Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING

v3.22.2.2
SEGMENT REPORTING
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
SEGMENT REPORTING SEGMENT REPORTING
Operating segments include components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the Company’s Chief Executive Officer, “CEO”) in deciding how to allocate resources and in assessing the Company’s performance.
Operating segments for the Company are organized by product type and managed by segment managers who are responsible for the operating and financial results of each segment. Due to the similarities in the manufacturing and distribution processes for the Company’s products, much of the information provided in these consolidated financial statements and the footnotes to the consolidated financial statements, is similar to, or the same as, that information reviewed on a regular basis by the Company’s CEO.

The Company’s management evaluates segment profit/loss for each of the Company’s operating segments. The Company defines segment profit/loss as income from continuing operations before interest, taxes, depreciation, amortization, share-based compensation expense, gains/losses on foreign currency fluctuations, gains/losses on the early extinguishment of debt and miscellaneous expenses. Segment profit/loss also excludes the impact of certain items that are not directly attributable to the reportable segments’ underlying operating performance. Such items are shown below in the table reconciling segment profit/(loss) to consolidated income/(loss) from continuing operations before income taxes. The Company does not have any material inter-segment sales. Information about total assets by segment is not disclosed because such information is not reported to or used by the Company’s CEO. Segment goodwill and other intangible assets, net, are disclosed in Note 9 and Note 8, respectively.
As of September 30, 2022, the Company’s operations were organized in the following two reportable segments:
1.The Cannabinoid operating segment: comprised of the Company’s cultivation, extraction, manufacturing and commercialization of cannabinoid products. This operating segment is in the early stages of commercializing
cannabinoid products internationally pursuant to applicable international and domestic legislation, regulations, and other permits. The Company’s principal customers and sales for its products are primarily outside of the U.S.
2.Non-Cannabinoid operating segment: comprised of the brands acquired as part of the Herbal Brands acquisition in April 2019. The segment is engaged in the business of formulating, manufacturing, marketing, selling, distributing, and otherwise commercializing nutraceuticals and other natural remedies, wellness products, detoxification products, nutraceuticals, and nutritional and dietary supplements. The Company’s principal customers for its Herbal Brands products include mass retailers, specialty and health retailer and distributors in the U.S.

The following table is a comparative summary of the Company’s net sales and segment profit by reportable segment for the periods presented:
Three Months Ended September 30, Nine Months Ended September 30,
  2022 2021 2022 2021
Segment Net Sales:
Cannabinoid $ 979  $ 875  $ 4,269  $ 2,131 
Non-Cannabinoid 2,326  3,156  8,917  9,049 
Total net sales 3,305  4,031  13,186  11,180 
 
Segment Profit (Loss):
Cannabinoid $ (4,395) $ (4,391) $ (17,421) $ (10,859)
Non-Cannabinoid 95  551  1,109  1,797 
Total segment loss $ (4,300) $ (3,840) $ (16,312) $ (9,062)
 
Reconciliation:
Total segment loss $ (4,300) $ (3,840) $ (16,312) $ (9,062)
Unallocated corporate expenses (1,425) (2,243) (6,802) (8,416)
Non-cash share-based compensation (958) (3,264) (2,606) (8,137)
Depreciation and amortization (508) (337) (1,562) (1,440)
Intangible asset impairment (19,000) —  (19,000) — 
Loss from operations $ (26,191) $ (9,684) $ (46,282) $ (27,055)
 
Loss (gain) on debt extinguishment, net —  (3,375) 2,263  (3,375)
Gain on remeasurement of warrant liability (196) (9,065) (2,009) (5,390)
Gain on investment —  —  (6,851) — 
Foreign exchange loss 768  298  1,420  1,137 
Interest (income) expense and amortization of debt issuance cost (51) 485  2,719  2,383 
Other expense (income), net 101  964  111  (123)
(Loss) Income before income tax $ (26,813) $ 1,009  $ (43,935) $ (21,687)
The following table disaggregates the Company’s revenue by channel for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Mass retail $ 2,008  $ 1,958  $ 7,243  $ 5,567 
Distributors 927  1,650  4,250  4,330 
Specialty, health and other retail 282  277  1,234  852 
E-commerce 88  146  459  431 
Total $ 3,305  $ 4,031  $ 13,186  $ 11,180 

The following table represents the Company's revenues attributed to countries based on location of customer:
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
United States $ 2,228  $ 3,130  $ 8,736  $ 9,022 
Israel 116  $ 226  $ 1,139  $ 424 
Australia 333  501  1,017  1,141 
Brazil 249  1  1,169  147 
Germany 360  25  912  25 
Other 19  148  213  421 
 Total $ 3,305  $ 4,031  $ 13,186  $ 11,180 
During the nine months ended September 30, 2022 and 2021, the majority of the Company's net sales for the non-cannabinoid segment were in the U.S., with approximately $8.7 million of non-cannabinoid net sales.

Percentage of Revenues Percentage of Accounts Receivable
Three Months Ended September 30, Nine Months Ended September 30, September 30, December 31,
2022 2021 2022 2021 2022 2021
Customer A * * * * 24% *
Customer B (a)
17% 15% 12% 17% 10% 25%
Customer C (b)
* * * * 20% 18%
Customer E (b)
* * * * 13% *
* denotes less than 10%

(a) net sales attributed are reflected in the non-cannabinoid segments
(b) net sales attributed are reflected in the cannabinoid segments
September 30,
2022		 December 31,
2021
Long-lived assets
   
Colombia $ 16,722  $ 18,950 
Portugal 12,087  11,733 
Other(a)
187  249 
Total $ 28,996  $ 30,932 
(a)“Other” includes long-lived assets primarily in the U.S.
Long-lived assets consist of the Company's property plant and equipment assets.