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2020-06-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2021
OR
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For the transition period from to
Commission File Number: 001-38496
Canopy Growth Corporation
(Exact name of registrant as specified in its charter)
|
Canada
|
N/A
|
|
( State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
1 Hershey Drive
Smiths Falls, Ontario
|
K7A 0A8
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Registrant’s telephone number, including area code: (855)
558-9333
Securities registered pursuant to Section 12(b) of the
Act:
|
Title of each class
|
|
Trading
Symbol(s)
|
|
Name of each exchange on which registered
|
|
Common shares, no par value
|
|
CGC
|
|
NASDAQ Global Select Market
|
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
|
Large accelerated filer
|
|
☒
|
|
Accelerated filer
|
|
☐
|
|
|
|
|
|
|
Non-accelerated filer
|
|
☐
|
|
Smaller reporting company
|
|
☐
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
|
☐
|
|
|
|
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of August 5, 2021, there were 393,179,437 common shares of the
registrant issued and outstanding.
Table of Contents
Unless otherwise noted or the context indicates otherwise,
references in this Quarterly Report on Form 10-Q (“Quarterly
Report”) to the “Corporation”, “Canopy Growth”, “we”, “us” and
“our” refer to Canopy Growth Corporation, its direct and indirect
wholly-owned subsidiaries and, if applicable, its joint ventures
and investments accounted for by the equity method; the term
“cannabis” means the plant of any species or subspecies of genus
Cannabis and any part of that plant, including all derivatives,
extracts, cannabinoids, isomers, acids, salts, and salts of
isomers; and the term “U.S. hemp” has the meaning given to the term
“hemp” in the U.S. Agricultural Improvement Act of 2018, including
hemp-derived cannabidiol (“CBD”).
This Quarterly Report contains references to our trademarks and
trade names and to trademarks and trade names belonging to other
entities. Solely for convenience, trademarks and trade names
referred to in this Quarterly Report may appear without the ® or ™
symbols, but such references are not intended to indicate, in any
way, that their respective owners will not assert, to the fullest
extent under applicable law, their rights thereto. We do not intend
our use or display of other companies’ trademarks or trade names to
imply a relationship with, or endorsement or sponsorship of us or
our business by, any other companies.
All currency amounts in this Quarterly Report are stated in
Canadian dollars, which is our reporting currency, unless otherwise
noted. All references to “dollars” or “CDN$” are to Canadian
dollars and all references to “US$” are to U.S. dollars.
i
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
CANOPY GROWTH CORPORATION
CONDENSED
INTERIM CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars, except number of shares and per
share data, unaudited)
|
|
|
June 30,
2021
|
|
|
March 31,
2021
|
|
|
ASSETS
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
559,840
|
|
|
$
|
1,154,653
|
|
|
Short-term investments
|
|
|
1,491,286
|
|
|
|
1,144,563
|
|
|
Restricted short-term investments
|
|
|
14,336
|
|
|
|
11,332
|
|
|
Amounts receivable, net
|
|
|
106,455
|
|
|
|
92,435
|
|
|
Inventory
|
|
|
411,675
|
|
|
|
367,979
|
|
|
Prepaid expenses and other assets
|
|
|
91,584
|
|
|
|
67,232
|
|
|
Total current assets
|
|
|
2,675,176
|
|
|
|
2,838,194
|
|
|
Other financial assets
|
|
|
791,658
|
|
|
|
708,167
|
|
|
Property, plant and equipment
|
|
|
1,142,614
|
|
|
|
1,074,537
|
|
|
Intangible assets
|
|
|
347,063
|
|
|
|
308,167
|
|
|
Goodwill
|
|
|
2,000,458
|
|
|
|
1,889,354
|
|
|
Other assets
|
|
|
9,514
|
|
|
|
5,061
|
|
|
Total assets
|
|
$
|
6,966,483
|
|
|
$
|
6,823,480
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
91,339
|
|
|
$
|
67,262
|
|
|
Other accrued expenses and liabilities
|
|
|
79,938
|
|
|
|
100,813
|
|
|
Current portion of long-term debt
|
|
|
15,705
|
|
|
|
9,827
|
|
|
Other liabilities
|
|
|
69,148
|
|
|
|
106,428
|
|
|
Total current liabilities
|
|
|
256,130
|
|
|
|
284,330
|
|
|
Long-term debt
|
|
|
1,545,073
|
|
|
|
1,573,136
|
|
|
Deferred income tax liabilities
|
|
|
26,570
|
|
|
|
21,379
|
|
|
Liability arising from Acreage Arrangement
|
|
|
450,000
|
|
|
|
600,000
|
|
|
Warrant derivative liability
|
|
|
299,318
|
|
|
|
615,575
|
|
|
Other liabilities
|
|
|
109,038
|
|
|
|
107,240
|
|
|
Total liabilities
|
|
|
2,686,129
|
|
|
|
3,201,660
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest
|
|
|
135,300
|
|
|
|
135,300
|
|
|
Canopy Growth Corporation shareholders' equity:
|
|
|
|
|
|
|
|
|
|
Common shares - $nil par value; Authorized - unlimited number of
shares;
Issued - 393,119,100 shares and 382,875,179 shares,
respectively
|
|
|
7,463,557
|
|
|
|
7,168,557
|
|
|
Additional paid-in capital
|
|
|
2,413,779
|
|
|
|
2,415,650
|
|
|
Accumulated other comprehensive loss
|
|
|
(61,518
|
)
|
|
|
(34,240
|
)
|
|
Deficit
|
|
|
(5,675,738
|
)
|
|
|
(6,068,156
|
)
|
|
Total Canopy Growth Corporation shareholders' equity
|
|
|
4,140,080
|
|
|
|
3,481,811
|
|
|
Noncontrolling interests
|
|
|
4,974
|
|
|
|
4,709
|
|
|
Total shareholders' equity
|
|
|
4,145,054
|
|
|
|
3,486,520
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
6,966,483
|
|
|
$
|
6,823,480
|
|
The accompanying notes are
an integral part of these condensed interim consolidated financial
statements.
1
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(in thousands of Canadian dollars, except number of shares and per
share data, unaudited)
|
|
|
Three months ended June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Revenue
|
|
$
|
155,423
|
|
|
$
|
119,088
|
|
|
Excise taxes
|
|
|
19,214
|
|
|
|
8,672
|
|
|
Net revenue
|
|
|
136,209
|
|
|
|
110,416
|
|
|
Cost of goods sold
|
|
|
108,971
|
|
|
|
103,921
|
|
|
Gross margin
|
|
|
27,238
|
|
|
|
6,495
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
112,574
|
|
|
|
135,392
|
|
|
Share-based compensation
|
|
|
13,126
|
|
|
|
30,685
|
|
|
Asset impairment and restructuring costs
|
|
|
89,249
|
|
|
|
12,794
|
|
|
Total operating expenses
|
|
|
214,949
|
|
|
|
178,871
|
|
|
Operating loss
|
|
|
(187,711
|
)
|
|
|
(172,376
|
)
|
|
Loss from equity method investments
|
|
|
(100
|
)
|
|
|
(7,189
|
)
|
|
Other income (expense), net
|
|
|
580,666
|
|
|
|
48,205
|
|
|
Income (loss) before income taxes
|
|
|
392,855
|
|
|
|
(131,360
|
)
|
|
Income tax (expense) recovery
|
|
|
(2,900
|
)
|
|
|
3,038
|
|
|
Net income (loss)
|
|
|
389,955
|
|
|
|
(128,322
|
)
|
|
Net loss attributable to noncontrolling interests and
redeemable noncontrolling interest
|
|
|
(2,463
|
)
|
|
|
(19,821
|
)
|
|
Net income (loss) attributable to Canopy Growth Corporation
|
|
$
|
392,418
|
|
|
$
|
(108,501
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
$
|
1.02
|
|
|
$
|
(0.30
|
)
|
|
Basic weighted average common shares outstanding
|
|
|
384,055,133
|
|
|
|
363,763,347
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share
|
|
$
|
0.84
|
|
|
$
|
(0.30
|
)
|
|
Diluted weighted average common shares outstanding
|
|
|
404,546,243
|
|
|
|
363,763,347
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
389,955
|
|
|
$
|
(128,322
|
)
|
|
Other comprehensive income (loss), net of income tax effect
|
|
|
|
|
|
|
|
|
|
Fair value changes of own credit risk of financial liabilities
|
|
|
660
|
|
|
|
(15,360
|
)
|
|
Foreign currency translation
|
|
|
(27,938
|
)
|
|
|
(53,124
|
)
|
|
Total other comprehensive income (loss), net of income tax
effect
|
|
|
(27,278
|
)
|
|
|
(68,484
|
)
|
|
Comprehensive income (loss)
|
|
|
362,677
|
|
|
|
(196,806
|
)
|
|
Comprehensive income (loss) attributable to noncontrolling
interests
and redeemable noncontrolling interest
|
|
|
(2,463
|
)
|
|
|
(19,821
|
)
|
|
Comprehensive income (loss) attributable to Canopy Growth
Corporation
|
|
$
|
365,140
|
|
|
$
|
(176,985
|
)
|
The accompanying notes are
an integral part of these condensed interim consolidated financial
statements.
2
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’
EQUITY
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
|
|
|
Share-based reserve
|
|
|
Warrants
|
|
|
Ownership changes
|
|
|
Redeemable noncontrolling interest
|
|
|
other comprehensive income (loss)
|
|
|
Deficit
|
|
|
Noncontrolling interests
|
|
|
Total
|
|
|
Balance at March 31, 2021
|
|
$
|
7,168,557
|
|
|
$
|
480,786
|
|
|
$
|
2,568,438
|
|
|
$
|
(512,340
|
)
|
|
$
|
(121,234
|
)
|
|
$
|
(34,240
|
)
|
|
$
|
(6,068,156
|
)
|
|
$
|
4,709
|
|
|
$
|
3,486,520
|
|
|
Other issuances of common shares
and warrants
|
|
|
285,915
|
|
|
|
(25,692
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
260,223
|
|
|
Replacement equity instruments
from the acquisition of Supreme
Cannabis
|
|
|
-
|
|
|
|
5,566
|
|
|
|
13,350
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,916
|
|
|
Exercise of Omnibus Plan stock
options
|
|
|
5,522
|
|
|
|
(1,930
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,592
|
|
|
Share-based compensation
|
|
|
-
|
|
|
|
12,861
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,861
|
|
|
Issuance and vesting of restricted
share units
|
|
|
3,563
|
|
|
|
(3,563
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Changes in redeemable
noncontrolling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,463
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
2,463
|
|
|
|
-
|
|
|
Ownership changes relating to
noncontrolling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
265
|
|
|
|
265
|
|
|
Comprehensive (loss) income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(27,278
|
)
|
|
|
392,418
|
|
|
|
(2,463
|
)
|
|
|
362,677
|
|
|
Balance at June 30, 2021
|
|
$
|
7,463,557
|
|
|
$
|
468,028
|
|
|
$
|
2,581,788
|
|
|
$
|
(512,340
|
)
|
|
$
|
(123,697
|
)
|
|
$
|
(61,518
|
)
|
|
$
|
(5,675,738
|
)
|
|
$
|
4,974
|
|
|
$
|
4,145,054
|
|
The accompanying notes are
an integral part of these condensed interim consolidated financial
statements.
3
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’
EQUITY
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
|
|
|
Share-based reserve
|
|
|
Warrants
|
|
|
Ownership changes
|
|
|
Redeemable noncontrolling interest
|
|
|
other comprehensive income (loss)
|
|
|
Deficit
|
|
|
Noncontrolling interests
|
|
|
Total
|
|
|
Balance at March 31, 2020
|
|
$
|
6,373,544
|
|
|
$
|
517,741
|
|
|
$
|
2,638,951
|
|
|
$
|
(501,403
|
)
|
|
$
|
(40,134
|
)
|
|
$
|
220,899
|
|
|
$
|
(4,323,236
|
)
|
|
$
|
221,758
|
|
|
$
|
5,108,120
|
|
|
Other issuances of common shares
and warrants
|
|
|
26,214
|
|
|
|
(26,798
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(584
|
)
|
|
Exercise of warrants
|
|
|
315,256
|
|
|
|
-
|
|
|
|
(70,266
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
244,990
|
|
|
Exercise of Omnibus Plan stock
options
|
|
|
9,231
|
|
|
|
(4,509
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,722
|
|
|
Share-based compensation
|
|
|
-
|
|
|
|
29,140
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
29,140
|
|
|
Changes in redeemable
noncontrolling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(22,513
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
10,663
|
|
|
|
(11,850
|
)
|
|
Ownership changes relating to
noncontrolling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
162
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,647
|
|
|
|
2,809
|
|
|
Comprehensive income (loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(68,484
|
)
|
|
|
(108,501
|
)
|
|
|
(19,821
|
)
|
|
|
(196,806
|
)
|
|
Balance at June 30, 2020
|
|
$
|
6,724,245
|
|
|
$
|
515,574
|
|
|
$
|
2,568,685
|
|
|
$
|
(501,241
|
)
|
|
$
|
(62,647
|
)
|
|
$
|
152,415
|
|
|
$
|
(4,431,737
|
)
|
|
$
|
215,247
|
|
|
$
|
5,180,541
|
|
The accompanying notes are
an integral part of these condensed interim consolidated financial
statements.
4
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars, unaudited)
|
|
|
Three months ended June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
389,955
|
|
|
$
|
(128,322
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment
|
|
|
17,116
|
|
|
|
17,415
|
|
|
Amortization of intangible assets
|
|
|
8,016
|
|
|
|
16,632
|
|
|
Share of loss on equity method investments
|
|
|
100
|
|
|
|
7,189
|
|
|
Share-based compensation
|
|
|
13,126
|
|
|
|
30,685
|
|
|
Asset impairment and restructuring costs
|
|
|
89,249
|
|
|
|
12,794
|
|
|
Income tax expense (recovery)
|
|
|
2,900
|
|
|
|
(3,038
|
)
|
|
Non-cash foreign currency
|
|
|
(17,846
|
)
|
|
|
8,688
|
|
|
Interest paid
|
|
|
(23,666
|
)
|
|
|
(57
|
)
|
|
Change in operating assets and liabilities, net of effects from
purchases of businesses:
|
|
|
|
|
|
|
|
|
|
Amounts receivable
|
|
|
(4,946
|
)
|
|
|
17,577
|
|
|
Prepaid expenses and other assets
|
|
|
(8,804
|
)
|
|
|
(16,059
|
)
|
|
Inventory
|
|
|
44,228
|
|
|
|
(10,772
|
)
|
|
Accounts payable and accrued liabilities
|
|
|
(16,960
|
)
|
|
|
3,755
|
|
|
Other, including non-cash fair value adjustments
|
|
|
(658,248
|
)
|
|
|
(75,033
|
)
|
|
Net cash used in operating activities
|
|
|
(165,780
|
)
|
|
|
(118,546
|
)
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases of and deposits on property, plant and equipment
|
|
|
(20,279
|
)
|
|
|
(61,547
|
)
|
|
Purchases of intangible assets
|
|
|
(833
|
)
|
|
|
(3,088
|
)
|
|
Proceeds on sale of intangible assets
|
|
|
-
|
|
|
|
18,337
|
|
|
Purchases of short-term investments
|
|
|
(346,603
|
)
|
|
|
(382,486
|
)
|
|
Net cash proceeds on sale of subsidiaries
|
|
|
10,324
|
|
|
|
-
|
|
|
Sale of (investments in) other financial assets
|
|
|
56
|
|
|
|
(2,564
|
)
|
|
Recovery of amounts related to construction financing
|
|
|
-
|
|
|
|
10,000
|
|
|
Payment of acquisition related liabilities
|
|
|
(8,367
|
)
|
|
|
(4,511
|
)
|
|
Net cash outflow on acquisition of noncontrolling interests
|
|
|
-
|
|
|
|
(125
|
)
|
|
Net cash outflow on acquisition of subsidiaries
|
|
|
(8,857
|
)
|
|
|
-
|
|
|
Net cash used in investing activities
|
|
|
(374,559
|
)
|
|
|
(425,984
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Payment of share issue costs
|
|
|
(444
|
)
|
|
|
(595
|
)
|
|
Proceeds from issuance of shares by RIV Capital
|
|
|
-
|
|
|
|
92
|
|
|
Proceeds from exercise of stock options
|
|
|
3,592
|
|
|
|
4,722
|
|
|
Proceeds from exercise of warrants
|
|
|
-
|
|
|
|
244,990
|
|
|
Issuance of long-term debt
|
|
|
-
|
|
|
|
4,439
|
|
|
Repayment of long-term debt
|
|
|
(48,116
|
)
|
|
|
(6,345
|
)
|
|
Net cash (used in) provided by financing activities
|
|
|
(44,968
|
)
|
|
|
247,303
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(9,506
|
)
|
|
|
(30,079
|
)
|
|
Net decrease in cash and cash equivalents
|
|
|
(594,813
|
)
|
|
|
(327,306
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
|
1,154,653
|
|
|
|
1,303,176
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
559,840
|
|
|
$
|
975,870
|
|
The accompanying notes are
an integral part of these condensed interim consolidated financial
statements.
5
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars, unaudited)
|
|
Three months ended June 30,
|
|
|
|
2021
|
|
|
|
|
2020
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
|
Cash received during the period:
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
$
|
33
|
|
|
|
|
$
|
2,000
|
|
|
Cash paid during the period:
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
$
|
330
|
|
|
|
|
$
|
408
|
|
|
Noncash investing and financing activities
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment
|
$
|
4,776
|
|
|
|
|
$
|
17,337
|
|
The accompanying notes are
an integral part of these condensed interim consolidated financial
statements.
6
CANOPY GROWTH CORPORATION
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
(in thousands of Canadian dollars, unaudited)
1. DESCRIPTION OF
BUSINESS
Canopy Growth Corporation is a publicly traded corporation,
incorporated in Canada, with its head office located at 1 Hershey
Drive, Smiths Falls, Ontario. References herein 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 a diverse range of cannabis and
cannabinoid-based products for both adult recreational and medical
purposes under a portfolio of distinct brands in Canada pursuant to
the Cannabis Act, which
came into effect on October 17, 2018 and regulates both the medical
and recreational cannabis markets in Canada. The Company has also
expanded to jurisdictions outside of Canada where federally lawful,
permissible and regulated for cannabis and/or hemp, and the
Company, through its subsidiaries, operates in the United States,
Germany, and certain other global markets. Additionally, the
Company produces, distributes and sells a range of other consumer
products globally, including vaporizers; beauty, skincare, wellness
and sleep products; and sports nutrition beverages.
2. BASIS
OF PRESENTATION
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, 2021 (the “Annual Report”) and have been prepared
on a basis consistent with the accounting policies as described in
the Annual Report.
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.
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.
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.
New accounting policies
Recently Adopted Accounting Pronouncements
Income Taxes
In December 2019, the Financial Accounting Standards Board (“FASB”)
issued ASU 2019-12, Income
Taxes (Topic 740): Simplifying the Accounting for Income
Taxes (“ASU 2019-12”), which among other things, eliminates
certain exceptions in the current rules regarding the approach for
intraperiod tax allocations and the methodology for calculating
income taxes in an interim
7
period, and clarifies the accounting for transactions that result
in a step-up in the tax basis of goodwill. The Company adopted ASU
2019-12 as of April 1, 2021.
There was no impact of adopting ASU 2019-12 on the condensed
interim consolidated financial statements.
Investments-Equity Securities
In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321),
Investments-Equity Method and Joint Ventures (Topic 323), and
Derivatives and Hedging (Topic 815). ASU 2020-01 clarifies
the interaction of accounting for the transition into and out of
the equity method. The new standard also clarifies the accounting
for measuring certain purchased options and forward contracts to
acquire investments. The Company adopted ASU 2020-01 as of April 1,
2021. There was no impact of adopting ASU 2020-01 on the condensed
interim consolidated financial statements.
Accounting Guidance not yet adopted
Convertible Instruments and Contracts in an Entity’s Own Equity
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options
(Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s
Own Equity (Subtopic 815-40):Accounting for Convertible Instruments
and Contracts in an Entity’s Own Equity (“ASU 2020-06”),
which simplifies the accounting for
convertible instruments by reducing the number of accounting models
for convertible debt instruments and convertible preferred stock.
In addition, ASU 2020-06 enhances information transparency by
making targeted improvements to the disclosures for convertible
instruments and earnings-per-share (EPS) guidance and amends the
guidance for the derivatives scope exception for contracts in an
entity’s own equity to reduce form-over-substance-based accounting
conclusions. ASU 2020-06 is
effective for interim and annual periods beginning after December
15, 2021, with early adoption permitted after December 15,
2020. The Company is evaluating the impact on the
consolidated financial statements and expects to implement the
provisions of ASU 2020-06 effective April 1, 2022.
3. ASSET IMPAIRMENT AND RESTRUCTURING COSTS
In the three months ended June 30, 2021, the Company recorded
charges related to operational changes resulting from the
continuing strategic review of its business as a result of recent
acquisition activities, and the partial outcome of certain
integration initiatives. Additionally, the Company recognized
incremental costs associated with the closure of certain of its
Canadian production facilities in December 2020. Charges totaling
$89,249 were recognized in the three months ended June 30, 2021,
primarily representing the difference between the net book value of
the associated long-lived assets and their estimated fair
value.
4. CASH AND CASH EQUIVALENTS
The components of cash and
cash equivalents are as follows:
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
|
2021
|
|
|
2021
|
|
|
Cash
|
|
$
|
367,284
|
|
|
$
|
436,588
|
|
|
Cash equivalents
|
|
|
192,556
|
|
|
|
718,065
|
|
|
|
|
$
|
559,840
|
|
|
$
|
1,154,653
|
|
5. SHORT-TERM INVESTMENTS
The components of
short-term investments are as follows:
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
|
2021
|
|
|
2021
|
|
|
Term deposits
|
|
$
|
442,916
|
|
|
$
|
463,824
|
|
|
Government securities
|
|
|
92,360
|
|
|
|
136,620
|
|
|
Asset-backed securities
|
|
|
252,848
|
|
|
|
16,342
|
|
|
Commercial paper and other
|
|
|
703,162
|
|
|
|
527,777
|
|
|
|
|
$
|
1,491,286
|
|
|
$
|
1,144,563
|
|
The amortized cost of short-term investments at June 30, 2021 is
$1,492,227 (March 31, 2021 – $1,145,364).
8
6. AMOUNTS RECEIVABLE, NET
The components of amounts
receivable, net are as follows:
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
|
2021
|
|
|
2021
|
|
|
Accounts receivable, net
|
|
$
|
87,582
|
|
|
$
|
67,106
|
|
|
Indirect taxes receivable
|
|
|
8,674
|
|
|
|
8,281
|
|
|
Interest receivable
|
|
|
6,052
|
|
|
|
5,140
|
|
|
Other receivables
|
|
|
4,147
|
|
|
|
11,908
|
|
|
|
|
$
|
106,455
|
|
|
$
|
92,435
|
|
Included in the accounts
receivable, net balance at June 30, 2021 is an allowance for
doubtful accounts of $1,582 (March 31, 2021 –
$1,411).
7. INVENTORY
The components of inventory
are as follows:
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
|
2021
|
|
|
2021
|
|
|
Raw materials, packaging supplies and consumables
|
|
$
|
66,006
|
|
|
$
|
55,554
|
|
|
Work in progress
|
|
|
219,816
|
|
|
|
223,652
|
|
|
Finished goods
|
|
|
125,853
|
|
|
|
88,773
|
|
|
|
|
$
|
411,675
|
|
|
$
|
367,979
|
|
In the three months ended
June 30, 2021, the Company recorded write-downs related to
inventory in cost of goods sold of $6,014 (three months ended June 30,
2020 – $19,386).
8. PREPAID EXPENSES AND OTHER ASSETS
The components of prepaid
expenses and other assets are as follows:
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
|
2021
|
|
|
2021
|
|
|
Prepaid expenses
|
|
$
|
44,412
|
|
|
$
|
28,349
|
|
|
Deposits
|
|
|
21,008
|
|
|
|
18,316
|
|
|
Prepaid inventory
|
|
|
1,157
|
|
|
|
1,496
|
|
|
Other assets
|
|
|
25,007
|
|
|
|
19,071
|
|
|
|
|
$
|
91,584
|
|
|
$
|
67,232
|
|
9
9. OTHER FINANCIAL ASSETS
The following table
outlines changes in other financial assets. Additional details on
how the fair value of significant investments is calculated are
included in Note 21.