| 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 nine months ended September 30, 2017:
|
|
Consumer
Products Segment |
|
|
Specialty
Pharmaceutical Segment |
|
|
Consolidated Totals |
|
| Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
| Product sales,
net |
|
$ |
5,591,210 |
|
|
$ |
– |
|
|
$ |
5,591,210 |
|
| Gross profit |
|
|
3,997,649 |
|
|
|
– |
|
|
|
3,997,649 |
|
| Gain on change in derivative
liability |
|
|
10,987 |
|
|
|
– |
|
|
|
10,987 |
|
| Royalty buy-out |
|
|
– |
|
|
|
– |
|
|
|
– |
|
| Selling, general and administrative |
|
|
(4,259,725 |
) |
|
|
(51,353 |
) |
|
|
(4,311,078 |
) |
| Research
and development |
|
|
(76,520 |
) |
|
|
(102,818 |
) |
|
|
(179,338 |
) |
| Operating
loss |
|
$ |
(327,609 |
) |
|
$ |
(154,171 |
) |
|
$ |
(481,780 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, 2016: |
|
|
|
|
|
|
|
|
|
|
|
|
| Product sales, net |
|
$ |
2,939,997 |
|
|
$ |
– |
|
|
$ |
2,939,997 |
|
| Gross profit |
|
|
1,888,949 |
|
|
|
– |
|
|
|
1,888,949 |
|
| Selling, general and administrative |
|
|
(2,952,533 |
) |
|
|
(119,908 |
) |
|
|
(3,072,441 |
) |
| Research
and development |
|
|
(292,738 |
) |
|
|
(103,500 |
) |
|
|
(396,238 |
) |
| Operating
loss |
|
$ |
(1,356,322 |
) |
|
$ |
(223,408 |
) |
|
$ |
(1,579,730 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
| Product sales, net |
|
$ |
13,437,233 |
|
|
$ |
– |
|
|
$ |
13,437,233 |
|
| Gross profit |
|
|
9,275,111 |
|
|
|
– |
|
|
|
9,275,111 |
|
| Gain on change in derivative
liability |
|
|
248,875 |
|
|
|
– |
|
|
|
248,875 |
|
| Royalty buy-out |
|
|
– |
|
|
|
(2,432,000 |
) |
|
|
(2,432,000 |
) |
| Selling, general and administrative |
|
|
(11,312,687 |
) |
|
|
(200,873 |
) |
|
|
(11,513,560 |
) |
| Research
and development |
|
|
(181,509 |
) |
|
|
(392,192 |
) |
|
|
(573,701 |
) |
| Operating
loss |
|
$ |
(1,970,210 |
) |
|
$ |
(3,025,065 |
) |
|
$ |
(4,995,275 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, 2016: |
|
|
|
|
|
|
|
|
|
|
|
|
| Product sales, net |
|
$ |
7,850,430 |
|
|
$ |
– |
|
|
$ |
7,850,430 |
|
| Gross profit |
|
|
5,178,911 |
|
|
|
– |
|
|
|
5,178,911 |
|
| Selling, general and administrative |
|
|
(8,904,694 |
) |
|
|
(242,717 |
) |
|
|
(9,147,411 |
) |
| Research
and development |
|
|
(658,817 |
) |
|
|
(220,781 |
) |
|
|
(879,598 |
) |
| Operating
loss |
|
$ |
(4,384,600 |
) |
|
$ |
(463,498 |
) |
|
$ |
(4,848,098 |
) |
|