Quarterly report pursuant to Section 13 or 15(d)

Segment Reporting and Foreign Operations

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

Note 15 - 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 September 30, 2016:                  
                   
Net revenues   $ 542     $ 7,865     $ 826     $ 2,007     $ 11,240  
Cost of net revenues   $ (249 )   $ (6,625 )   $ (239 )   $ (1,029 )   $ (8,142 )
Gross profit   $ 293     $ 1,240     $ 587     $ 978     $ 3,098  
Gross margin %     54 %     16 %     71 %     49 %     28 %
Depreciation and amortization   $ 122     $ 206     $ 6     $ --       334  
Amortization of intangibles   $ 728     $ 192     $ 136     $ --     $ 1,056  
                                         
Three Months Ended September 30, 2015:                                        
                                         
Net revenues   $ 487     $ 10,321     $ 871     $ 3,195     $ 14,874  
Cost of net revenues   $ (183 )   $ (8,432 )   $ (192 )   $ (1,679 )   $ (10,486 )
Gross profit   $ 304     $ 1,889     $ 679     $ 1,516     $ 4,388  
Gross margin %     62 %     18 %     78 %     47 %     30 %
Depreciation and amortization   $ 47     $ 36     $ 64     $ 1     $ 148  
Amortization of intangibles   $ 728     $ 192     $ 136     $ --     $ 1,056  
                                         
Nine Months Ended September 30, 2016:                                        
                                         
Net revenues   $ 1,228     $ 26,692     $ 2,446     $ 8,293     $ 38,659  
Cost of net revenues   $ (416 )   $ (21,947 )   $ (649 )   $ (5,158 )   $ (28,170 )
Gross profit   $ 812     $ 4,745     $ 1,797     $ 3,135     $ 10,489  
Gross margin %     66 %     18 %     73 %     38 %     27 %
Depreciation and amortization   $ 290     $ 574     $ 19     $ 1     $ 884  
Amortization of intangibles   $ 2,185     $ 576     $ 408     $ --     $ 3,169  
                                         
Nine Months Ended September 30, 2015:                                        
                                         
Net revenues   $ 862     $ 33,970     $ 2,831     $ 9,031     $ 46,694  
Cost of net revenues   $ (377 )   $ (27,261 )   $ (620 )   $ (4,305 )   $ (32,563 )
Gross profit   $ 485     $ 6,709     $ 2,211     $ 4,726     $ 14,131  
Gross margin %     56 %     20 %     78 %     52 %     30 %
Depreciation and amortization   $ 102     $ 98     $ 70     $ 2     $ 272  
Amortization of intangibles   $ 1,954     $ 576     $ 408     $ --     $ 2,938  

  

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
September 30,		     For the Nine Months Ended
September 30,		  
    2016     2015     2016     2015  
Income from operations of reportable segments   $ 3,098     $ 4,388     $ 10,489     $ 14,131  
Unallocated operating expenses     (7,240 )     (7,511 )     (22,761 )     (21,757 )
Interest expense     (639 )     (120 )     (1,037 )     (340 )
Other income (expense)     61       71       108       196  
Consolidated loss before income taxes   $ (4,720 )   $ (3,172 )   $ (13,201 )   $ (7,770 )

 

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 September 30, 2016:                              
Revenues by geographic area   $ 11,231     $ 9     $ --     $ --     $ 11,240  
Operating loss by geographic area   $ (3,622 )   $ (511 )   $ (9 )   $ --     $ (4,142 )
Net loss by geographic area   $ (4,200 )   $ (511 )   $ (9 )   $ --     $ (4,720 )
                                         
Three Months Ended September 30, 2015:                                        
Revenues by geographic area   $ 14,862     $ 12     $ --     $ --     $ 14,874  
Operating loss by geographic area   $ (2,835 )   $ (280 )   $ (8 )   $ --     $ (3,123 )
Net loss by geographic area   $ (2,884 )   $ (280 )   $ (8 )   $ --     $ (3,172 )
                                         
Nine Months Ended September 30, 2016:                                        
Revenues by geographic area   $ 38,605     $ 54     $ --     $ --     $ 38,659  
Operating loss by geographic area   $ (10,903 )   $ (1,344 )   $ (25 )   $ --     $ (12,272 )
Net loss by geographic area   $ (11,832 )   $ (1,344 )   $ (25 )   $ --     $ (13,201 )
                                         
Nine Months Ended September 30, 2015:                                        
Revenues by geographic area   $ 46,664     $ 30     $ --     $ --     $ 46,694  
Operating loss by geographic area   $ (6,830 )   $ (772 )   $ (24 )   $ --     $ (7,626 )
Net loss by geographic area   $ (6,984 )   $ (772 )   $ (14 )   $ --     $ (7,770 )
                                         
As of September 30, 2016:                                        
Identifiable assets by geographic area   $ 55,761     $ 487     $ 772     $ --     $ 57,020  
Long lived assets by geographic area   $ 30,220     $ 325     $ --     $ --     $ 30,545  
                                         
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