Quarterly report pursuant to Section 13 or 15(d)

SEGMENT INFORMATION

v3.10.0.1
SEGMENT INFORMATION
9 Months Ended
Aug. 31, 2018
SEGMENT INFORMATION [Text Block]

NOTE 3 - SEGMENT INFORMATION

The Chief Executive Officer ("CEO") is the Company’s chief operating decision-maker ("CODM").

Based on the Company's organizational structure, its business activities and information reviewed by the CODM for the purposes of allocating resources and assessing performance, management has determined that there are two operating segments.

CDMO

The CDMO activity is comprised of a specialization in cell therapy development for advanced therapeutic products and is comprised of two types of services to its customers: (i) process and assay development services and (ii) cGMP contract manufacturing services. The CDMO activities include the operations of Masthercell Global since the Corporate Reorganization (which includes the operations of CureCell and Atvio from the same date) and MaSTherCell prior to the Corporate Reorganization. As of the date of acquisition of CureCell and Atvio their activity is included in this segment.

CT Business

The CT Business activity is based on our technology that demonstrates the capacity to induce a shift in the developmental fate of cells from the liver and differentiating (converting) them into “pancreatic beta cell-like” insulin producing cells for patients with Type 1 Diabetes. This segment is comprised of all entities aside from Masthercell Global, CureCell and Atvio.

The CODM does not review assets by segment, therefore the measure of assets has not been disclosed for each segment.

Segment data for the nine months ended August 31, 2018 is as follows:

                Corporate        
                and        
    CDMO     CT     Eliminations     Consolidated  
    (in thousands)  
Revenues from external customers $ 15,807   $ 83   $ (3,037 ) $ 12,853 *  
Cost of revenues   (7,826 )   -     927     (6,899 )
Segment gross profit (loss)   7,981     83     (2,110 )   5,954  
Research and development expenses, net   (245 )   (4,764 )   2,110     (2,899 )
Operating expenses   (3,895 )   (4,448 )         (8,343 )
Other income   228     -           228  
Segment operating profit (loss)   4,069     (9,129 )   -     (5,060 )
Adjustments to presentation of segment                        
Adjusted EBIT                        
     Depreciation and amortization   (1,807 )   (7 )            
Segment performance   2,262     (9,136 )            

* The Company's revenues consist of: $9,493 from services and $3,360 from goods sold.

Reconciliation of segment performance to loss for the nine months ended August 31, 2018:

    Nine months  
    Ended August  
    31, 2018  
    in thousands  
Segment performance   (6,874 )
Stock-based compensation   (2,782 )
Financial expenses, net   (3,164 )
Net gain on remeasurement of previously
     equity interest in Atvio and CureCell to 
     acquisition date fair value
  4,509  
Transaction expenses related to GPP agreement   (1,500 )
Share in losses of associated companies   (732 )
Loss before income tax $ (10,543 )

Segment data for the three months ended August 31, 2018 is as follows:

                Corporate        
                and        
    CDMO     CT     Eliminations     Consolidated  
    (in thousands)  
Revenues from external customers $ 8,092   $ 83   $ (1,945 ) $ 6,230 *  
Cost of revenues   (3,908 )   -     539     (3,369 )
Segment gross profit (loss)   4,184     83     (1,406 )   2,861  
Research and development expenses, net   (245 )   (3,298 )   1,406     (1,737 )
Operating expenses   (1,712 )   (1,453 )         (3,165 )
Other expenses   (88 )   -           (88 )
Segment operating profit (loss)   2,139     (4,268 )   -     (2,129 )
Adjustments to presentation of segment                        
Adjusted EBIT                        
     Depreciation and amortization   (567 )   (3 )            
Segment performance   1,572     (4,271 )            

* The Company's revenues consist of: $4,473 from services and $1,757 from goods sold.

Reconciliation of segment performance to loss for the three months ended August 31, 2018:

    Three Months  
    Ended August  
    31, 2018  
    in thousands  
  Segment performance   (2,699 )
Stock-based compensation   (955 )
Financial expenses, net   (1,070 )
Share in losses of associated companies   (202 )
Net gain on remeasurement of previously 
     equity interest in Atvio and CureCell to 
     acquisition date fair value
  4,509  
Transaction expenses related to GPP agreement   (1,500 )
Loss before income tax $ (1,917 )

Segment data for the nine months ended August 31, 2017 is as follows:

                Corporate        
                and        
    CDMO     CT     Eliminations     Consolidated  
    (in thousands)  
Revenues from external customers $ 7,705   $   -   $ (993 ) $ 6,712  
Cost of revenues   (4,358 )         403     (3,955 )
Segment gross profit (loss)   3,347           (590 )   2,757  
Research and development expenses, net         (1,932 )   590     (1,342 )
Operating expenses   (916 )   (6,060 )         (6,976 )
Segment operating profit (loss)   2,431     (7,992 )   -     (5,561 )
Adjustments to presentation of segment                        
Adjusted EBIT                        
Depreciation and amortization expenses   (2,145 )   (7 )            
Segment Performance   286     (7,999 )            

Reconciliation of segment performance to loss for the nine months ended August 31, 2017:

    Nine Months  
    Ended  
    August 31,  
    2017  
    in thousands  
Segment performance   (7,713 )
Stock-based compensation   (1,469 )
Financial expenses, net   (2,534 )
Share in losses of associated companies   (348 )
Loss before income tax   (12,064 )

Segment data for the three months ended August 31, 2017 is as follows:

                Corporate        
                and        
    CDMO     CT     Eliminations     Consolidated  
    (in thousands)  
Net revenues from external customers $ 2,956           (394 )   2,562  
Cost of revenues   (1,439 )         95     (1,344 )
Segment gross profit (loss)   1,517           (299 )   1,218  
Research and development expenses, net         (688 )   299     (389 )
Operating expenses   (1,641 )   (1,272 )         (2,913 )
Segment operating profit (loss)   (124 )   (1,960 )   -     (2,084 )
Adjustments to presentation of segment                        
Adjusted EBIT                        
Depreciation and amortization expense   (945 )                  
Segment Performance   (1,069 )   (1,960 )            

Reconciliation of segment performance to loss for the three months ended August 31, 2017:

    Three  
    Months  
    Ended  
    August 31,  
    2017  
    in thousands  
Segment performance   (3,029 )
Stock-based compensation   (383 )
Financial expenses, net   45  
Share in losses of associated companies   (152 )
Loss before income tax   (3,519 )

Geographic, Product and Customer Information

Substantially all the Company's revenues and long-lived assets are in Belgium and South Korea. Net revenues from single customers from the CDMO segment that exceed 10% of total net revenues are:

    Nine Months Ended     Three Months Ended  
    August 31,     August 31,     August 31,     August 31,  
    2018     2017     2018     2017  
    (in thousands)  
Customer A $ 2,339   $ 852   $   -   $ 2,813  
Customer B $ 3,922   $   -   $ 1,651   $   -  
Customer C $ 3,109   $ 809   $ 956   $ 1,904  
Customer D $   -   $ 679   $   -   $ 1,637  
Customer E $   -   $   -   $ 1,100   $   -  
Customer F $   -   $   -   $ 784   $   -