Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING

v3.21.2
SEGMENT REPORTING
 9 Months Ended
Sep. 30, 2021
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 to consolidated income 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, 2021, 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 will initially be 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 homeopathic 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,
  2021 2020 2021 2020
Segment Net Sales:
Cannabinoid $ 901  $ 1,136  $ 2,157  $ 1,531 
Non-Cannabinoid 3,130  2,781  9,023  7,239 
Total net sales 4,031  3,917  11,180  8,770 
 
Segment Profit (Loss):
Cannabinoid (4,391) (4,529) (10,859) (14,384)
Non-Cannabinoid 551  933  1,797  1,346 
Total segment loss $ (3,840) $ (3,596) $ (9,062) $ (13,038)
 
Reconciliation:
Total segment loss (3,840) (3,596) (9,062) (13,038)
Unallocated corporate expenses (2,243) (92) (8,416) (4,037)
Non-cash share-based compensation (3,264) (489) (8,137) (1,202)
Depreciation and amortization (337) (534) (1,440) (1,251)
Goodwill impairment —  —  —  (1,682)
Loss from operations $ (9,684) $ (4,711) $ (27,055) $ (21,210)
 
Gain on debt extinguishment, net (3,375) —  —  (3,375) — 
Loss on fair value of derivative instrument —  57  —  —  57 
Gain on remeasurement of warrant liability (9,065) —  —  (5,390) — 
Loss on investments —  58  —  —  318 
Foreign exchange loss 298  96  —  1,137  455 
Interest expense 485  1,204  —  2,383  2,993 
Other expense, net 964  (20) —  (123) 28 
Gain (loss) before loss from equity investment $ 1,009  $ (6,106) $ (21,687) $ (25,061)

During 2021 and 2020, 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.
September 30,
2021		 December 31,
2020
Long-lived assets
   
Cannabinoid $ 29,513  $ 25,485 
Non-Cannabinoid
136  176 
Other(a)
16  19 
  $ 29,665  $ 25,680 
(a)“Other” includes long-lived assets primarily in the Company’s corporate offices.
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 markets in terms of long-lived assets are Colombia and Portugal.
The following table disaggregates the Company’s revenue by channel for the periods presented:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Mass retail $ 1,958  $ 2,602  $ 5,567  $ 4,635 
Specialty, health and other retail 277  97  852  1,007 
Distributors 1,650  1,130  4,330  2,705 
E-commerce 146  88  431  423 
$ 4,031  $ 3,917  $ 11,180  $ 8,770