SEGMENT REPORTING

12 Months Ended

Dec. 31, 2021

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 19 – SEGMENT REPORTING

Business Segments

ASC 280 establishes the standards for reporting information about segments in financial statements. In applying the criteria set forth in ASC 280, we have determined that we have two reportable segments: Cure, which develops and manufactures pharmaceutical and wellness products, and Sera Labs, which sells wellness products through direct to consumer and wholesale channels.

The Company evaluates performance based on net operating profit. Administrative functions such as finance, treasury, and information systems are centralized. However, where applicable, portions of the administrative function expenses are allocated between the operating segments. The operating segments do not share manufacturing or distribution facilities. In the event any materials and/or services are provided to one operating segment by the other, the transaction is valued according to the company’s transfer policy, which approximates market price. The costs of operating the manufacturing plant is captured discretely in the Cure segment. The Company’s property, plant and equipment, inventory, and accounts receivable are captured and reported discretely within each operating segment.

Summary financial information for the two reportable segments for the year ended December 31, 2021 is as follows (in thousands):

	Cure			Sera Labs			Eliminations			Consolidated
Net sales	$	651		$	6,078		$	(174	)	$	6,555
Net operating loss	$	(8,232	)	$	(6,860	)	$	-		$	(15,092	)
Assets	$	46,491		$	8,608		$	(14,175	)	$	40,574
Accounts receivable, net	$	18		$	339		$	-		$	357
Inventory, net	$	243		$	621		$	-		$	864
Interest expense	$	468		$	86		$	-		$	544
Depreciation and amortization	$	1,295		$	2,312		$	-		$	3,607

Summary financial information for the two reportable segments for the year ended December 31, 2020 is as follows (in thousands):

	Cure			Sera  Labs			Eliminations			Consolidated
Net sales	$	1,007		$	1,044		$	-		$	2,051
Net operating loss	$	(17,377	)	$	(1,581	)	$	-		$	(18,958	)
Assets	$	45,376		$	15,158		$	(14,175	)	$	46,359
Accounts receivable, net	$	131		$	93		$	-		$	224
Inventory, net	$	209		$	240		$	-		$	449
Interest expense	$	2,472		$	-		$	-		$	2,472
Depreciation and amortization	$	341		$	577		$	-		$	918

Total expenditures for additions to long-lived assets were minimal during the years ended December 31, 2021 and 2020.

Disaggregation of Revenues and Concentration Risk

The following table presents the percentage of consolidated revenues attributable to products or services classes that represent greater than ten percent of consolidated revenues for the years ended December 31, 2021 and 2020:

	Year Ended December 31,
	2021			2020
CureFilm™ sales		20	%		37	%
Research & Development services		0	%		11	%
Product sales - CBD		71	%		49	%
Total		91	%		97	%

The Company did not have revenue from any customers that individually represents 10% or more of consolidated revenues for the year ended December 31, 2021. The Company received revenue from one customer that individually represents greater than ten percent of consolidated revenues. Revenue for this customer represents 16% of consolidated revenues for the year ended December 31, 2020. Accounts receivable from this customer at December 31, 2020 was $0.03 million.