INFORMATION CONCERNING INDUSTRY SEGMENTS AND MAJOR CUSTOMERS

9 Months Ended

12 Months Ended

Sep. 30, 2021

Dec. 31, 2020

Segment Reporting [Abstract]

INFORMATION CONCERNING INDUSTRY SEGMENTS AND MAJOR CUSTOMERS

NOTE 11 – SEGMENT INFORMATION

The Company classifies its business operations into one segment as follows:

• Services & Support: provides technology solutions that address prevalent IT challenges, including network resiliency, security products and services, network virtualization, and cloud migrations, IT managed services, wired and wireless network design and implementation, and converged infrastructure configuration, deployment and management.

Management has chosen to historically organize the Company and disclose reportable segments based on our products and services. Intercompany revenues are eliminated upon consolidation. “Other” includes non-allocated corporate overhead costs. As a result of our treatment of Suttle and the E&S Segment as discontinued operations, “Other” includes amounts previously allocated to Suttle and E&S that do not meet the criteria to be included in income from discontinued operations.

Information concerning the Company’s continuing operations in its S&S segment for the three and nine month periods ended September 30, 2021 and 2020 are as follows:

	Services &				Intercompany
	Support		Other		Eliminations		Total
Three Months Ended September 30, 2021
Sales	$	1,947,000	$	—	$	(119,000)	$	1,828,000
Cost of sales		1,113,000		—		—		1,113,000
Gross profit		834,000		—		(119,000)		715,000
Selling, general and
administrative expenses		669,000		1,138,000		(119,000)		1,688,000
Amortization expense		110,000		—		—		110,000
Transaction costs		—		543,000		—		543,000
Restructuring expense		—		242,000		—		242,000
Operating income (loss)		55,000		(1,923,000)		—		(1,868,000)
Other income		4,000		66,000		—		70,000
Income (loss) before income tax	$	59,000	$	(1,857,000)	$	—	$	(1,798,000)
Depreciation and amortization	$	133,000	$	72,000	$	—	$	205,000
Capital expenditures	$	5,000	$	9,000	$	—	$	14,000
Assets	$	6,776,000	$	50,213,000	$	(27,000)	$	56,962,000

	Services &				Intercompany
	Support		Other		Eliminations		Total
Three Months Ended September 30, 2020
Sales	$	3,530,000	$	—	$	(176,000)	$	3,354,000
Cost of sales		2,190,000		—		(9,000)		2,181,000
Gross profit		1,340,000		—		(167,000)		1,173,000
Selling, general and
administrative expenses		803,000		1,324,000		(167,000)		1,960,000
Amortization expense		106,000		—		—		106,000
Transaction costs		—		72,000		—		72,000
Operating income (loss)		431,000		(1,396,000)		—		(965,000)
Other income		—		275,000		—		275,000
Income (loss) before income tax	$	431,000	$	(1,121,000)	$	—	$	(690,000)
Depreciation and amortization	$	146,000	$	128,000	$	—	$	274,000
Capital expenditures	$	—	$	79,000	$	—	$	79,000
Assets	$	8,334,000	$	47,410,000	$	(27,000)	$	55,717,000

	Services &				Intercompany
	Support		Other		Eliminations		Total
Nine Months Ended September 30, 2021
Sales	$	5,719,000	$	—	$	(406,000)	$	5,313,000
Cost of sales		3,459,000		—		—		3,459,000
Gross profit		2,260,000		—		(406,000)		1,854,000
Selling, general and
administrative expenses		2,290,000		3,683,000		(406,000)		5,567,000
Amortization expense		346,000		—		—		346,000
Transaction costs		—		2,471,000		—		2,471,000
Restructuring expense		—		242,000		—		242,000
Operating loss		(376,000)		(5,780,000)		—		(6,156,000)
Other income (expense)		20,000		(186,000)		—		(166,000)
Loss before income tax	$	(356,000)	$	(5,966,000)	$	—	$	(6,322,000)
Depreciation and amortization	$	426,000	$	218,000	$	—	$	644,000
Capital expenditures	$	11,000	$	9,000	$	—	$	20,000

	Services &				Intercompany
	Support		Other		Eliminations		Total
Nine Months Ended September 30, 2020
Sales	$	5,882,000	$	—	$	(561,000)	$	5,321,000
Cost of sales		3,792,000		—		(36,000)		3,756,000
Gross profit		2,090,000		—		(525,000)		1,565,000
Selling, general and
administrative expenses		1,614,000		3,928,000		(525,000)		5,017,000
Amortization expense		106,000		—		—		106,000
Transaction costs		—		486,000		—		486,000
Operating income (loss)		370,000		(4,414,000)		—		(4,044,000)
Other income		—		948,000		—		948,000
Income (loss) before income tax	$	370,000	$	(3,466,000)	$	—	$	(3,096,000)
Depreciation and amortization	$	178,000	$	443,000	$	—	$	621,000
Capital expenditures	$	1,000	$	100,000	$	—	$	101,000

NOTE 14 - INFORMATION CONCERNING INDUSTRY SEGMENTS AND MAJOR CUSTOMERS

Following the acquisition of Ecessa during the second quarter of 2020 and the merging of certain operations, the Company classifies its remaining businesses into two segments as follows:

● Electronics & Software: designs, develops and sells Intelligent Edge solutions that provide connectivity and power through PoE products and actionable intelligence to end devices in an IoT ecosystem through embedded and cloud-based management software. In addition, this segment continues to generate revenue from its traditional products consisting of, media converters, NICs, and Ethernet switches that offer the ability to affordably integrate the benefits of fiber optics into any data network; and

● Services & Support: provides technology solutions that address prevalent IT challenges, including network resiliency, security products and services, network virtualization, and cloud migrations, IT managed services, wired and wireless network design and implementation, and converged infrastructure configuration, deployment and management, and SD-WAN network devices.

Management has chosen to organize the enterprise and disclose reportable segments based on products and services. Intersegment revenues are eliminated upon consolidation. “Other” includes non-allocated corporate overhead costs. As a result of our treatment of Suttle as discontinued operations, “Other” includes amounts previously allocated to Suttle that do not meet the criteria to be included in income from discontinued operations.

Electronics & Software manufactures its products in Asia and the United States and makes sales in both the U.S. and international markets. Services & Support operates in the U.S. and primarily makes sales in the U.S. Net long-lived assets held in foreign countries were approximately $49,000 and $112,000 at December 31, 2020 and 2019, respectively. Consolidated sales to U.S. customers were approximately 87% and 74% of sales from continuing operations in 2020 and 2019 respectively. In 2020, sales to two of Electronics & Software’s customers accounted for 18.7% and 17.3% of consolidated sales and one of Services & Support’s customers accounted for 10.3% of consolidated sales. In 2019, sales to two of Electronics & Software’s customers accounted for 21.2% and 16.2% of consolidated sales. At December 31, 2020, Electronics & Software had one customer that made up 17% of consolidated accounts receivable and Services & Support had one customer that made up 38% of accounts receivable. At December 31, 2019, Electronics & Software had two customers that made up 45% and 17% of consolidated accounts receivable.

Information concerning the Company’s operations in the various segments for the years ended December 31, 2020 and 2019 is as follows:

	Electronics &			Services &						Intersegment
	Software			Support			Other			Eliminations			Total
2020
Sales	$	34,496,000		$	8,777,000		$	—		$	(697,000	)	$	42,576,000
Cost of sales		19,606,000			5,798,000			—			(35,000	)		25,36 9,000
Gross profit		14,890,000			2,979,000			—			(662,000	)		17,207,000
Selling, general and administrative expenses		13,875,000			2,669,000			3,337,000			(662,000	)		19,219,000
Acquisition costs		—			—			685,000			—			685,000
Operating income (loss)		1,015,000			310,000			(4,022,000	)		—			(2,697,000	)
Other income (expense)		(10,000	)		(32,000	)		964,000			—			922,000
Income (loss) from continuing operations before tax	$	1,005,000		$	278,000		$	(3,058,000	)	$	—		$	(1,775,000	)
Depreciation and amortization	$	288,000		$	292,000		$	382,000		$	—		$	962,000
Capital expenditures	$	81,000		$	14,000		$	155,000		$	—		$	250,000
Assets	$	15,398,000		$	8,521,000		$	31,664,000		$	(27,000	)	$	55,556,000

	Electronics &			Services &						Intersegment
	Software			Support			Other			Eliminations			Total
2019
Sales	$	47,007,000		$	4,741,000		$	—		$	(842,000	)	$	50,906,000
Cost of sales		25,613,000			3,259,000			—			(152,000	)		28,720,000
Gross profit		21,394,000			1,482,000			—			(690,000	)		22,186,000
Selling, general and administrative expenses		17,354,000			1,485,000			4,028,000			(690,000	)		22,177,000
Operating income (loss)		4,040,000			(3,000	)		(4,028,000	)		—			9,000
Other income (expense)		(7,000	)		(10,000	)		243,000			—			226,000
Income (loss) from continuing operations before tax	$	4,033,000		$	(13,000	)	$	(3,785,000	)	$	—		$	235,000
Depreciation and amortization	$	360,000		$	92,000		$	581,000		$	—		$	1,033,000
Capital expenditures	$	81,000		$	69,000		$	275,000		$	—		$	425,000
Assets	$	19,902,000		$	1,694,000		$	37,582,000		$	(27,000	)	$	59,151,000