| SEGMENT INFORMATION |
The Company operates in two distinct
business segments: a consumer product segment in manufacturing, marketing and selling plant-based CBD products to a range of market
sectors; and, a specialty pharmaceutical segment focused on developing and commercializing novel therapeutics utilizing synthetic
CBD. The Company’s segments maintain separate financial information for which operating results are evaluated on a regular
basis by the Company’s senior management in deciding how to allocate resources and in assessing performance. The Company
evaluates its consumer product segment based on net product sales, gross profit and operating income or loss. The Company currently
evaluates its specialty pharmaceutical segment based on the progress of its clinical development programs.
The following
table presents information by reportable operating segment for the three and six month periods ended June 30, 2016 and 2015:
| |
|
Consumer
Products Segment |
|
|
Specialty
Pharmaceutical Segment |
|
|
Consolidated
Totals |
|
| Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2016: |
|
|
|
|
|
|
|
|
|
|
|
|
| Product sales, net |
|
$ |
2,487,756 |
|
|
$ |
– |
|
|
$ |
2,487,756 |
|
| Gross profit |
|
|
1,664,327 |
|
|
|
– |
|
|
|
1,664,327 |
|
| Selling, general and administrative |
|
|
3,262,917 |
|
|
|
122,809 |
|
|
|
3,385,726 |
|
| Research and development |
|
|
224,266 |
|
|
|
117,281 |
|
|
|
341,547 |
|
| Operating (loss) income |
|
$ |
(1,822,856 |
) |
|
$ |
(240,090 |
) |
|
$ |
(2,062,946 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2015: |
|
|
|
|
|
|
|
|
|
|
|
|
| Product sales, net |
|
$ |
2,413,886 |
|
|
$ |
– |
|
|
$ |
2,413,886 |
|
| Gross profit |
|
|
1,288,061 |
|
|
|
– |
|
|
|
1,288,061 |
|
| Selling, general and administrative |
|
|
2,850,053 |
|
|
|
– |
|
|
|
2,850,053 |
|
| Research and development |
|
|
433,544 |
|
|
|
– |
|
|
|
433,544 |
|
| Operating (loss) income |
|
$ |
(1,995,536 |
) |
|
$ |
– |
|
|
$ |
(1,995,536 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2016: |
|
|
|
|
|
|
|
|
|
|
|
|
| Product sales, net |
|
$ |
4,910,434 |
|
|
$ |
– |
|
|
$ |
4,910,434 |
|
| Gross profit |
|
|
3,289,962 |
|
|
|
– |
|
|
|
3,289,962 |
|
| Selling, general and administrative |
|
|
5,952,161 |
|
|
|
122,809 |
|
|
|
6,074,970 |
|
| Research and development |
|
|
366,079 |
|
|
|
117,281 |
|
|
|
483,360 |
|
| Operating (loss) income |
|
$ |
(3,028,278 |
) |
|
$ |
(240,090 |
) |
|
$ |
(3,268,368 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2015: |
|
|
|
|
|
|
|
|
|
|
|
|
| Product sales, net |
|
$ |
5,127,938 |
|
|
$ |
– |
|
|
$ |
5,127,938 |
|
| Gross profit |
|
|
2,866,007 |
|
|
|
– |
|
|
|
2,866,007 |
|
| Selling, general and administrative |
|
|
6,787,204 |
|
|
|
– |
|
|
|
6,787,204 |
|
| Research and development |
|
|
744,022 |
|
|
|
– |
|
|
|
744,022 |
|
| Operating (loss) income |
|
$ |
(4,665,219 |
) |
|
$ |
– |
|
|
$ |
(4,665,219 |
) |
|