SEGMENTS AND CONCENTRATIONS

12 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

SEGMENTS AND CONCENTRATIONS

NOTE 16        SEGMENTS AND CONCENTRATIONS

Segments

As a result of discontinuing the retail segment, see Note 3, the Company now has two reportable segments: OEM distribution and design. See Note 2 for more information on the composition and accounting policies of our reportable segments. The results of the retail segment were classified as discontinued operations as discussed in Note 3. Segment information presented herein excludes the results of the retail segment for all periods presented.

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 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:  

	Revenues
	Fiscal 2023		Fiscal 2022
OEM distribution	$	14,002,000	$	18,036,000
Design		22,686,000		20,171,000
Total segment revenues	$	36,688,000	$	38,207,000

	Operating Income/(Loss)
	Fiscal 2023			Fiscal 2022
OEM distribution	$	440,000		$	905,000
Design		2,182,000			2,148,000
Total segment operating income		2,622,000			3,053,000
General corporate expenses		(2,462,000	)		(2,465,000	)
Operating loss from continuing operations before income taxes		160,000			588,000
Other expense/(income), net		(19,000	)		136,000
Income from continuing operations before income taxes	$	179,000		$	452,000

	Depreciation and Amortization
	Fiscal 2023		Fiscal 2022
OEM distribution	$	4,000	$	8,000
Design		312,000		301,000
Total	$	316,000	$	309,000

	Segment Assets
	September 30,
	2023		2022
OEM distribution	$	2,478,000	$	4,276,000
Design		6,721,000		6,116,000
Total segment assets		9,199,000		10,392,000
General corporate assets		6,924,000		6,731,000
Discontinued assets held for sale		508,000		3,150,000
Other assets of discontinued retail segment		755,000		666,000
Total assets	$	17,386,000	$	20,939,000

Geographic Concentrations

The Company’s long-lived assets consist of property and equipment and operating lease right-of-use assets, all of which are located in the United States. The following table sets forth our consolidated net revenues by country for Fiscal 2023 and Fiscal 2022:

	Revenues
	Fiscal 2023		Fiscal 2022
United States	$	27,116,000	$	25,538,000
China		3,443,000		5,325,000
Germany		3,000,000		2,976,000
Poland		1,275,000		2,643,000
Other foreign countries		1,854,000		1,725,000
Total	$	36,688,000	$	38,207,000

Customer Concentrations

The Company had certain customers in the OEM distribution segment whose individual percentage of the Company’s consolidated revenues was 10% or greater. Revenue from one of these customers or their affiliates or contract manufacturers represented 11.2% of the Company’s consolidated net revenues in Fiscal 2023 and revenues from two of these customers or their affiliates or contract manufacturers represented 25.5% of the Company’s consolidated net revenues in Fiscal 2022.

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 27.9% and 11.8% of the Company’s consolidated net revenues in Fiscal 2023 and 2022, respectively.

The Company had customers in the OEM distribution segment whose accounts receivable balances accounted for 10% or more of the Company’s consolidated accounts receivable. One customer or its affiliate or contract manufacturer represented 12.0% of the Company’s consolidated accounts receivable at September 30, 2023 and two customers or their affiliates or contract manufacturers represented 28.1% of the Company’s consolidated accounts receivable at September 30, 2022.

At September 30, 2023, the Company had one customer in the design segment whose accounts receivable balances accounted for 10% or more of the Company’s consolidated accounts receivable. Accounts receivable from this customer represented 31.1% of the Company’s consolidated accounts receivable at September 30, 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 13% of our consolidated net revenues for Fiscal 2022. The Company expects the loss of this customer to cause a significant decline in OEM distribution segment revenues in future periods.

Supplier Concentration

The Company’s OEM distribution segment procures substantially all its products through independent suppliers in China through Forward China (see Note 14). Depending on the product, Forward China may require several different suppliers to furnish component parts or pieces.