| 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 months ended June 30, 2018 and 2017:
| |
|
Consumer Products Segment |
|
Specialty Pharmaceutical Segment |
|
Consolidated Totals |
| Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2018: |
|
|
|
|
|
|
|
|
|
|
|
|
| Product sales, net |
|
$ |
12,348,695 |
|
|
$ |
– |
|
|
$ |
12,348,695 |
|
| Gross profit |
|
|
9,060,076 |
|
|
|
– |
|
|
|
9,060,076 |
|
| Selling, general and administrative |
|
|
(5,319,536 |
) |
|
|
(1,068 |
) |
|
|
(5,320,604 |
) |
| Research and development |
|
|
(75,833 |
) |
|
|
(366,171 |
) |
|
|
(442,004 |
) |
| Operating income (loss) |
|
$ |
3,664,707 |
|
|
$ |
(367,239 |
) |
|
$ |
3,297,468 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
| Product sales, net |
|
$ |
4,081,832 |
|
|
$ |
– |
|
|
$ |
4,081,832 |
|
| Gross profit |
|
|
2,844,458 |
|
|
|
– |
|
|
|
2,844,458 |
|
| Gain on change in derivative liabilities |
|
|
27,288 |
|
|
|
– |
|
|
|
27,288 |
|
| Selling, general and administrative |
|
|
(3,447,786 |
) |
|
|
(77,987 |
) |
|
|
(3,525,773 |
) |
| Research and development |
|
|
(55,956 |
) |
|
|
(149,691 |
) |
|
|
(205,647 |
) |
| Operating loss |
|
$ |
(631,996 |
) |
|
$ |
(227,678 |
) |
|
$ |
(859,674 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2018: |
|
|
|
|
|
|
|
|
|
|
|
|
| Product sales, net |
|
$ |
20,419,460 |
|
|
$ |
– |
|
|
$ |
20,419,460 |
|
| Gross profit |
|
|
14,621,979 |
|
|
|
– |
|
|
|
14,621,979 |
|
| Selling, general and administrative |
|
|
(10,046,120 |
) |
|
|
(15,077 |
) |
|
|
(10,061,197 |
) |
| Research and development |
|
|
(192,467 |
) |
|
|
(403,241 |
) |
|
|
(595,708 |
) |
| Operating income (loss) |
|
$ |
4,383,392 |
|
|
$ |
(418,318 |
) |
|
$ |
3,965,074 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
| Product sales, net |
|
$ |
7,846,023 |
|
|
$ |
– |
|
|
$ |
7,846,023 |
|
| Gross profit |
|
|
5,277,462 |
|
|
|
– |
|
|
|
5,277,462 |
|
| Gain on change in derivative liabilities |
|
|
237,888 |
|
|
|
– |
|
|
|
237,888 |
|
| Royalty buy-out |
|
|
– |
|
|
|
(2,432,000 |
) |
|
|
(2,432,000 |
) |
| Selling, general and administrative |
|
|
(7,052,962 |
) |
|
|
(149,520 |
) |
|
|
(7,202,482 |
) |
| Research and development |
|
|
(104,989 |
) |
|
|
(289,374 |
) |
|
|
(394,363 |
) |
| Operating loss |
|
$ |
(1,642,601 |
) |
|
$ |
(2,870,894 |
) |
|
$ |
(4,513,495 |
) |
|