Note 8. Segment Information

Andrea follows the provisions of ASC 280 “Segment Reporting.” Reportable operating segments are determined based on Andrea’s management approach. The management approach, as defined by ASC 280, is based on the way that the chief operating decision-maker organizes the segments within an enterprise for making operating decisions and assessing performance. While Andrea’s results of operations are primarily reviewed on a consolidated basis, the chief operating decision-maker also manages the enterprise in two segments: (i) Patent Monetization and (ii) Andrea DSP Microphone and Audio Software Products. Patent Monetization includes Monetization Revenues (as defined in our Amended and Restated Revenue Sharing Agreement). Andrea DSP Microphone and Audio Software Products primarily include products based on the use of some, or all, of the following technologies: Andrea Digital Super Directional Array microphone technology (“DSDA”), Andrea Direction Finding and Tracking Array microphone technology (“DFTA”), Andrea PureAudio noise filtering technology, and Andrea EchoStop, an advanced acoustic echo cancellation technology.

The following represents selected condensed consolidated interim financial information for Andrea’s segments for the three and nine-month periods ended September 30, 2017 and 2016.

2017 Three Month Segment Data	Patent Monetization			Andrea DSP Microphone and Audio Software Products			2017 Three Month Segment Data
Net product revenues	$	-		$	277,113		$	277,113
License revenues		6,003,709			26,852			6,030,561
Operating income (loss)		5,552,626			(202,934	)		5,349,692
Depreciation and amortization		5,850			12,411			18,261
Assets		331,020			8,039,159			8,370,179
Property and equipment and intangibles		144,559			204,238			348,797
Purchases of patents and trademarks		3,077			3,077			6,154
Purchases of property and equipment		-			3,696			3,696

2016 Three Month Segment Data	Patent Monetization			Andrea DSP Microphone and Audio Software Products			2016 Three Month Segment Data
Net product revenues	$	-		$	117,870		$	117,870
License revenues		611			44,399			45,010
Operating loss		(388,573	)		(254,856	)		(643,429	)
Depreciation and amortization		6,070			11,817			17,887
Purchases of patents and trademarks		491			490			981

December 31, 2016 Year End Segment Data	Patent Monetization			Andrea DSP Microphone and Audio Software Products			2016 Year End Segment Data
Assets	$	673,295		$	2,973,007		$	3,646,302
Property and equipment and intangibles		154,945			218,560			373,505

2017 Nine Month Segment Data	Patent Monetization			Andrea DSP Microphone and Audio Software Products			2017 Nine Month Segment Data
Net product revenues	$	-		$	460,912		$	460,912
License revenues		6,004,726			68,609			6,073,335
Operating income (loss)		153,761			(899,588	)		(745,827	)
Depreciation and amortization		17,870			35,832			53,702
Purchases of patents and trademarks		7,484			7,484			14,968
Purchases of property and equipment		-			14,026			14,026

2016 Nine Month Segment Data	Patent Monetization			Andrea DSP Microphone and Audio Software Products			2016 Nine Month Segment Data
Net product revenues	$	-		$	357,721		$	357,721
License revenues		2,947,319			197,379			3,144,698
Operating income (loss)		712,742			(857,764	)		(145,022	)
Depreciation and amortization		18,195			35,843			54,038
Purchases of patents and trademarks		5,341			5,340			10,681

Management assesses non-operating income statement data on a consolidated basis only. International revenues are based on the country in which the end-user is located. For the three-month periods ended September 30, 2017 and 2016 total revenues by geographic area were as follows:

Geographic Data	September 30, 2017		September 30, 2016
Total revenues:
United States	$	231,907	$	107,820
Foreign⁽¹⁾		6,075,767		55,060
	$	6,307,674	$	162,880

____________________
(1)	Net revenues to Korea represented 95% of total net revenues for the three months ended September 30, 2017. Net revenues to People’s Republic of China represented 25% of total net revenues for the three months ended September 30, 2016.

For the nine-month periods ended September 30, 2017 and 2016 total revenues by geographic area were as follows:

Geographic Data	September 30, 2017		September 30, 2016
Total revenues:
United States	$	374,194	$	1,639,466
Foreign⁽¹⁾		6,160,053		1,862,953
	$	6,534,247	$	3,502,419

____________________
(1)	Net revenues to Korea represented 92% of total net revenues for the nine months ended September 30, 2017. Net revenues to Israel represented 37% of total net revenues for the nine months ended September 30, 2016.

As of September 30, 2017 and December 31, 2016, accounts receivable by geographic area were as follows:

Geographic Data	September 30, 2017		December 31, 2016
Accounts receivable:
United States	$	173,470	$	35,268
Foreign		80,650		34,714
	$	254,120	$	69,982