Segment Information | Segment Information Segment reporting is prepared on the same basis that the Company’s chief operating decision makers (the “CODMs”) manage the business, make operating decisions and assess the Company’s performance. For the years ended December 31, 2020 and December 31, 2019, the Company determined that it has the following two reportable segments: United States and Rest of World. The United States operating segment consists of the manufacture and distribution of hemp-derived CBD infused products. The Rest of World operating segment is involved in the cultivation, manufacture, and marketing of cannabis and cannabis-derived products for the medical and adult-use markets . These two segments represent the geographic regions in which the Company operates and the different product offerings within each geographic region. The results of each segment are regularly reviewed by the CODMs to assess the performance of the segment and make decisions regarding the allocation of resources. The CODMs review adjusted earnings (loss) before interest, tax, depreciation and amortization (“Adjusted EBITDA”) as the measure of segment profit or loss to evaluate performance of and allocate resources for its reportable segments. Adjusted EBITDA is defined as earnings before interest, tax, depreciation, non-cash items and items that do not reflect management’s assessment of on-going business performance. Reporting by operating segments follows the same accounting policies as those used to prepare the consolidated financial statements. The operating segments are presented in accordance with the same criteria used for internal reporting prepared for the CODMs. Inter-segment transactions are recorded at the stated values as agreed to by the segments. Segment data was as follows for the year ended December 31, 2020: United States Rest of World Corporate Total Consolidated statements of net income (loss) and comprehensive income (loss) Net revenue Cannabis flower $ — $ 27,932 $ — $ 27,932 Cannabis extracts 9,495 8,759 — 18,254 Other — 533 — 533 Net revenue 9,495 37,224 — 46,719 Share of loss from equity accounted investees — (4,510) — (4,510) Interest revenue 16 18,585 — 18,601 Interest expense (34) (152) — (186) Interest income (expense), net (18) 18,433 — 18,415 Depreciation and amortization 234 2,638 — 2,872 Income tax expense 323 1,024 — 1,347 Loss from discontinued operations — (650) — (650) Adjusted EBITDA (28,019) (98,349) (20,885) (147,253) Consolidated balance sheets Total assets 253,745 388,351 1,283,586 1,925,682 Investments in equity accounted investees — 19,235 — 19,235 Goodwill 178,414 1,108 — 179,522 Purchase of property, plant and equipment 385 31,027 — 31,412 Segment data was as follows for the year ended December 31, 2019: United States Rest of World Corporate Total Consolidated statements of net income (loss) and comprehensive income (loss) Net revenue Cannabis flower $ — $ 15,020 $ — $ 15,020 Cannabis extracts 3,364 5,338 — 8,702 Other — 28 — 28 Net revenue 3,364 20,386 — 23,750 Share of loss from equity accounted investees — (2,009) — (2,009) Interest revenue 6 29,207 — 29,213 Interest expense — (1,244) — (1,244) Interest income, net 6 27,963 — 27,969 Depreciation and amortization 46 2,044 — 2,090 Income tax expense — — — — Loss from discontinued operations — (363) — (363) Adjusted EBITDA (1,703) (84,826) (11,779) (98,308) Consolidated balance sheets Total assets 293,985 309,854 1,486,603 2,090,442 Investments in equity accounted investees — 557 — 557 Goodwill 213,414 1,078 — 214,492 Purchase of property, plant and equipment 259 38,405 — 38,664 Segment data was as follows for the year ended December 31, 2018: United States Rest of World Corporate Total Consolidated statements of net income (loss) and comprehensive income (loss) Net revenue Cannabis flower $ — $ 9,210 $ — $ 9,210 Cannabis extracts — 2,732 — 2,732 Other — 179 — 179 Net revenue — 12,121 — 12,121 Share of loss from equity accounted investees — (723) — (723) Interest revenue — 220 — 220 Interest expense — (139) — (139) Interest income, net — 81 — 81 Depreciation and amortization — 807 — 807 Income tax expense — — — — Loss from discontinued operations — (894) — (894) Adjusted EBITDA — (10,357) — (10,357) Consolidated balance sheets Total assets — 183,471 — 183,471 Investments in equity accounted investees — 2,960 — 2,960 Goodwill — 1,314 — 1,314 Purchase of property, plant and equipment — 88,308 — 88,308 Adjusted EBITDA is reconciled to net income (loss) as follows for the years ended December 31, 2020, 2019 and 2018: (in thousands of U.S. dollars) Year ended December 31, 2020 US ROW Corporate Total Net income (loss) $ (77,368) $ 32,671 $ (30,573) $ (75,270) Adjustments Interest expense (income), net 18 (18,433) — (18,415) Income tax expense 323 1,024 — 1,347 Impairment loss on goodwill and intangible assets 40,000 — — 40,000 Financing and transaction costs 40 — — 40 Gain on revaluation of derivative liabilities — (129,254) — (129,254) Gain on disposal of other investments — (4,789) — (4,789) Share of loss from equity accounted investees — 4,510 — 4,510 Loss from discontinued operations — 650 — 650 Other loss (income) 20 1,814 — 1,834 Review costs related to restatement of 2019 interim financial statements — — 9,688 9,688 Share-based payments 8,714 6,647 — 15,361 Adjusted EBIT (28,253) (105,160) (20,885) (154,298) Adjustments Depreciation and amortization 234 6,811 — 7,045 Adjusted EBITDA (28,019) (98,349) (20,885) (147,253) (in thousands of U.S. dollars) Year ended December 31, 2019 US ROW Corporate Total Net income (loss) $ (3,070) $ 1,180,241 $ (11,597) $ 1,165,574 Adjustments Interest income, net (6) (27,963) — (27,969) Impairment loss on goodwill and intangible assets — — — — Repurposing charges — 7,268 — 7,268 Financing and transaction costs 117 32,091 — 32,208 Gain on revaluation of derivative liabilities — (1,276,819) — (1,276,819) Gain on disposal of other investments — (16,277) — (16,277) Share of loss from equity accounted investees — 2,009 — 2,009 Loss from discontinued operations — 363 — 363 Other loss (income) 182 (197) (182) (197) Share-based payments 900 10,719 — 11,619 Adjusted EBIT (1,877) (88,565) (11,779) (102,221) Adjustments Depreciation and amortization 174 3,739 — 3,913 Adjusted EBITDA $ (1,703) $ (84,826) $ (11,779) $ (98,308) (in thousands of U.S. dollars) Year ended December 31, 2018 Net income (loss) $ (21,817) Adjustments Interest income, net (81) Loss (gain) on disposal of other investments (164) Share of loss (income) from equity accounted investees 723 Loss from discontinued operations 894 Share-based payments 8,151 Adjusted EBIT (12,294) Adjustments Depreciation and amortization 1,937 Adjusted EBITDA $ (10,357) Sources of net revenue were as follows: Year ended December 31, 2020 2019 Cannabis flower $ 27,932 $ 15,020 Cannabis extracts 18,254 8,702 Other 533 28 Net revenue $ 46,719 $ 23,750 Net revenue attributed to a geographic region based on the location of the customer were as follows: Year ended December 31, 2020 2019 Canada $ 34,538 $ 20,202 United States 9,495 3,364 Other countries 2,686 184 Total $ 46,719 $ 23,750 Property, plant and equipment assets were physically located in the following geographic regions: As of December 31, 2020 2019 Canada $ 162,163 $ 139,160 United States 2,293 2,103 Other countries 23,143 18,685 Total $ 187,599 $ 159,948 The Company sells products through a limited number of major customers. Major customers are defined as customers that each individually accounted for greater than 10% of the Company’s annual revenues and greater than 10% of accounts receivable. United States During the years ended December 31, 2020 and December 31, 2019, the Company had no major customers in the U.S. segment. As of December 31, 2020, $65 in expected credit losses has been recognized on receivables from contract with customers (December 31, 2019 – $12). Refer to Note 23(a). Rest of World During the year ended December 31, 2020, the Company earned a total net revenue before excise taxes of $34,295 from four major customers (December 31, 2019 – $7,597; December 31, 2018 – $2,186 from two and one major customers, respectively), accounting for 63% of the Company’s revenues (December 31, 2019 – 32%; December 31, 2018 – 17%). As of December 31, 2020, $9 (December 31, 2019 – $124; December 31, 2018 – $nil) in expected credit losses has been recognized on receivables from contract with customers. Refer to Note 23(a). |