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SEGMENTS AND CONCENTRATIONS
 3 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
SEGMENTS AND CONCENTRATIONS

NOTE 5                  SEGMENTS AND CONCENTRATIONS

 

The Company has three reportable segments: OEM distribution, retail distribution and design. See Note 2 for more information on the composition and accounting policies of our reportable segments.

 

Our chief operating decision maker (“CODM”) regularly reviews revenue and operating income for each segment to assess financial results and allocate resources. For our OEM and retail distribution segments, we exclude general and administrative and general corporate expenses from their measure of profitability as these expenses are not allocated to the segments and therefore not included in the measure of profitability used by the CODM. For the design segment, general and administrative expenses directly attributable to that segment are included in its measure of profitability as these expenses are included in the measure of its profitability reviewed by the CODM. We do not include intercompany activity in our segment results shown below to be consistent with the information that is presented to the CODM. Segment assets consist of accounts receivable and inventory, which are regularly reviewed by the CODM, as well as goodwill and intangible assets resulting from design segment acquisitions.

 

Information by segment and related reconciliations are shown in the tables below: 

          
  

For the Three Months Ended

December 31,

 
   2022   2021 
Revenues:        
OEM distribution  $4,377,000   $5,242,000 
Retail distribution   1,057,000    1,392,000 
Design   5,376,000    4,980,000 
Total segment revenues  $10,810,000   $11,614,000 
           
Operating income/(loss):          
OEM distribution  $112,000   $497,000 
Retail distribution   (326,000)   (228,000)
Design   433,000    585,000 
Total segment operating income   219,000    854,000 
General corporate expenses   (686,000)   (640,000)
Total (loss)/income from operations   (467,000)   214,000 
Other (income)/expense, net   (37,000)   34,000 
(Loss)/income before income taxes  $(430,000)  $180,000 
           
Depreciation and amortization:          
OEM distribution  $2,000   $2,000 
Design   76,000    71,000 
Total depreciation and amortization  $78,000   $73,000 

 

          
    

December 31,

2022

    

September 30,

2022

 
Segment Assets:          
OEM distribution  $5,262,000   $4,276,000 
Retail distribution   3,865,000    3,816,000 
Design   6,346,000    6,116,000 
Total segment assets   15,473,000    14,208,000 
General corporate assets   6,385,000    6,731,000 
Total assets  $21,858,000   $20,939,000 

 

The Company had certain customers in the OEM distribution segment whose individual percentage of the Company’s consolidated revenues was 10% or greater. Revenues from two customers or their affiliates or contract manufacturers represented 25.0% and 25.2%, respectively, of the Company’s consolidated net revenues for the three months ended December 31, 2022 and 2021, respectively.

 

For the three months ended December 31, 2022, the Company had one customer in the design segment whose individual percentage of the Company’s consolidated revenues was 10% or greater. Revenues from this customer represented 14.4% of the Company’s consolidated net revenues for the three months ended December 31, 2022. There were no customers in the design segment whose individual percentage of the Company’s consolidated revenues was 10% or greater during the three months ended December 31, 2021.

 

At December 31, 2022 and September 30, 2022, the Company had customers in the OEM distribution segment whose accounts receivable balance accounted for 10% or more of the Company’s consolidated accounts receivable. Accounts receivable from two customers or their affiliates or contract manufacturers represented 37.0% and 28.1%, respectively, of the Company’s consolidated accounts receivable at December 31, 2022 and September 30, 2022.

 

At December 31, 2022, the Company had one customer in the design segment whose accounts receivable balance accounted for 10% or more of the Company’s consolidated accounts receivable. Accounts receivable from this customer represented 11.5% of the Company’s consolidated accounts receivable at December 31, 2022. There were no customers in the design segment whose individual percentage of the Company’s consolidated accounts receivable was 10% or greater at September 30, 2022.

 

In March 2023, the Company’s contract with one of its major diabetic customers in the OEM distribution segment will expire. Due to increased pricing pressures, the Company will not be extending its contract with this customer. Revenue from this customer represented 12% of our consolidated net revenues for both the three months ended December 31, 2022 and 2021. The Company expects the loss of this customer to cause a significant decline in OEM distribution segment revenues in future periods.