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.”
MarketWatch
- 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.
MarketWatch - The company warned its previous financial statements were faulty and its internal controls on financial reporting were flawed.
Twitter–@chernandburn
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.
OTC Dynamics
Separately, Hexo announced it would again delay filing its interim financial statements and related documents for Q2 2020.(It did the same thing in October.)
- 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.
Twitter–@matt_lamers
- 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.
Twitter–@matt_lamers
BMO downgraded Hexo to “underperform” and suspended its target price.
Twitter–@matt_lamers
