| Information Concerning Industry Segments and Major Customers |
NOTE 11- INFORMATION CONCERNING INDUSTRY SEGMENTS AND MAJOR CUSTOMERS
The Company classifies its businesses into four segments as follows:
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Transition Networks manufactures media converters, NIDs, NICs, Ethernet switches and other connectivity products that offer the ability to affordably integrate the benefits of fiber optics into any data network;
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Suttle manufactures and markets connectivity infrastructure products for broadband and voice communications;
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JDL Technologies provides technology solutions that address prevalent IT challenges, including virtualization and cloud solutions, managed services, wired and wireless network design and implementation, and converged infrastructure configuration and deployment; and
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Net2Edge develops, manufactures and sells products to transmit packetized voice and data across networks and between copper-wired and fiber optic equipment.
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Management has chosen to organize the enterprise and disclose reportable segments based on products and services. Intersegment revenues are eliminated upon consolidation.
Transition Networks manufactures its products in Asia and the United States and makes sales in both the U.S. and international markets. Suttle products are sold principally to U.S. customers. Suttle operates manufacturing facilities in the U.S. JDL Technologies operates in the U.S. and makes sales in the U.S. Net2Edge operates in the U.K. and primarily makes sales in the international markets. Net long-lived assets held in foreign countries were approximately $159,000 and $93,000 at December 31, 2018 and 2017, respectively. Consolidated sales to U.S. customers were approximately 83% and 83% of sales from continuing operations in 2018 and 2017 respectively. In 2018, sales to one of Transition Networks’ customers accounted for 11.3% of consolidated sales and sales to one of Suttle’s customers accounted for 10.3% of consolidated sales. In 2017, sales to one of Suttle’s customers accounted for 10.3% of consolidated sales. At December 31, 2018, Transition Networks had two customers that made up 16% and 14% of consolidated accounts receivable, JDL had one customer that made up 15% of accounts receivable, and Suttle had one customer that made up 14% of consolidated accounts receivable. At December 31, 2017, Suttle had one customer that made up 21% of consolidated accounts receivables and Transition Networks had two customers that made up 17% and 15% of consolidated accounts receivable.
Information concerning the Company’s operations in the various segments for the twelve-month periods ended December 31, 2018 and 2017 is as follows:
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Transition
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JDL
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Intersegment
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Networks
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Suttle
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Technologies
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Net2Edge
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Other
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Eliminations
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Total
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2018
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Sales
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$
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36,470,000
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$
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23,410,000
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$
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5,134,000
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$
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1,700,000
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$
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-
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$
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(951,000)
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$
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65,763,000
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Cost of sales
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19,775,000
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19,725,000
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3,830,000
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1,215,000
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-
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(89,000)
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44,456,000
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Gross profit
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16,695,000
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3,685,000
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1,304,000
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485,000
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-
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(862,000)
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21,307,000
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Selling, general and
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administrative expenses
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14,812,000
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8,393,000
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1,879,000
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3,279,000
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-
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(862,000)
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27,501,000
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Restructuring expense
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-
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364,000
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-
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-
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-
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-
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364,000
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Operating (loss) income
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1,883,000
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(5,072,000)
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(575,000)
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(2,794,000)
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-
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-
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(6,558,000)
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Other income (expense)
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(31,000)
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(52,000)
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3,000
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22,000
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230,000
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-
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172,000
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Income (loss) before tax
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$
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1,852,000
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$
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(5,124,000)
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$
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(572,000)
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$
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(2,772,000)
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$
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230,000
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$
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-
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$
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(6,386,000)
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Depreciation and amortization
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$
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420,000
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$
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1,551,000
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$
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179,000
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$
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65,000
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$
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-
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$
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-
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$
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2,215,000
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Capital expenditures
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$
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81,000
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$
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542,000
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$
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-
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$
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127,000
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$
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14,000
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$
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-
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$
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764,000
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Assets
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$
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19,228,000
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$
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12,298,000
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$
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2,572,000
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$
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1,894,000
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$
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17,356,000
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$
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(27,000)
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$
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53,321,000
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Transition
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JDL
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Intersegment
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Networks
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Suttle
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Technologies
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Net2Edge
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Other
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Eliminations
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Total
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2017
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Sales
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$
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38,541,000
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$
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32,384,000
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$
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11,210,000
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$
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1,079,000
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$
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-
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$
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(891,000)
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$
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82,323,000
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Cost of sales
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21,779,000
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30,964,000
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8,437,000
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398,000
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-
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(91,000)
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61,487,000
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Gross profit
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16,762,000
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1,420,000
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2,773,000
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681,000
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-
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(800,000)
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20,836,000
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Selling, general and
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administrative expenses
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15,371,000
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8,900,000
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2,101,000
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3,127,000
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-
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(800,000)
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28,699,000
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Impairment
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-
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-
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1,463,000
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154,000
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-
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-
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1,617,000
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Restructuring expense
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-
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2,285,000
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-
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-
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-
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-
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2,285,000
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Operating income (loss)
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1,391,000
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(9,765,000)
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(791,000)
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(2,600,000)
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-
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-
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(11,765,000)
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Other income (expense)
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10,000
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(123,000)
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-
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(15,000)
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33,000
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-
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(95,000)
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Income (loss) before tax
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$
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1,401,000
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$
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(9,888,000)
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$
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(791,000)
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$
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(2,615,000)
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$
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33,000
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$
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-
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$
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(11,860,000)
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Depreciation and amortization
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$
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705,000
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$
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2,155,000
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$
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269,000
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$
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57,000
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$
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-
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$
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-
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$
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3,186,000
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Capital expenditures
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$
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232,000
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$
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397,000
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$
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8,000
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$
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69,000
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$
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67,000
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$
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-
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$
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773,000
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Assets
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$
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12,543,000
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$
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18,359,000
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$
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1,073,000
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$
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1,229,000
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$
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24,969,000
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$
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(27,000)
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$
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58,146,000
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