SAN FRANCISCO, Feb. 28, 2020 /PRNewswire/ — Hagens Berman urges investors in Cronos Group Inc. (NASDAQ: CRON) who have suffered significant losses to submit their losses now. The firm is investigating possible securities law violations, and certain investors may have valuable claims.
Cronos Group Inc. (CRON) Investigation:
The investigation concerns the propriety of Cronos’ accounting for and disclosures relating to its recent Lord Jones acquisition.
On Aug. 2, 2019, Cronos announced it agreed to acquire certain subsidiaries of Redwood Holding Group that market and distribute hemp-derived cannabidiol (CBD) infused skincare and other consumer products under the brand, Lord Jones. Under the terms of the $300 million deal, the Company agreed to pay $225 million in cash and $75 million in newly-issued common shares.
The transaction closed on Sept. 5, 2019 and was mostly accounted for as goodwill in Cronos’ Q3 2019 financial statements filed with the SEC on Nov. 12, 2019.
During the interim, MarketWatch reported “the deal was noteworthy for two reasons: (1) that the acquisition price was equal to 75 to 150 times the young company’s 2018 revenue of between $2 million and $4 million according to a person familiar with the matter, and (2) that a fund co-founded by Cronos’s CEO and a longtime director stood to collect 40% of the purchase price, including more than $20 million in fees.”
Then, on Feb. 24, 2020, Cronos announced it would delay its Q4 and FY 2019 earnings release and conference call, previously scheduled for Feb. 27, 2020. No explanation for the delay was given. In response, the price of Cronos shares sharply fell.
“We’re focused on investors’ losses and whether Cronos misled investors about the Lord Jones deal,” said Reed Kathrein, the Hagens Berman partner leading the investigation.
If you purchased shares of Cronos and suffered significant losses, click here to discuss your legal rights with Hagens Berman.
Whistleblowers: Persons with non-public information regarding Cronos should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email CRON@hbsslaw.com.
About Hagens Berman
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Reed Kathrein, 844-916-0895
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SOURCE Hagens Berman Sobol Shapiro LLP