Full Press Release Details
As of September 30, 2019, Canopy Growth Corporation (the Company ) determined that it no longer qualified as a foreign
private issuer as such term is defined in Rule 405 under the Securities Act of 1933. This means that as of April 1, 2020, the Company has been required to comply with all of the periodic disclosure requirements of the Securities Exchange
Act of 1934 applicable to U.S. domestic issues, such as Forms 10-K, 10-Q and 8-K, rather than the forms the Company has filed
with the Securities and Exchange Commission ( SEC ) in the past as a foreign private issuer, such as Forms 40-F and 6-K.
Accordingly, the Company is now required to prepare its financial statements filed with the SEC in accordance with generally accepted
accounting principles in the United States ( U.S. GAAP ). As required pursuant to section 4.3(4) of National Instrument 51-102 Continuous Disclosure Obligations, the Company must
restate its interim financial reports for the fiscal year ended March 31, 2020 in accordance with U.S. GAAP, such interim financial reports having previously been prepared in accordance with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
The attached amended and restated condensed interim consolidated financial statements
(the Financial Statements ) for the three months ended June 30, 2019 and 2018 have been prepared in accordance with U.S. GAAP, are current as of August 14, 2019 and provide financial information for the three months ended
June 30, 2019, as amended and restated on July 10, 2020. Other than as expressly set forth above, the revised Financial Statements do not, and do not purport to, update or restate the information in the original condensed interim consolidated
financial statements or reflect any events that occurred after the date of the filing of the original condensed interim consolidated financial statements.
The Company s Annual Report on Form 10-K (the Annual Report ) dated June 1, 2020
is available under the Company s profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Readers are cautioned that these Financial Statements should be read in conjunction with the Annual Report, including the consolidated financial
statements and the related notes thereto included in Item 8 thereof.
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2019 AND 2018
(IN CANADIAN DOLLARS)
CANOPY GROWTH CORPORATION
| Condensed interim consolidated balance sheets | 1 | |||
| Condensed interim consolidated statements of operations and comprehensive loss | 2 | |||
| Condensed interim consolidated statements of changes in shareholders equity | 3 | |||
| Condensed interim consolidated statements of cash flows | 4 | |||
| Notes to the condensed interim consolidated financial statements | 5-29 |
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
| June 30, | March 31, | |||||||||||
| (Expressed in CDN $000 s) | Notes | 2019 | 2019 | |||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | 3 | $ | 1,816,632 | $ | 2,480,830 | |||||||
| Short-term investments | 4 | 1,324,255 | 2,034,133 | |||||||||
| Restricted short-term investments | 19,533 | 21,432 | ||||||||||
| Amounts receivable, net | 5 | 102,766 | 106,974 | |||||||||
| Inventory | 6 | 254,151 | 190,072 | |||||||||
| Prepaid expenses and other assets | 7 | 105,029 | 85,691 | |||||||||
| 3,622,366 | 4,919,132 | |||||||||||
| Equity method investments | 8 | 113,321 | 112,385 | |||||||||
| Other financial assets | 9 | 746,691 | 363,427 | |||||||||
| Property, plant and equipment | 10 | 1,433,188 | 1,096,340 | |||||||||
| Intangible assets | 11 | 569,029 | 558,070 | |||||||||
| Goodwill | 12 | 1,877,719 | 1,489,859 | |||||||||
| Other assets | 31,391 | 25,902 | ||||||||||
| $ | 8,393,705 | $ | 8,565,115 | |||||||||
| Liabilities and Shareholders equity | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | $ | 205,033 | $ | 188,920 | ||||||||
| Other accrued expenses and liabilities | 13 | 51,786 | 37,613 | |||||||||
| Current portion of long-term debt | 14 | 18,288 | 103,716 | |||||||||
| Other liabilities | 15 | 97,647 | 81,414 | |||||||||
| 372,754 | 411,663 | |||||||||||
| Long-term debt | 14 | 787,508 | 842,259 | |||||||||
| Deferred income tax liabilities | 24 | 115,077 | 105,081 | |||||||||
| Warrant derivative liability | 26 | 1,092,748 | ||||||||||
| Other liabilities | 15 | 207,455 | 134,004 | |||||||||
| 2,575,542 | 1,493,007 | |||||||||||
| Redeemable noncontrolling interest | 16 | 8,500 | 6,400 | |||||||||
| Canopy Growth Corporation shareholders equity: | ||||||||||||
| Common shares $nil par value; Authorized - unlimited number of shares; Issued - 339,718,381 shares and 337,510,408 shares, respectively | 17 | 6,077,390 | 6,029,222 | |||||||||
| Additional paid-in capital | 2,694,673 | 1,592,024 | ||||||||||
| Accumulated other comprehensive (loss) income | 19 | (52,039 | ) | (5,905 | ) | |||||||
| Deficit | (3,187,779 | ) | (835,118 | ) | ||||||||
| Total Canopy Growth Corporation shareholder s equity | 5,532,245 | 6,780,223 | ||||||||||
| Noncontrolling interests | 20 | 277,418 | 285,485 | |||||||||
| Total shareholders equity | 5,809,663 | 7,065,708 | ||||||||||
| Total liabilities and shareholders equity | $ | 8,393,705 | $ | 8,565,115 |
The accompanying notes are an integral part of these condensed interim consolidated financial
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED JUNE 30, 2019 AND 2018
| June 30, | June 30, | |||||||||||
| (Expressed in CDN $000 s except share amounts) | Notes | 2019 | 2018 | |||||||||
| Revenue | 22 | $ | 103,391 | $ | 25,916 | |||||||
| Excise taxes | 22 | 12,909 | ||||||||||
| Net revenue | 22 | 90,482 | 25,916 | |||||||||
| Cost of goods sold | 72,192 | 18,452 | ||||||||||
| Gross margin | 18,290 | 7,464 | ||||||||||
| Selling, general and administrative expenses | 145,647 | 43,951 | ||||||||||
| Share-based compensation | 87,362 | 25,567 | ||||||||||
| Total operating expenses | 233,009 | 69,518 | ||||||||||
| Operating loss | (214,719 | ) | (62,054 | ) | ||||||||
| Loss from equity method investments | 8 | (1,833 | ) | (2,569 | ) | |||||||
| Other income (expense), net | 23 | 32,768 | (31,169 | ) | ||||||||
| Loss before income taxes | (183,784 | ) | (95,792 | ) | ||||||||
| Income tax (expense) recovery | 24 | (10,267 | ) | 2,493 | ||||||||
| Net loss | $ | (194,051 | ) | $ | (93,299 | ) | ||||||
| Net loss attributable to noncontrolling interests and redeemable noncontrolling interest | (8,182 | ) | (3,628 | ) | ||||||||
| Net loss attributable to Canopy Growth Corporation | $ | (185,869 | ) | $ | (89,671 | ) | ||||||
| Basic and diluted loss per share | $ | (0.54 | ) | $ | (0.45 | ) | ||||||
| Basic and diluted weighted average common shares outstanding | 346,779,156 | 200,160,740 | ||||||||||
| Comprehensive loss: | ||||||||||||
| Net loss | $ | (194,051 | ) | $ | (93,299 | ) | ||||||
| Fair value changes of own credit risk of financial liabilities | 14,610 | (9,420 | ) | |||||||||
| Foreign currency translation | (60,744 | ) | (1,320 | ) | ||||||||
| Total other comprehensive (loss), net of income tax effect | (46,134 | ) | (10,740 | ) | ||||||||
| Comprehensive loss | (240,185 | ) | (104,039 | ) | ||||||||
| Comprehensive loss attributable to noncontrolling interests and redeemable noncontrolling interest | (8,182 | ) | (3,628 | ) | ||||||||
| Comprehensive loss attributable to Canopy Growth Corporation | (232,003 | ) | (100,411 | ) |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 2019 AND 2018
| Additional paid-in capital | ||||||||||||||||||||||||||||||||||||||||
| (Expressed in CDN $000 s except share amounts) | Note | Common shares | Share- based reserve | Warrants | Ownership changes | Redeemable noncontrolling interest | Accumulated other comprehensive income (loss) | Deficit | Noncontrolling interests | Total | ||||||||||||||||||||||||||||||
| Balance at March 31, 2018 | $ | 1,079,442 | $ | 57,982 | $ | 70,455 | $ | (1,019 | ) | $ | (64,745 | ) | $ | 35,408 | $ | (132,904 | ) | $ | 85,732 | $ | 1,130,351 | |||||||||||||||||||
| Cumulative effect from adoption of ASU 2016-1 | (34,800 | ) | 34,800 | |||||||||||||||||||||||||||||||||||||
| Other issuances of common shares and warrants | 37,911 | (2,616 | ) | 35,295 | ||||||||||||||||||||||||||||||||||||
| Exercise of warrants | 322 | (189 | ) | 133 | ||||||||||||||||||||||||||||||||||||
| Exercise of Omnibus Plan stock options | 9,414 | (4,318 | ) | 5,096 | ||||||||||||||||||||||||||||||||||||
| Share-based compensation | 18,921 | 18,921 | ||||||||||||||||||||||||||||||||||||||
| Issuance and vesting of restricted share units | 2,247 | 2,247 | ||||||||||||||||||||||||||||||||||||||
| Changes in redeemable noncontrolling interest | (18,826 | ) | 726 | (18,100 | ) | |||||||||||||||||||||||||||||||||||
| Ownership changes relating to noncontrolling interest | (499 | ) | 6,223 | 5,724 | ||||||||||||||||||||||||||||||||||||
| Comprehensive loss | (10,740 | ) | (89,671 | ) | (3,628 | ) | (104,039 | ) | ||||||||||||||||||||||||||||||||
| Balance at June 30, 2018 | $ | 1,127,089 | $ | 72,216 | $ | 70,266 | $ | (1,518 | ) | $ | (83,571 | ) | $ | (10,132 | ) | $ | (187,775 | ) | $ | 89,053 | $ | 1,075,628 | ||||||||||||||||||
| Balance at March 31, 2019 | $ | 6,029,222 | $ | 505,172 | $ | 1,589,925 | $ | (500,963 | ) | $ | (2,110 | ) | $ | (5,905 | ) | $ | (835,118 | ) | $ | 285,485 | $ | 7,065,708 | ||||||||||||||||||
| Other issuances of common shares and warrants | 17 | 18,600 | (18,674 | ) | (74 | ) | ||||||||||||||||||||||||||||||||||
| Exercise of warrants | 17 | 897 | (470 | ) | 427 | |||||||||||||||||||||||||||||||||||
| Exercise of Omnibus Plan stock options | 18 | 28,671 | (12,594 | ) | 16,077 | |||||||||||||||||||||||||||||||||||
| Share-based compensation | 18 | 84,769 | 84,769 | |||||||||||||||||||||||||||||||||||||
| Acreage warrant modification | 26 | 1,049,153 | (2,166,792 | ) | (1,117,639 | ) | ||||||||||||||||||||||||||||||||||
| Changes in redeemable noncontrolling interest | 16 | 615 | (2,715 | ) | (2,100 | ) | ||||||||||||||||||||||||||||||||||
| Ownership changes relating to noncontrolling interest | 20 | (150 | ) | 2,830 | 2,680 | |||||||||||||||||||||||||||||||||||
| Comprehensive loss | (46,134 | ) | (185,869 | ) | (8,182 | ) | (240,185 | ) | ||||||||||||||||||||||||||||||||
| Balance at June 30, 2019 | $ | 6,077,390 | $ | 558,673 | $ | 2,638,608 | $ | (501,113 | ) | $ | (1,495 | ) | $ | (52,039 | ) | $ | (3,187,779 | ) | $ | 277,418 | $ | 5,809,663 |
The accompanying notes are an integral part of these condensed interim consolidated financial
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2019 AND 2018
| June 30, | June 30, | |||||||||||
| (Expressed in CDN $000 s) | Notes | 2019 | 2018 | |||||||||
| Cash flows from operating activities | ||||||||||||
| Net loss | $ | (194,051 | ) | $ | (93,299 | ) | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Depreciation of property, plant and equipment | 13,587 | 3,661 | ||||||||||
| Amortization of intangible assets | 7,165 | 2,632 | ||||||||||
| Share of loss on equity investments | 8 | 1,833 | 2,569 | |||||||||
| Share-based compensation | 18 | 87,362 | 26,351 | |||||||||
| Income tax expense (recovery) | 24 | 10,267 | (2,721 | ) | ||||||||
| Non-cash foreign currency | 2,834 | 834 | ||||||||||
| Change in operating assets and liabilities, net of effects from purchases of businesses: | ||||||||||||
| Amounts receivable | 13,506 | (6,321 | ) | |||||||||
| Prepaid expenses and other assets | (24,009 | ) | (11,667 | ) | ||||||||
| Inventory | (50,716 | ) | (17,113 | ) | ||||||||
| Accounts payable and accrued liabilities | (12,582 | ) | 1,791 | |||||||||
| Other, including non-cash fair value adjustments | (13,486 | ) | 25,642 | |||||||||
| Net cash used in operating activities | (158,290 | ) | (67,641 | ) | ||||||||
| Cash flows from investing activities | ||||||||||||
| Purchases of and deposits on property, plant and equipment | (211,824 | ) | (153,654 | ) | ||||||||
| Purchases of intangible assets | (7,692 | ) | (2,819 | ) | ||||||||
| Redemption (purchase) of short-term investments | 687,818 | (1,212 | ) | |||||||||
| Investments in equity method investees | 8 | (2,824 | ) | (3,500 | ) | |||||||
| Investments in other financial assets | (29,414 | ) | (21,759 | ) | ||||||||
| Investment in Acreage Arrangement | 9,26 | (395,190 | ) | |||||||||
| Change in acquisition related liabilities | (21,447 | ) | ||||||||||
| Net cash outflow on acquisition of subsidiaries | 25 | (425,024 | ) | (37 | ) | |||||||
| Net cash used in investing activities | (405,597 | ) | (182,981 | ) | ||||||||
| Cash Flows from financing activities: | ||||||||||||
| Payment of share issue costs | (74 | ) | (301 | ) | ||||||||
| Proceeds from issuance of shares by Canopy Rivers | 86 | 787 | ||||||||||
| Proceeds from exercise of stock options | 18 | 16,077 | 1,758 | |||||||||
| Proceeds from exercise of warrants | 17 | 427 | 133 | |||||||||
| Issuance of long-term debt | 14 | (i) | 600,000 | |||||||||
| Payment of debt issue costs | 14 | (i) | (16,045 | ) | ||||||||
| Repayment of long-term debt | (98,207 | ) | (374 | ) | ||||||||
| Net cash (used) provided by financing activities | (81,691 | ) | 585,958 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (18,620 | ) | ||||||||||
| Net (decrease) increase in cash and cash equivalents | (664,198 | ) | 335,336 | |||||||||
| Cash and cash equivalents, beginning of period | 2,480,830 | 322,560 | ||||||||||
| Cash and cash equivalents, end of period | $ | 1,816,632 | $ | 657,896 | ||||||||
| Supplemental disclosure of cash flow information | ||||||||||||
| Cash paid during the year: | ||||||||||||
| Income taxes | ||||||||||||
| Noncash investing and financing activities | ||||||||||||
| Additions to property, plant and equipment | 124,427 | 84,460 |
The accompanying notes are an integral part of these condensed interim consolidated financial
CANOPY GROWTH CORPORATION
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2019 AND 2018
(Expressed in CDN $000 s except share amounts)
Canopy Growth Corporation is a publicly traded corporation, incorporated in Canada, with its head office located at 1 Hershey
Drive, Smiths Falls, Ontario with its common shares listed on the TSX, under the trading symbol WEED and as of May 24, 2018 on the NYSE, under the trading symbol CGC . References in these condensed interim consolidated
financial statements to Canopy Growth or the Company refer to Canopy Growth Corporation and its subsidiaries.
The principal activities of the Company are the production, distribution and sale of cannabis as regulated by the Access to
Cannabis for Medical Purposes Regulations ( ACMPR ) in Canada, up to and including October 16, 2018. On October 17, 2018, the ACMPR was superseded by The Cannabis Act which regulates the production, distribution, and possession
of cannabis for both medical and adult recreational access in Canada. The Company is also expanding to jurisdictions outside of Canada where federally lawful and regulated for cannabis and/or hemp including subsidiaries which operate in the United
States, Europe, Latin America and the Caribbean, Asia / Pacific, and Africa. Through its partially owned subsidiary Canopy Rivers Inc. ( Canopy Rivers ), the Company also provides growth capital and a strategic support platform that
pursues investment opportunities in the global cannabis sector, where federally lawful.
These condensed interim consolidated financial statements have been presented in Canadian dollars and are prepared in
accordance with accounting principles generally accepted in the United States of America ( U.S. GAAP ). Canopy Growth has 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. Our
condensed interim consolidated 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.
Certain information and footnote disclosures normally included in the audited annual consolidated financial statements prepared
in accordance with U.S. GAAP have been omitted or condensed. These condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company s annual report on
Form 10-K for the year ended March 31, 2020 (the Annual Consolidated Financial Statements ), and have been prepared on a basis consistent with the accounting policies as described in the Annual
Consolidated Financial Statements.
These condensed interim consolidated financial statements are unaudited and reflect
adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods in accordance with U.S. GAAP.
The results reported in these condensed interim consolidated financial statements should not be regarded as necessarily
indicative of results that may be expected for an entire fiscal year. The policies set out below are consistently applied to all periods presented, unless otherwise noted.
(i) Principles of consolidation
The accompanying 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. Information on the Company s subsidiaries
with noncontrolling interests is included in Note 20.
(ii) Variable interest entities
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 Accounting Standards Codification ( ASC ) 810 Consolidations, where the Company concludes that it is the primary beneficiary of a VIE, the Company consolidates the accounts of that
CANOPY GROWTH CORPORATION
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2019 AND 2018
(Expressed in CDN $000 s except share amounts)
(iii) Equity method investments
Investments accounted for using the equity method 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. 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. Refer to Note 8 for additional information on the Company s investments accounted for using the equity method.
(iv) Use of estimates
The preparation of these condensed interim consolidated financial statements and accompanying notes in conformity with U.S.
GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates.
(v) New accounting policies
(a) Recently adopted accounting pronouncements
In February 2016, the Financial Accounting Standards Board ( FASB ) issued new guidance on the recognition and
measurement of leases, ASC 842 Leases. Under this guidance, a lessee recognizes assets and liabilities on its balance sheet for most leases. Lease expense continues to be consistent with previous guidance. Additionally, this guidance
requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leasing arrangements.
The Company adopted the guidance on April 1, 2019, using the modified retrospective approach and, accordingly, prior
period balances and disclosures have not been restated. The Company elected the package of transition practical expedients for expired or existing contracts, which retains prior conclusions reached on lease identification, classification, and
initial direct costs incurred.
The adoption of this guidance resulted in the recognition of operating lease right-of-use assets of $99,880, net of lease provisions of $10,703 and $110,583 of lease liabilities, with a $nil impact on deficit. The transition to ASC 842 did not have a
material impact on the Company s results of operations or liquidity. When measuring lease liabilities, the Company used its incremental borrowing rate of April 1, 2019 of 4.5%. Further information is disclosed in Note 27.
In May 2014, the FASB issued Accounting Standards Update ( ASU ) 2014-09,
Revenue from Contracts with Customers ( ASU 2014-09 ), which provides a single comprehensive model for accounting for revenue from contracts with customers and supersedes nearly all previously
existing revenue recognition guidance. The core principle of ASU 2014-09 is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. Canopy Growth adopted the new standard as of April 1, 2018. There was no impact of adopting ASU 2014-09 on