Segment Reporting and Geographic Information

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Reporting and Geographic Information

9. Segment Reporting and Geographic Information

ASC 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 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 to its chief operating decision makers (“CODM”). The Company’s CODM is its CEO.

The Company is organized into four reportable operating segments: Physical Access Control Systems (“PACS”), previously referred to as Premises, Identity, Credentials and All Other.

The CODM reviews financial information and business performance for each operating segment. The Company evaluates the performance of its operating segments at the revenue and gross profit levels. The CODM does not review operating expenses or asset information by operating segment for purposes of assessing performance or allocating resources.

Net revenue and gross profit information by segment for the three and nine months ended September 30, 2016 and 2015 is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
PACS:
Net revenue	$	7,253		$	5,976		$	17,908		$	15,212
Gross profit		4,334			3,531			10,244			9,130
Gross profit margin		60	%		59	%		57	%		60	%
Identity:
Net revenue		3,508			3,109			8,923			8,970
Gross profit		1,359			1,526			3,324			3,988
Gross profit margin		39	%		49	%		37	%		44	%
Credentials:
Net revenue		4,799			7,788			14,110			22,324
Gross profit		1,227			2,255			3,654			6,357
Gross profit margin		26	%		29	%		26	%		28	%
All Other:
Net revenue		-			323			580			1,211
Gross profit		-			209			261			776
Gross profit margin		0	%		65	%		45	%		64	%
Total:
Net revenue		15,560			17,196			41,521			47,717
Gross profit		6,920			7,521			17,483			20,251
Gross profit margin		44	%		44	%		42	%		42	%
Operating expenses:
Research and development		1,480			2,235			4,997			6,567
Selling and marketing		3,312			5,236			10,807			15,698
General and administrative		2,115			6,456			9,674			15,057
Impairment of goodwill		—			—			—			988
Restructuring and severance		160			215			3,100			408
Total operating expenses:		7,067			14,142			28,578			38,718
Loss from operations		(147	)		(6,621	)		(11,095	)		(18,467	)
Non-operating income (expense):
Interest expense, net		(525	)		(478	)		(1,814	)		(1,367	)
Foreign currency gain (loss), net		35			(10	)		309			(186	)
Loss before income taxes and noncontrolling    interest	$	(637	)	$	(7,109	)	$	(12,600	)	$	(20,020	)

Geographic net revenue is based on customer’s ship-to location. Information regarding net revenue by geographic region for the three and six months ended September 30, 2016 and 2015 is as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Americas	$	9,924		$	12,473		$	27,343		$	32,423
Europe and the Middle East		2,834			2,294			6,654			7,386
Asia-Pacific		2,802			2,429			7,524			7,908
Total	$	15,560		$	17,196		$	41,521		$	47,717
Revenues:
Americas		64	%		73	%		66	%		68	%
Europe and the Middle East		18	%		13	%		16	%		15	%
Asia-Pacific		18	%		14	%		18	%		17	%
Total		100	%		100	%		100	%		100	%

Long-lived assets by geographic location as of September 30, 2016 and December 31, 2015 are as follows (in thousands):

	September 30,		December 31,
	2016		2015
Property and equipment, net:
Americas	$	1,152	$	2,096
Europe and the Middle East		205		295
Asia-Pacific		1,315		1,827
Total property and equipment, net	$	2,672	$	4,218