SEGMENT REPORTING

6 Months Ended

Jun. 30, 2021

SEGMENT REPORTING

NOTE 18 – SEGMENT REPORTING

Business Segments

The Company manages its operations through two business 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 six months ending June 30, 2021 is as follows (in thousands):

	Cure			Sera Labs			Eliminations			Consolidated
Net Sales	$	279		$	3,327		$	(51	)	$	3,555
Operating Loss	$	(4,116	)	$	(3,647	)	$	-		$	(7,763	)
Assets	$	43,956		$	14,651		$	(14,175	)	$	44,432
Accounts receivable, net	$	36		$	206		$	-		$	242
Inventory, net	$	336		$	495		$	-		$	831

Summary financial information for the two reportable segments for the six months ending June 30, 2020 is as follows (in thousands):

	Cure			Sera Labs		Eliminations		Consolidated
Net Sales	$	549		$	-	$	-	$	549
Operating Loss	$	(11,485	)	$	-	$	-	$	(11,485	)
Assets	$	30,157		$	-	$	-	$	30,157
Accounts receivable, net	$	43		$	-	$	-	$	43
Inventory, net	$	210		$	-	$	-	$	210

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 three and six months June 30, 2020 and 2020:

	Three Months Ended						Six Months Ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
CureFilm™ sales		4	%		61	%		7	%		67	%
Research & Development services		1			37			1			31
Product sales - CBD		78			-			82			-
Product sales - PPE		17			-			10			-
Total		100	%		98	%		100	%		98	%

The Company received revenue from one customer that individually represents 17% and 10% of consolidated revenues for the three and six months ended June 30, 2021. There were no accounts receivable for this customer at June 30, 2020 and December 31, 2020. The Company received revenue from four customers that individually represent greater than 10% of consolidated revenues, representing 98% of consolidated revenues for the three months ended June 30, 2020, and three customers that individually represent greater than 10% of consolidated revenues, representing 81% of consolidated revenues for the six months ended June 30, 2020. Accounts receivable from these customers was $0.04 million and $0.13 million at June 30, 2020 and December 31, 2019, respectively.