Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING

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SEGMENT REPORTING
 3 Months Ended
Mar. 31, 2023
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 intangible assets, net, are disclosed in Note 8.
As of March 31, 2023, 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 loss by reportable segment for the periods presented:
Three Months Ended March 31,
  2023 2022
Segment Net Revenue:
Cannabinoid $ 1,222  $ 1,811 
Non-Cannabinoid 2,756  3,230 
Total Net Revenue 3,978  5,041 
 
Segment Profit (Loss):
Cannabinoid (2,315) (5,705)
Non-Cannabinoid 447  348 
Total Loss $ (1,868) $ (5,357)
 
Reconciliation:
Total Segment Loss (1,868) (5,357)
Unallocated corporate expenses (1,558) (3,535)
Non-cash share-based compensation (468) (500)
Depreciation and amortization (236) (327)
Loss from operations $ (4,130) $ (9,719)
 
Loss on debt extinguishment, net —  2,263 
Loss (gain) on remeasurement of warrant liability 44  (490)
Foreign exchange (gain) loss (45) 211 
Interest (income) expense and amortization of debt issuance cost (17) 2,109 
Other expense (income), net 39  (51)
Loss from operations before income taxes and equity investment loss $ (4,151) $ (13,761)
The following table disaggregates the Company’s revenue by channel for the periods presented:

Three Months Ended March 31,
2023 2022
Mass retail $ 2,524  $ 2,814 
Distributors 1,262  1,658 
Specialty, health and other retail 161  392 
E-commerce 31  177 
Total $ 3,978  $ 5,041 
The following table represents the Company's revenues attributed to countries based on location of customer:
Three Months Ended March 31,
2023 2022
United States $ 2,756  $ 3,233 
Brazil 887  643 
Israel 250  638 
Australia (a)
36  368 
Other 49  159 
 Total $ 3,978  $ 5,041 
(a) During the quarter, we made additional sales of Portuguese flowers of approximately $300 to Australia, recognized as part of our discontinued operation. See Note 19 for further information.

Customers with an accounts receivable balance of 10% or greater of total accounts receivable and customers with net revenue of 10% or greater of total revenues are presented below for the periods indicated:

Percentage of Revenues Percentage of Accounts Receivable
Three Months Ended March 31, 2023 March 31, December 31,
2023 2022 2023 2022
Customer A (a)
15% 11% 12% 18%
Customer B (b)
* 13% * 13%
Customer C (b)
* * * 15%
Customer D (b)
* 13% * *
Customer E (b)
20% * 28% *
Customer F (b)
* * * 10%
* 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

During the three months ended March 31, 2023 and 2022, the Company's net sales for the non-cannabinoid segment were in the U.S; cannabinoid net sales were mostly outside of the U.S., primarily in Colombia, Israel, Brazil and Australia.

The following table disaggregates the Company’s long-lived assets, by segment for the periods presented:
March 31,
2023		 December 31,
2022
Long-lived assets
   
Cannabinoid $ 14,861  $ 15,308 
Non-Cannabinoid 130  155 
Total $ 14,991  $ 15,463 
Long-lived assets consist of non-current assets other than goodwill; intangible assets, net; deferred tax assets; investments in unconsolidated subsidiaries and equity securities; and financial instruments. The Company’s largest market in terms of long-lived assets is in Colombia.