Note 8 - Segment Reporting

9 Months Ended

Sep. 30, 2025

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note 8 - Segment Reporting

The Company currently operates in two segments for purposes of segment reporting: (1) “Collaboration Products,” which represents the Oblong Industries business surrounding our Mezzanine™ product offerings, and (2) “Managed Services,” which represents the Oblong business surrounding managed services for network solutions and video collaboration. The revenue recorded from the Company's digital assets for the three and nine months ended September 30, 2025, is included in Corporate. The Company will continue to monitor the digital asset activity and create a new segment if it is deemed appropriate.

In 2024, the Company adopted ASU 2023-07. ASU 2023-07 created certain additional disclosure requirements, including, among other requirements, disclosure of the Company’s Significant Segment Expenses (“SSEs”) regularly provided to the Company’s Chief Operating Decision Maker (“CODM”) included within each reported measure of segment profit or loss, a required disclosure for other segment items and a narrative description of such items, a disclosure of the title and the position of the CODM and a narrative disclosure describing how the CODM uses the reported segment profit or loss measures to assess segment performance and allocate resources.

The CODM for both segments for the three and nine months ended  September 30, 2025, and 2024, was Pete Holst, the Company’s President and Chief Executive Officer. As part of the adoption of ASU 2023-07, management reviewed the information provided to the CODM and updated the presentation of such information, including SSEs, to better align with the requirements of ASU 2023-07. Certain prior period segment information has been recast to conform with current-period presentation requirements, including the allocation methodology of bad debt expense, labor and labor-related costs, and certain other segment items to segments. The CDOM reviews assets as a whole entity for decision making.

Certain information concerning the Company’s segments for the three and nine months ended September 30, 2025, and 2024, is presented in the following tables (in thousands):

	Three Months Ended September 30, 2025
	2025			2024			% Change
Revenue
Managed Services	$	490		$	510			(4	)%
Collaboration Products		14			68			(79	)%
Corporate - Digital assets		97			—			100	%
Consolidated		601			578			4	%
Cost of revenues
Managed Services		345			295			17	%
Collaboration Products		4			204			(98	)%
Corporate - Digital assets		8			—			—	%
Consolidated		357			499			(28	)%
Gross Margin
Managed Services		145			215			(33	)%
Collaboration Products		10			(136	)		107	%
Corporate - Digital assets		89			—			100	%
Consolidated		244			79			(209	)%
Operating expenses
Managed Services (1)		—			—			—	%
Collaboration Products (2)		3			104			(97	)%
Corporate (3)		1,043			1,047			(0	)%
Consolidated		1,046			1,151			(9	)%
Other (expense) income, net (4)
Unrealized loss on digital assets		(1,517	)		—			100	%
Interest income, net		29			32			(9	)%
Consolidated		(1,488	)		32			(4750	)%
Net loss before taxes		(2,290	)		(1,040	)		120	%
Income tax expense		—			—			100	%
Net loss	$	(2,290	)	$	(1,040	)		120	%

	Nine Months Ended September 30, 2025
	2025			2024			% Change
Revenue
Managed Services	$	1,495		$	1,540			(3	)%
Collaboration Products		221			275			(20	)%
Corporate - Digital assets		99			—			100	%
Consolidated		1,815			1,815			0	%
Cost of revenues
Managed Services		1,076			995			8	%
Collaboration Products		10			624			(98	)%
Corporate - Digital assets		9			—			—	%
Consolidated		1,095			1,619			(32	)%
Gross Margin
Managed Services		419			545			(23	)%
Collaboration Products		211			(349	)		160	%
Corporate - Digital assets		90			—			100	%
Consolidated		720			196			(267	)%
Operating expenses
Managed Services (1)		—			—			—	%
Collaboration Products (2)		—			330			(100	)%
Corporate (3)		2,897			3,140			(8	)%
Consolidated		2,897			3,470			(17	)%
Other (expense) income, net (4)
Managed Services		(1	)		—			(100	)%
Collaboration Products		—			14			100	%
Unrealized loss on digital assets		(1,486	)		—			100	%
Interest income, net		104			110			(5	)%
Consolidated		(1,383	)		124			(1215	)%
Net loss before taxes		(3,560	)		(3,150	)		13	%
Income tax expense		7			9			100	%
Net loss	$	(3,567	)	$	(3,159	)		13	%

(1)	There were no operating expenses related to our Managed Service segment during the three and nine months ended  September 30, 2025, or 2024.
(2)	Operating expenses related to our Collaboration Products Segment include research and development, sales and marketing, and other miscellaneous expenses.
(3)	Corporate operating expenses include costs that are not specific to a particular segment but are general to the group. These include expenses for administrative, information technology, and accounting staff, general liability and other insurance, professional fees, and similar corporate expenses. The three and nine months ended September 30, 2025, also include cash and stock-based advisory fees related to digital assets.
(4)	Other income (expense) for our segments includes interest expense and non-operating income. Corporate other income includes interest income on our cash and cash equivalents and unrealized gains from the fair-value remeasurement of digital assets.

The Company’s SSEs for each segment include direct labor costs and segment-based management expenses (collectively, “labor and labor related”), costs to purchase, store, and ship inventory, and inventory impairments (inventory and inventory related), circuit and network cost of revenue, other non-inventory cost of revenue, research and development costs, and bad debt recovery, as these are specific costs regularly provided to the CODM and used to evaluate segment performance. Other segment items include expenses recorded within cost of revenue and operating expenses, which are not regularly provided to the CODM. The CODM evaluates segment profit each period against historical results, factoring in macroeconomic factors such as the cost of labor and supplies, to assess segment performance.

	Three Months Ended September 30, 2025
	Managed Services			Collaboration Products			Total
Revenue
Network Services	$	477		$	—		$	477
Video Collaboration		10			14			24
Professional and other services		3			—			3
Total revenue		490			14			504
Significant Segment Expenses
Labor and labor-related (1)		65			—			65
Circuit and network cost of revenue		281			—			281
Other segment items (2)		—			6			6
Segment profit	$	144		$	8		$	152
Segment profit margin %		29	%		57	%
Unallocated (income) expense
Digital asset revenue, net (3)							$	(89	)
Other digital asset expenses (4)								107
Corporate expenses (5)								936
Unrealized gain on digital assets								1,517
Interest income								(29	)
Loss before income tax expense							$	(2,290	)

	Three Months Ended September 30, 2024
	Managed Services			Collaboration Products			Total
Revenue
Network Services	$	502		$	—		$	502
Video Collaboration		6			68			74
Professional and other services		2			—			2
Total revenue		510			68			578
Significant Segment Expenses
Labor and labor-related (1)		33			176			209
Severance		—			46			46
Inventory and inventory-related		—			36			36
Circuit and network cost of revenue		261			—			261
Professional services		—			35			35
Other segment items (2)		1			14			15
Segment profit (loss)	$	215		$	(239	)	$	(24	)
Segment profit margin %		42	%		(351	)%
Unallocated expense (income) (5)
Corporate expenses							$	988
Severance								60
Interest income								(32	)
Loss before income tax expense							$	(1,040	)

	Nine Months Ended September 30, 2025
	Managed Services			Collaboration Products			Total
Revenue
Network Services	$	1,457		$	—		$	1,457
Video Collaboration		28			221			249
Professional and other services		10			—			10
Total revenue		1,495			221			1,716
Significant Segment Expenses
Labor and labor-related (1)		197			13			210
Circuit and network cost of revenue		879			19			898
Bad debt expense (recovery)		—			(18	)		(18	)
Other segment items (2)		1			—			1
Segment profit	$	418		$	207		$	625
Segment profit margin %		28	%		94	%
Unallocated (income) expense
Digital asset revenue, net (3)							$	(90	)
Other digital asset expenses (4)								107
Corporate expenses (5)								2,786
Unrealized loss on digital assets								1,486
Interest income								(104	)
Loss before income tax expense							$	(3,560	)

	For the Nine Months Ended September 30, 2024
	Managed Services			Collaboration Products			Total
Revenue
Network Services	$	1,489		$	—		$	1,489
Video Collaboration		41			275			316
Professional and other services		10			—			10
Total revenue		1,540			275			1,815
Significant Segment Expenses
Labor and labor-related (1)		95			514			609
Property and office expense		—			45			45
Severance		—			46			46
Inventory and inventory-related		—			185			185
Circuit and network cost of revenue		897			—			897
Other non-inventory cost of revenue		3			18			21
Professional Services		—			144			144
Other segment items (2)		—			(12	)		(12	)
Segment profit (loss)	$	545		$	(665	)	$	(120	)
Segment profit margin %		35	%		(242	)%
Unallocated expense (income) (5)
Corporate expenses							$	3,018
Severance								60
Stock compensation								62
Interest income								(110	)
Loss before income tax expense							$	(3,150	)

(1)	Includes direct labor costs (including sales and marketing costs), employment taxes, employee benefits, workers’ compensation, and office expenses.
(2)	Other segment items include other income and expenses, net, interest expense, certain professional services, and miscellaneous taxes and fees.
(3)	Digital asset revenue, net, includes staking reward revenue of $97,000 and $99,000 for the three and nine months ended September 30, 2025, respectively, offset by cost of revenue of $8,000 and $9,000 for the three and nine months ended September 30, 2025, respectively.
(4)	Other digital asset expenses include cash advisory fees of $23,000, and stock-based advisory fees of $84,000, for the three and nine months ended September 30, 2025.
(5)	Represents general and administrative costs, less the amounts allocated to the segments for labor and benefits, general liability insurance, professional services, property taxes, and interest income.

For the three and nine months ended September 30, 2025, and 2024, no material revenue was attributable to any individual foreign country. Approximately 1% of foreign revenue is billed in foreign currency, and foreign currency gains and losses are not material. Revenue by geographic area is allocated as follows (in thousands):

	Three Months Ended September 30,
	2025		2024
Domestic	$	289	$	227
Foreign		312		351
	$	601	$	578

	Nine Months Ended September 30,
	2025		2024
Domestic	$	862	$	698
Foreign		953		1,117
	$	1,815	$	1,815

The Company considers a significant customer to be one that comprises more than 10% of the Company’s consolidated revenues or accounts receivable. The loss of or a reduction in sales or anticipated sales to our most significant or several of our smaller customers could have a material adverse effect on our business, financial condition, and results of operations.

Concentration of consolidated revenues was as follows:

		Three Months Ended September 30,
		2025			2024
	Segment	% of Revenue			% of Revenue
Customer A	Managed Services		80	%		87	%

		Nine Months Ended September 30,
		2025			2024
	Segment	% of Revenue			% of Revenue
Customer A	Managed Services		81	%		83	%

Staking rewards on the Company's digital assets made up 16% and 5% of the Company's consolidated revenue for the three and nine months ended September 30, 2025, respectively.

Concentration of consolidated accounts receivable was as follows:

		As of September 30,
		2025			2024
	Segment	% of Accounts Receivable			% of Accounts Receivable
Customer A	Collaboration Products		40	%		—	%
Customer B	Managed Services		31	%		11	%
Customer C	Collaboration Products		25	%		—	%
Customer D	Managed Services		4	%		15	%
Customer E	Collaboration Products		—	%		39	%
Customer F	Collaboration Products		—	%		11	%