Toronto-based Cronos Group Inc. (PRMCF) reported financial results for the third quarter ended September 30, 2017. The company delivered $1.3 million in revenue for an increase of 104% quarter-over-quarter and an increase of 962% over last year’s $123,647.
Net income was reported at $1.0 million, which was a nice jump over last year’s loss of $227,607. The diluted earnings per share were one cent, which was also higher than last year’s zero earnings per share.
“We have successfully transformed the Company over the past year and a half. We are now focused on executing our strategy to generate accelerated revenue growth and create long-term shareholder value,” says Mike Gorenstein, CEO of Cronos Group.
According to the company statement, “As of September 30, 2017, it is expected that the Company’s biological assets will yield approximately 489.3 kg of medical cannabis (December 31, 2016 -213 kg). As at September 30, 2017, the Company held 597.2 kg of finished goods (December 31, 2016 – 236 kg) and 0.298 kg of seeds in raw material (December 31, 2016 – 0.298 kg), and has 4,065 plants that are biological assets (December 31, 2016 – 2,558 plants).”
Cronos Looks Ahead
Cronos is constructing additional capacity at the Peace Naturals Project, Inc. with a 286,000 sq. ft. production facility, which is on schedule and a 28,000 sq. ft. greenhouse. Production from the new facility is expected to begin in the second half of 2018. The Peace Naturals Greenhouse is expected to be operational in Q4 2017 and fully-operational for production in the first half of 2018.
In November 2017, Health Canada approved Crono’s extraction laboratory at Peace Naturals, which uses supercritical and subcritical CO2 and commercial oil production methodologies. The resulting increased oil production will facilitate the introduction of new formulations, such as capsules, tinctures, and ointments. The company’s statement said that by quarter-end, it released a number of new strain-specific cannabis oils that have been received favorably by patients. “As Cronos continues to place an emphasis on product quality, this production methodology for extracted products is expected to create an ongoing competitive advantage in the marketplace,” said the statement.
Preparing For Adult-Use Market
Cronos Group is preparing for the anticipated legalization of the Canadian recreational market, that is expected to be launched in July 2018. Cronos rebranded its wholly-owned subsidiary and licensed producer In The Zone Ltd. to Original BC Ltd which will serve as the Company’s recreational cannabis platform from which it will launch its recreational brand portfolio.
Since the beginning of Q3 2017, Cronos Group has raised $72.3 million to fund its operations and capacity expansion plans. The company statement read, “Total capital raised includes: (i) a $40.0mm senior secured credit facility, the largest straight debt offering in the cannabis industry to date, based on publicly available information, and (ii) several equity raises at increasing share price levels. In order to minimize equity dilution, the company did not issue convertible notes or warrants in connection with these financings.”