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 unaudited condensed consolidated interim financial information for Andrea’s segments for the three and nine month periods ended September 30, 2019 and 2018 and the fiscal year ended December 31, 2018.

2019 Three Month Segment Data	Patent Monetization			Andrea DSP Microphone and Audio Software Products			2019 Three Month Segment Data
Net product revenues	$	-		$	374,024		$	374,024
Service related revenues		-			3,711			3,711
License revenues		202			4,732			4,934
Operating loss		(97,488	)		(68,012	)		(165,500	)
Depreciation and amortization		5,657			12,887			18,544
Assets		323,227			1,073,972			1,397,199
Total long lived assets		126,138			140,931			267,069
Payments for patents and trademarks		2,425			2,425			4,850

2018 Three Month Segment Data	Patent Monetization			Andrea DSP Microphone and Audio Software Products			2018 Three Month Segment Data
Net product revenues	$	-		$	438,188		$	438,188
Service related revenues		-			9,600			9,600
License revenues		345			4,757			5,102
Operating loss		(110,444	)		(77,270	)		(187,714	)
Depreciation and amortization		8,500			14,582			23,082
Purchases of property and equipment		-			13,938			13,938
Payments for patents and trademarks		9,812			9,812			19,624

December 31, 2018 Year End Segment Data	Patent Monetization			Andrea DSP Microphone and Audio Software Products			2018 Year End Segment Data
Assets	$	287,206		$	1,231,802		$	1,519,008
Total long lived assets		131,410			186,497			317,907

2019 Nine Month Segment Data	Patent Monetization			Andrea DSP Microphone and Audio Software Products			2019 Nine Month Segment Data
Net product revenues	$	-		$	1,349,153		$	1,349,153
Service related revenues		-			17,271			17,271
License revenues		739			18,479			19,218
Operating loss		(314,939	)		(87,012	)		(401,951	)
Depreciation and amortization		19,476			41,170			60,646
Payments for patents and trademarks		4,904			4,904			9,808

2018 Nine Month Segment Data	Patent Monetization			Andrea DSP Microphone and Audio Software Products			2018 Nine Month Segment Data
Net product revenues	$	-		$	921,402		$	921,402
Service related revenues		-			23,538			23,538
License revenues		984			24,620			25,604
Operating loss		(334,727	)		(418,842	)		(753,569	)
Depreciation and amortization		23,692			46,048			69,740
Purchases of property and equipment		-			13,938			13,938
Payments for patents and trademarks		22,687			22,687			45,374

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, 2019 and 2018 total revenues by geographic area were as follows:

Geographic Data	September 30, 2019		September 30, 2018
Total revenues:
United States	$	237,031	$	359,798
Foreign⁽¹⁾		145,638		93,092
	$	382,669	$	452,890

____________________

(1)	Net revenues to People’s Republic of China represented 15% of total net revenues for the three months ended September 30, 2019. Net revenues to any one foreign country did not exceed 10% for the three months ended September 30, 2018.

For the nine-month periods ended September 30, 2019 and 2018 total revenues by geographic area were as follows:

Geographic Data	September 30, 2019		September 30, 2018
Total revenues:
United States	$	1,038,082	$	711,772
Foreign⁽¹⁾		347,560		258,772
	$	1,385,642	$	970,544

____________________

(1)	Net revenues to any one foreign country did not exceed 10% for the nine months ended September 30, 2019. Net revenues to People’s Republic of China represented 10% of total net revenues for the nine months ended September 30, 2018.

As of September 30, 2019 and December 31, 2018, accounts receivable by geographic area were as follows:

Geographic Data	September 30, 2019		December 31, 2018
Accounts receivable:
United States	$	222,152	$	293,978
Foreign		139,987		124,703
	$	362,139	$	418,681