Segment Reporting, Geographic Information and Major Customers

9 Months Ended

Sep. 30, 2013

Segment Reporting, Geographic Information and Major Customers

10. Segment Reporting, Geographic Information and Major Customers

ASC Topic 280, Segment Reporting (“ASC 280”) establishes standards for the reporting by public business enterprises of information about operating segments, products and services, geographic areas, and major customers. The method for determining what information to report is based on the way that management organizes the operating segments within the Company for making operating decisions and assessing financial performance. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenue and incur expenses and about which separate financial information is available. The Company’s chief operating decision makers (“CODM”) are considered to be its CEO and CFO.

The Company currently has two reportable business segments, both of which focus on providing secure identification solutions. In the Identity Management segment, the Company offers physical access control and security systems and services, cloud-based credential management solutions, customized ID solutions for identity management, payment and other applications, and card-based payment systems for sports stadiums and other venues. In the ID Products segment, the Company offers secure identification products including smart card technology-based readers, terminals and tokens, and radio frequency identification (“RFID”) and NFC inlays and inlay-based tags, labels and cards.

The CODM reviews financial information and business performance for each operating segment and also for the Identity Management and ID Products reportable segment. The Company evaluates the performance of its segments at the total revenue and total gross margin level. The company does not track revenue by products and services at segment level. The CODM does not review operating expenses or assert information for purposes of assessing performance or allocating resources.

Summary information by segment is as follows (in thousands):

	ThreeMonthsEnded September30,								NineMonthsEnded September30,
	2013				2012				2013				2012
Identity Management:
Revenues from external customers	$	12,331			$	13,833			$	33,977			$	40,721
Intersegment revenue		17				1				22				20
Total Identity Management revenue		12,348				13,834				33,999				40,741
Elimination of intersegment revenues		(17	)			(1	)			(22	)			(20	)
Total revenue	$	12,331			$	13,833			$	33,977			$	40,721
Gross profit	$	5,666			$	6,872			$	15,422			$	19,053
Gross profit %		46		%		50		%		45		%		47		%
ID Products:
Revenues from external customers	$	13,937			$	9,112			$	36,950			$	27,286
Intersegment revenue		171				106				463				414
Total ID Products revenue		14,108				9,218				37,413				27,700
Elimination of intersegment revenues		(171	)			(106	)			(463	)			(414	)
Total revenue	$	13,937			$	9,112			$	36,950			$	27,286
Gross profit	$	5,657			$	2,848			$	13,249			$	9,005
Gross profit %		41		%		31		%		36		%		33		%
Total:
Net revenue	$	26,268			$	22,945			$	70,927			$	68,007
Gross profit		11,323				9,720				28,671				28,058
Gross profit %		43		%		42		%		40		%		41		%

Geographic revenue is based on selling location. Information regarding revenue by geographic region is as follows (in thousands):

	Three Months Ended September30,						Nine Months Ended September30,
	2013			2012			2013			2012
Americas:
United States	$	14,873		$	12,718		$	36,816		$	35,213
Other		78			296			459			626
Total Americas		14,951			13,014			37,275			35,839
Europe and the Middle East:
Germany		5,964			4,156			18,186			14,445
Other		2,393			2,497			6,916			7,582
Total Europe and the Middle East		8,357			6,653			25,102			22,027
Asia-Pacific:
Singapore		1,803			2,040			5,016			6,633
Other		1,157			1,238			3,534			3,508
Total Asia-Pacific		2,960			3,278			8,550			10,141
Total	$	26,268		$	22,945		$	70,927		$	68,007
Revenues:
Americas		57	%		57	%		53	%		53	%
Europe		32	%		29	%		35	%		32	%
Asia-Pacific		11	%		14	%		12	%		15	%
Total		100	%		100	%		100	%		100	%

No customers exceeded 10% of total revenue during the three and nine months ended September30, 2013 or 2012. No customer represented 10% of the Company’s accounts receivable balance at September30, 2013 or December31, 2012.

The Company tracks assets by physical location. Long-lived assets by geographic location are as follows (in thousands):

	September30, 2013		December31, 2012
Property and equipment, net
Americas:
United States	$	1,657	$	1,071
Other		1		1
Total Americas		1,658		1,072
Europe:
Germany		3,278		3,378
Netherlands		1,079		1,123
Other		347		412
Total Europe		4,704		4,913
Asia-Pacific
Singapore		2,365		2,799
Other		110		108
Total Asia-Pacific		2,475		2,907
Total	$	8,837	$	8,892