The U.S. Securities and Exchange Commission’s Division of Enforcement told Cronos Group to preserve all records dealing with recognition of revenues from bulk-resin purchases and biomass wholesale for a “confidential and non-public inquiry.”
- In late February, Cronos announced an unexplained delay in its Q4 and full-year financials. The company later announced the delay as the result of an ongoing review by internal audit committee, third-party lawyers, and forensic accountants.
CBC Business, MarketWatch
- On Tuesday, Cronos announced it would re-state three of the four quarterly financial statements it filed for 2019 due to internal review of bulk resin purchases and wholesale revenues.
- The company warned its previous financial statements were faulty and its internal controls on financial reporting were flawed.
Marlboro parent company Altria owns 45% of Cronos stock and former Altria CFO Jerry Barbato, who became Cronos CFO last April, may be forced out. (C-suite leaders continue leaving their posts at other LPs.)
Twitter–GoBlueCdn, MJ Biz Daily
- A US law firm announced filed a class action lawsuit against Cronos.
- The company warned of a coming “significant impairment,” which Desjardins analyst John Chu suspected was related to Hexo’s $263M all-stock acquisition of Newstrike Brands last year.
La Presse–In French, BNN Bloomberg
- None of this would be good news in a regular week, but coming amid the continuing uncertainty of the COVID pandemic, the news leaves Hexo in a deeply uncertain position.
La Presse–In French
- Hexo joins CannTrust, Aurora, and Sundial in having to worry about keeping its stock price high enough. If it remains below $1, it could be delisted from the NYSE and the TSX composite index.
Motley Fool, Twitter–@itsdgc
Hexo CEO Sebastien St-Louis received a 30% raise to roughly $500,000 last year, giving him $8.8M compensation, up from $1.5M the previous year.
- Hexo had three CFOs in 2019, one of whom was paid $840,000, another more than $700,000, and a third paid $150,000 plus monthly $20,000 bonus for being an interim figure.
BMO downgraded Hexo to “underperform” and suspended its target price.