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16. SEGMENT AND GEOGRAPHIC INFORMATION
 12 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
SEGMENT AND GEOGRAPHIC INFORMATION

NOTE 16        SEGMENT AND GEOGRAPHIC INFORMATION

 

The Company has two reportable segments: distribution and design. See Note 1 for more information on the composition of our reportable segments. The distribution segment sources and distributes carrying cases and other accessories for medical monitoring and diagnostic kits and a variety of other portable electronic and non-electronic devices. This segment operates in the EMEA Region, the Americas and the APAC Region. Geographic regions are defined by reference primarily to the location of the customer or its contract manufacturer. The design segment provides a full spectrum of hardware and software product design and engineering services. This segment operates predominantly in the Americas region.

 

Segment operating loss and net loss before income taxes are shown in table below:

 

    Fiscal 2020     Fiscal 2019  
Revenues, net                
Distribution   $ 20,752,000     $ 21,988,000  
Design     13,726,000       15,421,000  
Total revenues, net   $ 34,478,000     $ 37,409,000  
                 
Cost of sales                
Distribution   $ 17,978,000     $ 18,613,000  
Design     9,862,000       12,215,000  
Total cost of sales   $ 27,840,000     $ 30,828,000  
                 
Loss from operations                
Distribution   $ (1,604,000 )   $ (1,377,000 )
Design     (378,000 )     (1,720,000 )
Total loss from operations   $ (1,982,000 )   $ (3,097,000 )
                 
Other (income)/expense, net                
Distribution   $ (202,000 )   $ 438,000  
Design     (14,000 )     73,000  
Total other (income)/expense, net   $ (216,000 )   $ 511,000  
                 
Loss before income taxes                
Distribution   $ (1,402,000 )   $ (1,815,000 )
Design     (364,000 )     (1,793,000 )
Total loss before income taxes   $ (1,766,000 )   $ (3,608,000 )

 

Segment assets are shown in the table below:

 

    September 30,  
    2020     2019  
Distribution   $ 8,289,000     $ 9,554,000  
Design     11,067,000       6,540,000  
Total   $ 19,356,000     $ 16,094,000  

  

Revenues from External Customers

 

Consolidated

 

The following table sets forth our consolidated net revenues by geographic region for Fiscal 2020 and Fiscal 2019. All of the design segment customer revenues are classified under the United States within the Americas region:

 

    Fiscal 2020     Fiscal 2019  
EMEA Region:                
Germany   $ 3,375,000     $ 3,875,000  
Poland     2,675,000       3,355,000  
Great Britain     267,000       –  
Switzerland     –       297,000  
Austria     406,000       186,000  
Other     362,000       166,000  
Total EMEA Region     7,085,000       7,879,000  
                 
Americas:                
United States [1]     21,017,000       21,730,000  
Other     44,000       4,000  
Total Americas     21,061,000       21,734,000  
                 
APAC Region:                
Hong Kong     4,876,000       6,017,000  
Malaysia     200,000       153,000  
China     217,000       318,000  
Singapore     228,000       564,000  
Taiwan     162,000       164,000  
Other     649,000       580,000  
Total APAC Region     6,332,000       7,796,000  
Total Net Revenues   $ 34,478,000     $ 37,409,000  

 

[1] Includes $13,726,000 and $15,421,000 of revenue in Fiscal 2020 and Fiscal 2019, respectively, attributed to the design segment whose customers reside in the United States.

 

Major Customers and Concentrations by Geographic Region

 

In Fiscal 2020 and Fiscal 2019, the Company had significant customers whose individual percentage of the Company’s total revenues was 10% or greater. The risk of collecting accounts receivable from all customers is enhanced as a result of the economic impact of the COVID-19 pandemic. The concentrations of revenues and accounts receivable for each operating segment are detailed below.

 

Distribution Segment Revenues Concentration

 

The following customers or their affiliates or contract manufacturers accounted for more than 10% of the distribution segment’s net revenues, by geographic region, and in segment total for Fiscal 2020 and Fiscal 2019:

 

    Fiscal 2020  
    EMEA     Americas     APAC     Total  
Customer A     46%       39%       1%       29%  
Customer B     24%       16%       9%       17%  
Customer C     –       1%       76%       24%  
Customer D     14%       11%       2%       9%  
Totals     84%       67%       88%       79%  

 

    Fiscal 2019  
    EMEA     Americas     APAC     Total  
Customer A     42%       42%       –       30%  
Customer B     29%       22%       6%       19%  
Customer C     –       3%       76%       28%  
Customer D     13%       15%       3%       10%  
Totals     84%       82%       85%       87%  

 

Design Segment Revenues Concentration

 

All of our design segment customers operate in the United States. The following customers accounted for more than 10% of the design segment’s net revenues for Fiscal 2020 and Fiscal 2019:

 

    Fiscal 2020     Fiscal 2019  
Customer 1     19%       1%  
Customer 2     13%       9%  
Customer 3     14%       19%  
Customer 4     –       17%  
Total     46%       46%  

  

Distribution Segment Accounts Receivable Concentration

 

At September 30, 2020 and 2019, concentrations of accounts receivable with significant customers representing 10% or more of distribution segment accounts receivable were as follows:

 

    September 30,  
    2020     2019  
Customer A     23%       29%  
Customer B     22%       21%  
Customer C     20%       16%  
Customer D     17%       24%  
Totals     82%       90%  

 

Design Segment Accounts Receivable Concentration 

 

At September 30, 2020 and 2019, concentrations of accounts receivable with significant customers representing 10% or greater of design segment accounts receivable were as follows:

 

    September 30,  
    2020     2019  
Customer 1     24%       3%  
Customer 3     5%       19%  
Customer 4     –       44%  
Customer 5     14%       5%  
Customer 6     10%       3%  
Totals     53%       74%  

 

Long-Lived Assets

 

Identifiable long-lived assets, consisting predominantly of property, plant and equipment, by operating segment are presented net of accumulated depreciation and amortization. All of the Company’s long-lived assets are geographically located in the Americas region. See table below:

 

    September 30,  
    2020     2019  
    Consolidated     Distribution     Design     Consolidated     Distribution     Design  
Americas   $ 215,000     $ 23,000     $ 192,000     $ 243,000     $ 18,000     $ 225,000  
APAC     –       –       –       –       –       –  
EMEA     –       –       –       –       –       –  
Total long-lived assets (net)   $ 215,000     $ 23,000     $ 192,000     $ 243,000     $ 18,000     $ 225,000  

 

Total Liabilities

 

The following table presents total liabilities by operating segment for the years ended September 30, 2019 and 2018:

 

    September 30,  
    2020     2019  
             
Distribution   $ 5,780,000     $ 6,061,000  
Design     6,993,000       2,322,000  
Total   $ 12,773,000     $ 8,383,000  

 

Supplier Concentration

 

The Company procures all its supply of carrying solutions products for the distribution segment from independent suppliers in China through Forward China. Depending on the product, Forward China may require several different suppliers to furnish component parts or pieces. The Company purchased 100% of its OEM products from Forward China in Fiscal 2020 and 2019.

 

The Company procures materials and supplies used to build prototypes and “mock-ups” for design service projects. Vendors are from the United States.