| Note 16. SEGMENT INFORMATION |
Our
operating and reportable segments are currently organized around the following products that we offer as part of our core business
strategy:
| |
· |
Hydroponic Produce |
| |
|
|
| |
· |
Cannabis Products |
These
two reportable segments, described in greater detail below, had previously been reported on a combined basis as they had been
operated and evaluated as one operating segment. We experienced significant growth over the last year in most of our product areas.
As we have grown organically, and as we have added to our capabilities through acquisitions, our products have increased in scale
and become more strategically important and distinctly organized and managed under these two groupings. In addition, our chief
operating decision maker ("CODM") has begun reviewing results and managing and allocating resources among these two
strategic business groupings, and we have begun budgeting using these business segments. Our segment information for the nine
months and quarter ended September 30, 2014 have been reclassified to conform to our current presentation.
Our
CODM reviews revenues including intersegment revenues, gross profit and operating income (loss) before income taxes when evaluating
segment performance and allocating resources to each segment. Accordingly, intersegment revenue is included in the segment revenues
presented in the tables below and is eliminated from revenues and cost of sales in the "Eliminations and Other" column.
The "Eliminations and Other" column also includes various income and expense items that we do not allocate to our operating
segments. These income and expense amounts include the results of our hydroponic equipment, which are not material, interest income,
interest expense, corporate overhead, and corporate-wide expense items such as legal and professional fees as well as expense
items for which we have not identified a reasonable basis for allocation. The accounting policies of the reportable segments are
the same as those described in Note 1 of the Notes to the Consolidated Condensed Financial Statements.
Hydroponic
Produce Our locally grown hydroponic produce is started from seed and is grown in environmentally controlled greenhouses.
When harvested, the products are sold through retailers targeted to customers seeking fresh produce locally grown using environmentally
sustainable methods.
Cannabis
Products IVXX's cannabis products are currently produced in our supercritical Co2 lab in California
and are sold in select dispensaries throughout California. We plan to operate medical marijuana cultivation, production, and dispensary
facilities in Nevada through our subsidiaries, MediFarm, MediFarm I, and MediFarm II. We were granted eight provisional permits
in Nevada and have received approval from the local authorities with respect to eight of the eight permits.
Summarized
financial information concerning our reportable segments is shown in the following tables. Total asset amounts at September 30,
2015 and 2014 exclude intercompany receivable balances eliminated in consolidation.
| |
|
3
Months Ended September 30, 2015 |
|
| |
|
Hydroponic |
|
|
Cannabis |
|
|
Eliminations |
|
|
|
|
| |
|
Produce |
|
|
Products |
|
|
and
Other |
|
|
Total |
|
| Total Revenues |
|
$ |
1,597,378 |
|
|
$ |
420,973 |
|
|
$ |
- |
|
|
$ |
2,018,351 |
|
| Cost
of Goods Sold |
|
|
1,370,804 |
|
|
|
290,256 |
|
|
|
(12,515 |
) |
|
|
1,648,545 |
|
| |
|
|
226,574 |
|
|
|
130,717 |
|
|
|
12,515 |
|
|
|
369,806 |
|
| Selling, general
and administrative expenses |
|
|
441,177 |
|
|
|
164,970 |
|
|
|
1,493,167 |
|
|
|
2,099,314 |
|
| Loss from operations |
|
|
(214,603 |
) |
|
|
(34,253 |
) |
|
|
(1,480,652 |
) |
|
|
(1,729,508 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other Income (Expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization
of debt discount |
|
|
- |
|
|
|
- |
|
|
|
(258,306 |
) |
|
|
(258,306 |
) |
| Loss
on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
(263,950 |
) |
|
|
(263,950 |
) |
| Loss from derivatives
issued with debt greater than debt carrying value |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Gain
(Loss) on fair market valuation of derivatives |
|
|
- |
|
|
|
- |
|
|
|
372,400 |
|
|
|
372,400 |
|
| Interest
Income (Expense) |
|
|
- |
|
|
|
- |
|
|
|
(108,563 |
) |
|
|
(108,563 |
) |
| Total Other Income
(Expense) |
|
|
- |
|
|
|
- |
|
|
|
(258,419 |
) |
|
|
(258,419 |
) |
| Loss before Provision
of Income Taxes |
|
$ |
(214,603 |
) |
|
$ |
(34,253 |
) |
|
$ |
(1,739,071 |
) |
|
$ |
(1,987,927 |
) |
| |
|
3
Months Ended September 30, 2014 |
|
| |
|
Hydroponic |
|
|
Cannabis |
|
|
Eliminations |
|
|
|
|
| |
|
Produce |
|
|
Products |
|
|
and
Other |
|
|
Total |
|
| Total Revenues |
|
$ |
1,311,850 |
|
|
$ |
- |
|
|
$ |
3,123 |
|
|
$ |
1,314,973 |
|
| Cost
of Goods Sold |
|
|
1,247,308 |
|
|
|
- |
|
|
|
3,727 |
|
|
|
1,251,035 |
|
| |
|
|
64,542 |
|
|
|
- |
|
|
|
(604 |
) |
|
|
63,938 |
|
| Selling, general
and administrative expenses |
|
|
344,209 |
|
|
|
517,459 |
|
|
|
7,173,503 |
|
|
|
8,035,171 |
|
| Loss from operations |
|
|
(279,667 |
) |
|
|
(517,459 |
) |
|
|
(7,174,107 |
) |
|
|
(7,971,233 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other Income (Expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from derivatives
issued with debt greater than debt carrying value |
|
|
- |
|
|
|
- |
|
|
|
(2,248,000 |
) |
|
|
(2,248,000 |
) |
| Gain
(Loss) on fair market valuation of derivatives |
|
|
- |
|
|
|
- |
|
|
|
1,085,505 |
|
|
|
1,085,505 |
|
| Interest
Income (Expense) |
|
|
- |
|
|
|
- |
|
|
|
(387,720 |
) |
|
|
(387,720 |
) |
| Total Other Income
(Expense) |
|
|
- |
|
|
|
- |
|
|
|
(1,550,215 |
) |
|
|
(1,550,215 |
) |
| Loss before Provision
of Income Taxes |
|
$ |
(279,667 |
) |
|
$ |
(517,459 |
) |
|
$ |
(8,724,322 |
) |
|
$ |
(9,521,448 |
) |
| |
|
9
Months Ended September 30, 2015 |
|
| |
|
Hydroponic |
|
|
Cannabis |
|
|
Eliminations |
|
|
|
|
| |
|
Produce |
|
|
Products |
|
|
and
Other |
|
|
Total |
|
| Total Revenues |
|
$ |
6,832,805 |
|
|
$ |
852,745 |
|
|
$ |
120,444 |
|
|
$ |
7,805,994 |
|
| Cost
of Goods Sold |
|
|
6,266,858 |
|
|
|
569,417 |
|
|
|
108,584 |
|
|
|
6,944,859 |
|
| |
|
|
565,947 |
|
|
|
283,328 |
|
|
|
11,860 |
|
|
|
861,135 |
|
| Selling, general
and administrative expenses |
|
|
1,373,976 |
|
|
|
721,104 |
|
|
|
5,697,365 |
|
|
|
7,792,445 |
|
| Loss from operations |
|
|
(808,029 |
) |
|
|
(437,776 |
) |
|
|
(5,685,505 |
) |
|
|
(6,931,310 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other Income (Expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization
of debt discount |
|
|
- |
|
|
|
- |
|
|
|
(524,161 |
) |
|
|
(524,161 |
) |
| Loss
on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
(263,950 |
) |
|
|
(263,950 |
) |
| Loss from derivatives
issued with debt greater than debt carrying value |
|
|
- |
|
|
|
- |
|
|
|
(561,000 |
) |
|
|
(561,000 |
) |
| Gain
(Loss) on fair market valuation of derivatives |
|
|
- |
|
|
|
- |
|
|
|
1,779,600 |
|
|
|
1,779,600 |
|
| Interest
Income (Expense) |
|
|
- |
|
|
|
- |
|
|
|
(426,793 |
) |
|
|
(426,793 |
) |
| Total Other Income
(Expense) |
|
|
- |
|
|
|
- |
|
|
|
3,696 |
|
|
|
3,696 |
|
| Loss before Provision
of Income Taxes |
|
$ |
(808,029 |
) |
|
$ |
(437,776 |
) |
|
$ |
(5,681,809 |
) |
|
$ |
(6,927,614 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets at
September 30, 2015 |
|
$ |
5,645,677 |
|
|
$ |
1,105,796 |
|
|
$ |
1,887,156 |
|
|
$ |
8,638,629 |
|
| |
|
9
Months Ended September 30, 2014 |
|
| |
|
Hydroponic |
|
|
Cannabis |
|
|
Eliminations |
|
|
|
|
| |
|
Produce |
|
|
Products |
|
|
and
Other |
|
|
Total |
|
| Total Revenues |
|
$ |
5,465,186 |
|
|
$ |
- |
|
|
$ |
121,907 |
|
|
$ |
5,587,093 |
|
| Cost
of Goods Sold |
|
|
5,488,662 |
|
|
|
- |
|
|
|
132,040 |
|
|
|
5,620,702 |
|
| |
|
|
(23,476 |
) |
|
|
- |
|
|
|
(10,133 |
) |
|
|
(33,609 |
) |
| Selling, general
and administrative expenses |
|
|
1,026,825 |
|
|
|
517,459 |
|
|
|
12,586,769 |
|
|
|
14,131,053 |
|
| Loss from operations |
|
|
(1,050,301 |
) |
|
|
(517,459 |
) |
|
|
(12,596,902 |
) |
|
|
(14,164,662 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other Income (Expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from derivatives
issued with debt greater than debt carrying value |
|
|
- |
|
|
|
- |
|
|
|
(4,808,000 |
) |
|
|
(4,808,000 |
) |
| Gain
(Loss) on fair market valuation of derivatives |
|
|
- |
|
|
|
- |
|
|
|
817,680 |
|
|
|
817,680 |
|
| Interest
Income (Expense) |
|
|
2,601 |
|
|
|
- |
|
|
|
(840,634 |
) |
|
|
(838,033 |
) |
| Total Other Income
(Expense) |
|
|
2,601 |
|
|
|
- |
|
|
|
(4,830,954 |
) |
|
|
(4,828,353 |
) |
| Loss before Provision
of Income Taxes |
|
$ |
(1,047,700 |
) |
|
$ |
(517,459 |
) |
|
$ |
(17,427,856 |
) |
|
$ |
(18,993,015 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets at
September 30, 2014 |
|
$ |
5,587,047 |
|
|
$ |
2,000,990 |
|
|
$ |
2,315,645 |
|
|
$ |
9,903,682 |
|
|