Segment Reporting

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Reporting

NOTE 12 – SEGMENT REPORTING

The Company’s principal operating segments coincide with the types of products to be sold. The products from which revenues are derived are consistent with the reporting structure of the Company’s internal organization. The Company’s two reportable segments for the nine months ended September 30, 2014 were i) the Nanofilm Segment and ii) the Research and Development Segment. For the 2013 periods, the Company only operated in the Nanofilm Segment. The Company’s chief operating decision-maker has been identified as the Chairman and CEO, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon the Company’s management organization structure as of September 30, 2014 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to the reportable segments disclosed. There are no inter-segment revenue transactions and, therefore, revenues are only to external customers. As the Company primarily generates its revenues from customers in the United States, no geographical segments are presented.

Segment operating profit is determined based upon internal performance measures used by the chief operating decision-maker. The Company derives the segment results from its internal management reporting system. The accounting policies the Company uses to derive reportable segment results are the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics, including net revenues, gross profit and operating income (loss). Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. The Company manages certain operating expenses separately at the corporate level and does not allocate such expenses to the segments. Segment income from operations excludes interest income/expense and other income or expenses and income taxes according to how a particular reportable segment’s management is measured. Management does not consider impairment charges, and unallocated costs in measuring the performance of the reportable segments.

Segment information available with respect to these reportable business segments for the three and nine months ended September 30, 2014 and 2013 was as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013
Revenues:
Nanofilm segment	$	1,721,307		$	2,435,426	$	7,360,680		$	6,703,993
Research and development segment		233,414			-		233,414			-
Total segment and consolidated revenues		1,954,721			2,435,426		7,594,094			6,703,993
Gross profit:
Nanofilm segment		591,105			911,339		3,398,810			2,555,506
Research and development segment		22,857			-		22,857			-
Total segment and consolidated gross profit		613,962			911,339		3,421,667			2,555,506
Income (loss) from operations
Nanofilm segment	$	(355,391	)	$	15,501	$	462,952		$	(163,304	)
Research and development segment		(11,370	)		-		(11,370	)		-
Total segment income (loss)		(366,761	)		15,501		451,582			(163,304	)
Unallocated costs		(281,960	)		-		(281,960	)		-
Total consolidated income (loss) from operations	$	(648,721	)	$	15,501	$	169,622		$	(163,304	)
Depreciation and amortization:
Nanofilm segment	$	82,644		$	55,071	$	167,010		$	165,213
Research and development segment		4,492			-		4,492			-
Total segment depreciation and amortization		87,136			55,071		171,502			165,213
Unallocated depreciation		-			-		-			-
Total consolidated depreciation and amortization		87,136			55,071		171,502			165,213
Capital additions:
Nanofilm segment	$	136,981		$	7,685	$	144,039		$	37,796
Research and development segment		-			-		-			-
Total segment capital additions		136,981			7,685		144,039			37,796
Unallocated capital additions		-			-		-			-
Total consolidated capital additions	$	136,981		$	7,685	$	144,039		$	37,796

	September 30, 2014		December 31, 2013
Segment tangible assets:
Nanofilm segment	$	690,194	$	672,704
Research and development segment		113,082		-
Total consolidated tangible assets	$	803,276	$	672,704

The Company does not allocate any general and administrative expenses, other income or income taxes to its reportable segments because these activities are managed at a corporate level.