Registration of securities issued in business combination transactions

NOTE 11 ??? SEGMENT INFORMATION

v3.21.4
NOTE 11 – SEGMENT INFORMATION
 9 Months Ended 12 Months Ended
Sep. 30, 2021
Dec. 31, 2020
Segment Reporting [Abstract]    
NOTE 11 – SEGMENT INFORMATION

NOTE 11 – SEGMENT INFORMATION

The Company classifies its business operations into one segment as follows:

 

• Services & Support: provides technology solutions that address prevalent IT challenges, including network resiliency, security products and services, network virtualization, and cloud migrations, IT managed services, wired and wireless network design and implementation, and converged infrastructure configuration, deployment and management.

 

Management has chosen to historically organize the Company and disclose reportable segments based on our products and services. Intercompany revenues are eliminated upon consolidation. “Other” includes non-allocated corporate overhead costs. As a result of our treatment of Suttle and the E&S Segment as discontinued operations, “Other” includes amounts previously allocated to Suttle and E&S that do not meet the criteria to be included in income from discontinued operations.

 

Information concerning the Company’s continuing operations in its S&S segment for the three and nine month periods ended September 30, 2021 and 2020 are as follows:

                         
    Services &         Intercompany    
    Support   Other   Eliminations   Total
Three Months Ended September 30, 2021                        
Sales   $ 1,947,000   $ —   $ (119,000)   $ 1,828,000
Cost of sales     1,113,000     —     —     1,113,000
Gross profit     834,000     —     (119,000)     715,000
Selling, general and                        
administrative expenses     669,000     1,138,000     (119,000)     1,688,000
Amortization expense     110,000     —     —     110,000
Transaction costs     —     543,000     —     543,000
Restructuring expense     —     242,000     —     242,000
Operating income (loss)     55,000     (1,923,000)     —     (1,868,000)
Other income     4,000     66,000     —     70,000
Income (loss) before income tax   $ 59,000   $ (1,857,000)   $ —   $ (1,798,000)
                         
Depreciation and amortization   $ 133,000   $ 72,000   $ —   $ 205,000
                         
Capital expenditures   $ 5,000   $ 9,000   $ —   $ 14,000
                         
Assets   $ 6,776,000   $ 50,213,000   $ (27,000)   $ 56,962,000
                         
                         
    Services &         Intercompany    
    Support   Other   Eliminations   Total
Three Months Ended September 30, 2020                        
Sales   $ 3,530,000   $ —   $ (176,000)   $ 3,354,000
Cost of sales     2,190,000     —     (9,000)     2,181,000
Gross profit     1,340,000     —     (167,000)     1,173,000
Selling, general and                        
administrative expenses     803,000     1,324,000     (167,000)     1,960,000
Amortization expense     106,000     —     —     106,000
Transaction costs     —     72,000     —     72,000
Operating income (loss)     431,000     (1,396,000)     —     (965,000)
Other income     —     275,000     —     275,000
Income (loss) before income tax   $ 431,000   $ (1,121,000)   $ —   $ (690,000)
                         
Depreciation and amortization   $ 146,000   $ 128,000   $ —   $ 274,000
                         
Capital expenditures   $ —   $ 79,000   $ —   $ 79,000
                         
Assets   $ 8,334,000   $ 47,410,000   $ (27,000)   $ 55,717,000

 

 

                       
  Services &         Intercompany    
  Support   Other   Eliminations   Total
Nine Months Ended September 30, 2021                      
Sales $ 5,719,000   $ —   $ (406,000)   $ 5,313,000
Cost of sales   3,459,000     —     —     3,459,000
Gross profit   2,260,000     —     (406,000)     1,854,000
Selling, general and                      
administrative expenses   2,290,000     3,683,000     (406,000)     5,567,000
Amortization expense   346,000     —     —     346,000
Transaction costs   —     2,471,000     —     2,471,000
Restructuring expense   —     242,000     —     242,000
Operating loss   (376,000)     (5,780,000)     —     (6,156,000)
Other income (expense)   20,000     (186,000)     —     (166,000)
Loss before income tax $ (356,000)   $ (5,966,000)   $ —   $ (6,322,000)
                       
Depreciation and amortization $ 426,000   $ 218,000   $ —   $ 644,000
                       
Capital expenditures $ 11,000   $ 9,000   $ —   $ 20,000
                       
                         
                         
    Services &         Intercompany      
    Support   Other   Eliminations   Total
Nine Months Ended September 30, 2020                        
Sales   $ 5,882,000   $ —   $ (561,000)   $ 5,321,000
Cost of sales     3,792,000     —     (36,000)     3,756,000
Gross profit     2,090,000     —     (525,000)     1,565,000
Selling, general and                        
administrative expenses     1,614,000     3,928,000     (525,000)     5,017,000
Amortization expense     106,000     —     —     106,000
Transaction costs     —     486,000     —     486,000
Operating income (loss)     370,000     (4,414,000)     —     (4,044,000)
Other income     —     948,000     —     948,000
Income (loss) before income tax   $ 370,000   $ (3,466,000)   $ —   $ (3,096,000)
                         
Depreciation and amortization   $ 178,000   $ 443,000   $ —   $ 621,000
                         
Capital expenditures   $ 1,000   $ 100,000   $ —   $ 101,000

NOTE 14 - INFORMATION CONCERNING INDUSTRY SEGMENTS AND MAJOR CUSTOMERS

 

Following the acquisition of Ecessa during the second quarter of 2020 and the merging of certain operations, the Company classifies its remaining businesses into two segments as follows:

 

● Electronics & Software: designs, develops and sells Intelligent Edge solutions that provide connectivity and power through PoE products and actionable intelligence to end devices in an IoT ecosystem through embedded and cloud-based management software. In addition, this segment continues to generate revenue from its traditional products consisting of, media converters, NICs, and Ethernet switches that offer the ability to affordably integrate the benefits of fiber optics into any data network; and

 

● Services & Support: provides technology solutions that address prevalent IT challenges, including network resiliency, security products and services, network virtualization, and cloud migrations, IT managed services, wired and wireless network design and implementation, and converged infrastructure configuration, deployment and management, and SD-WAN network devices.

 

Management has chosen to organize the enterprise and disclose reportable segments based on products and services. Intersegment revenues are eliminated upon consolidation. “Other” includes non-allocated corporate overhead costs. As a result of our treatment of Suttle as discontinued operations, “Other” includes amounts previously allocated to Suttle that do not meet the criteria to be included in income from discontinued operations.

 

Electronics & Software manufactures its products in Asia and the United States and makes sales in both the U.S. and international markets. Services & Support operates in the U.S. and primarily makes sales in the U.S. Net long-lived assets held in foreign countries were approximately $49,000 and $112,000 at December 31, 2020 and 2019, respectively. Consolidated sales to U.S. customers were approximately 87% and 74% of sales from continuing operations in 2020 and 2019 respectively. In 2020, sales to two of Electronics & Software’s customers accounted for 18.7% and 17.3% of consolidated sales and one of Services & Support’s customers accounted for 10.3% of consolidated sales. In 2019, sales to two of Electronics & Software’s customers accounted for 21.2% and 16.2% of consolidated sales. At December 31, 2020, Electronics & Software had one customer that made up 17% of consolidated accounts receivable and Services & Support had one customer that made up 38% of accounts receivable. At December 31, 2019, Electronics & Software had two customers that made up 45% and 17% of consolidated accounts receivable.

 

Information concerning the Company’s operations in the various segments for the years ended December 31, 2020 and 2019 is as follows:

    Electronics &     Services &           Intersegment        
    Software     Support     Other     Eliminations     Total  
2020                              
Sales   $ 34,496,000     $ 8,777,000     $ —     $ (697,000 )   $ 42,576,000  
Cost of sales     19,606,000       5,798,000       —       (35,000 )     25,36 9,000  
Gross profit     14,890,000       2,979,000       —       (662,000 )     17,207,000  
                                         
Selling, general and administrative expenses     13,875,000       2,669,000       3,337,000       (662,000 )     19,219,000  
Acquisition costs     —       —       685,000       —       685,000  
Operating income (loss)     1,015,000       310,000       (4,022,000 )     —       (2,697,000 )
Other income (expense)     (10,000 )     (32,000 )     964,000       —       922,000  
Income (loss) from continuing operations before tax   $ 1,005,000     $ 278,000     $ (3,058,000 )   $ —     $ (1,775,000 )
                                         
Depreciation and amortization   $ 288,000     $ 292,000     $ 382,000     $ —     $ 962,000  
                                         
Capital expenditures   $ 81,000     $ 14,000     $ 155,000     $ —     $ 250,000  
                                         
Assets   $ 15,398,000     $ 8,521,000     $ 31,664,000     $ (27,000 )   $ 55,556,000  

 

 

    Electronics &     Services &           Intersegment        
    Software     Support     Other     Eliminations     Total  
2019                              
Sales   $ 47,007,000     $ 4,741,000     $ —     $ (842,000 )   $ 50,906,000  
Cost of sales     25,613,000       3,259,000       —       (152,000 )     28,720,000  
Gross profit     21,394,000       1,482,000       —       (690,000 )     22,186,000  
Selling, general and administrative expenses     17,354,000       1,485,000       4,028,000       (690,000 )     22,177,000  
Operating income (loss)     4,040,000       (3,000 )     (4,028,000 )     —       9,000  
Other income (expense)     (7,000 )     (10,000 )     243,000       —       226,000  
Income (loss) from continuing operations before tax   $ 4,033,000     $ (13,000 )   $ (3,785,000 )   $ —     $ 235,000  
                                         
Depreciation and amortization   $ 360,000     $ 92,000     $ 581,000     $ —     $ 1,033,000  
                                         
Capital expenditures   $ 81,000     $ 69,000     $ 275,000     $ —     $ 425,000  
                                         
Assets   $ 19,902,000     $ 1,694,000     $ 37,582,000     $ (27,000 )   $ 59,151,000