SEGMENTS AND CONCENTRATIONS

6 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

SEGMENTS AND CONCENTRATIONS

NOTE 5          SEGMENTS AND CONCENTRATIONS

The Company has three reportable segments: OEM distribution, retail distribution and design. See Note 2 for more information on the composition and accounting policies of our reportable segments.

Our chief operating decision maker (“CODM”) regularly reviews revenue and operating income for each segment to assess financial results and allocate resources. For our OEM and retail distribution segments, we exclude general and administrative and general corporate expenses from their measure of profitability as these expenses are not allocated to the segments and therefore not included in the measure of profitability used by the CODM. For the design segment, general and administrative expenses directly attributable to that segment are included in its measure of profitability as these expenses are included in the measure of its profitability reviewed by the CODM. We do not include intercompany activity in our segment results shown below to be consistent with the information that is presented to the CODM. Segment assets consist of accounts receivable and inventory, which are regularly reviewed by the CODM, as well as goodwill and intangible assets resulting from design segment acquisitions.

Information by segment and related reconciliations are shown in tables below: 

	For the Three Months Ended March 31,						For the Six Months Ended March 31,
	2023			2022			2023			2022
Revenues:
OEM distribution	$	4,057,000		$	4,676,000		$	8,434,000		$	9,917,000
Retail distribution		919,000			649,000			1,976,000			2,041,000
Design		5,682,000			4,990,000			11,058,000			9,970,000
Total segment revenues	$	10,658,000		$	10,315,000		$	21,468,000		$	21,928,000
Operating income/(loss):
OEM distribution	$	28,000		$	326,000		$	140,000		$	823,000
Retail distribution		(736,000	)		(356,000	)		(1,062,000	)		(584,000	)
Design		531,000			389,000			963,000			974,000
Total segment operating (loss)/income		(177,000	)		359,000			41,000			1,213,000
General corporate expenses		(667,000	)		(682,000	)		(1,352,000	)		(1,322,000	)
Total (loss)/income from operations		(844,000	)		(323,000	)		(1,311,000	)		(109,000	)
Other (income)/expense, net		27,000			33,000			(10,000	)		67,000
(Loss)/income before income taxes	$	(871,000	)	$	(356,000	)	$	(1,301,000	)	$	(176,000	)
Depreciation and amortization:
OEM distribution	$	1,000		$	3,000		$	2,000		$	4,000
Design		78,000			80,000			154,000			153,000
Total depreciation and amortization	$	79,000		$	83,000		$	156,000		$	157,000

	March 31, 2023		September 30, 2022
Segment Assets:
OEM distribution	$	4,530,000	$	4,276,000
Retail distribution		2,961,000		3,816,000
Design		6,373,000		6,116,000
Total segment assets		13,864,000		14,208,000
General corporate assets		6,424,000		6,731,000
Total assets	$	20,288,000	$	20,939,000

The Company had certain customers in the OEM distribution segment whose individual percentage of the Company’s consolidated revenues was 10% or greater. Revenues from one customer or its affiliates or contract manufacturers represented 12.7% of the Company’s consolidated net revenues for the three months ended March 31, 2023 and revenues from two customers represented 26.2% of the Company’s consolidated net revenues for the three months ended March 31, 2022. Revenues from two customers or their affiliates or contract manufacturers represented 22.6% and 25.7% of the Company’s consolidated net revenues for the six months ended March 31, 2023 and 2022, respectively.

For the three and six months ended March 31, 2023, the Company had one customer in the design segment whose individual percentage of the Company’s consolidated revenues was 10% or greater. Revenues from this customer represented 24.1% and 11.7% of the Company’s consolidated net revenues for the three months ended March 31, 2023 and 2022, respectively, and 19.2% and 10.2% of the Company’s consolidated net revenues for the six months ended March 31, 2023 and 2022, respectively.

At March 31, 2023 and September 30, 2022, the Company had customers in the OEM distribution segment whose accounts receivable balance accounted for 10% or more of the Company’s consolidated accounts receivable. Accounts receivable from two customers or their affiliates or contract manufacturers represented 31.3% and 28.1%, respectively, of the Company’s consolidated accounts receivable at March 31, 2023 and September 30, 2022.

At March 31, 2023, the Company had one customer in the design segment whose accounts receivable balance accounted for 10% or more of the Company’s consolidated accounts receivable. Accounts receivable from this customer represented 19.6% of the Company’s consolidated accounts receivable at March 31, 2023. There were no customers in the design segment whose individual percentage of the Company’s consolidated accounts receivable was 10% or greater at September 30, 2022.

In March 2023, the Company’s contract with one of its major diabetic customers in the OEM distribution segment expired. Due to increased pricing pressures, the Company did not extend its contract with this customer. Revenue from this customer represented approximately 12% of our consolidated net revenues for both the six months ended March 31, 2023 and 2022. The Company expects the loss of this customer to cause a significant decline in OEM distribution segment revenues in future periods.