SEGMENTS AND CONCENTRATIONS

12 Months Ended

Sep. 30, 2024

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 2024		Fiscal 2023
OEM distribution	$	10,204,000	$	14,002,000
Design		19,991,000		22,686,000
Total segment revenues	$	30,195,000	$	36,688,000

	Operating Income/(Loss)
	Fiscal 2024			Fiscal 2023
OEM distribution	$	369,000		$	440,000
Design		26,000			2,182,000
Total segment operating income		395,000			2,622,000
General corporate expenses		(2,327,000	)		(2,462,000	)
Operating (loss)/income from continuing operations before income taxes		(1,932,000	)		160,000
Other income, net		(7,000	)		(19,000	)
(Loss)/income from continuing operations before income taxes	$	(1,925,000	)	$	179,000

	Depreciation and Amortization
	Fiscal 2024		Fiscal 2023
OEM distribution	$	4,000	$	4,000
Design		329,000		312,000
Total	$	333,000	$	316,000

	Segment Assets
	September 30,
	2024		2023
OEM distribution	$	2,614,000	$	2,478,000
Design		5,820,000		6,721,000
Total segment assets		8,434,000		9,199,000
General corporate assets		6,334,000		6,924,000
Discontinued assets held for sale		–		508,000
Other assets of discontinued retail segment		–		755,000
Total assets	$	14,768,000	$	17,386,000

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 2024 and Fiscal 2023: 

	Revenues
	Fiscal 2024		Fiscal 2023
United States	$	23,593,000	$	27,116,000
Poland		2,797,000		1,275,000
Germany		1,276,000		3,000,000
China		435,000		3,443,000
Other foreign countries		2,094,000		1,854,000
Total	$	30,195,000	$	36,688,000

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 13.0% and 11.2% of the Company’s consolidated net revenues in Fiscal 2024 and Fiscal 2023, respectively.

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 25.2% and 27.9% of the Company’s consolidated net revenues in Fiscal 2024 and Fiscal 2023, respectively. In December 2024, our largest design customer notified the Company of its plan to discontinue their insulin patch program, on which the Company was working. We expect this to cause a material decrease in our revenues beginning with the second quarter of fiscal 2025. We are currently working on cost reduction efforts to mitigate the reduction in revenue, including a reduction in force which was communicated in December 2024. See Note 1.

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 14.5% and 12.0% of the Company’s consolidated accounts receivable at September 30, 2024 and 2023, respectively.

At September 30, 2024, 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 19.0% and 31.1% of the Company’s consolidated accounts receivable at September 30, 2024 and 2023, respectively.

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.