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, 2017 and 2016 is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
PACS:
Net revenue	$	6,434		$	7,253		$	17,622		$	17,908
Gross profit		3,412			4,334			9,556			10,244
Gross profit margin		53	%		60	%		54	%		57	%
Identity:
Net revenue		3,421			3,508			10,568			8,923
Gross profit		1,229			1,359			3,666			3,324
Gross profit margin		36	%		39	%		35	%		37	%
Credentials:
Net revenue		5,577			4,799			15,471			14,110
Gross profit		1,220			1,227			4,013			3,654
Gross profit margin		22	%		26	%		26	%		26	%
All Other:
Net revenue		—			—			3			580
Gross profit		—			—			6			261
Gross profit margin		—			—			200	%		45	%
Total:
Net revenue		15,432			15,560			43,664			41,521
Gross profit		5,861			6,920			17,241			17,483
Gross profit margin		38	%		44	%		39	%		42	%
Operating expenses:
Research and development		1,597			1,480			4,584			4,997
Selling and marketing		3,448			3,312			10,142			10,807
General and administrative		1,247			2,115			5,119			9,674
Restructuring and severance		(49	)		160			(49	)		3,100
Total operating expenses:		6,243			7,067			19,796			28,578
Loss from operations		(382	)		(147	)		(2,555	)		(11,095	)
Non-operating income (expense):
Interest expense, net		(643	)		(525	)		(1,995	)		(1,814	)
Gain on extinguishment of debt		—			—			977			—
Foreign currency (losses) gains, net		(51	)		35			(202	)		309
Loss before income taxes and noncontrolling interest	$	(1,076	)	$	(637	)	$	(3,775	)	$	(12,600	)

Geographic net revenue is based on the customer’s ship-to location. Information regarding net revenue by geographic region for the three and nine months ended September 30, 2017 and 2016 is as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Americas	$	10,291		$	9,924		$	28,894		$	27,343
Europe and the Middle East		1,771			2,834			5,767			6,654
Asia-Pacific		3,370			2,802			9,003			7,524
Total	$	15,432		$	15,560		$	43,664		$	41,521
Revenues:
Americas		67	%		64	%		66	%		66	%
Europe and the Middle East		11	%		18	%		13	%		16	%
Asia-Pacific		22	%		18	%		21	%		18	%
Total		100	%		100	%		100	%		100	%

Long-lived assets by geographic location as of September 30, 2017 and December 31, 2016 are as follows (in thousands):

	September 30,		December 31,
	2017		2016
Property and equipment, net:
Americas	$	877	$	1,100
Europe and the Middle East		115		162
Asia-Pacific		1,125		1,154
Total property and equipment, net	$	2,117	$	2,416