<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                  For the quarterly period ended: June 30, 2001
                                       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: 0-24464

                                THE CRONOS GROUP
             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                                                  <C>
                 LUXEMBOURG                                                    NOT APPLICABLE
(State or other Jurisdiction of incorporation or organization)      (I.R.S. Employer Identification No.)
</TABLE>

             16, ALLEE MARCONI, BOITE POSTALE 260, L-2120 LUXEMBOURG
               (Address of principal executive offices)(zip code)

              Registrant's telephone number, including area codes:
                                  (352) 453145

                            -------------------------

        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 [X]  NO [ ]


        THE NUMBER OF COMMON SHARES OUTSTANDING AS OF AUGUST 13, 2001:

            CLASS                    NUMBER OF SHARES OUTSTANDING
            -----                    ----------------------------
           Common                              7,364,580

<PAGE>   2

                                THE CRONOS GROUP

                                TABLE OF CONTENTS



<TABLE>
<S>                                                                                       <C>
PART I -- FINANCIAL INFORMATION                                                            1
  ITEM 1 -- FINANCIAL STATEMENTS...........................................................1

    Management Representation..............................................................1
      Condensed Consolidated Statements of Income..........................................2
      Condensed Consolidated Balance Sheets................................................3
      Condensed Consolidated Statements of Cash Flows......................................4
      Consolidated Statements of Shareholder's Equity......................................5
        Notes to the Condensed Consolidated Financial Statements...........................6

  ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   RESULTS OF OPERATIONS..................................................................12

    General...............................................................................12
    Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000.........13
    Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000.............14
    Liquidity and Capital Resources.......................................................16
    Capital Resources.....................................................................16

  ITEM 3 -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....................17

PART II -- OTHER INFORMATION                                                              18
  Item 1 -- Legal Proceedings.............................................................18
  Item 2 -- Changes in Securities and Use of Proceeds.....................................20
  Item 3 -- Defaults Upon Senior Securities...............................................20
  Item 4 -- Submission of Matters to a Vote of Security Holders...........................20
  Item 5 -- Other Information.............................................................20
  Item 6 -- Exhibits and Reports on Form 8-K..............................................20

</TABLE>


<PAGE>   3

                              THE CRONOS GROUP

                         PART I -- FINANCIAL INFORMATION

ITEM 1 -- FINANCIAL STATEMENTS

        Management Representation

        The unaudited condensed consolidated interim financial statements
included herein have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
disclosures normally included in annual financial statements prepared in
accordance with accounting standards generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and regulations.

        These condensed consolidated financial statements should be read in
conjunction with the financial statements and the notes thereto included in the
Company's latest Annual Report on Form 10-K.

        This financial information reflects, in the opinion of management, all
adjustments necessary to present fairly, the results for the interim periods.
Such adjustments consist of only normal recurring adjustments. The results of
operations for such interim periods are not necessarily indicative of the
results to be expected for the full year.


                                                                               1

<PAGE>   4
                                THE CRONOS GROUP

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
           (US DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                       Three Months Ended             Six Months Ended
                                                            June 30,                       June 30,
                                                     -----------------------       -----------------------
                                                         2001           2000           2001           2000
                                                     --------       --------       --------       --------
<S>                                                  <C>            <C>            <C>            <C>
Gross lease revenue                                  $ 30,087       $ 34,065       $ 61,566       $ 68,211
Commissions, fees and other income:
- US Limited Partnerships                                 333            331            666            665
- Unrelated parties                                     1,375          1,554          2,287          2,509
Gain on sale of investment:
- gain on conversion of investment                          -              -              -          1,502
- realized holding gain                                     -             89            301          1,668
                                                     --------       --------       --------       --------
TOTAL REVENUES                                         31,795         36,039         64,820         74,555
                                                     --------       --------       --------       --------

Direct operating expenses                               7,930          6,400         14,550         13,921
Payments to container owners:
- US Limited Partnerships                               4,747          6,778         10,502         12,980
- Other container owners                                9,475         11,265         19,738         22,242
Depreciation and amortization                           4,022          3,985          8,078          7,945
Selling, general and administrative expenses            3,366          4,121          6,834          8,418
Interest expense                                        2,202          2,376          4,394          4,786
Recovery of related party loans                        (6,000)             -         (6,000)             -
Impairment losses                                       4,000              -          4,000              -
                                                     --------       --------       --------       --------
TOTAL EXPENSES                                         29,742         34,925         62,096         70,292
                                                     --------       --------       --------       --------
INCOME BEFORE INCOME TAXES                              2,053          1,114          2,724          4,263
Income taxes                                               45            246            122            551
                                                     --------       --------       --------       --------
NET INCOME                                              2,008            868          2,602          3,712
Other comprehensive income:
- unrealised holding loss on available for sale
  securities arising during the period                      -           (150)          (294)          (416)
- reclassification adjustment                               -            (81)          (150)           (81)
                                                     --------       --------       --------       --------
COMPREHENSIVE INCOME                                    2,008            637          2,158          3,215
                                                     ========       ========       ========       ========
BASIC AND DILUTED NET INCOME PER COMMON SHARE        $   0.25       $   0.09       $   0.30       $   0.40
                                                     ========       ========       ========       ========

</TABLE>


The accompanying notes are an integral part of these condensed consolidated
financial statements.


                                                                               2
<PAGE>   5
                                THE CRONOS GROUP

                      CONDENSED CONSOLIDATED BALANCE SHEETS
           (US DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                         June 30,     December 31,
                                                             2001            2000
                                                        ---------     -----------
<S>                                                     <C>            <C>
ASSETS
Cash and cash equivalents                               $   4,374       $   6,601
Amounts due from lessees (net)                             24,343          28,334
Amounts receivable from container owners                    9,259           9,851
New container equipment for resale                            976          11,790
Net investment in direct finance leases                       808              99
Investments                                                     -             628
Container equipment (net)                                 145,105         140,751
Building and other equipment (net)                            695             846
Cash deposits (restricted)                                  1,339           1,418
Intangible assets                                          12,443          12,695
Other assets including prepayments                         17,398          17,880
                                                        ---------       ---------
TOTAL ASSETS                                            $ 216,740       $ 230,893
                                                        ---------       ---------

LIABILITIES AND SHAREHOLDERS' EQUITY
Amounts payable to container owners                     $  18,662       $  23,254
Amounts payable to container manufacturers                  8,723          12,314
Other amounts payable and accrued expenses                 14,400          15,684
Debt and capital lease obligations                         99,194          99,379
Current and deferred income taxes                           7,089           7,117
Deferred income and unamortized acquisition fee             7,761           8,392
                                                        ---------       ---------
TOTAL LIABILITIES                                         155,829         166,140
                                                        ---------       ---------

SHAREHOLDERS' EQUITY
Common shares                                              18,317          18,317
Additional paid-in capital                                 49,925          49,925
Share subscriptions receivable                                (79)            (79)
Accumulated other comprehensive income, net of tax              -             444
Common shares held in treasury                             (6,000)              -
Accumulated deficit                                        (1,252)         (3,854)
                                                        ---------       ---------
TOTAL SHAREHOLDERS' EQUITY                                 60,911          64,753
                                                        =========       =========
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY              $ 216,740       $ 230,893
                                                        =========       =========
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.


                                                                               3
<PAGE>   6
                                THE CRONOS GROUP

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
           (US DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                              Six Months Ended
                                                                   June 30,
                                                           -----------------------
                                                               2001           2000
                                                           --------       --------
<S>                                                        <C>            <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES                  $ 13,175       $ 12,856
                                                           --------       --------
INVESTING ACTIVITIES:
Purchase of container and other equipment                   (16,828)        (1,916)
Proceeds from sale of building                                    -          3,483
Proceeds from sales of container and other equipment          3,326            969
Proceeds from sale of investment                                484              -
Proceeds from release of escrow deposits                          -            973
                                                           --------       --------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES         (13,018)         3,509
                                                           --------       --------

FINANCING ACTIVITIES:
Proceeds from issuance of term debt                           9,039              -
Repayments of term debt and capital lease obligations       (11,502)       (11,022)
Cash deposits (restricted)                                       79         (5,165)
                                                           --------       --------
NET CASH USED IN FINANCING ACTIVITIES                        (2,384)       (16,187)
                                                           --------       --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS         (2,227)           178

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD              6,601          8,701
                                                           --------       --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                 $  4,374       $  8,879
                                                           --------       --------

Supplementary disclosure of cash flow information:

Cash paid during the period for:
- interest                                                 $  4,611       $  4,040
- income taxes                                                  220            566
Cash received during the period for:
- interest                                                      341            550
- income taxes                                                   19              -
Non-cash investing and financing activities:
- container equipment acquired under capital lease            2,002          2,654
- other fixed assets acquired under capital lease               276              -
Non-cash operating activities:
- recovery of related party loans                             6,000              -

</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.


                                                                               4
<PAGE>   7
                                THE CRONOS GROUP

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
           (US DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

SIX MONTHS ENDED JUNE 30, 2001

<TABLE>
<CAPTION>

                                                                Accumulated
                                   Additional          Share          other   Restricted                       Common         Total
                          Common      paid-in  subscriptions  comprehensive     retained   Accumulated    shares held  shareholders'
                          shares      capital     receivable         income     earnings       deficit    in treasury        equity
                         -------   ----------  -------------  -------------   ----------   -----------    -----------  ------------
<S>                      <C>       <C>         <C>            <C>            <C>           <C>           <C>           <C>
Balance,
December 31, 2000        $18,317      $49,925          $(79)          $444        $1,832      $(5,686)      $     --      $ 64,753
Net income                                                                                      2,602                        2,602
Receipt of shares
   in settlement of
   related party loans                                                                                        (6,000)       (6,000)
Change in
   unrealized
   holding gain
   on available for
   sale securities                                                    (444)                                                   (444)
                         -------      -------          ----           ----        ------      -------        -------       --------
Balance, June 30, 2001   $18,317      $49,925          $(79)          $-          $1,832      $(3,084)       $(6,000)     $ 60,911
                         -------      -------          ----           ----        ------      -------       -------       --------
</TABLE>



The accompanying notes are an integral part of these condensed consolidated
financial statements.


                                                                               5
<PAGE>   8

                                THE CRONOS GROUP

                  NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS (US DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

1.  The condensed consolidated financial statements include the accounts of The
    Cronos Group and its wholly-owned subsidiaries. All material intercompany
    accounts and transactions have been eliminated.

2.  Operating segment data

Condensed segment information is provided in the tables below:

<TABLE>
<CAPTION>
                                                                      Other
                                                  US Limited      container          Owned
                                                Partnerships         owners      containers           Total
                                                ------------      ---------      ----------       ---------
<S>                                             <C>               <C>             <C>             <C>
THREE MONTHS ENDED JUNE 30, 2001
Gross lease revenue                                $   8,494      $  13,735       $   7,858       $  30,087
Operating profit (loss) before indirect items          1,651            589          (2,572)           (332)
Operating profit (loss)                                  478           (633)         (3,272)         (3,427)
Segment assets                                        11,347         16,411         153,428         181,186

THREE MONTHS ENDED JUNE 30, 2000
Gross lease revenue                                $  10,816      $  15,424       $   7,825       $  34,065
Operating profit before indirect items                 2,171          1,853           1,550           5,574
Operating profit                                         783            496             848           2,127
Segment assets                                        16,027         17,745         147,707         181,479

SIX MONTHS ENDED JUNE 30, 2001
Gross lease revenue                                $  17,716      $  28,144       $  15,706       $  61,566
Operating profit before indirect items                 3,384          2,162          (1,859)          3,687
Operating profit (loss)                                1,010           (293)         (3,244)         (2,527)
Segment assets                                        11,347         16,411         153,428         181,186

SIX MONTHS ENDED JUNE 30, 2000
Gross lease revenue                                $  22,022      $  30,517       $  15,672       $  68,211
Operating profit before indirect items                 4,432          3,483           2,533          10,448
Operating profit                                       1,571            677           1,062           3,310
Segment assets                                        16,027         17,745         147,707         181,479

</TABLE>

Reconciliation of operating profit (loss) for reportable segments to income
before income taxes:

<TABLE>
<CAPTION>
                                            Three Months Ended         Six Months Ended
                                                 June 30,                  June 30,
                                         ---------------------       ---------------------
                                             2001         2000          2001          2000
                                         -------       -------       -------       -------
<S>                                      <C>           <C>           <C>           <C>
Operating profit (loss)                  $(3,427)      $ 2,127       $(2,527)      $ 3,310
Gain on sale of investment                     -            89           301         3,170
Selling, general and administrative         (380)         (924)         (797)       (1,861)
expenses
Amortization of intangibles                 (140)         (178)         (253)         (356)
Recovery of related party loans            6,000             -         6,000             -
                                         -------       -------       -------       -------
Income before income taxes               $ 2,053       $ 1,114       $ 2,724       $ 4,263
                                         =======       =======       =======       =======

</TABLE>


                                                                               6
<PAGE>   9

                                THE CRONOS GROUP

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3.   Items affecting second quarter results from operations

        In June 2001, the Group recorded impairment charges relating to
refrigerated container equipment and loan notes receivable, secured by a
residual interest in container equipment, the aggregate of which reduced net
income by $4 million or $0.50 per share.

a)   Container Equipment

        In the second quarter of 2001, the Group undertook a review of its
refrigerated container equipment. The purpose of the review was to consider
recent changes in the marketplace and economic environment and to identify the
consequences, if any, from an accounting perspective. Management identified a
number of issues that have had an impact on the carrying value of certain
equipment at June 30, 2001.

i.      In 1992, the Montreal Protocol outlawed the production of the R12
        refrigerant gas by developed countries. Since that date, shipping lines
        and leasing companies have operated fleets including equipment with the
        R12 refrigerant gas. However, the environmental impact of refrigerant
        gases has become increasingly prominent. On January 1, 2001, it became
        illegal for R12 to be handled, other than for disposal, in almost all
        countries that are members of the European Union.

ii.     Several of the major shipping lines that lease from Cronos and other
        leasing companies have committed to eliminating containers with the R12
        refrigerant gas from their fleets in 2001. Inventories of this equipment
        will continue to increase as shipping lines redeliver leased equipment.

iii.    During 2000, Cronos completed a number of term leases for R12 equipment.
        However, over the course of 2001, the factors outlined above together
        with the deteriorating economic environment have resulted in a very slow
        leasing market for R12 equipment. In addition, it is probable that
        residual prices for R12 containers will decrease as equipment is
        returned.

        Cronos management considered the impact of these factors in June 2001
and decided to change the current marketing strategy for R12 equipment.
Management concluded effective July 1, 2001, that inventories of R12 equipment
would be targeted for immediate sale. Management also conducted a review of
equipment that was on lease at June 30, 2001.

        Assets to be disposed of: In June 2001 management committed to a plan to
dispose of 531 containers with a carrying value of $2.4 million. It was
concluded that the carrying value of the assets exceeded fair value and
accordingly an impairment charge of $1.4 million was recorded to operations
under impairment losses. The assets are reported as part of the Owned container
business segment. It is expected that the assets will be disposed of during the
second half of 2001 and in the first quarter of 2002.

        Assets to be held and used: Management conducted a review of 776
containers with a carrying value of $3.7 million that were on lease at June 30,
2001. It was concluded that the carrying value of these assets exceeded the
future cash flows expected to result from the use of the assets and their
eventual disposition, and therefore was not recoverable. Accordingly a charge of
$0.6 million was recorded to operations under impairment losses. Fair value was
determined by discounting future expected cash flows. The assets are reported as
part of the Owned container business segment.


                                                                               7
<PAGE>   10

                                THE CRONOS GROUP

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3.  Items affecting second quarter results from operations (continued)

b)   Loan notes receivable

        In 1998, 1997 and 1996, the Group sold containers to a third-party
container owner for a total of $49.7 million. The total consideration for the
container sales comprised four elements:

i.      A cash payment.

ii.     Management fees receivable on revenues earned by the containers.

iii.    Non-interest bearing loan notes. The loan notes fall due for repayment
        after certain other loan notes due to third parties have been repaid
        from funds generated from the containers, which are managed by the
        Group.

iv.     An option to acquire 75% of the container owning company in August 2006
        for one US dollar. This effectively entitles the Group to a residual
        interest in the containers.

        The four elements of the transactions were essential and integral parts
of the consideration. Collectively, they gave the Group the right to participate
in the future management and disposal of the containers.

        Management has conducted a discounting exercise on the future revenues
to be generated based on historic and projected trends on per diem revenues,
utilization and container disposal proceeds.

        In the second quarter of 2001, the Group revised the projections for per
diem revenues and utilization downwards. This is due to the current global
economic climate and forecasts for economic recovery. Based on the revised
projected trends, the Group considers that the carrying value of the loan notes
due from the third-party container owners exceed the discounted value of the
future cash flows by $2 million. Accordingly, a charge of $2 million was
recorded to operations under impairment losses. The charge has been reported as
part of the Owned container business segment.

c)  Recovery of related party loans

        In May 2001, the Group was awarded 1.8 million outstanding common shares
in the Company that were beneficially owned by a former Chairman and Chief
Executive Officer in part consideration for amounts owed under two promissory
notes. Such shares had been recorded as common shares held in treasury. The
valuation of $6 million, which is based on the estimated fair value of the
shares received, represents partial recovery of interest and principle
receivable under the two promissory notes.


                                                                               8
<PAGE>   11
                                THE CRONOS GROUP

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4.  Earnings per common share (US dollar amounts in thousands, except per share
amounts)

    The components of basic and diluted net income per share were as follows:

<TABLE>
<CAPTION>
                                                       Three Months Ended                Six Months Ended
                                                             June 30,                        June 30,
                                                  --------------------------      --------------------------
                                                        2001            2000            2001            2000
                                                  ----------      ----------      ----------      ----------
<S>                                               <C>             <C>             <C>             <C>
Net income available for common shareholders      $    2,008      $      868      $    2,602      $    3,712
                                                  ----------      ----------      ----------      ----------
Average outstanding shares of common stock         7,962,513       9,158,378       8,560,445       9,158,378
Dilutive effect of:
- Executive officer common share options              29,343          25,806          19,360          44,038
- Warrants                                            18,119          15,742          11,410          27,993
- 1999 Stock Option Plan                                   -               -               -          10,306
- Non-Employee Director's Equity Plan                 16,374               -          12,096               -
                                                  ----------      ----------      ----------      ----------
Common stock and common stock equivalents          8,026,349       9,199,926       8,603,311       9,240,715
                                                  ----------      ----------      ----------      ----------
Basic and diluted net income per share            $     0.25      $     0.09      $     0.30      $     0.40
                                                  ----------      ----------      ----------      ----------
</TABLE>


5.  Amounts receivable from container owners

        Amounts receivable from container owners include amounts due from
related parties of $5.0 million and $5.9 million at June 30, 2001 and December
31, 2000, respectively.

6.  Investments in related parties

        Investments in related parties comprise general partnership investments
and further limited partnership investments in eight sponsored funds. These
general and limited partner investments are accounted for using the equity
method. The subsidiary of the Company that acts as a general partner maintains
insurance for bodily injury, death and property damage for which a partnership
may be liable, and may be contingently liable for uninsured obligations of the
partnerships.

        The investment in US Limited Partnerships was $nil and $1 thousand at
June 30, 2001 and December 31, 2000, respectively.

7.  Container equipment

        Container equipment is net of accumulated depreciation of $75.3 million
and $78.8 million at June 30, 2001 and December 31, 2000, respectively.


8.  Amounts payable to container owners

        Amounts payable to container owners include amounts payable to related
parties of $11.8 million and $10.5 million at June 30, 2001 and December 31,
2000, respectively.


9.  Debt and capital lease obligations

        Debt and capital lease obligations include amounts due within twelve
months of $12.8 million and $18.2 million at June 30, 2001 and December 31,
2000, respectively.


                                                                               9
<PAGE>   12

                                THE CRONOS GROUP

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


10. Commitments and contingencies (to be read in conjunction with Note 16 to the
2000 Consolidated Financial Statements)

a.  Contingencies - Austrian allegations

        Since 1983, the Group has managed containers for Austrian investment
entities sponsored by companies owned or controlled by Contrin Holding S.A., a
Luxembourg holding company ("Contrin") and for Contrin itself.

        The Group is in a dispute with Contrin over funds that Contrin claims to
have remitted to the Group for the purchase of containers. Contrin claims that
in 1994 it transmitted $2.6 million to the Group for the purchase of containers.
The Group did not receive these funds and believes that the funds were diverted
to an account controlled by Stefan M. Palatin, a former Chairman and Chief
Executive Officer of the Group, and that this was known or should have been
known by Contrin.

        In December 1997, the Group recorded an accrual of $3.4 million relating
to the alleged transfer of $2.6 million, the related interest, plus the
estimated settlement costs of this and other claims by Contrin. On June 30,
2001, the balance of this accrual was $3 million.

        On August 8, 2000, Contrin filed an action in the Luxembourg District
Court against the Group seeking recovery of $2.6 million, together with interest
and costs. On January 10, 2001, the Group responded to Contrin's complaint,
requesting that the District Court dismiss the proceeding for lack of
jurisdiction over the dispute. The Group intends to contest Contrin's claims, on
the merits, if the Group's motion to dismiss is not granted, but is unable to
predict the outcome of the dispute.

        To preserve its rights of indemnity in the face of Contrin's claims, the
Group, on June 1, 2000, filed a protective claim against Mr. Palatin and his
wife. By its claim, the Group seeks to establish that the Palatins are liable to
the Group for any liability which the Group may have to Contrin arising out of
the 1994 transfers.

        On July 13, 2000, Cronos also filed a protective claim against the bank
that received the funds, Barclays Bank PLC ("Barclays") in the High Court of
Justice, London, England. By its claim, the Group seeks a declaration that
Barclays is liable to the Group for $2.6 million, plus interest and costs,
arising out of Contrin's 1994 transfer to an account with Barclays in the name
of Mrs. Palatin. The Group is currently evaluating documents produced by
Barclays to determine whether to proceed with its claim against Barclays.

        Contrin investors have also made claims with respect to alleged
transactions between third parties and companies alleged to be connected to Mr.
Palatin, including Transocean Equipment Manufacturing and Trading Limited
("TOEMT"), involving the purchase and sale of containers in a manner designed to
secure a tax mitigation advantage to those third parties. It is alleged that
sums remain owing to the third parties by one or more of these companies in
connection with the pre-arranged trading in containers. Current management of
the Company believes that the Group was not involved in these transactions, that
the Group had no access to the records of the alleged transactions and insofar
as the Group has managed the containers, the Group has acted in accordance with
instructions from authorized representatives of the third parties.

        Management considers that prudent provision has been made in the
financial statements for the matters noted above. There is a reasonable
possibility that a material change could occur with respect to these commitments
and contingencies within one year of the date of these financial statements. In
such an event, management estimates that possible losses could exceed the amount
accrued by $1.9 million.


                                                                              10
<PAGE>   13
                                THE CRONOS GROUP

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10.  Commitments and contingencies (continued)

b)  Contingencies - TOEMT

        TOEMT, which is currently in liquidation in the United Kingdom, has been
separately registered in the same name in both the United Kingdom and the Isle
of Man. At June 30, 2001 and December 31, 2000, the Group had $1.1 million and
$0.9 million respectively, in amounts payable to TOEMT on deposit in a bank
account pending resolution of certain matters relating to the liquidation
process. Over the past eighteen months, the Group has become aware that more
than one creditor of TOEMT may claim an interest in the distributions made by
the Group with respect to the containers owned by TOEMT. At the present time,
the Group has insufficient information to evaluate the competing claims or to
determine whether the Group may have any liability to the competing creditors
for the prior distributions made with respect to the TOEMT containers.


                                                                              11
<PAGE>   14
                                THE CRONOS GROUP


ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

        GENERAL


        The Group generates revenues by leasing to ocean carriers marine
containers that are owned either by third-party container owners or by the Group
itself. These leases, which generate most of the Group's revenues, are generally
operating leases.

        The following chart summarizes the composition of the Cronos fleet
(based on original equipment cost) at June 30 for each of the periods indicated:

<TABLE>
<CAPTION>
                                    2001       2000
                                    ----       ----
<S>                                <C>       <C>
US Public Limited Partnerships       32%       33%
Other container owners               44%       44%
Owned containers                     24%       23%
                                    ---       ---
Total                               100%      100%
                                    ===       ===
</TABLE>


        All containers, whether owned or managed, are operated as part of a
single fleet. The Group has discretion over which ocean carriers, container
manufacturers and suppliers of goods and services it deals with. Since the
Group's agreements with the managed container owners ("Managed Container
Owners") meet the definition of leases in Statement of Financial Accounting
Standards No. 13, they are accounted for in the Company's financial statements
as leases under which the container owners are lessors and the Group is lessee.
The agreements with container owners generally provide that the Group will make
payments to the container owners based upon the rentals collected from ocean
carriers after deducting direct operating expenses and the Group's management
fee. The majority of payments to container owners are therefore dependent upon
the leasing of the containers by the Group to ocean carriers and the collection
of lease rentals. Minimum lease payments on the agreements which have fixed
payment terms are presented in Note 13 to the Company's 2000 Consolidated
Financial Statements. For the six months ended June 30, 2001, over 83% of
payments to container owners represented agreements under the terms of which the
amount due to the container owner was calculated as a percentage of the rentals
collected from the ocean carriers after deducting the direct operating expenses
paid by the Group.

        The following chart summarizes the composition of the Cronos fleet (in
thousands), based on twenty-foot equivalent units ("TEU"), by equipment type, at
June 30 for each of the periods indicated:

<TABLE>
<CAPTION>
                                       2001       2000
                                    -------     ------
<S>                                   <C>        <C>
Dry Cargo                             370.2      358.3
Refrigerated                           13.1       12.9
Cellular Palletwide Containers          4.5        3.5
("CPCs")
Rolltrailer                             2.5        2.2
Tank                                    2.0        2.0
Other Dry Freight Specials              3.0        2.9
                                    -------     ------
Total fleet                           395.3      381.8
                                    =======     ======
</TABLE>


                                                                              12
<PAGE>   15
                                THE CRONOS GROUP

        Demand for dry cargo containers decreased in the first six months of
2001 in line with the slowdown in the US economy and the resulting decline in
leasing activity in the transpacific trade routes.

        The Group operates a diversified fleet of containers, including
refrigerated containers, tanks, CPCs and rolltrailers. Specialized containers
account for over 50% of the Cronos owned fleet (based on original equipment
cost). Due to their specialized nature, demand for these containers is less
likely to be affected by global economic downturns. During the second quarter of
2001, Cronos has experienced strong demand for all specialized containers.

        The following chart summarizes the combined utilization of the Cronos
fleet (based on approximate original equipment cost) at the dates indicated:

<TABLE>
<CAPTION>
                                              2001            2000
                                              ----            ----
<S>                                           <C>             <C>
Utilization at June 30                         71%             81%
</TABLE>


        Over the course of the last twelve months, the Group's combined per diem
rate fell by approximately 8% from the combined rate at June 30, 2000.



        THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30,
2000

        Operating loss for the three months ended June 30, 2001, was $3.4
million compared to an operating profit of $2.1 million for the corresponding
period of 2000. Management fees decreased by $1.6 million reflecting lower net
lease revenue for the managed segments due primarily to the reduction in demand
for dry containers. This was partly offset by a $0.1 million reduction in
allocated selling, general and administrative expenses. The operating loss for
the owned container segment includes $4 million of impairment charges.

        Gross lease revenue of $30.1 million for the three months ended June 30,
2001, was $4 million, or 11.7%, lower than in the corresponding period of 2000.
This was primarily due to the combined effect of lower utilization and per diem
rates for the dry container fleet, reflecting the current global economic
climate.

        Commissions, fees and other income for the three months ended June 30,
2001, were $1.7 million compared to $1.9 million in the same period of 2000, a
decrease of $0.2 million. The second quarter of 2000 included a $0.3 million net
gain on the disposal of a property. In the second quarter of 2001, investment
income and disposal fees were lower than in 2000 by a total of $0.2 million.
This was partly offset by a $0.3 million increase in CPC license fee income.

        Direct operating expenses of $7.9 million for the three months ended
June 30, 2001 were $1.5 million, or 23.9%, higher than in the second quarter of
2000. Lower legal and insurance costs of $0.1 million were more than offset by
increased repair costs of $0.2 million and increased storage and repositioning
costs of $1.4 million.

        Payments to container owners of $14.2 million during the three months
ended June 30, 2001, were $3.8 million, or 21.2%, lower when compared to the
corresponding period in 2000. Net lease revenue declined for each of these
segments due primarily to the decline in market demand for dry containers. A $2
million decrease in Payments to US Limited Partnerships was due to a smaller
fleet size, reflecting the sale of containers owned by older programs in the
second half of 2000, as well as lower dry container utilization and per diem
rates. Payments to Other Container Owners were $9.5 million, a decrease of $1.8
million, or 15.9%, when compared to the same period of 2000.

        Depreciation and amortization during the three months ended June 30,
2001, was almost unchanged compared to the second quarter of 2000. A $0.2
million increase in depreciation expense for container equipment was offset by a
$0.2 million decrease in depreciation expense for other fixed assets. The
reduction in non-container depreciation was due to the sale of a building in
June 2000.


                                                                              13
<PAGE>   16
                                THE CRONOS GROUP


        Selling, general and administrative expenses declined to $3.4 million
for the three months ended June 30, 2001, from $4.1 million in the corresponding
period of 2000, a decrease of $0.8 million, or 18.3%. This was due primarily to
reduced non-operating legal and other expenses and lower manpower costs.

        Interest expense of $2.2 million for the three months ended June 30,
2001, was $0.2 million, or 7.3%, lower when compared to the corresponding period
in 2000. A $0.1 million non-recurring charge incurred in the second quarter of
2001 in connection with the refinancing of certain loan facilities was more than
offset by the effect of lower interest rates.

        Recovery of related party loans of $6 million for the three months ended
June 30, 2001, represented the partial recovery of interest and principal
receivable under two promissory notes between the Group and a former Chairman
and Chief Executive Officer of the Group. The Group had previously made a
provision against some of the amounts owed under the promissory notes in
December 1997. In May 2001, Cronos was awarded 1.8 million outstanding common
shares in the Company that were beneficially owned by the former Chairman and
Chief Executive Officer in partial consideration for amounts owed under the
promissory notes. Such shares had been recorded as common shares in treasury.
The valuation of $6 million was based on the estimated fair value of the shares
received.

        Impairment charges of $4 million were recorded during the second quarter
of 2001 against certain refrigerated containers and against loan notes
receivable from a third-party container owner.

        The Group undertook a review of its refrigerated container equipment and
identified a number of issues that have had an impact on the carrying value of
certain equipment, which use the R12 refrigerant gas. Management concluded that,
due to recent legislation within the European Union, which prohibited the
handling of R12 except for disposal, and due to commitments from leading lessees
of this equipment to eliminate such containers from their fleets during 2001,
the carrying value of these containers exceeded fair value. As a result of the
review, inventories of R12 equipment would be targeted for immediate sale and it
was concluded that 531 containers with a carrying value of $2.4 million exceeded
fair value. Accordingly an impairment charge of $1.4 million was recorded.
Additionally, a review was conducted of 776 containers with a carrying value of
$3.7 million that were on lease at June 30, 2001. It was concluded that the
carrying value of these assets exceeded the future cash flows expected to
result from the use of the assets and their eventual disposition, and therefore
was not recoverable. Accordingly an impairment charge of $0.6 million was
recorded.

         In the second quarter of 2001, the Group also reviewed the carrying
value of a loan note receivable from third party container owners. Due to the
current global economic climate and forecasts for economic recovery, management
revised the projections for per diem revenues and utilization downwards. Based
on the revised projected trends, the Group considers that the carrying value of
the loan notes due from the third-party container owners exceed the discounted
value of the future cash flows by $2 million. Accordingly, an impairment charge
of $2 million was recorded.



        SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30,
2000

        Operating loss for the six months ended June 30, 2001, was $2.5 million
compared to an operating profit of $3.3 million for the corresponding period of
2000. Profits declined for the three segments as net lease revenue decreased
reflecting the global economic climate. This was partly offset by a reduction in
selling, general and administrative expenses. The owned container segment
included impairment charges of $4 million.

        Gross lease revenue of $61.6 million in the six months ended June 30,
2001 was $6.6 million, or 9.7%, lower than in the same period of 2000. This was
due to the combined effect of lower utilization and per diem rates.


                                                                              14
<PAGE>   17

                                THE CRONOS GROUP

        Commissions, fees and other income for the six months ended June 30,
2001, of $3 million were $0.2 million, or 7%, lower than in the first six months
of 2000. The corresponding period for 2000 included a gain on the sale of a
building of $0.3 million, higher acquisition fees of $0.1 million, and higher
investment income of $0.1 million, which were partly offset by a $0.3 million
increase in CPC license fees in the first half of 2001.

        Gain on sale of investment of $0.3 million in the first six months of
2001 represented the sale of shares that had been held in escrow as security for
a 1994 tax indemnification agreement. This agreement expired on December 31,
2000, and the shares were released in the first quarter of 2001. The gain of
$3.2 million in the first half of 2000 represented profit realized pursuant to
the receipt of shares from two escrow accounts that had been held pending
post-closing reports and adjustments related to the Agreement and Plan of Merger
between Transamerica Corporation and Trans Ocean Limited in 1996.

        Direct operating expenses of $14.6 million in the first six months of
2001 were $0.6 million, or 4.5%, higher than in the corresponding period of
2000. A reduction of $1.2 million in charges for legal expenses and doubtful
accounts was more than offset by a $1.8 million increase in storage costs due to
a larger off-hire dry container fleet.

        Payments to container owners of $30.2 million in the first half of 2001,
were $5.0 million, or 14.1%, lower when compared to the corresponding period in
2000. This is a result of declining net lease revenue due to the current global
economic climate. Payments to US Limited Partnerships were $2.5 million lower
than in the same period of 2000 due to the sale of containers owned by older
programs in the second half of 2000 as well as the combined effect of lower
utilization and per diem rates for dry containers. Payments to Other Container
Owners were also $2.5 million lower than in the first half of 2000 as lower
utilization and per diem rates more than offset the effect of a larger fleet.

        Depreciation and amortization for the six months ended June 30, 2001,
was $8.1 million, compared to $7.9 million for the corresponding period of 2000.
An increase in container depreciation was partially offset by a reduction in
depreciation for other fixed assets as a result of the sale of a building in
June 2000.

        Selling, general and administrative expenses decreased to $6.8 million
in the first half of 2001, from $8.4 million in the first half of 2000, a
reduction of $1.6 million, or 18.8%. This was due primarily to reductions in
non-operating legal and related expenses of $0.9 million, reduced manpower costs
of $0.3 million, lower professional services costs of $0.2 million, reduced
information technology costs of $0.1 million and other cost savings of $0.1
million.

        Interest expense of $4.4 million for the six months ended June 30, 2001,
decreased by $0.4 million, or 8.2%, when compared to the corresponding period in
2000. This decrease was primarily due to the effect of lower interest rates.
Interest expense for the first half of 2001 included a $0.1 million
non-recurring charge incurred in connection with the refinancing of certain loan
facilities.

        Recovery of related party loans for the six months ended June 30, 2001,
represented the partial recovery of interest and principal receivable under two
promissory notes between the Group and a former Chairman and Chief Executive
Officer of the Group. The Group had previously made a provision against some of
the amounts owed under the promissory notes in December 1997. In May 2001,
Cronos was awarded 1.8 million outstanding common shares in the Company that
were beneficially owned by the former Chairman and Chief Executive Officer in
partial consideration for amounts owed under the promissory notes. Such shares
had been recorded as common shares in treasury. The valuation of $6 million was
based on the estimated fair value of the shares received.


                                                                              15
<PAGE>   18

                                THE CRONOS GROUP

        Impairment charges of $4 million for the six months ended June 30, 2001
were recorded against certain refrigerated containers and against loan notes
receivable from a third-party container owner.

        The Group undertook a review of its refrigerated container equipment and
identified a number of issues that have had an impact on the carrying value of
certain equipment, which use the R12 refrigerant gas. As a result of the review,
management concluded that inventories of R12 equipment would be targeted for
immediate sale and that 531 containers with a carrying value of $2.4 million
exceeded fair value. Additionally, a review was conducted of 776 containers with
a carrying value of $3.7 million that were on lease at June 30, 2001. It was
concluded that the carrying value of these assets exceeded the future cash
flows expected to result from the use of the assets and their eventual
disposition. As a result of these reviews, an impairment charge of $2 million
was recorded.

        The Group also reviewed the carrying value of a loan note receivable
from third party container owners. Due to the current global economic climate
and forecasts for economic recovery, management revised the projections for per
diem revenues and utilization downwards. Based on the revised projected trends,
the Group considers that the carrying value of the loan notes due from the
third-party container owners exceed the discounted value of the future cash
flows by $2 million. Accordingly, an impairment of $2 million was recorded.

        LIQUIDITY AND CAPITAL RESOURCES

        Cash from Operating Activities: Net cash provided by operating
activities was $13.2 million and $12.9 million during the first six months of
2001 and 2000, respectively. The net cash generated in 2001 was primarily due to
a decrease in container equipment for resale, reflecting the sale of $8 million
of container equipment to a new managed container owner program, which was
partly offset by a decrease in amounts due to container manufacturers of $3.6
million. The net cash generated in 2000 reflected a $4.6 million increase in
amounts due to container manufacturers, as well as the receipt of $1.5 million
of sales tax which was subsequently paid to the tax authorities in the third
quarter. This was partly offset by a $4.3 million increase in new container
equipment for resale, and a $3.1 million increase in the amounts due from
lessees.

        Cash from Investing Activities: Net cash used in investing activities
was $13 million in the first six months of 2001, reflecting the acquisition of
$16.8 million of container equipment, $9 million of which relates to a new five
year refrigerated container term lease. Net cash provided by investing
activities comprised proceeds from the sale of container equipment of $3.3
million and proceeds from the sale of investments of $0.5 million. Net cash
provided by investing activities was $3.5 million in the first six months of
2000 reflecting $4.5 million in proceeds from the sale of a building and
container equipment, and the receipt of $1 million of funds that had been held
in an escrow account.

        Cash from Financing Activities: Net cash used in financing activities
was $2.4 million during the first six months of 2001, compared to $16.2 million
for the corresponding period of 2000. In the first six months of 2001, the Group
borrowed $9 million of new term debt and repaid $11.5 million of debt and
capital lease obligations. In the first six months of 2000, debt repayments
included $2.7 million of proceeds realized on the conversion of investment
securities. In addition, the Group placed $5.2 million on deposit in a
restricted cash account, including $3.5 million of property sale proceeds, in
accordance with the terms of the loan agreement.

        CAPITAL RESOURCES

        The Group has placed orders with container manufacturers totaling $1.7
million at June 30, 2001. These orders relate to containers to be purchased for
managed container owners or to be financed by the Group using debt funding.

        On July 19, 2001, the Group entered into a $60 million revolving credit
facility with Fortis Bank (Nederland) N.V. This facility is for a term of three
years with an interest rate of libor plus 2.25%, payable monthly in arrears. The
first draw down under the facility was utilized to refinance existing loan
facilities and to fund new container additions.


                                                                              16
<PAGE>   19

                                THE CRONOS GROUP

ITEM 3 -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        Interest rate risk: Outstanding borrowings are subject to interest rate
risk. Approximately 76% of total borrowings had floating interest rates at June
30, 2001. The Group conducted an analysis of borrowings with variable interest
rates to determine their sensitivity to interest rate changes. In this analysis,
the same change was applied to the current balance outstanding, leaving all
other factors constant. It was found that if a 10% increase were applied to
variable interest rates, the expected effect would be to reduce annual cash
flows by $0.4 million.

        Exchange rate risk: Substantially all of the Group's revenues are billed
and paid in US dollars and a significant portion of costs are billed and paid in
US dollars. Of the remaining costs, the majority are individually small,
unpredictable and incurred in various denominations and thus are not suitable
for cost effective hedging. By reference to the first six months of 2001, it is
estimated that for every 10% incremental decline in the value of the US dollar
against various foreign currencies, the effect would be to reduce cash flows by
$0.6 million in any given year.

        As exchange rates are outside of the control of the Group, there can be
no assurance that such fluctuations will not adversely effect its results of
operations and financial condition.

NEW ACCOUNTING PRONOUNCEMENTS

        On January 1, 2001 the Group adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities". The adoption of SFAS 133 did not have a significant impact on the
financial position, results of operations, or cash flows of the Group.

        In June 2001, the Financial Accounting Standards Board issued SFAS No.
141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 141 requires that all business combinations initiated after
June 30, 2001 be accounted for under the purchase method and addresses the
initial recognition and measurement of goodwill and other intangible assets
acquired in a business combination. SFAS No. 142 addresses the initial
recognition and measurement of intangible assets acquired outside of a business
combination and the accounting for goodwill and other intangible assets
subsequent to their acquisition. SFAS No. 142 provides that intangible assets
with finite useful lives be amortized and that goodwill and intangible assets
with indefinite lives will not be amortized, but will rather be tested at least
annually for impairment. The Group will adopt SFAS No. 142 for its fiscal year
beginning January 1, 2002, and is evaluating the impact of the adoption of these
standards. The Group has not yet determined the effect of adoption on its
financial position and results of operations.


                                                                              17
<PAGE>   20
                                THE CRONOS GROUP

                          PART II -- OTHER INFORMATION

ITEM 1 -- LEGAL PROCEEDINGS

        DISPUTE WITH THE CONTRIN GROUP

        The Group manages containers for investment entities sponsored by or
affiliated with Contrin. Approximately 2% (measured by TEUs) of the Group's
fleet of managed containers is owned by Contrin. The Group is in a dispute with
Contrin over funds that Contrin claims to have remitted to Cronos for the
purchase of containers. Contrin claims that in 1994 it transmitted $2.6 million
to Cronos for the purchase of containers. The Group did not receive these funds
and believes that the funds were diverted to an account controlled by Mr.
Palatin, and that this was known or should have been known by Contrin.

        On August 8, 2000, Contrin, through its affiliate, Contrin Worldwide
Container Leasing GmbH, filed an action in the Luxembourg District Court against
the Group, seeking recovery of $2.6 million, together with interest and costs.
On January 10, 2001, the Group responded to Contrin's complaint, requesting that
the District Court dismiss the proceeding for lack of jurisdiction over the
dispute. The Group intends to contest Contrin's claims, on the merits, if its
motion to dismiss is not granted, but is unable to predict the outcome of the
dispute.

        To preserve its rights of indemnity in the face of Contrin's claims, the
Group, on June 1, 2000, filed a protective claim in the High Court of Justice,
London, England, against Mr. Palatin and his wife. By its claim, the Group seeks
to establish that the Palatins are liable to the Group for any liability which
the Group may have to Contrin arising out of the 1994 transfers. On March 29,
2001, The Group secured a "freezing injunction" from the High Court of Justice
in aid of its claim against the Palatins. By the injunction, the Palatins are
prohibited from selling, charging, or otherwise disposing of their interest in
an estate the Group believes is beneficially owned by the Palatins in Amersham,
England, until further order of the Court. The injunction also extends to
Klamath Enterprises, S.A. ("Klamath"), a Panamanian company and the record owner
of the estate. The Palatins have contested the jurisdiction of the High Court of
Justice over them, and have filed an affidavit with the Court asserting that the
estate is owned by Pontino SA, a Panamanian company, in which they disclaim any
interest. The Group believes that the High Court of Justice has jurisdiction to
hear its claim against the Palatins and that their disclaimer of any beneficial
interest in the Amersham estate is not credible. On June 22, 2001, upon the
stipulation of the parties, the Court entered its Order staying further
prosecution of the Group's claim against the Palatins. The purpose of the stay
is to await resolution of the Group's motion to dismiss Contrin's Luxembourg
action against the Group. By the terms of the stay, either party may restore the
action upon 14 days' notice to the other party. The Group's freezing injunction
remains in place during the period of the stay, but the Palatins may, upon 14
days' notice to the Group, apply to modify the terms of the injunction.

        On July 13, 2000, the Group also filed a protective claim (2000 Folio
No. 10) against Barclays in the High Court of Justice, London, England. By its
claim, the Group seeks a declaration that Barclays is liable to the Group for
$2.6 million, plus interest and costs, arising out of Contrin's 1994 transfer to
an account with Barclays in the name of Mrs. Palatin. The Group obtained an
order from the Court requiring the production of documents by Barclays. The
Group is currently evaluating the documents produced by Barclays to determine
whether to proceed with its claim against Barclays.


                                                                              18

<PAGE>   21
                                THE CRONOS GROUP

        COLLECTION OF PALATIN NOTES

        In October 1999, the Company brought an action against Mr. Palatin in
the Supreme Court of the State of New York, for payment of the remaining
balances due under two promissory notes, both dated July 14, 1997 (the "Palatin
Notes"), by and between a subsidiary of the Company, as payee, and Mr. Palatin,
as payor. The original principal amount of the Palatin Notes was $9.6 million.
Mr. Palatin made no payments under the Palatin Notes, which were due on October
31 and December 31, 1997, respectively. The amounts due under the Palatin Notes
were reduced by $5.3 million as a result of the sale, on or about June 21, 1999,
of 1,463,636 common shares of the Company by certain of the Company's lenders
(the indebtedness of the Company to the lenders was reduced by a like amount).
The shares had been acquired by the banks by pledge from the Company to secure,
in part, indebtedness owed by the Company to the banks. As a result of the sale
of the shares, Mr. Palatin owed the Company, at the time the Company filed its
complaint in New York Supreme Court, $6.2 million in principal and $0.4 million
in interest under the Palatin Notes.

        Mr. Palatin did not respond to the Company's lawsuit, and on February 8,
2000, the Supreme Court of the State of New York entered its default judgment
against Mr. Palatin in the amount of $6.6 million. Since that time the Company
has pursued execution of the judgment against Mr. Palatin's beneficial ownership
of the common shares of the Company. According to filings made with the SEC by
the shareholder of Klamath Enterprises S.A. ("Klamath"), Mr. Palatin was the
beneficial owner of the 1,793,798 outstanding common shares of the Company owned
of record by Klamath (the "Klamath Shares"). The Company pursued execution of
the judgment it obtained against Mr. Palatin in the Superior Court of the
Commonwealth of Massachusetts, Norfolk County, where its transfer agent,
EquiServe Trust Company, N.A. ("EquiServe"), is located, and in Geneva,
Switzerland, where the individual the Company believes is the record owner of
the outstanding shares of Klamath resides. The Company secured, from the
Massachusetts Court, preliminary injunctive orders against Mr. Palatin and
Klamath, enjoining them from selling or transferring the Klamath Shares, and the
Company obtained from the Swiss courts a preliminary attachment order preventing
the record owner of the outstanding shares of Klamath from transferring the
Klamath Shares.

        On May 8, 2001, in response to a motion the Company made in the
Massachusetts Court, the Court entered its judgment against Mr. Palatin and
Klamath, affirming the default judgment of the New York State Supreme Court in
the amount of $6,583,665.72, and ordering the Company's transfer agent,
EquiServe, to cancel the Klamath Shares, to issue a new stock certificate for
1,793,798 common shares in the name of the Company's subsidiary, Cronos
Equipment (Bermuda) Limited ("Cronos Bermuda"), and to transfer the Klamath
Shares to Cronos Bermuda on the books and records of the transfer agent.
EquiServe promptly cancelled the Klamath Shares and issued a new stock
certificate for 1,793,798 common shares of the Company to Cronos Bermuda. The
Court also ordered Mr. Palatin and Klamath to pay Cronos Bermuda's fees and
expenses, including attorneys' fees, incurred in securing the final judgment.

        From and after May 8, 2001, the Klamath Shares, representing 19.6% of
the 9,158,378 common shares of the Company issued and outstanding prior to the
said date, no longer will be deemed outstanding common shares of the Company.
Cronos Bermuda, as the holder of the Klamath Shares, will not be entitled to
vote at any meeting of the Company's shareholders or on any matter put to the
shareholders for approval, and will not be entitled to any dividends or other
distributions the Company declares on its outstanding common shares.

        Under Luxembourg law, the Company has three years to resell the Klamath
Shares. If the shares are not resold within this period of time, then they are
automatically cancelled. The Company may also, under Luxembourg law, seek
shareholder approval for the retirement and cancellation of the shares. The
Company does not presently intend to resell the shares but to cancel and retire
them, either by seeking shareholder approval for a cancellation and retirement
of the shares or by allowing the time within which to resell the shares to
lapse.


                                                                              19

<PAGE>   22

                                THE CRONOS GROUP

        PREVIOUS REPORTS

        Investors are referred to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2000, for the Company's report on the SEC's
proceedings against Mr. Palatin and the cease-and-desist orders consented to by
Messrs. Weissenberger and Friedberg, former directors and (in the case of Mr.
Palatin and Mr. Weissenberger) former officers of the Company.



ITEM 2 -- CHANGES IN SECURITIES AND USE OF PROCEEDS

        Not applicable

ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES

        Not applicable

ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        Incorporated by reference to Schedule 14A (Rule 14a-101) filed April 27,
2001

ITEM 5 -- OTHER INFORMATION

        Not applicable

ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits

<TABLE>
<CAPTION>
Number   Description
------   -----------
<S>     <C>
10.20   Guarantee, dated as of July 19, 2001, by and between the Group and
        Fortis Bank N.V, as agent on behalf of itself.

10.21   Loan Agreement, dated as of July 19, 2001, by and between Cronos Finance
        (Bermuda) Limited as issuer, and Fortis Bank N.V. as agent on behalf of
        the noteholder, and itself, as the initial noteholder.
</TABLE>


(b)     Reports on Form 8-K

        On January 31, 2001, a Current Report on Form 8-K was filed by the
        Company announcing the results of the shareholder voting on the matters
        submitted to the shareholders at the annual meeting.

        On May 11, 2001, a Current Report on Form 8-K was filed by the Company
        announcing that Massachusetts Superior Court had entered a judgement
        cancelling 1,793,798 outstanding common shares.


                                                                              20
<PAGE>   23
                                THE CRONOS GROUP

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                THE CRONOS GROUP

<TABLE>
<CAPTION>
SIGNATURE                           TITLE                                           DATE
---------                           -----                                           ----
<S>                                 <C>                                             <C>
By    /s/ PETER J YOUNGER           Director, Chief Operating Officer,              August 13, 2001
      Peter J Younger               Chief Financial Officer and
                                    Chief Accounting Officer
                                    (Principal Financial and Accounting Officer)
</TABLE>


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