Annual report pursuant to Section 13 and 15(d)

13. SEGMENT INFORMATION

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13. SEGMENT INFORMATION
 12 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
13. 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 years ended December 31, 2016 and 2015:

 

    Consumer
Products Segment		     Specialty
Pharmaceutical
Segment		     Consolidated
Totals		  
Years Ended                        
December 31, 2016:                        
Product sales, net   $ 11,060,636     $ –     $ 11,060,636  
Gross profit     6,997,635       –       6,997,635  
Gain on collection of related party notes receivable     379,486       –       379,486  
Gain on change in derivative liability     147,200       –       147,200  
Impairment of inventory     (3,562,459 )     –       (3,562,459 )
Impairment of PhytoSPHERE goodwill and intangible assets     (2,746,512 )     –       (2,746,512 )
Selling, general and administrative     (12,741,211 )      (388,739 )     (13,129,950 ) 
Research and development     (834,963 )      (324,046 )     (1,159,009 )
Operating (loss) income   $ (12,360,824 )   $ (712,785 )   $ (13,073,609 )
                         
December 31, 2015:                        
Product sales, net   $ 11,529,402     $ –     $ 11,529,402  
Gross profit     6,730,984       –       6,730,984  
Litigation settlement income     756,714       –       756,714  
Selling, general and administrative     (17,377,282 )      –       (17,377,282 ) 
Research and development     (1,320,003 )     –       (1,320,003 )
Operating (loss) income   $ (11,209,587 )   $ –     $ (11,209,587 )