況が変化した場合、それ以前に実施する必要があります。
16. その他の未払経費および負債
その他の未払費用および負債の構成は以下の通りです：
|
|
9月30日, |
|
|
3月31日 |
|
||
|
|
2024 |
|
|
2024 |
|
||
従業員報酬 |
|
$ |
|
|
$ |
|
||
税金と政府料金 |
|
|
|
|
|
|
||
専門家料金 |
|
|
|
|
|
|
||
他 |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
17借金
負債の部品は次の通りです:
|
|
|
|
9月30日, |
|
|
3月31日 |
|
||
|
|
満期日 |
|
2024 |
|
|
2024 |
|
||
信用施設 |
|
|
|
|
|
|
|
|||
原資額 |
|
|
|
|
|
|
|
|
||
未払利息 |
|
|
|
|
|
|
|
|
||
遅延した融資費用 |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||
最高の転換社債 |
|
|
|
|
|
|
|
|||
ACCRETION社債 |
|
|
|
|
|
|
|
|||
2024年5月転換社債 |
|
|
|
|
|
|
- |
|
||
約束手形 |
|
|
|
- |
|
|
|
|
||
その他の revolving debt facility, loan, and financings |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
当期債務の一部 |
|
|
|
|
( |
) |
|
|
( |
) |
非流動負債部分：18,876 |
|
|
|
$ |
|
|
$ |
|
||
グリーンブルック・ｔｍｓ・インクは、Madryn Asset Management、LPの子会社に対する信用施設の債務契約条件を満たすことができず、債務の加速の可能性があることを示す。
2021年3月18日、会社は与信契約（以下「与信契約」という）を締結しました。 提供する
2024年4月1日、Yield10 Bioscience, Inc. は、2023年12月31日に終了した四半期および財政年度の財務結果を発表したプレスリリースを発行しました。プレスリリースのコピーは、 Exhiebition99.1として添付されています。これらの情報、Exhiebition99.1を含め、本書類に記載されたものは、1934年証券取引法18条の目的で「ファイルされたもの」と見なされるものではなく、1933年証券法または証券取引法のいずれかに基づく申請書に参照される場合を除き、参照されるものとは明示的に指定されていなければなりません。July 13, 2023, as part of the Company's balance sheet deleveraging initiatives, the Company entered into agreements with certain of its lenders under the Credit Agreement pursuant to which certain additional amendments were made to the Credit Agreement (the Credit Agreement, as amended as of July 13, 2023, is referred to herein as the "Amended Credit Agreement"). The
19
修正されました 信用契約により、会社はクレジットファシリティに基づく元本債務を、米ドル相当の米ドル相当額で前払いまたは買い戻す必要がありました
2023年8月11日と2023年9月14日のそれぞれに、修正クレジット契約の条件に従い、当社は、完了した資産売却による一定の純収入（「2024年第2四半期の返済」）を使用して、クレジットファシリティに基づいて未払いの元本を追加買い戻しました。2024年第2四半期のペイダウンにより、元本総額が減額されました
2023年11月28日と2023年12月27日のそれぞれに、修正クレジット契約の条件に従い、当社は、完了した資産売却による特定の純収入（「2024年第3四半期の返済」）を使用して、クレジットファシリティに基づく追加の未払いの元本を買い戻し、必要に応じて返済しました。2024年第3四半期のペイダウンにより、元本総額が減額されました
2024年2月21日、当社はクレジットファシリティに基づいて未払いの元本を追加買い戻しました（「2024年第4四半期の返済」）。2024年第4四半期のペイダウンにより、元本総額が減額されました
2024年4月29日と2024年6月28日に、当社はクレジットファシリティに基づいて未払いの元本を追加で買い戻しました（「2025年第1四半期のペイダウン」）。2025年第1四半期のペイダウンにより、元本総額が減額されました
2024年8月8日、当社は、2022年10月24日および2023年7月13日に改正された2021年3月18日付けのクレジット契約に基づき、クレジットファシリティのすべての貸し手との間で、当社と、借り手である貸し手である貸し手である11065220 Canada Inc. と、管理および担保代理人としての全国協会であるウィルミントン・トラストとの間で改正（「修正契約」）を締結しました。。修正契約の条件に従い、クレジットファシリティの満期日は
さらに、2025年3月31日以前に同じ条件でオプションの前払いが行われた場合、クレジットファシリティの満期日はさらに2027年9月18日まで延長されます。修正契約には、特定の否定契約、事業売却や債務不履行が発生した場合の返済条項の変更も含まれています。
2024年9月27日、当社はクレジットファシリティに基づいて未払いの元本を追加買い戻しました（「2025年第2四半期の返済」）。2025年第2四半期のペイダウンにより、元本総額は$削減されました
2024年8月8日まで、クレジットファシリティは満期になりました
約束手形
2023年4月13日、当社は、コンステレーション・ブランズ株式会社（「CBI」）の関連会社であるグリーンスター・カナダ・インベストメント・リミテッド・パートナーシップ（「グリーンスター」）と、ドルを取得およびキャンセルするための交換契約（「2023年4月交換契約」）を締結しました。
2024年4月18日、当社はグリーンスターと交換契約（「2024年4月の交換契約」）を締結しました。これに従ってグリーンスターは約ドルを換算しました
20
Share equal to $
Supreme Cannabis Convertible Debentures and Accretion Debentures
On October 19, 2018, The Supreme Cannabis Company, Inc. (“Supreme Cannabis”) entered into an indenture with Computershare Trust Company of Canada (the “Trustee”) pursuant to which Supreme Cannabis issued
In addition, on September 9, 2020, Supreme Cannabis issued new senior unsecured non-convertible debentures (the “Accretion Debentures”). The principal amount began at $nil and accreted at a rate of
As a result of the completion of an arrangement on June 22, 2021 by the Company and Supreme Cannabis, pursuant to which the Company acquired
In connection with the Supreme Arrangement, the Company, Supreme Cannabis and the Trustee entered into a supplemental indenture whereby the Company agreed to issue common shares upon conversion of any Supreme Debenture.
Prior to September 9, 2023, the Supreme Debentures were not redeemable. Beginning on and after September 9, 2023, Supreme Cannabis may from time to time, upon providing 60 days prior written notice to the Trustee, redeem the Supreme Debentures outstanding, provided that the Accretion Debentures have already been redeemed in full.
During the three and six months ended September 30, 2024, principal payments on Accretion Debentures totaled $
On August 20, 2024, the Company entered into an exchange and subscription agreement (the “August 2024 Supreme Convertible Debt Exchange”) with a single institutional investor (the “August 2024 Investor”) pursuant to which, among other things, the August 2024 Investor delivered to the Company approximately $
May 2024 Convertible Debenture
On May 2, 2024, the Company entered into an exchange and subscription agreement (the “Exchange and Subscription Agreement”) with a single institutional investor (the “May 2024 Investor”) pursuant to which, among other things, the May 2024 Investor delivered to the Company approximately $
21
The May 2024 Convertible Debenture is convertible into Canopy Growth common shares at the option of the May 2024 Investor at a conversion price equal to $
18. OTHER LIABILITIES
The components of other liabilities are as follows:
|
|
As at September 30, 2024 |
|
|
As at March 31, 2024 |
|
||||||||||||||||||
|
|
Current |
|
|
Long-term |
|
|
Total |
|
|
Current |
|
|
Long-term |
|
|
Total |
|
||||||
Lease liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Acquisition consideration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Refund liability |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Settlement liabilities and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
19. SHARE CAPITAL
CANOPY GROWTH
Authorized
An unlimited number of common shares.
(i) Equity financings
On June 6, 2024, the Company established an at-the-market equity program that allows it to sell up to US$
22
(ii) Other issuances of common shares and share capital transactions
During the six months ended September 30, 2024, the Company had the following other issuances and share capital transactions:
|
|
Number of common shares |
|
|
Share |
|
|
Share |
|
|||
Other issuances and share issue costs |
|
|
- |
|
|
$ |
( |
) |
|
$ |
- |
|
Total |
|
|
- |
|
|
$ |
( |
) |
|
$ |
- |
|
During the six months ended September 30, 2023, the Company had the following other issuances and share capital transactions:
|
|
Number of common shares1 |
|
|
Share |
|
|
Share |
|
|||
Settlement of convertible debentures |
|
|
|
|
$ |
|
|
$ |
- |
|
||
Settlement of Canopy Notes |
|
|
|
|
|
|
|
|
- |
|
||
Settlement of debentures |
|
|
|
|
|
|
|
|
- |
|
||
Other issuances and share issue costs |
|
|
|
|
|
|
|
|
( |
) |
||
Total |
|
|
|
|
$ |
|
|
$ |
( |
) |
||
1
(iii) Warrants
|
|
Number of |
|
|
Average |
|
|
Warrant |
|
|||
Balance outstanding at March 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|||
Issuance of warrants |
|
|
|
|
|
|
|
|
|
|||
Exercise of warrants |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance outstanding at September 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|||
|
|
Number of |
|
|
Average |
|
|
Warrant |
|
|||
Balance outstanding at March 31, 20231 |
|
|
|
|
$ |
|
|
$ |
|
|||
Issuance of warrants from private placement |
|
|
|
|
|
|
|
|
|
|||
Balance outstanding at September 30, 20231 |
|
|
|
|
$ |
|
|
$ |
|
|||
1
2
(iv) Issuances of exchangeable shares
On April 18, 2024, Greenstar and CBG Holdings LLC (“CBG”), indirect, wholly-owned subsidiaries of CBI exchanged all
20. SHARE-BASED COMPENSATION
CANOPY GROWTH CORPORATION SHARE-BASED COMPENSATION PLAN
On September 25, 2023, the Company's shareholders approved a new Omnibus Equity Incentive Plan (the "Omnibus Equity Incentive Plan") pursuant to which the Company can issue share-based long-term incentives. The Omnibus Equity Incentive Plan replaces the Company’s previous equity incentive plan, which was originally approved by the Company’s shareholders on July 30, 2018 (the “Previous Equity Incentive Plan”, together with the Omnibus Equity Incentive Plan, the “Incentive Plans”). The approval of
23
the Omnibus Equity Incentive Plan and replacement of the Previous Equity Incentive Plan are detailed in the Company’s annual definitive proxy statement filed with the Securities and Exchange Commission on August 9, 2023.
All directors, employees and consultants of the Company are eligible to receive awards of common share purchase options (“Options”), restricted share units (“RSUs”), deferred share units or shares-based awards (collectively, the “Awards”) under the Omnibus Equity Incentive Plan, subject to certain limitations. The Omnibus Equity Incentive Plan allows for a maximum term of each Option to be
The Omnibus Equity Incentive Plan was adopted on September 25, 2023.
The maximum number of common shares reserved for issuance upon the exercise or vesting, as applicable, of Awards granted pursuant to the Incentive Plans is
The Omnibus Equity Incentive Plan is administered by the Corporate Governance, Compensation and Nominating Committee of the Board (the “CGCN Committee”) which establishes in its discretion, among other things, exercise prices, at not less than the Fair Market Value (as defined in the Omnibus Equity Incentive Plan) at the date of grant, vesting terms and expiry dates (set at up to
The following is a summary of the changes in the Options outstanding during the six months ended September 30, 2024:
|
|
Options |
|
|
Weighted |
|
||
Balance outstanding at March 31, 2024 |
|
|
|
|
$ |
|
||
Options granted |
|
|
|
|
|
|
||
Options exercised |
|
|
( |
) |
|
|
|
|
Options expired/forfeited |
|
|
( |
) |
|
|
|
|
Balance outstanding at September 30, 2024 |
|
|
|
|
$ |
|
||
The following is a summary of the Options outstanding as at September 30, 2024:
|
|
Options Outstanding |
|
|
Options Exercisable |
|
||||||||||
|
|
|
|
|
Weighted Average |
|
|
|
|
|
Weighted Average |
|
||||
|
|
|
|
|
Remaining |
|
|
|
|
|
Remaining |
|
||||
|
|
Outstanding at |
|
|
Contractual Life |
|
|
Exercisable at |
|
|
Contractual Life |
|
||||
Range of Exercise Prices |
|
September 30, 2024 |
|
|
(years) |
|
|
September 30, 2024 |
|
|
(years) |
|
||||
$ |
|
|
|
|
|
|
|
|
|
|
|
|
||||
$ |
|
|
|
|
|
|
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|
||||
$ |
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|
||||
|
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|
||||
1 Prior period Options and exercise price amounts have been retrospectively adjusted to reflect the Share Consolidation, which became effective on December 15, 2023. See Note 2 for details.
At September 30, 2024, the weighted average exercise price of the Options outstanding and Options exercisable was $
The Company recorded $
24
The Company uses the Black-Scholes option pricing model to establish the fair value of Options granted during the three months ended September 30, 2024 and 2023, on their measurement date by applying the following assumptions:
|
|
September 30, |
|
September 30, |
|
|
2024 |
|
2023 |
Risk-free interest rate |
|
|
- |
|
Expected life of options (years) |
|
|
- |
|
Expected volatility |
|
|
- |
|
Expected forfeiture rate |
|
|
- |
|
Expected dividend yield |
|
|
- |
|
Black-Scholes value of each Option |
|
$ |
|
- |
Volatility was estimated by using the historical volatility of the Company. The expected life in years represents the period of time that Options granted are expected to be outstanding. The risk-free rate was based on zero coupon Canada government bonds with a remaining term equal to the expected life of the Options.
For the three and six months ended September 30, 2024, the Company recorded $
The following is a summary of the changes in the Company’s RSUs and PSUs during the six months ended September 30, 2024:
|
|
Number of RSUs |
|
|
Balance outstanding at March 31, 2024 |
|
|
|
|
RSUs and PSUs granted |
|
|
|
|
RSUs and PSUs released |
|
|
( |
) |
RSUs and PSUs cancelled and forfeited |
|
|
( |
) |
Balance outstanding at September 30, 2024 |
|
|
|
|
21. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated other comprehensive income includes the following components:
|
|
Foreign currency translation adjustments |
|
|
Changes of own credit risk of financial liabilities |
|
|
Accumulated other comprehensive income (loss) |
|
|||
As at March 31, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Disposal of consolidated entities |
|
|
|
|
|
- |
|
|
|
|
||
Extinguishment of promissory note and issuance of exchangeable shares |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Other comprehensive income |
|
|
|
|
|
- |
|
|
|
|
||
As at September 30, 2024 |
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
( |
) |
|
|
Foreign currency translation adjustments |
|
|
Changes of own credit risk of financial liabilities |
|
|
Accumulated other comprehensive income (loss) |
|
|||
As at March 31, 2023 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Settlement of unsecured senior notes, net of deferred income tax |
|
|
- |
|
|
|
|
|
|
|
||
Other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
As at September 30, 2023 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
22. NONCONTROLLING INTERESTS
The net change in the noncontrolling interests is as follows:
|
|
Other |
|
|
Total |
|
||
As at March 31, 2024 |
|
$ |
|
|
$ |
|
||
Comprehensive income (loss) |
|
|
- |
|
|
|
- |
|
Canopy USA Transaction |
|
|
( |
) |
|
|
( |
) |
As at September 30, 2024 |
|
$ |
- |
|
|
$ |
- |
|
25
|
|
BioSteel |
|
|
Other |
|
|
Total |
|
|||
As at March 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Comprehensive loss |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Net loss attributable to redeemable noncontrolling interest |
|
|
|
|
|
- |
|
|
|
|
||
Share-based compensation |
|
|
|
|
|
- |
|
|
|
|
||
Ownership changes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
As at September 30, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
23. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value measurements are made using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value:
The fair value measurement is categorized in its entirety by reference to its lowest level of significant input.
The Company records cash, accounts receivable, interest receivable and accounts payable, and other accrued expenses and liabilities at cost. The carrying values of these instruments approximate their fair value due to their short-term maturities. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.
Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis may include items such as property, plant and equipment, goodwill and other intangible assets, equity and other investments and other assets. The Company determines the fair value of these items using Level 3 inputs, as described in the related sections below.
The following table represents the Company's financial assets and liabilities measured at estimated fair value on a recurring basis:
|
|
Fair value measurement using |
|
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|
||||||||||
|
|
Quoted |
|
|
Significant |
|
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|
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|
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|
||||
|
|
prices in |
|
|
other |
|
|
Significant |
|
|
|
|
||||
|
|
active |
|
|
observable |
|
|
unobservable |
|
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|
|
||||
|
|
markets |
|
|
inputs |
|
|
inputs |
|
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|
||||
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
Total |
|
||||
September 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term investments |
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
||
Restricted short-term investments |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Equity method investments |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Other financial assets |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term investments |
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
||
Restricted short-term investments |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Other financial assets |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Other liabilities |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
26
The following table summarizes the valuation techniques and significant unobservable inputs in the fair value measurement of significant level 3 financial instruments:
|
Financial asset / financial liability |
|
Valuation techniques |
|
Significant unobservable inputs |
|
Relationship of unobservable inputs to fair value |
|
Canopy USA Equity Method Investment |
|
|
|
|||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
Elevate Loan Receivable |
|
|
|
|||
|
Acreage Debt |
|
|
|
24. REVENUE
Revenue is disaggregated as follows:
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Canada cannabis |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canadian adult-use cannabis1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Canadian medical cannabis2 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
International markets cannabis |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Storz & Bickel |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
This Works |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Other |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
1
2
The Company recognizes variable consideration related to estimated future product returns and price adjustments as a reduction of the transaction price at the time revenue for the corresponding product sale is recognized. Net revenue reflects actual returns and variable consideration related to estimated returns and price adjustments in the amount of $
27
25. OTHER INCOME (EXPENSE), NET
Other income (expense), net is disaggregated as follows:
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Fair value changes on other financial assets |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Fair value changes on equity method investments |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
Fair value changes on debt |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Fair value changes on acquisition related contingent |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Gain (charges) related to settlement of debt |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Foreign currency gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
26. INCOME TAXES
There have been no material changes to income tax matters in connection with normal course operations during the six months ended September 30, 2024.
The Company is subject to income tax in numerous jurisdictions with varying income tax rates. During the most recent period ended and the fiscal year to date, there were no material changes to the statutory income tax rates in the taxing jurisdictions where the majority of the Company’s income for tax purposes was earned, or where its temporary differences or losses are expected to be realized or settled. Although statutory income tax rates remain stable, the Company’s effective income tax rate may fluctuate, arising as a result of the Company’s evolving footprint, discrete transactions and other factors that, to the extent material, are disclosed in these financial statements.
The Company continues to believe that the amount of unrealized tax benefits appropriately reflects the uncertainty of items that are or may in the future be under discussion, audit, dispute or appeal with a tax authority or which otherwise result in uncertainty in the determination of income for tax purposes. If appropriate, an unrealized tax benefit will be realized in the reporting period in which the Company determines that realization is not in doubt. Where the final determined outcome is different from the Company’s estimate, such difference will impact the Company’s income taxes in the reporting period during which such determination is made.
27. ACREAGE ARRANGEMENT
On September 23, 2020, the Company and Acreage entered into a second amendment (the “Acreage Amending Agreement”) to the arrangement agreement (the “Original Acreage Arrangement Agreement”) and plan of arrangement (the “Original Acreage Arrangement”) between the Company and Acreage dated April 18, 2019, as amended on May 15, 2019. In connection with the Acreage Amending Agreement, the Company and Acreage implemented an amended and restated plan of arrangement (the “Acreage Amended Arrangement”) on September 23, 2020. Pursuant to the terms of the Original Acreage Arrangement, shareholders of Acreage and holders of certain securities convertible into the existing Acreage subordinated voting shares as of June 26, 2019, received an immediate aggregate total payment of US$
The Acreage Amended Arrangement provides for, among other things, the following:
28
See Note 3 for information regarding the Reorganization. In connection with the Reorganization and the Floating Share Arrangement Agreement, Canopy Growth irrevocably waived the Acreage Floating Option and subject to, among other things, the terms of the Floating Share Arrangement Agreement, Canopy USA will acquire all of the issued and outstanding Floating Shares. Following the implementation of the Reorganization, Canopy USA, holds certain U.S. cannabis investments previously held by the Company, which is expected to enable Canopy USA to consummate the acquisition of Acreage. On June 4, 2024, the Acreage Option was exercised and the closing of the transaction contemplated by the Acreage Option remains subject to certain closing conditions.
In connection with the Acreage Amended Arrangement, on September 23, 2020, an affiliate of the Company advanced US$
28. COMMITMENTS AND CONTINGENCIES
Legal proceedings
In the ordinary course of business, the Company is at times subject to various legal proceedings and disputes, including the proceedings specifically discussed below. The Company assesses the liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, a liability is recorded in the consolidated financial statements. Where a loss is only reasonably possible or the amount of the loss cannot be reasonably estimated, no liability is recorded in the consolidated financial statements, but disclosures, as necessary, are provided.
For the three months ended September 30, 2024 there have been no material changes with respect to provisions relating to legal proceedings for the Company.
29. SEGMENT INFORMATION
Reportable segments
The Company reports its financial results for the following
29
These segments reflect how the Company's operations are managed, how the Company's Chief Executive Officer, who is the Chief Operating Decision Maker (“CODM”), allocates resources and evaluates performance, and how the Company's internal management financial reporting is structured. The Company's CODM evaluates the performance of these segments, with a focus on (i) segment net revenue, and (ii) segment gross margin as the measure of segment profit or loss. Accordingly, information regarding segment net revenue and segment gross margin for the comparative periods has been restated to reflect the aforementioned change in reportable segments. The remainder of the Company's operations include revenue derived from, and cost of sales associated with, the Company's non-cannabis extraction activities and other ancillary activities; these are included within "other".
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Segmented net revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canada cannabis |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
International markets cannabis |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Storz & Bickel |
|
|
|
|
|
|
|
|
|
|
|
|
||||
This Works |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Other |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Segmented gross margin: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canada cannabis |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
International markets cannabis |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Storz & Bickel |
|
|
|
|
|
|
|
|
|
|
|
|
||||
This Works |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Other |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Share-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss (gain) on asset impairment and restructuring |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Operating loss from continuing operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other income (expense), net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Loss from continuing operations before incomes taxes |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Asset information by segment is not provided to, or reviewed by, the Company’s CODM as it is not used to make strategic decisions, allocate resources, or assess performance.
Entity-wide disclosures
Disaggregation of net revenue by geographic area:
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
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September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Germany |
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United States |
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Disaggregation of property, plant and equipment by geographic area:
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September 30, |
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March 31, |
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2024 |
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2024 |
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Canada |
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Germany |
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For the three months ended September 30, 2024,
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For the six months ended September 30, 2024,
30. SUBSEQUENT EVENTS
ATM Program
Since September 30, 2024, the Company sold an additional
Credit Facility Paydown
On October 16, 2024, the Company made an early prepayment under its Credit Facility in an aggregate principal amount equal to US$
31
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Introduction
This Management’s Discussion and Analysis (“MD&A”) should be read together with other information, including our unaudited condensed interim consolidated financial statements and the related notes to those statements included in Part I, Item 1 of this Quarterly Report (the “Interim Financial Statements”), our consolidated financial statements appearing in our Annual Report on Form 10-K for the year ended March 31, 2024 (the “Annual Report”), Part I, Item 1A, Risk Factors, of the Annual Report and Part II, Item 1A, Risk Factors, of this Quarterly Report. This MD&A provides additional information on our business, recent developments, financial condition, cash flows and results of operations, and is organized as follows:
We prepare and report our Interim Financial Statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Our Interim Financial Statements, and the financial information contained herein, are reported in thousands of Canadian dollars, except share and per share amounts or as otherwise stated. We have determined that the Canadian dollar is the most relevant and appropriate reporting currency as, despite continuing shifts in the relative size of our operations across multiple geographies, the majority of our operations are conducted in Canadian dollars and our financial results are prepared and reviewed internally by management in Canadian dollars.
Special Note Regarding Forward-Looking Statements
This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and other applicable securities laws, which involve certain known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,” “strategy,” “estimate,” “expect,” “project,” “projections,” “forecasts,” “plans,” “seeks,” “anticipates,” “potential,” “proposed,” “will,” “should,” “could,” “would,” “may,” “likely,” “designed to,” “foreseeable future,” “believe,” “scheduled” and other similar expressions. Our actual results or outcomes may differ materially from those anticipated. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
Forward-looking statements include, but are not limited to, statements with respect to:
32
33
Certain of the forward-looking statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.
The forward-looking statements contained herein are based upon certain material assumptions, including: (i) management’s perceptions of historical trends, current conditions and expected future developments; (ii) our ability to generate cash flow from operations; (iii) general economic, financial market, regulatory and political conditions in which we operate; (iv) the production and manufacturing capabilities and output from our facilities, strategic alliances and equity investments; (v) consumer interest in our products; (vi) competition; (vii) anticipated and unanticipated costs; (viii) government regulation of our activities and products including but not limited to the areas of taxation and environmental protection; (ix) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; (x) our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xi) our ability to conduct operations in a safe, efficient and effective manner; (xii) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; and (xiii) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.
By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this Quarterly Report and other reports we file with, or furnish to, the Securities and Exchange Commission (the “SEC”) and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, our limited operating history; our ability to continue as a going concern; risks that we may be required to write down intangible assets, including goodwill, due to impairment; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); our ability to maintain an effective system of internal control; the diversion of management time on matters related to Canopy USA; the ability of parties to certain transactions to receive, in a timely manner and on satisfactory terms, the necessary regulatory approvals; the risks that the Trust’s future ownership interest in Canopy USA is not quantifiable, and the Trust may have significant ownership and influence over Canopy USA; the risks relating to the conditions set forth in the Floating Share Arrangement Agreement and the Existing Acreage Arrangement Agreement not being satisfied or waived; the risks related to Acreage’s financial statements expressing doubt about its ability to continue as a going concern; the risks in the event that Acreage cannot satisfy its debt obligations as they become due; volatility in and/or degradation of general economic, market, industry or business conditions; risks relating to our current and future operations in emerging markets; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis products in vaping devices; risks and uncertainty regarding future product development; changes in regulatory requirements in relation to our business and products; our reliance on licenses issued by and contractual arrangements with various federal, state and provincial governmental authorities; inherent uncertainty associated with projections; future levels of revenues and the impact of increasing levels of competition; third-party manufacturing risks; third-party transportation risks; inflation risks; our exposure to risks related to an agricultural business, including wholesale price volatility and variable product quality; changes in laws, regulations and guidelines and our compliance with such laws, regulations and guidelines; risks relating to inventory write downs; risks relating to our ability to refinance debt as and when required on terms favorable to us and to comply with covenants contained in our debt facilities and debt instruments; risks associated with jointly owned investments; our ability to manage disruptions in credit markets or changes to our credit ratings; the success or timing of completion of ongoing or anticipated capital or maintenance projects; risks related to the integration of acquired businesses; the timing and manner of the legalization of cannabis in the United States; business strategies, growth opportunities and expected investment; counterparty risks and liquidity risks that may impact our ability to obtain loans and other credit facilities on favorable terms; the potential effects of judicial, regulatory or other proceedings, litigation or threatened litigation or proceedings, or reviews or investigations, on our business, financial condition, results of operations and cash flows; risks associated with divestment and restructuring; the anticipated effects of actions of third parties such as competitors, activist investors or federal, state, provincial, territorial or local regulatory authorities, self-regulatory organizations, plaintiffs in litigation or persons threatening litigation; consumer demand for cannabis and hemp products; the implementation and effectiveness of key personnel changes; risks related to stock exchange restrictions; risks related to the protection and enforcement of our intellectual property rights; the risks related to our exchangeable shares (the “Exchangeable Shares”) having different rights from our common shares and there may never be a trading market for the Exchangeable Shares; future levels of capital, environmental or
34
maintenance expenditures, general and administrative and other expenses; and the factors discussed under the heading “Risk Factors” in the Annual Report and in Item 1A of Part II of this Quarterly Report. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.
Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position, and cash flows as of and for periods ended on certain dates and to present information about management’s current expectations and plans relating to the future, and the reader is cautioned that the forward-looking statements may not be appropriate for any other purpose. While we believe that the assumptions and expectations reflected in the forward-looking statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-looking statements are made as of the date they are made and are based on the beliefs, estimates, expectations, and opinions of management on that date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by law. The forward-looking statements contained in this Quarterly Report and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees, and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements.
Part 1 - Business Overview
We are a world-leading cannabis company which produces, distributes, and sells a diverse range of cannabis and cannabis related products. Cannabis products are principally sold for adult-use and medical purposes under a portfolio of distinct brands. Our core operations are in Canada, Europe and Australia and we hold a significant non-controlling, non-voting interest in an entity that participates in the sale of cannabis and hemp derived products in the United States.
Using a consumer-driven approach, our portfolio delivers diverse products that offer experiences for occasions our consumers seek. Our mainstream and premium branded product portfolio includes multiple cannabis formats, such as high-quality dried flower, oils, softgel capsules, infused beverages, edibles and topical formats, as well as vaporizer devices, in addition to cannabis accessories, designed to meet the needs of consumers worldwide.
Our cannabis cultivation operations are focused in two facilities, our greenhouse facility in Kincardine, Ontario and the DOJA facility in Kelowna, British Columbia. We believe that the cultivation capacity in the Kincardine facility and the DOJA facility, as well as externally sourced cannabis flower supply can meet the current demand for our premium dried flower. The receipt of our European Union Good Manufacturing Practices (“EU GMP”) certification at the Kincardine facility enables us to continue exporting certified medical cannabis to medical markets in Europe as well as other medical cannabis markets around the world.
Our licensed operational capacity in Canada includes advanced manufacturing capability for oil and softgel encapsulation, pre-rolled joints (“PRJ”) (infused and non-infused), and hash production, which is primarily completed at our Smiths Falls, Ontario facility. Through our in-house manufacturing capabilities of adult-use cannabis products, we can process and package bulk cannabis flower, PRJ and vape products, whether internally or externally sourced, into high quality cannabis products. Our remaining products are manufactured through an adaptive third-party sourcing model for all cannabis beverages, edibles, and extracts. We are confident that our production and manufacturing capabilities and know-how are sufficient to meet the diverse needs of our adult-use and medical cannabis consumers in Canada.
Today, we offer a broad portfolio of brands and products and continue to expand our portfolio to include new innovative cannabis products and formats. We maintain agreements to supply all Canadian provinces and territories with our adult-use products for sale through their established retail distribution systems. Through our Spectrum Therapeutics website, patients who have registered with Spectrum Therapeutics are able to purchase products online and have them shipped directly to the address indicated on their registration document. We have developed several programs to improve access to medical cannabis for authorized patients through income-tested compassionate pricing program whereby eligible low-income patients may obtain a 20% discount on regular prices of medical cannabis. We also provide support through our customer care team to help patients identify if their medication is covered under the growing number of private health plans that have a medical cannabis component.
Our Canopy Medical and Spectrum Therapeutics brands continue to serve the medical market in Europe and Australia. Our European medical cannabis business operates in accordance with the specific regulatory framework in place in the relevant jurisdictions, including supplying EU GMP compliant pharmaceutical products. In Australia, Spectrum Therapeutics continues to support Australian medical patients through imported products.
We also offer premier herbal vaporizer products under the Storz & Bickel® (“Storz & Bickel”) brand.
Our cannabis products contain THC, CBD, or a combination of these two cannabinoids which are found in the cannabis sativa plant species. THC is the primary psychoactive or intoxicating cannabinoid found in cannabis. We also refer throughout this MD&A to “hemp,” which is a term used to classify varieties of the cannabis sativa plant that contain CBD and 0.3% or less THC content (by dry weight). Conversely, references to the term “marijuana” refers to varieties of the cannabis sativa plant with more than 0.3% THC.
35
Segment Reporting
We report our financial results for the following four reportable segments:
These segments reflect how our operations are managed, how our Chief Executive Officer, who is the Chief Operating Decision Maker (“CODM”), allocates resources and evaluates performance, and how our internal management financial reporting is structured. Our CODM evaluates the performance of these segments, with a focus on (i) segment net revenue, and (ii) segment gross margin as the measure of segment profit or loss. The information regarding segment net revenue and segment gross margin for the comparative periods has been restated to reflect the aforementioned change in reportable segments. The remainder of our operations include revenue derived from, and cost of sales associated with, our non-cannabis extraction activities and other ancillary activities; these are included within "other."
Canopy USA
On October 24, 2022, Canopy Growth completed a number of strategic transactions (the “Reorganization”) in connection with the creation of Canopy USA, a U.S.-domiciled holding company wherein, as of October 24, 2022, Canopy USA, holds certain U.S. cannabis investments previously held by Canopy Growth.
Following the creation of Canopy USA, the Nasdaq communicated its position to the Company stating that companies that consolidate “the assets and revenues generated from activities in violation under federal law cannot continue to list on Nasdaq”. Since the Company is committed to compliance with the listing requirements of the Nasdaq, the Company and Canopy USA effectuated certain changes to the initial structure of the Company’s interest in Canopy USA that were intended to facilitate the deconsolidation of the financial results of Canopy USA within the Company’s financial statements. These changes included, among other things, modifying the terms of the Protection Agreement (as defined below) between the Company, its wholly-owned subsidiary and Canopy USA as well as the terms of Canopy USA’s limited liability company agreement and amending the terms of certain agreements with third-party investors in Canopy USA to eliminate any rights to guaranteed returns (collectively, the “Reorganization Amendments”). On May 19, 2023, the Company and Canopy USA implemented the Reorganization Amendments, which included, entering into the First A&R Protection Agreement (as defined below) and amending and restating Canopy USA’s limited liability company agreement (the “A&R LLC Agreement”) in order to: (i) eliminate certain negative covenants that were previously granted by Canopy USA in favor of the Company as well as delegating to the managers of the Canopy USA Board (as defined below) not appointed by Canopy Growth the authority to approve the following key decisions (collectively, the “Key Decisions”): (a) the annual business plan of Canopy USA; (b) decisions regarding the executive officers of Canopy USA and any of its subsidiaries; (c) increasing the compensation, bonus levels or other benefits payable to any current, former or future employees or managers of Canopy USA or any of its subsidiaries; (d) any other executive compensation plan matters of Canopy USA or any of its subsidiaries; and (e) the exercise of the Wana Options (as defined below) or the Jetty Options, which for greater certainty means that the Company’s nominee on the Canopy USA Board will not be permitted to vote on any Key Decisions while the Company owns Non-Voting Shares; (ii) reduce the number of managers on the Canopy USA Board from four to three, including, reducing the Company’s nomination right to a single manager; (iii) amend the share capital of Canopy USA to, among other things, (a) create a new class of Canopy USA Class B Shares (as defined below), which may not be issued prior to the conversion of the Non-Voting Shares or the Class A shares of Canopy USA (the “Canopy USA Common Shares”) into Canopy USA Class B Shares; (b) amend the terms of the Non-Voting Shares such that the Non-Voting Shares will be convertible into Canopy USA Class B Shares (as opposed to Canopy USA Common Shares); and (c) amend the terms of the Canopy USA Common Shares such that upon conversion of all of the Non-Voting Shares into Canopy USA Class B Shares, the Canopy USA Common Shares will, subject to their terms, automatically convert into Canopy USA Class B Shares, provided that the number of Canopy USA Class B Shares to be issued to the former holders of the Canopy USA Common Shares will be equal to no less than 10% of the total issued and outstanding Canopy USA Class B Shares following such issuance. Accordingly, as a result of the Reorganization Amendments, in no circumstances will the Company, at the time of such conversions, own more than 90% of the Canopy USA Class B Shares.
In connection with the Reorganization Amendments, on May 19, 2023, Canopy USA and Huneeus 2017 Irrevocable Trust (the “Trust”) entered into a share purchase agreement (the “Trust SPA”), which sets out the terms of the Trust’s investment in Canopy
36
USA in the aggregate amount of up to US$20 million (the “Trust Transaction”). Agustin Huneeus, Jr. is the trustee of the Trust and is an affiliate of a shareholder of Jetty. Pursuant to the terms of the Trust SPA, the Trust will, subject to certain terms and conditions contained in the Trust SPA be issued Canopy USA Common Shares in two tranches with an aggregate value of up to US$10 million along with warrants of Canopy USA to acquire additional Canopy USA Common Shares. In addition, subject to the terms of the Trust SPA, the Trust has also been granted options to acquire additional Voting Shares (as defined in the A&R LLC Agreement) with a value of up to an additional US$10 million and one such additional option includes the issuance of additional warrants of Canopy USA. On April 26, 2024, Canopy USA completed the first tranche closing of the Trust Transaction in accordance with the Trust SPA. As of November 7, 2024, the Trust holds an aggregate 28,571,429 Canopy USA Common Shares and warrants to acquire up to 85,714,284 Voting Shares expiring on April 26, 2031.
In addition, subject to the terms and conditions of the A&R Protection Agreement (as defined below) and the terms of the option agreements to acquire Wana and Jetty, as applicable, Canopy Growth may be required to issue additional common shares in satisfaction of certain deferred and/or option exercise payments to the shareholders of Wana and Jetty. Canopy Growth will receive additional Non-Voting Shares from Canopy USA as consideration for any Company common shares issued in the future to the shareholders of Wana and Jetty.
On November 3, 2023, the Company received a letter from the staff of the SEC (the “Staff”) in which the Staff indicated that, despite the Reorganization Amendments, it would object to the deconsolidation of the financial results of Canopy USA from the Company's financial statements in accordance with U.S. GAAP once Canopy USA acquires Wana, Jetty or the Fixed Shares of Acreage. The Company subsequently had discussions with the Office of Chief Accountant of the SEC (the “OCA”) and determined to make certain additional amendments to the structure of Canopy USA (the “Additional Reorganization Amendments”) to facilitate the deconsolidation of Canopy USA from the financial results of Canopy Growth in accordance with U.S. GAAP upon Canopy USA’s acquisition of Wana, Jetty or Acreage. In connection with the Additional Reorganization Amendments, Canopy USA and its members entered into a second amended and restated limited liability company agreement (the “Second A&R LLC Agreement”). In accordance with the terms of the Second A&R LLC Agreement, the terms of the Non-Voting Shares have been amended such that the Non-Voting Shares are only convertible into Canopy USA Class B Shares following the date that the NASDAQ Stock Market or The New York Stock Exchange permit the listing of companies that consolidate the financial statements of companies that cultivate, distribute or possess marijuana (as defined in 21 U.S.C 802) in the United States (the “Stock Exchange Permissibility Date”). Based on the Company’s discussions with the OCA, upon effectuating the Additional Reorganization Amendments, the Company believes that the Staff would not object to the deconsolidation of the financial results of Canopy USA from the Company’s financial statements in accordance with U.S. GAAP.
Following the Reorganization, Reorganization Amendments and Additional Reorganization Amendments, on May 6, 2024, Canopy USA exercised the options (the “Wana Options”) to acquire Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC (collectively, “Wana”) leading cannabis edibles brand in North America and subsequently closed the transactions to acquire Wana Wellness, LLC and The Cima Group, LLC. On October 8, 2024, Canopy USA closed the acquisition of Mountain High Products, LLC. In addition, Canopy USA exercised the options (the “Jetty Options”) to acquire Lemurian, Inc. (“Jetty”) a California-based producer of high-quality cannabis extracts and pioneer of clean vape technology and subsequently completed the first tranche closing to acquire Jetty. On June 4, 2024, the option to acquire the issued and outstanding Class E subordinate voting shares (the “Fixed Shares”) of Acreage (the “Acreage Option”) was exercised. Canopy USA also holds direct and indirect interests in the capital of TerrAscend Corp. (“TerrAscend”), a leading North American cannabis operator with vertically integrated operations and a presence in Pennsylvania, New Jersey, Michigan and California as well as licensed cultivation and processing operations in Maryland.
Canopy USA currently holds an ownership interest in the following assets, among others:
37
Following the implementation of the Reorganization, Canopy USA was determined to be a variable interest entity pursuant to ASC 810 - Consolidations (“ASC 810”) and prior to the completion of the Reorganization Amendments and the Additional Reorganization Amendments, Canopy Growth was determined to be the primary beneficiary of Canopy USA. As a result of such determination and in accordance with ASC 810, Canopy Growth consolidated the financial results of Canopy USA up to April 30, 2024.
Ownership of U.S. Cannabis Investments
Following the implementation of the Reorganization, the shares and interests in Acreage, Wana, Jetty and TerrAscend are held, directly or indirectly, by Canopy USA, and Canopy Growth no longer holds a direct interest in any shares or interests in such entities, other than the Acreage Option, which was exercised on June 4, 2024. Canopy Growth holds non-voting and non-participating shares (the “Non-Voting Shares”) in the capital of Canopy USA. The Non-Voting Shares do not carry voting rights, rights to receive dividends or other rights upon dissolution of Canopy USA. Following the Reorganization Amendments, the Non-Voting Shares are convertible into Class B shares of Canopy USA (the “Canopy USA Class B Shares”), provided that such conversion shall only be permitted following the Stock Exchange Permissibility Date. The Company also has the right (regardless of the fact that its Non-Voting Shares are non-voting and non-participating) to appoint one member to the Canopy USA board of managers (the “Canopy USA Board”).
On October 24, 2022, Canopy USA and the Company also entered into an agreement with, among others, Nancy Whiteman, the controlling shareholder of Wana, which was amended and restated on May 19, 2023 and on April 30, 2024, whereby subsidiaries of Canopy USA agreed to pay additional consideration in order to acquire the Wana Options and the future payments owed in connection with the exercise of the Wana Options were reduced to US$3.00 in exchange for the issuance of Canopy USA Common Shares and Canopy Growth common shares (the “Wana Amending Agreement”). In accordance with the terms of the Wana Amending Agreement, on April 30, 2024, (i) Canopy USA issued 60,955,929 Canopy USA Common Shares and (ii) Canopy Growth issued 1,086,279 Canopy Growth common shares to the shareholders of Wana. The Canopy USA Common Shares issued to Ms. Whiteman, or entities controlled by Ms. Whiteman, are subject to a repurchase right exercisable at any time after April 30, 2027, being the 36 month anniversary of the closing of the transaction contemplated by the Wana Amending Agreement (the “Wana Repurchase Right”) to repurchase all Canopy USA Common Shares that have been issued at a price per Canopy USA Common Share equal to the fair market value as determined by an appraiser. As part of this agreement, Canopy USA has granted Ms. Whiteman the right to appoint one member to the Canopy USA Board and a put right on the same terms and conditions as the Wana Repurchase Right.
As of November 7, 2024, the Trust holds 28,571,429 Canopy USA Common Shares, the shareholders of Wana collectively hold 60,955,929 Canopy USA Common Shares and a wholly-owned subsidiary of the Company holds all of the issued and outstanding Non-Voting Shares in the capital of Canopy USA, representing approximately 72.3% of the issued and outstanding shares in Canopy USA on an as-converted basis.
Canopy Growth and Canopy USA are also parties to a protection agreement (the “Protection Agreement”) to provide for certain covenants in order to preserve the value of the Non-Voting Shares held by Canopy Growth until such time as the Non-Voting Shares are converted in accordance with their terms, provided that, such conversion shall only be permitted following the Stock Exchange Permissibility Date, but does not provide Canopy Growth with the ability to direct the business, operations or activities of Canopy USA. The Protection Agreement was amended and restated in connection with: (a) the Reorganization Amendments (the “First A&R Protection Agreement”); and (b) the Additional Reorganization Amendments (the “Second A&R Protection Agreement” and together with the First A&R Protection Agreement, the “A&R Protection Agreement”).
Upon closing of Canopy USA’s acquisition of Acreage, Canopy Growth will receive additional Non-Voting Shares from Canopy USA in consideration for the issuance of common shares of the Company that shareholders of Acreage will receive in accordance with the terms of the Existing Acreage Arrangement Agreement and the Floating Share Arrangement Agreement.
Until such time as Canopy Growth converts the Non-Voting Shares into Canopy USA Class B Shares following the Stock Exchange Permissibility Date, Canopy Growth will have no economic or voting interest in Canopy USA, Wana, Jetty, TerrAscend, or Acreage. Canopy USA, Wana, Jetty, TerrAscend, and Acreage will continue to operate independently of Canopy Growth.
Acreage Agreements
On October 24, 2022, Canopy Growth entered into an arrangement agreement with Canopy USA and Acreage, as amended (the “Floating Share Arrangement Agreement”), pursuant to which, subject to approval of the holders of the Floating Shares and the terms and conditions of the Floating Share Arrangement Agreement, Canopy USA will acquire all of the issued and outstanding Floating Shares by way of the Floating Share Arrangement in exchange for 0.045 of a Company common share for each Floating Share held. In connection with the Floating Share Arrangement Agreement, Canopy Growth has irrevocably waived the right to acquire all of the issued and outstanding Floating Shares (the “Acreage Floating Option”) existing under the Existing Acreage Arrangement Agreement.
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On October 24, 2022, the Company and Canopy USA entered into a third amendment to tax receivable agreement (the “Amended TRA”) with, among others, certain current or former unitholders (the “Holders”) of High Street Capital Partners, LLC, a subsidiary of Acreage (“HSCP”), pursuant to HSCP’s amended tax receivable agreement (the “TRA”) and related tax receivable bonus plans with Acreage. Pursuant to the Amended TRA, the Company, on behalf of Canopy USA, agreed to issue common shares of the Company with a value of US$30.4 million to certain Holders as consideration for the assignment of such Holder’s rights under the TRA to Canopy USA. As a result of the Amended TRA, Canopy USA is the sole member and beneficiary under the TRA. In connection with the foregoing, the Company issued: (i) 564,893 common shares with a value of $20.6 million (US$15.2 million) to certain Holders on November 4, 2022 as the first installment under the Amended TRA; and (ii) 710,208 common shares with a value of $20.6 million (US$15.2 million) to certain Holders on March 17, 2023, as the second installment under the Amended TRA. The Company, on behalf of Canopy USA, also agreed to issue common shares of the Company with a value of approximately US$19.6 million to certain eligible participants pursuant to HSCP’s existing tax receivable bonus plans to be issued immediately prior to completion of the Floating Share Arrangement.
In addition to shareholder and court approvals, the Floating Share Arrangement is subject to applicable regulatory approvals including, but not limited to, TSX approval and the satisfaction of certain other closing conditions, including the conditions set forth in the amended and restated plan of arrangement (the “Acreage Amended Arrangement”) implemented by Canopy Growth and Acreage on September 23, 2020 in connection with the Existing Acreage Arrangement Agreement. The Floating Share Arrangement received the requisite approval from the holders of Floating Shares at the special meeting of Acreage shareholders held on March 15, 2023 and on March 20, 2023 Acreage obtained a final order from the Supreme Court of British Columbia approving the Floating Share Arrangement.
On June 4, 2024, the Acreage Option was exercised in accordance with the terms of the arrangement agreement dated April 18, 2019, as amended on May 15, 2019, September 23, 2020 and November 17, 2020 (the “Existing Acreage Arrangement Agreement”), with such exercise being completed in advance of the Exercise Outside Date (as defined in the Floating Share Arrangement Agreement). Concurrently with the closing of the acquisition of the Fixed Shares pursuant to the exercise of the Acreage Option, the Fixed Shares will be issued to Canopy USA. Accordingly, Canopy Growth will not hold any Fixed Shares or Floating Shares. Completion of the acquisition of the Fixed Shares is subject to the satisfaction of certain conditions set forth in the Existing Acreage Arrangement Agreement. The acquisition of the Floating Shares pursuant to the Floating Share Arrangement is anticipated to occur immediately prior to the acquisition of the Fixed Shares pursuant to the Existing Acreage Arrangement Agreement such that 100% of the issued and outstanding shares of Acreage will be owned by Canopy USA on closing of the acquisition of both the Fixed Shares and the Floating Shares.
On June 3, 2024, the Company exercised its option to acquire certain outstanding debt of Acreage (the “Debt Acquisition”) in connection with the option agreement dated November 15, 2022 (the “Option Agreement”) among a wholly-owned subsidiary of Canopy Growth (the “Optionor”) and the lenders (the “Lenders”) party to Acreage’s credit agreement dated as of December 16, 2021, as amended by the first amendment to credit agreement dated as of October 24, 2022 and the second amendment to credit agreement dated as of April 28, 2023.
The Optionor entered into various agreements in connection with the Debt Acquisition in order to acquire approximately US$99.8 million of Acreage’s outstanding debt (the “Acquired Debt”) from certain Lenders in exchange for US$69.8 million in cash and the release of approximately US$30.1 million (the “Option Premium”) that was held in escrow pursuant to the Option Agreement. As reported in the Annual Report, the Option Premium was not included in Canopy Growth’s cash and cash equivalents as of March 31, 2024.
The Optionor subsequently transferred approximately US$2.2 million of the Acquired Debt to the other Lender (the “Rolling Lender”) and entered into a series of agreements with the Rolling Lender and Acreage, among others, including an amended and restated credit agreement (the "First ARCA"), which provided for, among other things, the Acquired Debt, certain interest payments to be paid-in-kind, revisions to certain financial covenants and, following certain events, an extension to the maturity date.
On September 13, 2024, the Optionor entered into a series of transactions with, among others, Acreage, the Rolling Lender and an arm's length third-party lender (the "Other Lender"). Pursuant to such transactions, all of Acreage's indebtedness held by the Rolling Lender was acquired by the Other Lender. Following the acquisition by the Other Lender, the Optionor, the Other Lender and Acreage, among others, amended and restated the First ARCA pursuant to a second amended and restated credit agreement dated as of September 13, 2024 (the "Second ARCA"). Pursuant to the Second ARCA and an agreement among lenders entered into on September 13, 2024 between, among others, the Optionor and the Other Lender, all interest owing to the Optionor under the Second ARCA is, subject to the consent of the Other Lender, to be paid-in-kind and not in cash. Under the Second ARCA, as of September 13, 2024, the Optionor was owed an aggregate principal amount equal to approximately US$102 million which is subordinate to approximately US$65 million owed to the Other Lender.
39
Recent Developments
Canopy USA
As described above, Canopy Growth has implemented the Reorganization Amendments and the Additional Reorganization Amendments and Canopy USA subsequently completed the first tranche closing of the Trust Transaction and exercised the Wana Options and the Jetty Options, such that we will not consolidate the financial results of Canopy USA as of April 30, 2024. Following the implementation of the Reorganization, Canopy USA was determined to be a variable interest entity pursuant to ASC 810 and prior to the completion of the Reorganization Amendments and the Additional Reorganization Amendments, Canopy Growth was determined to be the primary beneficiary of Canopy USA. As a result of such determination and in accordance with ASC 810, Canopy Growth consolidated the financial results of Canopy USA up to April 30, 2024.
Deconsolidation of Canopy USA
As of April 30, 2024, as a result of the series of transactions related to the Additional Reorganization Amendments described above (the “Canopy USA Transactions”), Canopy Growth has deconsolidated the financial results of Canopy USA and has a non-controlling interest in Canopy USA as of such date. The deconsolidation of Canopy USA occurred after completion of the following structural amendments: (i) execution of the Second A&R LLC Agreement, (ii) execution of the Second A&R Protection Agreement and (iii) completion of the initial tranche closing of the Trust Transaction, which included the election of a third member to the Canopy USA Board such that the Canopy USA Board is comprised of an appointee from the Trust, Ms. Whiteman, and the Company.
Canopy Growth's deconsolidation of Canopy USA resulted in recognition of an equity method investment and a loan receivable recorded at fair value.
Balance Sheet Deleveraging Initiatives
On April 18, 2024, the Company entered into an exchange agreement (the “April 2024 Exchange Agreement”) with Greenstar Canada Investment Limited Partnership (“Greenstar”), an affiliate of Constellation Brands, Inc. (“CBI”), pursuant to which Greenstar converted approximately $81.2 million of the principal amount of the $100 million principal amount of a promissory note (the “CBI Note”) into 9,111,549 Exchangeable Shares (the “Note Exchange”), calculated based on a price per Exchangeable Share equal to $8.91. Pursuant to the terms of the April 2024 Exchange Agreement, all accrued but unpaid interest on the CBI Note together with the remaining principal amount of the CBI Note was cancelled and forgiven for no additional consideration by Greenstar. Following the closing of the Note Exchange, there is no outstanding balance owing under the CBI Note and the CBI Note has been cancelled.
On April 29, 2024 and June 28, 2024, the Company repurchased additional outstanding principal amounts under the Credit Facility (the "First Quarter 2025 Paydowns"). The First Quarter 2025 Paydowns resulted in an aggregate principal reduction of $11.2 million (US$8.2 million) for a cash payment of $11.2 million (US$8.2 million).
On August 20, 2024, the Company entered into an exchange and subscription agreement (the "August 2024 Supreme Convertible Debt Exchange") with a single institutional investor (the “August 2024 Investor”) pursuant to which, among other things, the August 2024 Investor delivered to the Company approximately $2.7 million of aggregate principal amount of outstanding Supreme Debentures (as defined below) in exchange for 291,351 common shares of the Company and $0.03 million in cash for accrued interest.
On September 27, 2024, the Company repurchased additional outstanding principal amounts under the Credit Facility (the "Second Quarter 2025 Paydown"). The Second Quarter 2025 Paydown resulted in an aggregate principal reduction of $1.1 million (US$0.9 million) for a cash payment of $1.1 million (US$0.9 million).
On October 16, 2024, the Company made an early prepayment under the Credit Facility in an aggregate principal amount equal to US$100.0 million of the principal amount outstanding thereunder at a discounted price of US$97.5 million. Pursuant to the Amending Agreement, the US$100.0 million prepayment of the Credit Facility was required to be made by December 31, 2024.
May 2024 Convertible Debenture
On May 2, 2024, the Company entered into an exchange and subscription agreement (the “Exchange and Subscription Agreement”) with a single institutional investor (the “May 2024 Investor”) pursuant to which, among other things, the May 2024 Investor delivered to the Company approximately $27.5 million aggregate principal amount of outstanding Supreme Debentures and Accretion Debentures (as defined below) held by the May 2024 Investor and paid the Company approximately US$50 million in exchange for the Company issuing to the May 2024 Investor (i) a new senior unsecured convertible debenture of the Company (the “May 2024 Convertible Debenture”) with an aggregate principal amount of approximately $96.4 million maturing five years from the closing date (the “Closing Date”) of the transaction (the “Transaction”) and (ii) 3,350,430 common share purchase warrants (the “May 2024 Investor Warrants”) of the Company. Each May 2024 Investor Warrant entitles the holder to acquire one Canopy Share at an exercise price equal to $16.18 per Canopy Share for a period of five years from the Closing Date. The May 2024 Convertible Debenture bears interest at a rate of 7.50% per annum, payable in semi-annual payments in cash or, at the option of the Company, in
40
Canopy Shares for the first four semi-annual interest payments after the Closing Date, subject to satisfaction of certain conditions, including the prior approval of the TSX.
The Exchange and Subscription Agreement granted the May 2024 Investor, for a period of four months from the Closing Date (the “Agreement ROFR Term”), a right of first refusal to subscribe for, and to be issued, as the sole investor in any proposed non-brokered private placement that the Company wishes to complete during the Agreement ROFR Term (the “Proposed Private Placement”); provided, however, that the May 2024 Investor shall subscribe for 100% of the Proposed Private Placement on the same terms and conditions contemplated in the Proposed Private Placement.
The May 2024 Convertible Debenture is convertible into Canopy Shares at the option of the May 2024 Investor at a conversion price equal to $14.38 per share. The May 2024 Convertible Debenture is subject to a forced conversion feature upon notice from the Company in the event that the average closing trading price of the Canopy Shares on the TSX exceeds $21.57 for a period of 10 consecutive trading days. In addition, pursuant to the terms of the May 2024 Convertible Debenture, for so long as the principal amount under the May 2024 Convertible Debenture remains outstanding (the “Debenture ROFR Term”), the Company granted the May 2024 Investor a right of first refusal to subscribe for, and to be issued, as an investor in any debt or equity financing that the Company wishes to complete during the Debenture ROFR Term (the “Proposed Financing”); provided, however, that the May 2024 Investor shall subscribe for 25% of the Proposed Financing on the same terms and conditions contemplated in the Proposed Financing.
Canadian Federal Budget Proposals
For capital gains realized on or after June 25, 2024, proposals originally released on June 10, 2024 with revised proposals released on August 12, 2024 and September 23, 2024, (collectively the “Capital Gains Proposals”), would generally increase the capital gains inclusion rate from one-half to two-thirds for corporations and trusts, and from one-half to two-thirds for individuals on the portion of capital gains realized, including capital gains realized indirectly through a trust or partnership, in a taxation year (or in each case the portion of the year beginning on June 25, 2024, in the case of the 2024 taxation year) that exceed $250,000. The Capital Gains Proposals also include transitional rules that effectively adjust the capital gains inclusion rate for taxation years beginning on or before June 24, 2024 and ending on or after June 25, 2024 to generally include only one-half of net capital gains realized (or deemed to be realized) on or before June 24, 2024. The Capital Gains Proposals further propose to adjust the value of capital losses realized in previous years so that two-thirds of capital losses realized prior to June 25, 2024 will be deductible against capital gains included in income at the two-thirds inclusion rate such that a capital loss will offset an equivalent capital gain regardless of the inclusion rate (additional adjustments would be required where the capital gains have been subjected to an effective inclusion rate of one-half rather than the basic inclusion rate of two-thirds). Revised alternative minimum tax rules were enacted on June 20, 2024, which may increase a shareholder’s liability for such tax.
Part 2 - Results of Operations
The results of operations presented below reports the financial performance of the continuing operations of Canopy Growth for the three and six months ended September 30, 2024. Further to Note 4 in the Company’s accompanying financial statements, the BioSteel segment results for all periods prior to September 14, 2023 and November 16, 2023, being the effective dates of deconsolidation as a result of the CCAA Proceedings (as defined below), are classified as discontinued operations and therefore are excluded from continuing operations.
On September 14, 2023, Canopy Growth ceased funding the operations of BioSteel Sports Nutrition Inc. (“BioSteel Canada”) and commenced proceedings (the "CCAA Proceedings") under the Companies' Creditors Arrangement Act (the "CCAA") in the Ontario Superior Court of Justice (Commercial List) (the "CCAA Court") and sought and obtained recognition of that proceeding under Chapter 15 of the United States Bankruptcy Code.
Discussion of Results of Operations for the Three Months Ended September 30, 2024
|
|
Three months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars, except share amounts and |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Selected consolidated financial information: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net revenue |
|
$ |
62,991 |
|
|
$ |
69,595 |
|
|
$ |
(6,604 |
) |
|
|
(9 |
%) |
Gross margin percentage |
|
|
35 |
% |
|
|
34 |
% |
|
|
- |
|
|
100 bps |
|
|
Net loss from continuing operations |
|
$ |
(131,550 |
) |
|
$ |
(148,162 |
) |
|
$ |
16,612 |
|
|
|
11 |
% |
Net loss from continuing operations |
|
$ |
(131,550 |
) |
|
$ |
(148,162 |
) |
|
$ |
16,612 |
|
|
|
11 |
% |
Basic and diluted loss per share from |
|
$ |
(1.52 |
) |
|
$ |
(2.07 |
) |
|
$ |
0.55 |
|
|
|
27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
1 For the three months ended September 30, 2024, the weighted average number of outstanding common shares, basic and diluted, totaled 86,827,991 (three months ended September 30, 2023 - 71,629,443). |
|
|||||||||||||||
2 Prior year share and per share amounts have been retrospectively adjusted to reflect the Share Consolidation, which became effective on December 15, 2023. |
|
|||||||||||||||
41
Revenue
We report net revenue in four segments: (i) Canada cannabis; (ii) international markets cannabis; (iii) Storz & Bickel; and (iv) This Works. Revenue derived from the remainder of our operations are included within "other". The following table presents segmented net revenue for the three months ended September 30, 2024 and 2023:
Net Revenue |
|
Three months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Canada cannabis |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canadian adult-use cannabis1 |
|
$ |
18,388 |
|
|
$ |
24,087 |
|
|
$ |
(5,699 |
) |
|
|
(24 |
%) |
Canadian medical cannabis2 |
|
|
18,689 |
|
|
|
16,179 |
|
|
|
2,510 |
|
|
|
16 |
% |
|
|
$ |
37,077 |
|
|
$ |
40,266 |
|
|
$ |
(3,189 |
) |
|
|
(8 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
International markets cannabis3 |
|
$ |
10,060 |
|
|
$ |
8,977 |
|
|
$ |
1,083 |
|
|
|
12 |
% |
Storz & Bickel |
|
$ |
15,854 |
|
|
$ |
11,991 |
|
|
$ |
3,863 |
|
|
|
32 |
% |
This Works |
|
$ |
- |
|
|
$ |
7,074 |
|
|
$ |
(7,074 |
) |
|
|
(100 |
%) |
Other |
|
|
- |
|
|
|
1,287 |
|
|
|
(1,287 |
) |
|
|
(100 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net revenue |
|
$ |
62,991 |
|
|
$ |
69,595 |
|
|
$ |
(6,604 |
) |
|
|
(9 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
1 Reflects excise taxes of $8,903 and other revenue adjustments, representing our determination of returns and pricing adjustments, of $1,300 for the three months ended September 30, 2024 (three months ended September 30, 2023 - excise taxes of $10,829 and other revenue adjustments of $500). |
|
|||||||||||||||
2 Reflects excise taxes of $2,064 for the three months ended September 30, 2024 (three months ended September 30, 2023 - $1,652). |
|
|||||||||||||||
3 Reflects other revenue adjustments of $nil for the three months ended September 30, 2024 (three months ended September 30, 2023 - $70). |
|
|||||||||||||||
Net revenue was $63.0 million in the second quarter of fiscal 2025, a decrease of $6.6 million as compared to $69.6 million in the second quarter of fiscal 2024.
Canada cannabis
Net revenue from our Canada cannabis segment was $37.1 million in the second quarter of fiscal 2025, as compared to $40.3 million in the second quarter of fiscal 2024.
Canadian adult-use cannabis net revenue was $18.4 million in the second quarter of fiscal 2025, as compared to $24.1 million in the second quarter of fiscal 2024. The year-over-year decrease is primarily attributable to lower sales volumes, which were partially affected by supply constraints for certain products as a result of financial difficulties with our contract manufacturers and lower sales velocity due to continued increase in price competition.
Canadian medical cannabis net revenue was $18.7 million in the second quarter of fiscal 2025, as compared to $16.2 million in the second quarter of fiscal 2024. The year-over-year increase is primarily attributable to an increase in the average size of medical orders placed by our customers due largely to an increase in the percentage of insured customers, and a larger assortment of cannabis product choices offered to our customers.
International markets cannabis
International markets cannabis revenue was $10.1 million in the second quarter of fiscal 2025, as compared to $9.0 million in the second quarter of fiscal 2024. The year-over-year increase is primarily attributable to the increased shipments of flower products in Europe, driven by Poland and Germany, which was offset by a decline in our Australian medical business.
Storz & Bickel
Revenue from Storz & Bickel was $15.9 million in the second quarter of fiscal 2025, as compared to $12.0 million in the second quarter of fiscal 2024. The year-over-year increase is primarily attributable to strong growth in Germany and the U.S., sales of our Mighty vaporizer and contribution from Venty, our new portable vaporizer that was launched in the third quarter of fiscal 2024.
This Works
Revenue from This Works was $nil in the second quarter of fiscal 2025, as compared to $7.1 million in the second quarter of fiscal 2024. The year-over-year decrease is due to the completion of the divestiture of This Works on December 18, 2023.
42
Cost of Goods Sold and Gross Margin
The following table presents cost of goods sold, gross margin and gross margin percentage on a consolidated basis for the three months ended September 30, 2024 and 2023:
|
|
Three months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars except where indicated) |
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
|||||
Net revenue |
|
$ |
62,991 |
|
|
$ |
69,595 |
|
|
$ |
(6,604 |
) |
|
|
(9 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of goods sold |
|
$ |
41,153 |
|
|
$ |
46,169 |
|
|
$ |
(5,016 |
) |
|
|
(11 |
%) |
Gross margin |
|
|
21,838 |
|
|
|
23,426 |
|
|
|
(1,588 |
) |
|
|
(7 |
%) |
Gross margin percentage |
|
|
35 |
% |
|
|
34 |
% |
|
|
- |
|
|
100 bps |
|
|
Cost of goods sold was $41.2 million in the second quarter of fiscal 2025, as compared to $46.2 million in the second quarter of fiscal 2024. Our gross margin was $21.8 million in the second quarter of fiscal 2025, or 35% of net revenue, as compared to a gross margin of $23.4 million and gross margin percentage of 34% of net revenue in the second quarter of fiscal 2024. The year-over-year increase in the gross margin percentage is primarily attributable to improvement in our international markets cannabis segment, primarily due to an increase in sales mix to higher-margin Poland as well as a lower overall cost structure.
We report gross margin and gross margin percentage in four segments: (i) Canada cannabis; (ii) international markets cannabis; (iii) Storz & Bickel; and (iv) This Works. Cost of sales associated with the remainder of our operations are included within "other". The following table presents segmented gross margin and gross margin percentage for the three months ended September 30, 2024 and 2023:
|
|
Three months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars except where indicated) |
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
|||||
Canada cannabis segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net revenue |
|
$ |
37,077 |
|
|
$ |
40,266 |
|
|
$ |
(3,189 |
) |
|
|
(8 |
%) |
Cost of goods sold |
|
|
25,127 |
|
|
|
25,964 |
|
|
|
(837 |
) |
|
|
(3 |
%) |
Gross margin |
|
|
11,950 |
|
|
|
14,302 |
|
|
|
(2,352 |
) |
|
|
(16 |
%) |
Gross margin percentage |
|
|
32 |
% |
|
|
36 |
% |
|
|
|
|
(400) bps |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
International markets cannabis segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
$ |
10,060 |
|
|
$ |
8,977 |
|
|
$ |
1,083 |
|
|
|
12 |
% |
Cost of goods sold |
|
|
5,320 |
|
|
|
6,286 |
|
|
|
(966 |
) |
|
|
(15 |
%) |
Gross margin |
|
|
4,740 |
|
|
|
2,691 |
|
|
|
2,049 |
|
|
|
76 |
% |
Gross margin percentage |
|
|
47 |
% |
|
|
30 |
% |
|
|
|
|
1,700 bps |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Storz & Bickel segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
$ |
15,854 |
|
|
$ |
11,991 |
|
|
$ |
3,863 |
|
|
|
32 |
% |
Cost of goods sold |
|
|
10,706 |
|
|
|
8,073 |
|
|
|
2,633 |
|
|
|
33 |
% |
Gross margin |
|
|
5,148 |
|
|
|
3,918 |
|
|
|
1,230 |
|
|
|
31 |
% |
Gross margin percentage |
|
|
32 |
% |
|
|
33 |
% |
|
|
|
|
(100) bps |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
This Works segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
$ |
- |
|
|
$ |
7,074 |
|
|
$ |
(7,074 |
) |
|
|
(100 |
%) |
Cost of goods sold |
|
|
- |
|
|
|
3,688 |
|
|
|
(3,688 |
) |
|
|
(100 |
%) |
Gross margin |
|
|
- |
|
|
|
3,386 |
|
|
|
(3,386 |
) |
|
|
(100 |
%) |
Gross margin percentage |
|
|
- |
% |
|
|
48 |
% |
|
|
|
|
(4,800) bps |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
$ |
- |
|
|
$ |
1,287 |
|
|
$ |
(1,287 |
) |
|
|
(100 |
%) |
Cost of goods sold |
|
|
- |
|
|
|
2,158 |
|
|
|
(2,158 |
) |
|
|
(100 |
%) |
Gross margin |
|
|
- |
|
|
|
(871 |
) |
|
|
871 |
|
|
|
100 |
% |
Gross margin percentage |
|
|
- |
% |
|
|
(68 |
%) |
|
|
|
|
6,800 bps |
|
||
Canada cannabis
Gross margin for our Canada cannabis segment was $12.0 million in the second quarter of fiscal 2025, or 32% of net revenue, as compared to $14.3 million in the second quarter of fiscal 2024, or 36% of net revenue. The year-over-year decrease in the gross margin percentage was primarily attributable to lower adult-use sales, partially offset by increased sales in higher-margin medical
43
business, the realized benefit of our cost savings program and strategic changes to our business that were initiated in the fourth quarter of fiscal 2023 and a year-over-year decrease in write-downs of excess inventory.
International markets cannabis
Gross margin for our international markets cannabis segment was $4.7 million in the second quarter of fiscal 2025, or 47% of net revenue, as compared to $2.7 million in the second quarter of fiscal 2024, or 30% of net revenue. The year-over-year increase in the gross margin percentage is primarily attributable to the shift in sales mix to higher-margin Poland, a shift in sales mix within individual markets to higher margin products, and a lower cost structure relating to our overall international cannabis operations.
Storz & Bickel
Gross margin for our Storz & Bickel segment was $5.1 million in the second quarter of fiscal 2025, or 32% of net revenue, as compared to $3.9 million in the second quarter of fiscal 2024, or 33% of net revenue. The year-over-year gross margin percentage remained consistent period over period as rebates provided to clear out remaining stock of a previously planned discontinued product were offset by strong margins realized on other product sales.
This Works
Gross margin for our This Works segment was $nil in the second quarter of fiscal 2025, or 0% of net revenue, as compared to $3.4 million in the second quarter of fiscal 2024, or 48% of net revenue. The year-over-year decrease in the gross margin percentage is due to the completion of the divestiture of This Works on December 18, 2023.
Operating Expenses
The following table presents operating expenses for the three months ended September 30, 2024 and 2023:
|
|
Three months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
$ |
16,798 |
|
|
$ |
20,129 |
|
|
$ |
(3,331 |
) |
|
|
(17 |
%) |
Sales and marketing |
|
|
14,983 |
|
|
|
19,601 |
|
|
|
(4,618 |
) |
|
|
(24 |
%) |
Acquisition, divestiture, and other costs |
|
|
3,930 |
|
|
|
10,488 |
|
|
|
(6,558 |
) |
|
|
(63 |
%) |
Depreciation and amortization |
|
|
6,019 |
|
|
|
7,393 |
|
|
|
(1,374 |
) |
|
|
(19 |
%) |
Selling, general and administrative expenses |
|
|
41,730 |
|
|
|
57,611 |
|
|
|
(15,881 |
) |
|
|
(28 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Share-based compensation expense |
|
|
5,221 |
|
|
|
2,717 |
|
|
|
2,504 |
|
|
|
92 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss (gain) on asset impairment and restructuring |
|
|
20,830 |
|
|
|
(29,895 |
) |
|
|
50,725 |
|
|
|
170 |
% |
Total operating expenses |
|
$ |
67,781 |
|
|
$ |
30,433 |
|
|
$ |
37,348 |
|
|
|
123 |
% |
Selling, general and administrative expenses
Selling, general and administrative expenses were $41.7 million in the second quarter of fiscal 2025, as compared to $57.6 million in the second quarter of fiscal 2024.
General and administrative expense was $16.8 million in the second quarter of fiscal 2025, as compared to $20.1 million in the second quarter of fiscal 2024. The year-over-year decrease is primarily attributable to: (i) the divestiture of This Works on December 18, 2023 and (ii) the impact of the restructuring actions and cost savings program initiated in the fourth quarter of fiscal 2023.
Sales and marketing expense was $15.0 million in the second quarter of fiscal 2025, as compared to $19.6 million in the second quarter of fiscal 2024. The year-over-year decrease is primarily attributable to: (i) the divestiture of This Works on December 18, 2023 and (ii) the impact of the restructuring actions and cost savings program initiated in the fourth quarter of fiscal 2023.
Acquisition, divestiture, and other costs were $3.9 million in the second quarter of fiscal 2025, as compared to $10.5 million in the second quarter of fiscal 2024. In the second quarter of fiscal 2025, costs were incurred primarily in relation to:
Comparatively, in the second quarter of fiscal 2024, costs were incurred primarily in relation to:
44
Depreciation and amortization expense was $6.0 million in the second quarter of fiscal 2025, as compared to $7.4 million in the second quarter of fiscal 2024. The year-over-year decrease is primarily attributable to the previously-noted restructuring actions and cost savings programs, including the closure of certain of our Canadian facilities and other operational changes to implement cultivation-related efficiencies and improvements in the Canadian adult-use cannabis business.
Share-based compensation expense
Share-based compensation expense was $5.2 million in the second quarter of fiscal 2025, as compared to $2.7 million in the second quarter of fiscal 2024. The year-over-year increase is primarily attributable to: (i) the first quarter of fiscal 2025 grant of 0.8 million options and 0.7 million restricted share units, and (ii) higher forfeitures in the second quarter of fiscal 2024 due to previously-noted restructuring actions.
Loss (gain) on asset impairment and restructuring
Loss (gain) on asset impairment and restructuring recorded in operating expenses were $20.8 million in the second quarter of fiscal 2025, as compared to $(29.9) million in the second quarter of fiscal 2024.
Loss on asset impairment and restructuring recorded in the second quarter of fiscal 2025 related primarily to the non-cash impairment of divestiture-related assets, employee restructuring costs, and ongoing holding costs to maintain previously restructured sites.
Comparatively, in the second quarter of fiscal 2024, the gain on asset impairment and restructuring was primarily related to a gain on the sale of our production facility at 1 Hershey Drive in Smiths Falls, Ontario. The gain is due to the sale proceeds exceeding the carrying value that was previously impaired at March 31, 2023. This gain was partially offset by various incremental impairment losses and other costs associated with the restructuring of our Canadian cannabis operations that were initiated in the three months ended March 31, 2023.
Other
The following table presents other income (expense), net, and income tax expense for the three months ended September 30, 2024 and 2023:
|
|
Three months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Other income (expense), net |
|
|
(85,305 |
) |
|
|
(128,334 |
) |
|
|
43,029 |
|
|
|
34 |
% |
Income tax expense |
|
|
(302 |
) |
|
|
(12,821 |
) |
|
|
12,519 |
|
|
|
98 |
% |
Other income (expense), net
Other income (expense), net was an expense amount of $85.3 million in the second quarter of fiscal 2025, as compared to an expense amount of $128.3 million in the second quarter of fiscal 2024. The year-over-year change of $43.0 million is primarily attributable to:
Comparatively, the expense amount in the second quarter of fiscal 2024 was primarily attributable to fair value decreases relating to our investments in:
45
These fair value decreases were partially offset by fair value increases related to our investments in:
Income tax expense
Income tax expense in the second quarter of fiscal 2025 was $0.3 million, compared to income tax expense of $12.8 million in the second quarter of fiscal 2024. In the second quarter of fiscal 2025, income tax expense consisted of deferred income tax expense of $0.2 million (compared to an expense of $12.5 million in the second quarter of fiscal 2024) and current income tax expense of $0.1 million (compared to an expense of $0.3 million in the second quarter of fiscal 2024).
The decrease of $12.3 million in the deferred income tax expense is primarily a result of the settlements of the Canopy Notes (as defined below) in the second quarter of fiscal 2024 and utilization of losses for tax purposes, where the accounting criteria for recognition of an asset has been met.
The decrease of $0.2 million in current income tax expense arose primarily as a result of the utilization of group’s tax attributes to shelter tax on income for tax purposes.
Net Loss from Continuing Operations
The net loss from continuing operations in the second quarter of fiscal 2025 was $131.6 million, as compared to a net loss of $148.2 million in the second quarter of fiscal 2024. The year-over-year decrease in the net loss is primarily attributable to: (i) the year-over-year change in other income (expense), net, of $43.0 million; and (ii) offset by the change from gain to loss on asset impairment and restructuring costs. These variances are described above.
46
Adjusted EBITDA (Non-GAAP Measure)
Our “Adjusted EBITDA” is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Management calculates Adjusted EBITDA as the reported net income (loss), adjusted to exclude income tax recovery (expense); other income (expense), net; loss on equity method investments; share-based compensation expense; depreciation and amortization expense; asset impairment and restructuring costs; restructuring costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition, divestiture, and other costs. Asset impairments related to periodic changes to our supply chain processes are not excluded from Adjusted EBITDA given their occurrence through the normal course of core operational activities. Accordingly, management believes that Adjusted EBITDA provides meaningful and useful financial information, as this measure demonstrates the operating performance of businesses.
The following table presents Adjusted EBITDA for the three months ended September 30, 2024 and 2023:
|
|
Three months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss from continuing operations |
|
$ |
(131,550 |
) |
|
$ |
(148,162 |
) |
|
$ |
16,612 |
|
|
|
11 |
% |
Income tax expense |
|
|
302 |
|
|
|
12,821 |
|
|
|
(12,519 |
) |
|
|
(98 |
%) |
Other (income) expense, net |
|
|
85,305 |
|
|
|
128,334 |
|
|
|
(43,029 |
) |
|
|
(34 |
%) |
Share-based compensation |
|
|
5,221 |
|
|
|
2,717 |
|
|
|
2,504 |
|
|
|
92 |
% |
Acquisition, divestiture, and other costs |
|
|
4,078 |
|
|
|
10,488 |
|
|
|
(6,410 |
) |
|
|
(61 |
%) |
Depreciation and amortization |
|
|
10,307 |
|
|
|
12,530 |
|
|
|
(2,223 |
) |
|
|
(18 |
%) |
Loss (gain) on asset impairment and restructuring |
|
|
20,830 |
|
|
|
(29,895 |
) |
|
|
50,725 |
|
|
|
170 |
% |
Restructuring costs recorded in cost of goods sold |
|
|
- |
|
|
|
(689 |
) |
|
|
689 |
|
|
|
100 |
% |
Adjusted EBITDA |
|
$ |
(5,507 |
) |
|
$ |
(11,856 |
) |
|
$ |
6,349 |
|
|
|
54 |
% |
The Adjusted EBITDA loss in the second quarter of fiscal 2025 was $5.5 million, as compared to an Adjusted EBITDA loss of $11.9 million in the second quarter of fiscal 2024. The year-over-year decrease in Adjusted EBITDA loss is primarily attributable to the year-over-year decrease in our selling, general and administrative expenses.
Discussion of Results of Operations for the Six Months Ended September 30, 2024
|
|
Six months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars, except share amounts and |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Selected consolidated financial information: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net revenue |
|
$ |
129,203 |
|
|
$ |
145,853 |
|
|
$ |
(16,650 |
) |
|
|
(11 |
%) |
Gross margin percentage |
|
|
35 |
% |
|
|
25 |
% |
|
|
- |
|
|
1,000 bps |
|
|
Net loss from continuing operations |
|
$ |
(260,741 |
) |
|
$ |
(158,731 |
) |
|
$ |
(102,010 |
) |
|
|
(64 |
%) |
Net loss from continuing operations |
|
$ |
(260,741 |
) |
|
$ |
(158,731 |
) |
|
$ |
(102,010 |
) |
|
|
(64 |
%) |
Basic and diluted loss per share from |
|
$ |
(3.14 |
) |
|
$ |
(2.50 |
) |
|
$ |
(0.64 |
) |
|
|
(26 |
%) |
1 For the six months ended September 30, 2024, the weighted average number of outstanding common shares, basic and diluted, totaled 83,056,230 (six months ended September 30, 2023 - 63,383,000). |
|
|||||||||||||||
2 Prior year share and per share amounts have been retrospectively adjusted to reflect the Share Consolidation, which became effective on December 15, 2023. |
|
|||||||||||||||
47
Revenue
We report net revenue in four segments: (i) Canada cannabis; (ii) international markets cannabis; (iii) Storz & Bickel; and (iv) This Works. Revenue derived from the remainder of our operations are included within "other". The following table presents segmented net revenue for the six months ended September 30, 2024 and 2023:
Net Revenue |
|
Six months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Canada cannabis |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canadian adult-use cannabis |
|
$ |
37,271 |
|
|
$ |
48,358 |
|
|
$ |
(11,087 |
) |
|
|
(23 |
%) |
Canadian medical cannabis2 |
|
|
37,484 |
|
|
|
31,801 |
|
|
|
5,683 |
|
|
|
18 |
% |
|
|
$ |
74,755 |
|
|
$ |
80,159 |
|
|
$ |
(5,404 |
) |
|
|
(7 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
International markets cannabis3 |
|
$ |
20,142 |
|
|
$ |
19,139 |
|
|
$ |
1,003 |
|
|
|
5 |
% |
Storz & Bickel |
|
$ |
34,306 |
|
|
$ |
30,064 |
|
|
$ |
4,242 |
|
|
|
14 |
% |
This Works |
|
$ |
- |
|
|
$ |
13,091 |
|
|
$ |
(13,091 |
) |
|
|
(100 |
%) |
Other |
|
|
- |
|
|
|
3,400 |
|
|
|
(3,400 |
) |
|
|
(100 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net revenue |
|
$ |
129,203 |
|
|
$ |
145,853 |
|
|
$ |
(16,650 |
) |
|
|
(11 |
%) |
1Reflects excise taxes of $16,420 and other revenue adjustments, representing our determination of returns and pricing adjustments, of $2,500 for the six months ended September 30, 2024 (six months ended September 30, 2023 - excise taxes of $21,855 and other revenue adjustments of $1,370). |
|
|||||||||||||||
2 Reflects excise taxes of $4,118 for the six months ended September 30, 2024 (six months ended September 30, 2023 - $3,012). |
|
|||||||||||||||
3 Reflects other revenue adjustments of $nil for the six months ended September 30, 2024 (six months ended September 30, 2023 - $137). |
|
|||||||||||||||
Net revenue was $129.2 million in the six months ended September 30, 2024, a decrease of $16.7 million as compared to $145.9 million in the six months ended September 30, 2023.
Canada cannabis
Net revenue from our Canada cannabis segment was $74.8 million in the six months ended September 30, 2024, as compared to $80.2 million in the six months ended September 30, 2023.
Canadian adult-use cannabis net revenue was $37.3 million in the six months ended September 30, 2024, as compared to $48.4 million in the six months ended September 30, 2023. The year-over-year decrease is primarily attributable to lower sales volumes, which were partially affected by supply constraints for certain products as a result of financial difficulties with our contract manufacturers and lower sales velocity due to continued increase in price competition.
Canadian medical cannabis net revenue was $37.5 million in the six months ended September 30, 2024, as compared to $31.8 million in the six months ended September 30, 2023. The year-over-year increase is primarily attributable to an increase in the average size of medical orders placed by our customers due largely to an increase in the percentage of insured customers, and a larger assortment of cannabis product choices offered to our customers.
International markets cannabis
International markets cannabis revenue was $20.1 million in the six months ended September 30, 2024, as compared to $19.1 million in the six months ended September 30, 2023. The year-over-year increase is primarily attributable to the increased shipments of flower products in Europe, driven by Poland and Germany, which was offset by a decline in our Australian medical business.
Storz & Bickel
Revenue from Storz & Bickel was $34.3 million in the six months ended September 30, 2024, as compared to $30.1 million in the six months ended September 30, 2023. The year-over-year increase is primarily attributable to strong growth in Germany and the U.S., sales of our Mighty vaporizer and contribution from Venty, our new portable vaporizer that was launched in the third quarter of fiscal 2024.
This Works
Revenue from This Works was $nil in the six months ended September 30, 2024, as compared to $13.1 million in the six months ended September 30, 2023. The year-over-year decrease is due to the completion of the divestiture of This Works on December 18, 2023.
48
Cost of Goods Sold and Gross Margin
The following table presents cost of goods sold, gross margin and gross margin percentage on a consolidated basis for the six months ended September 30, 2024 and 2023:
|
|
Six months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars except where indicated) |
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
|||||
Net revenue |
|
$ |
129,203 |
|
|
$ |
145,853 |
|
|
$ |
(16,650 |
) |
|
|
(11 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of goods sold |
|
$ |
84,334 |
|
|
$ |
108,665 |
|
|
$ |
(24,331 |
) |
|
|
(22 |
%) |
Gross margin |
|
|
44,869 |
|
|
|
37,188 |
|
|
|
7,681 |
|
|
|
21 |
% |
Gross margin percentage |
|
|
35 |
% |
|
|
25 |
% |
|
|
- |
|
|
1,000 bps |
|
|
Cost of goods sold was $84.3 million in the six months ended September 30, 2024, as compared to $108.7 million in the six months ended September 30, 2023. Our gross margin was $44.9 million in the six months ended September 30, 2024, or 35% of net revenue, as compared to a gross margin of $37.2 million and gross margin percentage of 25% of net revenue in the six months ended September 30, 2023. The year-over-year increase in the gross margin percentage is primarily attributable to:
We report gross margin and gross margin percentage in four segments: (i) Canada cannabis; (ii) international markets cannabis; (iii) Storz & Bickel; and (iv) This Works. Cost of sales associated with the remainder of our operations are included within "other". The following table presents segmented gross margin and gross margin percentage for the six months ended September 30, 2024 and 2023:
|
|
Six months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars except where indicated) |
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
|||||
Canada cannabis segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net revenue |
|
$ |
74,755 |
|
|
$ |
80,159 |
|
|
$ |
(5,404 |
) |
|
|
(7 |
%) |
Cost of goods sold |
|
|
50,711 |
|
|
|
66,125 |
|
|
|
(15,414 |
) |
|
|
(23 |
%) |
Gross margin |
|
|
24,044 |
|
|
|
14,034 |
|
|
|
10,010 |
|
|
|
71 |
% |
Gross margin percentage |
|
|
32 |
% |
|
|
18 |
% |
|
|
|
|
1,400 bps |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
International markets cannabis segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
$ |
20,142 |
|
|
$ |
19,139 |
|
|
$ |
1,003 |
|
|
|
5 |
% |
Cost of goods sold |
|
|
11,777 |
|
|
|
12,967 |
|
|
|
(1,190 |
) |
|
|
(9 |
%) |
Gross margin |
|
|
8,365 |
|
|
|
6,172 |
|
|
|
2,193 |
|
|
|
36 |
% |
Gross margin percentage |
|
|
42 |
% |
|
|
32 |
% |
|
|
|
|
1,000 bps |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Storz & Bickel segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
$ |
34,306 |
|
|
$ |
30,064 |
|
|
$ |
4,242 |
|
|
|
14 |
% |
Cost of goods sold |
|
|
21,846 |
|
|
|
18,439 |
|
|
|
3,407 |
|
|
|
18 |
% |
Gross margin |
|
|
12,460 |
|
|
|
11,625 |
|
|
|
835 |
|
|
|
7 |
% |
Gross margin percentage |
|
|
36 |
% |
|
|
39 |
% |
|
|
|
|
(300) bps |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
This Works segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
$ |
- |
|
|
$ |
13,091 |
|
|
$ |
(13,091 |
) |
|
|
(100 |
%) |
Cost of goods sold |
|
|
- |
|
|
|
6,810 |
|
|
|
(6,810 |
) |
|
|
(100 |
%) |
Gross margin |
|
|
- |
|
|
|
6,281 |
|
|
|
(6,281 |
) |
|
|
(100 |
%) |
Gross margin percentage |
|
|
- |
% |
|
|
48 |
% |
|
|
|
|
(4,800) bps |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
$ |
- |
|
|
$ |
3,400 |
|
|
$ |
(3,400 |
) |
|
|
(100 |
%) |
Cost of goods sold |
|
|
- |
|
|
|
4,324 |
|
|
|
(4,324 |
) |
|
|
(100 |
%) |
Gross margin |
|
|
- |
|
|
|
(924 |
) |
|
|
924 |
|
|
|
100 |
% |
Gross margin percentage |
|
|
- |
% |
|
|
(27 |
%) |
|
|
|
|
2,700 bps |
|
||
49
Canada cannabis
Gross margin for our Canada cannabis segment was $24.0 million in the six months ended September 30, 2024, or 32% of net revenue, as compared to $14.0 million in the six months ended September 30, 2023, or 18% of net revenue. The year-over-year increase in the gross margin percentage was primarily attributable to: (i) the realized benefit of our cost savings program and strategic changes to our business that were initiated in the fourth quarter of fiscal 2023; (ii) a year-over-year decrease in write-downs of excess inventory; and (iii) strong Canadian medical cannabis sales.
International markets cannabis
Gross margin for our international markets cannabis segment was $8.4 million in the six months ended September 30, 2024, or 42% of net revenue, as compared to $6.2 million in the six months ended September 30, 2023, or 32% of net revenue. The year-over-year increase in the gross margin percentage is primarily attributable to the shift in sales mix to higher-margin Poland as well as a lower cost structure relating to our overall international cannabis operations.
Storz & Bickel
Gross margin for our Storz & Bickel segment was $12.5 million in the six months ended September 30, 2024, or 36% of net revenue, as compared to $11.6 million in the six months ended September 30, 2023, or 39% of net revenue. The year-over-year decrease in the gross margin percentage is driven primarily by a shift in product mix as additional rebates were provided to clear out remaining stock of a previously planned discontinued product.
This Works
Gross margin for our This Works segment was $nil in the six months ended September 30, 2024, or 0% of net revenue, as compared to $6.3 million in the six months ended September 30, 2023, or 48% of net revenue. The year-over-year decrease in the gross margin percentage is due to the completion of the divestiture of This Works on December 18, 2023.
Operating Expenses
The following table presents operating expenses for the six months ended September 30, 2024 and 2023:
|
|
Six months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
$ |
35,705 |
|
|
$ |
45,621 |
|
|
$ |
(9,916 |
) |
|
|
(22 |
%) |
Sales and marketing |
|
|
30,231 |
|
|
|
40,352 |
|
|
|
(10,121 |
) |
|
|
(25 |
%) |
Acquisition, divestiture, and other costs |
|
|
11,705 |
|
|
|
19,392 |
|
|
|
(7,687 |
) |
|
|
(40 |
%) |
Depreciation and amortization |
|
|
12,057 |
|
|
|
15,009 |
|
|
|
(2,952 |
) |
|
|
(20 |
%) |
Selling, general and administrative expenses |
|
|
89,698 |
|
|
|
120,374 |
|
|
|
(30,676 |
) |
|
|
(25 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Share-based compensation expense |
|
|
9,372 |
|
|
|
6,434 |
|
|
|
2,938 |
|
|
|
46 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss (gain) on asset impairment and restructuring |
|
|
20,850 |
|
|
|
(27,961 |
) |
|
|
48,811 |
|
|
|
175 |
% |
Total operating expenses |
|
$ |
119,920 |
|
|
$ |
98,847 |
|
|
$ |
21,073 |
|
|
|
21 |
% |
Selling, general and administrative expenses
Selling, general and administrative expenses were $89.7 million in the six months ended September 30, 2024, as compared to $120.4 million in the six months ended September 30, 2023.
General and administrative expense was $35.7 million in the six months ended September 30, 2024, as compared to $45.6 million in the six months ended September 30, 2023. The year-over-year decrease is primarily attributable to: (i) the divestiture of This Works on December 18, 2023 and (ii) the impact of the restructuring actions and cost savings program initiated in the fourth quarter of fiscal 2023.
Sales and marketing expense was $30.2 million in the six months ended September 30, 2024, as compared to $40.4 million in the six months ended September 30, 2023. The year-over-year decrease is primarily attributable to: (i) the divestiture of This Works on December 18, 2023 and (ii) the impact of the restructuring actions and cost savings program initiated in the fourth quarter of fiscal 2023.
Acquisition, divestiture, and other costs were $11.7 million in the six months ended September 30, 2024, as compared to $19.4 million in the six months ended September 30, 2023. In the six months ended September 30, 2024, costs were incurred primarily in relation to:
50
Comparatively, in the six months ended September 30, 2023, costs were incurred primarily in relation to:
Depreciation and amortization expense was $12.1 million in the six months ended September 30, 2024, as compared to $15.0 million in the six months ended September 30, 2023. The year-over-year decrease is primarily attributable to the previously-noted restructuring actions and cost savings programs, including the closure of certain of our Canadian facilities and other operational changes to implement cultivation-related efficiencies and improvements in the Canadian adult-use cannabis business.
Share-based compensation expense
Share-based compensation expense was $9.4 million in the six months ended September 30, 2024, as compared to $6.4 million in the six months ended September 30, 2023. The year-over-year increase is primarily attributable to: (i) the first quarter of fiscal 2025 grant of 0.8 million options and 0.7 million restricted share units, and (ii) higher forfeitures in the first half of fiscal 2024 due to previously-noted restructuring actions.
Loss (gain) on asset impairment and restructuring
Loss (gain) on asset impairment and restructuring recorded in operating expenses were $20.9 million in the six months ended September 30, 2024, as compared to $(28.0) million in the six months ended September 30, 2023.
Loss on asset impairment and restructuring recorded in the six months ended September 30, 2024 related primarily to the non-cash impairment of divestiture-related assets, employee restructuring costs, and ongoing holding costs to maintain previously restructured sites. These amounts were offset by a gain related to remeasurement of a lease liability upon execution of the surrender agreement.
Comparatively, in the six months ended September 30, 2023, the gain on asset impairment and restructuring was primarily related to a gain on the sale of our production facility at 1 Hershey Drive in Smiths Falls, Ontario. The gain is due to the sale proceeds exceeding the carrying value that was previously impaired at March 31, 2023. This gain was partially offset by various incremental impairment losses and other costs associated with the restructuring of our Canadian cannabis operations that were initiated in the three months ended March 31, 2023.
Other
The following table presents other income (expense), net, and income tax expense for the six months ended September 30, 2024 and 2023:
|
|
Six months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Other income (expense), net |
|
|
(179,194 |
) |
|
|
(82,233 |
) |
|
|
(96,961 |
) |
|
|
(118 |
%) |
Income tax expense |
|
|
(6,496 |
) |
|
|
(14,839 |
) |
|
|
8,343 |
|
|
|
56 |
% |
Other income (expense), net
Other income (expense), net was an expense amount of $179.2 million in the six months ended September 30, 2024, as compared to an expense amount of $82.2 million in the six months ended September 30, 2023. The year-over-year change of $97.0 million is primarily attributable to:
51
These fair value decreases were partially offset by a fair value increases related to our investments in:
Comparatively, the expense amount in the six months ended September 30, 2023 was primarily attributable to fair value decreases relating to our investments in: (i) the Wana financial instrument ($49.1 million); (ii) the Jetty financial instrument ($17.3 million); and the Acreage Hempco debenture ($17.9 million). The fair value decreases were partially offset by fair value increases associated with our investments in: (i) the Acreage financial instrument ($21.3 million); (ii) the TerrAscend Exchangeable Shares ($33.1 million); and the TerrAscend Warrants ($13.2 million).
Income tax expense
Income tax expense in the six months ended September 30, 2024 was $6.5 million, compared to income tax expense of $14.8 million in the six months ended September 30, 2023. In the six months ended September 30, 2024, income tax expense consisted of
52
deferred income tax expense of $6.2 million (compared to an expense of $14.0 million in the six months ended September 30, 2023) and current income tax expense of $0.3 million (compared to an expense of $0.8 million in the six months ended September 30, 2023).
The decrease of $7.8 million in the deferred income tax expense is primarily a result of: (i) a decrease due to the settlements of the Canopy Notes in the second quarter of fiscal 2024 relative to the settlements of the CBI Note in fiscal 2025; and (ii) an increase due to the realization of deferred taxes for entities that historically did not meet the deferred tax asset recognition criteria.
The decrease of $0.5 million in current income tax expense arose primarily in connection with previously cash taxable legal entities that are no longer taxable and as a result of the utilization of group’s tax attributes to shelter tax on income for tax purposes.
Net Loss from Continuing Operations
The net loss from continuing operations in the six months ended September 30, 2024 was $260.7 million, as compared to a net loss of $158.7 million in the six months ended September 30, 2023. The year-over-year increase in the net loss is primarily attributable to: (i) the year-over-year change in other income (expense), net, of $97.0 million; (ii) the change from gain to loss on asset impairment and restructuring costs; and (iii) offset by the decrease in selling, general and administrative expenses and improvement in gross margins. These variances are described above.
Adjusted EBITDA (Non-GAAP Measure)
Our “Adjusted EBITDA” is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Management calculates Adjusted EBITDA as the reported net income (loss), adjusted to exclude income tax recovery (expense); other income (expense), net; loss on equity method investments; share-based compensation expense; depreciation and amortization expense; asset impairment and restructuring costs; restructuring costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition, divestiture, and other costs. Asset impairments related to periodic changes to our supply chain processes are not excluded from Adjusted EBITDA given their occurrence through the normal course of core operational activities. Accordingly, management believes that Adjusted EBITDA provides meaningful and useful financial information, as this measure demonstrates the operating performance of businesses.
The following table presents Adjusted EBITDA for the six months ended September 30, 2024 and 2023:
|
|
Six months ended September 30, |
|
|
|
|
|
|
|
|||||||
(in thousands of Canadian dollars) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Net loss from continuing operations |
|
$ |
(260,741 |
) |
|
$ |
(158,731 |
) |
|
$ |
(102,010 |
) |
|
|
(64 |
%) |
Income tax expense |
|
|
6,496 |
|
|
|
14,839 |
|
|
|
(8,343 |
) |
|
|
(56 |
%) |
Other (income) expense, net |
|
|
179,194 |
|
|
|
82,233 |
|
|
|
96,961 |
|
|
|
118 |
% |
Share-based compensation |
|
|
9,372 |
|
|
|
6,434 |
|
|
|
2,938 |
|
|
|
46 |
% |
Acquisition, divestiture, and other costs |
|
|
12,705 |
|
|
|
19,392 |
|
|
|
(6,687 |
) |
|
|
(34 |
%) |
Depreciation and amortization |
|
|
21,337 |
|
|
|
29,641 |
|
|
|
(8,304 |
) |
|
|
(28 |
%) |
Loss (gain) on asset impairment and restructuring |
|
|
20,850 |
|
|
|
(27,961 |
) |
|
|
48,811 |
|
|
|
175 |
% |
Restructuring costs recorded in cost of goods sold |
|
|
- |
|
|
|
(689 |
) |
|
|
689 |
|
|
|
100 |
% |
Adjusted EBITDA |
|
$ |
(10,787 |
) |
|
$ |
(34,842 |
) |
|
$ |
24,055 |
|
|
|
69 |
% |
The Adjusted EBITDA loss in the six months ended September 30, 2024 was $10.8 million, as compared to an Adjusted EBITDA loss of $34.8 million in the six months ended September 30, 2023. The year-over-year decrease in Adjusted EBITDA loss is primarily attributable to the year-over-year increase in our gross margin and the year-over-year decrease in our selling, general and administrative expenses.
Part 3 – Financial Liquidity and Capital Resources
The Interim Financial Statements have been prepared in accordance with generally accepted accounting principles on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
In our condensed interim consolidated financial statements for the quarterly period ended December 31, 2023, we raised substantial doubt about our ability to continue as a going concern for at least twelve months from the issuance of those condensed interim consolidated financial statements, due to certain material debt obligations coming due in the short-term, recurring losses from operations and additional required financing to fund our business and operations.
As of the filing of the Annual Report, we were able to successfully mitigate the substantial doubt by completing several balance sheet actions as further described in the Annual Report. During the six months ended September 30, 2024, we completed additional actions and established our at-the-market equity program (the “ATM Program”), issued and sold an aggregate of 16,805,852 common shares for gross proceeds of $138.5 million under the ATM Program, received additional proceeds from the BioSteel Canada asset sale, amended the terms of the Credit Facility thereby extending the maturity date of the Credit Facility, and paid down certain debt balances. We continue to evaluate different strategies and may pursue additional actions that are expected to further increase our
53
liquidity position, including, but not limited to, pursuing additional actions under our cost-savings plan and seeking additional financing from both the public and private markets through the issuance of equity and/or debt securities.
We have access to further liquidity through public offerings of equity and debt securities. To facilitate such offerings, in June 2024, we filed (a) a shelf registration statement with the SEC that is effective for a term of three years and expires in June 2027 (the “Shelf Registration Statement”); and (b) a short form base shelf prospectus dated June 5, 2024 that is effective for a 25 month period (the “Canadian Shelf Prospectus”). The amount of securities to be issued pursuant to the Shelf Registration Statement was not specified when it was filed and there is no specific dollar limit on the amount of securities we may issue. Pursuant to the Canadian Shelf Prospectus we may sell securities up to an aggregate total offering price of US$500 million (or the equivalent thereof in other currencies). The securities covered by the Shelf Registration Statement and the Canadian Shelf Prospectus include: (i) common shares; (ii) exchangeable shares; (iii) debt securities; (iv) subscription receipts; (v) warrants; and (viii) units consisting of one or more of such securities or any combination of these securities. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.
We may also access liquidity through the ATM Program, pursuant to which we may sell, from time to time, up to US$101.1 million of additional common shares as of the date hereof. Refer to Notes 19 and 30 to the Interim Financial Statements.
As a result of our plans above and the financial results at September 30, 2024, we conclude that the substantial doubt about our ability to continue as a going concern continues to be alleviated.
As of September 30, 2024, we had cash and cash equivalents of $228.4 million and short-term investments of $2.8 million.
We have recently completed the following debt and equity financings and repayments:
The Exchange and Subscription Agreement granted the May 2024 Investor, during the Agreement ROFR Term, a right of first refusal to subscribe for, and to be issued, as the sole investor in a Proposed Private Placement; provided, however, that the May 2024 Investor shall subscribe for 100% of the Proposed Private Placement on the same terms and conditions contemplated in the Proposed Private Placement.
The May 2024 Convertible Debenture is convertible into Canopy Shares at the option of the May 2024 Investor at a conversion price equal to $14.38 per share. The May 2024 Convertible Debenture is subject to a forced conversion feature upon notice from us in the event that the average closing trading price of the Canopy Shares on the TSX exceeds $21.57 for a period of 10 consecutive trading days. In addition, pursuant to the terms of the May 2024 Convertible Debenture, during Debenture ROFR Term, we granted the May 2024 Investor a right of first refusal to subscribe for, and to be issued, as an investor in a Proposed Financing; provided, however, that the May 2024 Investor shall subscribe for 25% of the Proposed Financing on the same terms and conditions contemplated in the Proposed Financing.
During the six months ended September 30, 2024 we sold an aggregate of 16,805,852 common shares at an average price of $8.24 per common share, for gross proceeds of $138.5 million and net proceeds, inclusive of commissions and fees, of $136.4 million. During the six months ended September 30, 2024, we paid an aggregate amount of $2.1 million as compensation to the agents involved in the sale of our common shares under the ATM Program.
54
In addition to the above, we continue to review and pursue selected external financing sources to ensure adequate financial resources. These potential sources include, but are not limited to: (i) obtaining financing from traditional or non-traditional investment capital organizations; (ii) obtaining funding from the sale of our common shares or other equity or debt instruments; and (iii) obtaining debt financing with lending terms that more closely match our business model and capital needs. We may from time to time seek to retire our outstanding debt through cash purchases and/or exchanges for equity securities, and open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Cash Flows
The following table presents cash flows for the six months ended September 30, 2024 and 2023:
|
|
Six months ended September 30, |
|
|||||
(in thousands of Canadian dollars) |
|
2024 |
|
|
2023 |
|
||
Net cash (used in) provided by: |
|
|
|
|
|
|
||
Operating activities1 |
|
$ |
(105,632 |
) |
|
$ |
(227,322 |
) |
Investing activities2 |
|
$ |
(31,993 |
) |
|
|
202,717 |
|
Financing activities |
|
$ |
194,717 |
|
|
|
(407,298 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
$ |
1,024 |
|
|
|
(2,129 |
) |
Net increase (decrease) in cash and cash equivalents |
|
$ |
58,116 |
|
|
|
(434,032 |
) |
Cash and cash equivalents, beginning of period3 |
|
$ |
170,300 |
|
|
|
677,007 |
|
Cash and cash equivalents, end of period4 |
|
$ |
228,416 |
|
|
$ |
242,975 |
|
1 Includes net cash used in operating activities from discontinued operations of $nil and $(54,709) for the six months ended September 30, 2024 and 2023, respectively. |
|
|||||||
2 Includes net cash provided by investing activities from discontinued operations of $13,414 and $(17,122) for the six months ended September 30, 2024 and 2023, respectively. |
|
|||||||
3 Includes cash of our discontinued operations of $nil and $9,314 for March 31, 2024 and 2023, respectively. |
|
|||||||
4 Includes cash of our discontinued operations of $nil and $2,599 for September 30, 2024 and 2023, respectively. |
|
|||||||
Operating activities
Cash used in operating activities totaled $105.6 million in the six months ended September 30, 2024, as compared to cash used of $227.3 million in the six months ended September 30, 2023. The decrease in the cash used in operating activities is primarily due to: (i) the year-over-year decrease in our working capital spending, resulting from our previously-noted restructuring actions and cost savings programs, including the closure of certain of our Canadian facilities and other operational changes to implement cultivation-related efficiencies and improvements in the Canadian adult-use cannabis business; and (ii) a reduction in the cash interest paid resulting from a reduction in our debt balances.
Investing activities
The cash used in investing activities totaled $32.0 million in the six months ended September 30, 2024, as compared to cash provided of $202.7 million in the six months ended September 30, 2023.
In the six months ended September 30, 2024, purchases of property, plant and equipment were $6.5 million, primarily related to building improvements and production equipment enhancements made at certain of our Canadian cultivation and production facilities. Comparatively, in the six months ended September 30, 2023, we invested $2.6 million in production equipment enhancements made at certain of our Canadian cultivation and production facilities, and at our Storz & Bickel facilities.
In the six months ended September 30, 2024, our strategic investments in other financial assets were $95.3 million and related primarily to the cash payment to acquire the outstanding principal, including all accrued and unpaid interest thereon, of Acreage’s debt, being an amount up to US$150.0 million (the “Acreage Debt”). Comparatively, in the six months ended September 30, 2023, our strategic investments in other financial assets were $0.5 million and related primarily to our investment in Indiva.
Net redemptions of short-term investments in the six months ended September 30, 2024 were $30.2 million, as compared to net redemptions of $81.0 million in the six months ended September 30, 2023. The year-over-year decrease in the net redemptions reflects the continued redemption of our short-term investments, largely to fund operations and investing activities as described above. As at September 30, 2024, we had short-term investments remaining of $2.8 million.
Net cash flow on sale or deconsolidation of subsidiaries in the six months ended September 30, 2024 was an outflow of $7.0 million and related to the deconsolidation of Canopy USA, refer to Note 3 in the Company’s accompanying financial statements for details. Comparatively, there were no sale or deconsolidation of subsidiaries in the six months ended September 30, 2023.
55
Additional cash inflows during the six months ended September 30, 2024 include proceeds of $4.9 million from the sale of property, plant and equipment, primarily in relation to previous restructuring actions. Comparatively, additional cash inflows during the six months ended September 30, 2023 include proceeds of $152.4 million from the sale of property, plant and equipment, primarily relating to facilities sold in connection with the restructuring actions associated with our Canadian cannabis operations and transition to an asset-light model.
Finally, other investing activities resulted in a cash inflow of $28.3 million in the six months ended September 30, 2024, primarily related to cash receipts from various loan repayments. Comparatively, other investing activities in the six months ended September 30, 2023 of $9.7 million primarily related to completing the purchase of the remaining 45% of the common shares of Les Serres Vert Cannabis Inc., in connection with the restructuring actions related to our Canadian cannabis operations initiated in the fourth quarter of fiscal 2023.
Financing activities
The cash provided by financing activities in the six months ended September 30, 2024 was $194.7 million, as compared to cash used of $407.3 million in the six months ended September 30, 2023. In the six months ended September 30, 2024, $138.5 million in gross proceeds were received from the sale of common shares as part of the ATM Program and $8.5 million in gross proceeds were received from the exercise of warrants, these amounts were offset by share issuance costs of $4.7 million.
In addition, $68.3 million was received relating to the Exchange and Subscription Agreement, offset by long-term debt repayments of $13.5 million which related primarily to the First Quarter 2025 Paydowns and Second Quarter 2025 Paydowns.
Other financing activities resulted in a cash outflow of $7.1 million, which related primarily to: (i) share issuance costs, as noted above and (ii) finance lease payments.
Comparatively, in the six months ended September 30, 2023, we made repayments of long-term debt in the amount of $415.2 million, which related to the various paydowns of our Credit Facility and settlement of the 4.25% unsecured senior notes due in 2023 (the “Canopy Notes”). Other financing activity cash outflow of $25.9 million related primarily to payments made in connection with terminating the finance lease for the cultivation facility in Mirabel, Quebec. In addition, debt extinguishment and issuance costs, and share issue costs contributed to the cash outflow. The cash outflows were offset by proceeds from the issuance of common shares.
Free Cash Flow (Non-GAAP Measure)
Free cash flow is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Management believes that free cash flow presents meaningful information regarding the amount of cash flow required to maintain and organically expand our business, and that the free cash flow measure provides meaningful information regarding our liquidity requirements.
The following table presents free cash flows for the three and six months ended September 30, 2024, and 2023:
|
|
Three months ended September 30, |
|
|
Six months ended September 30, |
|
||||||||||
(in thousands of Canadian dollars) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net cash used in operating activities - continuing |
|
$ |
(53,852 |
) |
|
$ |
(66,393 |
) |
|
$ |
(105,632 |
) |
|
$ |
(172,613 |
) |
Purchases of and deposits on property, plant |
|
|
(2,589 |
) |
|
|
(690 |
) |
|
|
(6,509 |
) |
|
|
(2,636 |
) |
Free cash flow1 - continuing operations |
|
$ |
(56,441 |
) |
|
$ |
(67,083 |
) |
|
$ |
(112,141 |
) |
|
$ |
(175,249 |
) |
1Free cash flow is a non-GAAP measure, and is calculated as net cash provided by (used in) operating activities, less purchases of and deposits on property, plant and equipment. |
|
|||||||||||||||
Free cash flow in the three months ended September 30, 2024 was an outflow of $56.4 million, as compared to an outflow of $67.1 million in the three months ended September 30, 2023. The year-over-year decrease in the free cash outflow primarily reflects the decrease in cash used in operating activities, as described above.
Free cash flow in the six months ended September 30, 2024 was an outflow of $112.1 million, as compared to an outflow of $175.2 million in the six months ended September 30, 2023. The year-over-year decrease in the free cash outflow primarily reflects the decrease in cash used in operating activities, as described above.
Debt
Since our formation, we have financed our cash requirements primarily through the issuance of common shares of Canopy Growth, including the $5.1 billion investment by CBI in the third quarter of fiscal 2019, and debt. Total debt outstanding as of September 30, 2024 was $553.9 million, a decrease from $597.2 million as of March 31, 2024. The total principal amount owing was $574.1 million at September 30, 2024, a decrease from $622.0 million at March 31, 2024. The decreases were primarily due to: (i) the April 2024 Exchange Agreement, which resulted in the settlement of all amounts owing under the CBI Note; (ii) the First Quarter
56
2025 Paydowns resulting in an aggregate principal reduction of $11.2 million; (iii) the Second Quarter 2025 Paydown resulting in an aggregate principal reduction of $1.1 million; and (iv) the August 2024 Supreme Convertible Debt Exchange (as defined below) and offset by the Exchange and Subscription Agreement where a cash payment of approximately US$50 million was received and approximately $27.5 million of aggregate principal amount outstanding Supreme Debentures and Accretion Debentures were settled in exchange for a new senior unsecured convertible debenture with an aggregate principal amount of $96.4 million.
Credit Facility
On March 18, 2021, the Company entered into a term loan credit agreement (the "Credit Agreement") providing for a five-year, first lien senior secured term loan facility in an aggregate principal amount of US$750.0 million (the “Credit Facility”).
The Company had the ability to obtain up to an additional US$500.0 million of incremental senior secured debt pursuant to the Credit Agreement. Pursuant to the balance sheet actions completed in connection with the Reorganization, on October 24, 2022, we entered into agreements with certain of our lenders under the Credit Agreement pursuant to which we agreed to purchase in the aggregate US$187.5 million of the principal amount outstanding under the Credit Facility at a discounted price of US$930 per US$1,000 or US$174.4 million in the aggregate. The first payment, which was oversubscribed, in the amount of approximately $117.5 million (US$87.9 million) was made on November 10, 2022 to reduce the principal indebtedness under the Credit Facility by approximately $126.3 million (US$94.4 million). The second payment of approximately $116.8 million (US$87.2 million) was made on April 17, 2023 to reduce principal indebtedness under the Credit Facility by approximately $125.6 million (US$93.8 million). Additionally, on October 24, 2022, we and certain of our lenders agreed to make certain amendments to the Credit Agreement which, among other things, resulted in: (i) a reduction to the minimum liquidity covenant to no less than US$100.0 million following completion of the second principal repurchase on April 17, 2023; (ii) certain changes to the application of net proceeds from asset sales; (iii) the establishment of a new committed delayed draw term credit facility in an aggregate principal amount of US$100.0 million; and (iv) the elimination of the additional US$500.0 million incremental term loan facility.
On July 13, 2023, we entered into an amended Credit Agreement (the “Amended Credit Agreement”). The Amended Credit Agreement required the Company to prepay or repurchase principal indebtedness under the Credit Facility in an amount equal to the U.S. dollar equivalent of $93,000 at a discounted price of US$930 per US$1,000 (the "July 2023 Paydown"). In addition, pursuant to the Amended Credit Agreement we agreed to apply certain net proceeds from asset sales to prepay or repurchase principal indebtedness under the Credit Facility and receive principal reductions at, in certain circumstances, a discounted price of US$950 per US$1,000. The Amended Credit Agreement also includes, among other things, amendments to the minimum liquidity covenant such that the US$100.0 million minimum ceased to apply concurrently with the July 2023 Paydown. The July 2023 Paydown was made on July 21, 2023.
On each of August 11, 2023 and September 14, 2023, pursuant to the terms of the Amended Credit Agreement, we repurchased additional outstanding principal amounts under the Credit Facility using certain net proceeds from completed asset sales (the “Second Quarter 2024 Paydowns”). The Second Quarter 2024 Paydowns resulted in an aggregate principal reduction of $73.3 million (US$54.5 million) for a cash payment of $69.6 million (US$51.8 million).
On each of November 28, 2023 and December 27, 2023, pursuant to the terms of the Amended Credit Agreement, we repurchased and repaid, as applicable, additional outstanding principal amounts under the Credit Facility using certain net proceeds from completed asset sales (the "Third Quarter 2024 Paydowns"). The Third Quarter 2024 Paydowns resulted in an aggregate principal reduction of $65.4 million (US$48.5 million) for a cash payment of $63.2 million (US$46.9 million).
On February 21, 2024, we repurchased and repaid, as applicable, additional outstanding principal amounts under the Credit Facility (the "Fourth Quarter 2024 Paydowns"). The Fourth Quarter 2024 Paydowns resulted in an aggregate principal reduction of $31.1 million (US$23.0 million) for a cash payment of $28.0 million (US$20.7 million).
On April 29, 2024 and June 28, 2024, we made the First Quarter 2025 Paydowns. The First Quarter 2025 Paydowns resulted in an aggregate principal reduction of $11.2 million (US$8.2 million) for a cash payment of $11.2 million (US$8.2 million).
On August 8, 2024, we entered into an amendment (the “Amending Agreement”) with all of the lenders to the Credit Facility under the Amended Credit Agreement. Pursuant to the terms of the Amending Agreement, the maturity date of the Credit Facility was extended to December 18, 2026 and a mandatory US$97.5 million prepayment of the Credit Facility at 97.5% of par thereby reducing the outstanding amount of the Credit Facility by US$100 million was required to be made by December 31, 2024. We made the mandatory prepayment on October 16, 2024. In addition, the maturity date of the Credit Facility will be further extended to September 18, 2027 if an optional prepayment on the same terms is made on or before March 31, 2025. Borrowings under the Credit Facility are available by either prime rate advances or SOFR advances. Prime rate advances bear interest at the applicable prime rate plus 7.50% per annum and are subject to a prime rate floor of 2.00%. SOFR advances bear interest at the adjusted term SOFR rate plus 8.50% per annum and are subject to an adjusted term SOFR rate floor of 1.00%. Our obligations under the Credit Facility are guaranteed by our material wholly-owned Canadian and U.S. subsidiaries. The Credit Facility is secured by substantially all of our assets and our material wholly-owned Canadian and U.S. subsidiaries, including material real property. The Amended Credit Agreement, as amended by the Amending Agreement contains representations and warranties, and affirmative and negative covenants.
57
On September 27, 2024, we made the Second Quarter 2025 Paydown. The Second Quarter 2025 Paydown resulted in an aggregate principal reduction of $1.1 million (US$0.9 million) for a cash payment of $1.1 million (US$0.9 million).
On October 16, 2024, the Company made an early prepayment under its Credit Facility in an aggregate principal amount equal to US$100.0 million of the principal amount outstanding thereunder at a discounted price of US$97.5 million. Pursuant to the Amending Agreement, the US$100.0 million prepayment of the Credit Facility was required to be made by December 31, 2024.
Supreme Cannabis Convertible Debentures and Accretion Debentures
On October 19, 2018, Supreme Cannabis Company, Inc. (“Supreme Cannabis”) issued 6.0% senior unsecured convertible debentures (the “Supreme Debentures”) for gross proceeds of $100.0 million. On September 9, 2020, the Supreme Debentures were amended to effect, among other things: (i) the cancellation of $63.5 million of principal amount of the Supreme Debentures; (ii) an increase in the interest rate to 8% per annum; (iii) the extension of the maturity date to September 10, 2025; and (iv) a reduction in the conversion price to $2.85.
In addition, on September 9, 2020, Supreme Cannabis issued new senior unsecured non-convertible debentures (the “Accretion Debentures”). The principal amount began at $nil and accretes at a rate of 11.06% per annum based on the remaining principal amount of the Supreme Debentures of $36.5 million to a maximum of $13.5 million, compounding on a semi-annual basis commencing on September 9, 2020, and ending on September 9, 2023. As of September 9, 2023, the principal amount of the Accretion Debentures was finalized as $10.4 million. The Accretion Debentures are payable in cash, but do not bear cash interest and are not convertible into Supreme Shares (as defined below). The principal amount of the Accretion Debentures will amortize, or be paid, at 1.0% per month over the 24 months prior to maturity.
As a result of the arrangement (the “Supreme Arrangement”) we completed with Supreme Cannabis on June 22, 2021 pursuant to which we acquired 100% of the issued and outstanding common shares of Supreme Cannabis (the “Supreme Shares”), the Supreme Debentures remain outstanding as securities of Supreme Cannabis, which, upon conversion will entitle the holder thereof to receive, in lieu of the number of Supreme Shares to which such holder was theretofore entitled, the consideration payable under the Supreme Arrangement that such holder would have been entitled to be issued and receive if, immediately prior to the effective time of the Supreme Arrangement, such holder had been the registered holder of the number of Supreme Shares to which such holder was theretofore entitled.
In connection with the Supreme Arrangement, we, Supreme Cannabis and Computershare Trust Company of Canada (the “Trustee”) entered into a supplemental indenture whereby we agreed to issue common shares upon conversion of any Supreme Debenture. In addition, we may force conversion of the Supreme Debentures outstanding with 30 days’ notice if the daily volume weighted average trading price of our common shares is greater than $385.90 for any 10 consecutive trading days. We, Supreme Cannabis and the Trustee entered into a further supplemental indenture whereby we agreed to guarantee the obligations of Supreme Cannabis pursuant to the Supreme Debentures and the Accretion Debentures.
Prior to September 9, 2023, the Supreme Debentures were not redeemable. Beginning on and after September 9, 2023, Supreme Cannabis may from time to time, upon providing 60 days prior written notice to the Trustee, redeem the Supreme Debentures outstanding, provided that the Accretion Debentures have already been redeemed in full.
Refer to the May 2024 Convertible Debenture details below for details on partial settlement of the Supreme Debentures and Accretion Debentures.
On August 20, 2024, we entered into the August 2024 Supreme Convertible Debt Exchange with the August 2024 Investor pursuant to which, among other things, the August 2024 Investor delivered to the Company approximately $2.7 million of aggregate principal amount of outstanding Supreme Debentures held by the August 2024 Investor in exchange for 291,351 common shares of the Company and $0.03 million in cash for accrued interest.
May 2024 Convertible Debenture
On May 2, 2024, we entered into the Exchange and Subscription Agreement with the May 2024 Investor pursuant to which, among other things, the May 2024 Investor delivered to us approximately $27.5 million aggregate principal amount of outstanding Supreme Debentures and Accretion Debentures held by the May 2024 Investor and paid us approximately US$50 million in exchange for us issuing to the May 2024 Investor (i) the May 2024 Convertible Debenture with an aggregate principal amount of $96.4 million maturing five years from the Closing Date of the Transaction and (ii) 3,350,430 May 2024 Investor Warrants of Canopy Growth. Each May 2024 Investor Warrant entitles the holder to acquire one Canopy Share at an exercise price equal to $16.18 per Canopy Share for a period of five years from the Closing Date. The May 2024 Convertible Debenture bears interest at a rate of 7.50% per annum, payable in semi-annual payments in cash or, at our option, in Canopy Shares for the first four semi-annual interest payments after the Closing Date, subject to satisfaction of certain conditions, including the prior approval of the TSX.
The Exchange and Subscription Agreement granted the May 2024 Investor, during the Agreement ROFR Term, a right of first refusal to subscribe for, and to be issued, as the sole investor in a Proposed Private Placement; provided, however, that the May 2024
58
Investor shall subscribe for 100% of the Proposed Private Placement on the same terms and conditions contemplated in the Proposed Private Placement.
The May 2024 Convertible Debenture is convertible into Canopy Shares at the option of the May 2024 Investor at a conversion price equal to $14.38 per share. The May 2024 Convertible Debenture is subject to a forced conversion feature upon notice from us in the event that the average closing trading price of the Canopy Shares on the TSX exceeds $21.57 for a period of 10 consecutive trading days. In addition, pursuant to the terms of the May 2024 Convertible Debenture, during the Debenture ROFR Term, we granted the May 2024 Investor a right of first refusal to subscribe for, and to be issued, as an investor in a Proposed Financing; provided, however, that the May 2024 Investor shall subscribe for 25% of the Proposed Financing on the same terms and conditions contemplated in the Proposed Financing.
Contractual Obligations and Commitments
Other than changes to our Supreme Cannabis Convertible Debentures and Accretion Debentures, the May 2024 Convertible Debenture, the CBI Note, the First Quarter 2025 Paydowns, the Second Quarter 2025 Paydown and certain agreements entered into in connection with the Reorganization, the Reorganization Amendments and the Additional Reorganization Amendments, as described above under “Recent Developments”, there have been no material changes to our contractual obligations and commitments from the information provided in the MD&A section in the Annual Report.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates from the information provided in the MD&A section in the Annual Report.
Impairment of goodwill
We do not believe that an event occurred or circumstances changed during the second quarter of fiscal 2025 that would, more likely than not, reduce the fair value of the Storz & Bickel reporting unit below its carrying value. Therefore, we concluded that the quantitative goodwill impairment assessment was not required for the Storz & Bickel reporting unit at September 30, 2024. The carrying value of goodwill associated with the Storz & Bickel reporting unit was $44,531 at September 30, 2024.
We are required to perform our next annual goodwill impairment analysis on March 31, 2025, or earlier should there be an event that occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Market risk is the potential economic loss arising from adverse changes in market factors. As a result of our global operating, acquisition and financing activities, we are exposed to market risk associated with changes in foreign currency exchange rates, interest rates and equity prices. To manage the volatility relating to these risks, we may periodically purchase derivative instruments including foreign currency forwards. We do not enter into derivative instruments for trading or speculative purposes.
Foreign currency risk
Our Interim Financial Statements are presented in Canadian dollars. We are exposed to foreign currency exchange rate risk as the functional currencies of certain subsidiaries, including those in the United States and Europe, are not in Canadian dollars. The translation of foreign currencies to Canadian dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date, and for revenues and expense using an average exchange rate for the period. Therefore, fluctuations in the value of the Canadian dollar affect the reported amounts of net revenue, expenses, assets and liabilities. The resulting translation adjustments are reported as a component of accumulated other comprehensive income or loss on the consolidated balance sheet.
A hypothetical 10% change in the U.S. dollar against the Canadian dollar compared to the exchange rate at September 30, 2024, would affect the carrying value of net assets by approximately $83.2 million, with a corresponding impact to the foreign currency translation account within accumulated other comprehensive income (loss). A hypothetical 10% change in the euro against the Canadian dollar compared to the exchange rate at September 30, 2024, would affect the carrying value of net assets by approximately $19.8 million, with a corresponding impact to the foreign currency translation account within accumulated other comprehensive income (loss).
We also have exposure to changes in foreign exchange rates associated with transactions which are undertaken by our subsidiaries in currencies other than their functional currency. As a result, we have been impacted by changes in exchange rates and may be impacted for the foreseeable future.
59
Foreign currency derivative instruments may be used to hedge existing foreign currency denominated assets and liabilities, forecasted foreign currency denominated sales/purchases to/from third parties as well as intercompany sales/purchases, intercompany principal and interest payments, and in connection with acquisitions, divestitures or investments outside of Canada. Historically, while we have purchased derivative instruments to mitigate the foreign exchange risks associated with certain transactions, the impact of these hedging transactions on our financial statements has been immaterial.
Interest rate risk
Our cash equivalents and short-term investments are held in both fixed-rate and adjustable-rate securities. Investments in fixed-rate instruments carry a degree of interest rate risk. The fair value of fixed-rate securities may be adversely impacted due to a rise in interest rates. Additionally, a falling-rate environment creates reinvestment risk because as securities mature, the proceeds are reinvested at a lower rate, generating less interest income. As at September 30, 2024, our cash and cash equivalents, and short-term investments consisted of $91.7 million in interest rate sensitive instruments (March 31, 2024 – $88.0 million).
Our financial liabilities consist of long-term fixed rate debt and floating-rate debt. Fluctuations in interest rates could impact our cash flows, primarily with respect to the interest payable on floating-rate debt.
|
|
Aggregate Notional Value |
|
|
Fair Value |
|
|
Decrease in Fair Value - Hypothetical 1% Rate Increase |
|
|||||||||||||||
|
|
September 30, 2024 |
|
|
March 31, 2024 |
|
|
September 30, 2024 |
|
|
March 31, 2024 |
|
|
September 30, 2024 |
|
|
March 31, 2024 |
|
||||||
Promissory note |
|
$ |
- |
|
|
$ |
100,000 |
|
|
$ |
- |
|
|
$ |
89,224 |
|
|
$ |
- |
|
|
$ |
(523 |
) |
Fixed interest rate debt |
|
|
99,862 |
|
|
|
38,186 |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
||||
Variable interest rate debt |
|
|
474,203 |
|
|
|
469,819 |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
||||
Equity price risk
We hold other financial assets and liabilities in the form of investments in shares, warrants, options, put liabilities, and convertible debentures that are measured at fair value and recorded through either net income (loss) or other comprehensive income (loss). We are exposed to price risk on these financial assets, which is the risk of variability in fair value due to movements in equity or market prices.
Information regarding the fair value of financial instrument assets and liabilities that are measured at fair value on a recurring basis, and the relationship between the unobservable inputs used in the valuation of these financial assets and their fair value is presented in Note 23 of the Interim Financial Statements.
60
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, and summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.
Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2024, our disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is timely recorded, processed, summarized and reported and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting.
There have been no changes in our “internal control over financial reporting” (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
61
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
Other than as disclosed below, we are not aware of: (a) any legal proceedings to which we are a party, or to which any of our properties is subject, which would be material to us or of any such proceedings being contemplated, (b) any penalties or sanctions imposed by a court relating to securities legislation, or other penalties or sanctions imposed by a court or regulatory body against us that would likely be considered important to a reasonable investor making an investment decision, and (c) any settlement agreements that we have entered into before a court relating to securities legislation or with a securities regulatory authority.
On May 23, 2023, an ostensible shareholder commenced a putative class action (Turpel v. Canopy Growth Corporation, et al., Case No. 1:23-cv-043022-PAE) against the Company and two of its officers in the U.S. District Court for the Southern District of New York on behalf of persons and entities that purchased or otherwise acquired the Company’s securities between May 31, 2022 and May 10, 2023, alleging violations of U.S. federal securities laws. Two similar cases were subsequently filed, captioned as Kantner v. Canopy Growth Corporation, et al., Case No. 1:23-cv-06266-PAE and Allen v. Canopy Growth Corporation, et al., Case No. 1:23-cv-05891-PAE.
On November 30, 2023, the U.S. District Court for the Southern District of New York consolidated the Turpel, Kantner and Allen actions (captioned as “In re Canopy Growth Securities Litigation, No. 23-cv-04302”) and appointed Chen Li as lead plaintiff. On January 22, 2024, the lead plaintiff filed a first amended complaint against the Company and certain of its current and former officers, alleging claims on behalf of persons and entities that purchased or otherwise acquired the Company’s securities between November 5, 2021 and June 22, 2023. The first amended complaint alleges that the Company made false or misleading statements and omissions regarding BioSteel’s revenue, performance and operations, and the Company’s internal controls over accounting and financial reporting in violation of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. The lead plaintiff seeks an unspecified amount of damages, attorneys’ fees and costs, and other relief. On March 7, 2024, the Company filed a motion to dismiss the first amended complaint and briefing on that motion was completed on April 11, 2024. On July 17, 2024, the U.S. District Court for the Southern District of New York dismissed the first amended complaint against the Company and all individual defendants with prejudice. On July 18, 2024, the district court issued a judgment closing the case. On August 9, 2024, lead plaintiff filed a notice of appeal to the United States Court of Appeals for the Second Circuit. On October 8, 2024, the parties filed a stipulation of voluntary dismissal of the appeal with prejudice. On October 9, 2024, the Court of Appeals for the Second Circuit entered an order dismissing the appeal.
On January 18, 2024, a follow-on derivative shareholder lawsuit, captioned Press v. Schmeling et al., was filed in the Supreme Court of the State of New York by ostensible shareholder Denise Press on behalf of Canopy Growth against the Company’s directors and certain of its officers alleging misstatements and omissions regarding revenue attributed to BioSteel Canada and the Company’s internal controls over accounting and financial reporting. The complaint asserts claims for breach of fiduciary duties, gross mismanagement, waste of corporate assets, unjust enrichment, and insider trading, and seeks damages, attorneys’ fees and costs, and equitable relief. All proceedings in this derivative shareholder lawsuit are currently stayed.
On June 27, 2023, an ostensible shareholder commenced a putative class action (Dziedziejko v. Canopy Growth Corporation et al., Court File No. CV-23-00701769-00CP) in the Ontario Superior Court of Justice against the Company, two of its officers, and the Company’s auditor on behalf of a putative class of all persons or entities who acquired Canopy Growth’s securities in the secondary market between June 1, 2021 to June 22, 2023 and held some or all of those securities until the close of trading on May 10, 2023 or June 22, 2023.
The plaintiff alleges that the Company’s disclosures contained misrepresentations within the meaning of the Securities Act (Ontario), that certain officers authorized, permitted, or acquiesced in the release of the impugned disclosures, that the Company and one of its officers acted in a manner that was oppressive or unfairly prejudicial to the proposed class members by failing to remedy alleged deficiencies in the Company’s internal controls, and that all of the defendants are liable for damages to the putative class. The action seeks an unspecified amount of damages, interest, legal fees, and the costs of administering a plan of distribution of the recovery. The Company was also named in two other putative class proceedings that were commenced between May 2023 and July 2023 in the Ontario Superior Court of Justice alleging that the Company’s disclosures contained misrepresentations. However, on November 10, 2023, the Ontario Superior Court of Justice decided a carriage motion staying those actions (Leonard v. Canopy Growth Corporation et al., Court File No. CV-23-00702281-00CP and Twidale v. Canopy Growth Corporation et al., Court File No. CV-23-00700135-00CP), and allowing Dziedziejko v. Canopy Growth Corporation et al., Court File No. CV-23-00701769-00CP to proceed to a class certification hearing.
On June 15, 2023, an ostensible shareholder commenced a putative class action (Asmaro v. Canopy Growth Corporation et al., Court File No. VLC-S-S-234351) against the Company and two of its officers in the Supreme Court of British Columbia on behalf of a putative class of all persons and entities who purchased or otherwise acquired securities of the Company between August 6, 2021 and May 10, 2023. The lawsuit alleges that the Company’s disclosures contained misrepresentations within the meaning of the Securities Act (British Columbia), that certain officers authorized, permitted, or acquiesced in the release of the impugned disclosures, and that all of the defendants are liable for damages to the putative class. The plaintiff seeks an unspecified amount of damages.
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In May 2023, in connection with the Company’s internal review of the financial reporting matters related to BioSteel Canada, as previously disclosed in the Annual Report (the “BioSteel Review”), the Company voluntarily self-reported to the SEC that the timing and amount of revenue recognition in the BioSteel Canada segment were under review. As a result of self-reporting the BioSteel Review, the Company is the subject of an ongoing investigation by the SEC. Although the Company is fully cooperating with the SEC and continues to voluntarily respond to requests in connection with this matter, it cannot predict when such matters will be completed or the outcome and potential impact. Any remedial measures, sanctions, fines or penalties, including, but not limited to, financial penalties and awards, injunctive relief and compliance conditions, imposed on the Company in connection with this matter could have a material adverse impact on our business, financial condition and results of operations. See “Risk Factors—Risks Relating to the Restatement of the Prior Financial Statements—As a result of self-reporting the BioSteel Review, the Company is the subject of an investigation by the SEC and an ongoing informal inquiry by regulatory authorities in Canada, and it cannot predict the timing of developments, and any adverse outcome of these continuing matters could have a material adverse effect on the Company” under Item 1A of the Annual Report.
The Company denies any alleged misconduct and liability for each of the claims asserted in the above-noted Court, believes that the defendants/respondents have meritorious defenses to the claims, and expects to vigorously defend the claims, although the Company cannot predict when or how they will be resolved or estimate what the potential loss or range of loss would be, if any.
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not currently a party to any other legal proceedings other than described above, the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition, results of operations or prospects. Please refer to “Risk Factors” under Item 1A of the Annual Report for further discussion.
Item 1A. Risk Factors.
For information regarding factors that could affect our results of operations, financial condition and liquidity, see the risk factors discussed in Part I, Item 1A in the Annual Report. Except as set forth below, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A in our Annual Report.
There can be no certainty that all conditions to the Floating Share Arrangement and the Acreage Amending Agreement will be satisfied or waived.
There can be no certainty, nor can the Company provide any assurance, that all conditions precedent contained in the Floating Share Arrangement Agreement and the Acreage Amending Agreement will be satisfied or waived. The Floating Share Arrangement is subject to certain conditions precedent which. There can be no certainty, nor can the Company provide any assurance, that these conditions will be satisfied or, if satisfied, when they will be satisfied. If such conditions precedent are not satisfied, it may result in the acquisition of Acreage not being completed.
Acreage’s financial statements express doubt about its ability to continue as a going concern.
Acreage’s publicly available financial statements as of and for three and six months ended June 30, 2024 filed with the SEC on August 14, 2024 (“Acreage’s June 30, 2024 Financial Statements”) express doubt about Acreage’s ability to continue as a going concern. In particular, Acreage’s June 30, 2024 Financial Statements state: “[Acreage] had an accumulated deficit as of June 30, 2024, as well as a net loss and negative cash flow from operating activities for the six months ended June 30, 2024. These factors raise substantial doubt about [Acreage]’s ability to continue as a going concern for at least one year from the issuance of these financial statements.” In the event that Acreage is unable to continue as a going concern, the Acreage Amended Arrangement and the Floating Share Arrangement may not be completed. In the event that the Acreage Amended Arrangement and the Floating Share Arrangement are completed and Acreage is unable to continue as a going concern, this would have a negative impact on Canopy USA’s business, financial results and operations and have an adverse impact on the Company’s United States strategy, and, ultimately, the Company’s financial results and operations.
On June 3, 2024, the Company closed the Debt Acquisition pursuant to the credit agreement dated as of December 16, 2021, as amended by the first amendment to credit agreement dated as of on October 24, 2022, and the second amendment to credit agreement dated as of April 28, 2023 (the “Prior Acreage Credit Agreement”). The Company entered into various agreements in connection with the Debt Acquisition in order to, among other things, acquire the Acquired Debt in exchange for US$69.8 million in cash and the release of approximately US$30.1 million that was held in escrow pursuant to the option agreement dated November 15, 2022 among a wholly-owned subsidiary of Canopy Growth and the lenders party to the Prior Acreage Credit Agreement.
In view of the foregoing, Acreage’s continuation as a going concern is dependent upon its continued operations, which in turn is dependent upon, among other things, Acreage’s ability to meet its financial requirements. There is no assurance that Acreage will be successful in its plans to fund its operations and debt obligations as they become due and payable, which for greater certainty includes its debt obligations in favor of the Company in connection with the Acquired Debt. Accordingly, in the event Acreage cannot satisfy its debt obligations as they become due, the Acquired Debt may not be repaid and the Company may lose the entirety of its investment. In addition, Acreage may be required to terminate or significantly curtail its operations or enter into arrangements with third parties that may require Acreage to relinquish rights to certain aspects of its business and/or dispose of certain assets, which may
63
ultimately result in Acreage not being able to satisfy the conditions in the Acreage Amended Arrangement and the Floating Share Arrangement and the acquisition of Acreage not being completed.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Arrangements
During the three months ended September 30, 2024, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the
Item 6. Exhibits.
Exhibit Number |
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Description |
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3.1 |
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3.2 |
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3.3 |
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3.4 |
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10.1# |
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10.2# |
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10.3# |
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10.4 |
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10.5 |
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31.1* |
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64
31.2* |
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32.1** |
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32.2** |
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101.INS |
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XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101.SCH |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
** This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act or the Exchange Act.
# This document has been identified as a management contract or compensatory plan or arrangement.
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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CANOPY GROWTH CORPORATION |
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Date: November 8, 2024 |
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By: |
/s/ David Klein |
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David Klein |
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Chief Executive Officer (Principal Executive Officer) |
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Date: November 8, 2024 |
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By: |
/s/ Judy Hong |
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Judy Hong |
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Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
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