Quarterly report pursuant to Section 13 or 15(d)

Segment Reporting and Foreign Operations

v3.5.0.2
Segment Reporting and Foreign Operations
 6 Months Ended
Jun. 30, 2016
Segment Reporting and Foreign Operations [Abstract]  
Segment Reporting and Foreign Operations

Note 13 - Segment Reporting and Foreign Operations

 

The Company operates in the following business segments:

 

  ● Mobile, IoT & Big Data Products: These products currently include our AirPatrol product line (location-based security and marketing platform for wireless and cellular devices that can detect, monitor and manage the content and behavior of smartphones, tablets and other mobile devices based on their location and user); on-premise big data appliance product (Light Miner Studio “LMS”) and will include future Sysorex owned products.
     
  ● Storage and Computing: This segment includes third party hardware, software and related maintenance/warranty products and services that Sysorex resells. It includes but is not limited to products for enterprise computing; storage; virtualization; networking; etc.
     
  ● SaaS Revenues: These are Software-as-a-Services (SaaS) or internet based hosted services including the Shoom product line and cloud based big data analytics services (based on our LMS product) and other data science services; analytics services for AirPatrol products and other managed services on a SaaS basis.
     
  ● Professional Services: These are general IT services including but not limited to: custom application/software design; architecture and development; project management; C4I system consulting; strategic outsourcing; staff augmentation; data center design and operations services; data migration services and other non-SaaS services.

 

The following tables present key financial information of the Company's reportable segments before unallocated corporate expenses (in thousands):

 

    Mobile, IoT & Big Data Products    

Storage

and Computing

     SaaS Revenues     Professional Services     Consolidated  
                               
Three Months Ended June 30, 2016:                  
                   
Net revenues   $ 491     $ 8,671     $ 792     $ 3,378     $ 13,332  
Cost of net revenues   $ (87 )   $ (7,361 )   $ (204 )   $ (2,236 )   $ (9,888 )
Gross profit   $ 404     $ 1,310     $ 588     $ 1,142     $ 3,444  
Gross margin %     82 %     15 %     74 %     34 %     26 %
Depreciation and amortization   $ 84     $ 197     $ 6     $ --       287  
Amortization of intangibles   $ 729     $ 192     $ 136     $ --     $ 1,057  
                                         
Three Months Ended June 30, 2015:                                        
                                         
Net revenues   $ 233     $ 13,363     $ 987     $ 3,114     $ 17,697  
Cost of net revenues   $ (68 )   $ (10,292 )   $ (206 )   $ (1,435 )   $ (12,001 )
Gross profit   $ 165     $ 3,071     $ 781     $ 1,679     $ 5,696  
Gross margin %     71 %     23 %     79 %     54 %     32 %
Depreciation and amortization   $ 24     $ 30     $ 23     $ 1     $ 78  
Amortization of intangibles   $ 672     $ 192     $ 136     $ --     $ 1,000  
                                         
Six Months Ended June 30, 2016:                                        
                                         
Net revenues   $ 686     $ 18,827     $ 1,620     $ 6,286     $ 27,419  
Cost of net revenues   $ (168 )   $ (15,322 )   $ (409 )   $ (4,129 )   $ (20,028 )
Gross profit   $ 518     $ 3,505     $ 1,211     $ 2,157     $ 7,391  
Gross margin %     76 %     19 %     75 %     34 %     27 %
Depreciation and amortization   $ 154     $ 382     $ 13     $ 1     $ 550  
Amortization of intangibles   $ 1,457     $ 384     $ 272     $ --     $ 2,113  
                                         
Six Months Ended June 30, 2015:                                        
                                         
Net revenues   $ 376     $ 23,640     $ 1,960     $ 5,843     $ 31,819  
Cost of net revenues   $ (194 )   $ (18,822 )   $ (428 )   $ (2,632 )   $ (22,076 )
Gross profit   $ 182     $ 4,818     $ 1,532     $ 3,211     $ 9,743  
Gross margin %     48 %     20 %     78 %     55 %     31 %
Depreciation and amortization   $ 55     $ 62     $ 45     $ 1     $ 163  
Amortization of intangibles   $ 1,225     $ 384     $ 272     $ --     $ 1,881  

 

Reconciliation of reportable segments’ combined income from operations to the consolidated loss before income taxes is as follows (in thousands):

 

    For the Three Months Ended
June 30,		     For the Six Months Ended 
June 30,		  
    2016     2015     2016     2015  
Income from operations of reportable segments   $ 3,444     $ 5,696     $ 7,391     $ 9,743  
Unallocated operating expenses     (7,392 )     (7,391 )     (15,521 )     (14,248 )
Interest expense     (255 )     (121 )     (398 )     (220 )
Other income (expense)     28       121       47       126  
Consolidated loss before income taxes   $ (4,175 )   $ (1,695 )   $ (8,481 )   $ (4,599 )

 

The Company’s operations are located primarily in the United States, Canada and Saudi Arabia. Revenues by geographic area are attributed by country of domicile of our subsidiaries. The financial data by geographic area are as follows (in thousands):

 

    United           Saudi              
    States     Canada     Arabia     Eliminations     Total  
Three Months Ended June 30, 2016:                              
Revenues by geographic area   $ 13,326     $ 6     $ --     $ --     $ 13,332  
Operating loss by geographic area   $ (3,491 )   $ (450 )   $ (7 )   $ --     $ (3,948 )
Net income (loss) by geographic area   $ (3,718 )   $ (450 )   $ (7 )   $ --     $ (4,175 )
                                         
Three Months Ended June 30, 2015:                                        
Revenues by geographic area   $ 17,680     $ 17     $ --     $ --     $ 17,697  
Operating loss by geographic area   $ (1,478 )   $ (211 )   $ (6 )   $ --     $ (1,695 )
Net loss by geographic area   $ (1,487 )   $ (211 )   $ 3     $ --     $ (1,695 )
                                         
Six Months Ended June 30, 2016:                                        
Revenues by geographic area   $ 27,375     $ 44     $ --     $ --     $ 27,419  
Operating loss by geographic area   $ (7,282 )   $ (832 )   $ (16 )   $ --     $ (8,130 )
Net loss by geographic area   $ (7,633 )   $ (832 )   $ (16 )   $ --     $ (8,481 )
                                         
Six Months Ended June 30, 2015:                                        
Revenues by geographic area   $ 31,802     $ 17     $ --     $ --     $ 31,819  
Operating loss by geographic area   $ (3,998 )   $ (492 )   $ (15 )   $ --     $ (4,505 )
Net loss by geographic area   $ (4,101 )   $ (492 )   $ (6 )   $ --     $ (4,599 )
                                         
As of June 30, 2016:                                        
Identifiable assets by geographic area   $ 61,934     $ 641     $ 772     $ --     $ 63,347  
Long lived assets by geographic area   $ 30,956     $ 336     $ --     $ --     $ 31,292  
                                         
As of December 31, 2015:                                        
Identifiable assets by geographic area   $ 67,538     $ 405     $ 772     $ --     $ 68,715  
Long lived assets by geographic area   $ 32,759     $ 241     $ --     $ --     $ 33,000