OPERATING SEGMENTS

The Company manages and organizes its business in two distinct reportable segments: (i) modular building manufacturing and (ii) structural wall panel and wood foundation manufacturing, including building supply retail operations. The modular building manufacturing segment, through KBS, manufactures modular buildings for both single-family residential homes and larger, commercial building projects. The structural wall panel and wood foundation manufacturing segment (which also includes the building supply retail operations) manufactures structural wall panels for both residential and commercial projects as well as permanent wood foundation systems for residential homes, through the EdgeBuilder subsidiary, in addition to operating a local building supply retail operation, through the Glenbrook subsidiary. The Company also has corporate level activities and expenditures which are not considered a reportable segment.

Each segments’ accounting policies are the same as those described in the summary of significant accounting policies, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. There are no intersegment sales.

The Company’s reportable business segments are strategic business units that offer different products and services. Each segment is managed separately because they have different manufacturing processes and market to different customer bases, in geographically different markets.

The following table presents certain financial information regarding each reportable segment (unaudited)(in thousands):



	Modular Home Manufacturing						Structural Wall Panel Manufacturing						Total
Three Months Ended September 30,	2018			2017			2018			2017			2018			2017
Segment net sales	$	3,127		$	6,045		$	5,183		$	4,201		$	8,310		$	10,246
Depreciation and amortization expense	139			128			53			50			192			178
Interest expense, net	81			99			141			132			222			231
Segment net (loss) income	(269		)	(816		)	(735		)	(405		)	(1,004		)	(1,221		)
Total segment assets	6,917			7,657			3,922			4,795			10,839			12,452
Expenditures for segment assets	—			286			2			11			2			297



	Modular Home Manufacturing						Structural Wall Panel Manufacturing						Total
Nine Months Ended September 30,	2018			2017			2018			2017			2018			2017
Segment net sales	$	12,918		$	17,935		$	13,551		$	12,538		$	26,469		$	30,473
Depreciation and amortization expense	403			375			151			351			554			726
Interest expense, net	255			278			405			644			660			922
Segment net (loss) income	(488		)	(1,121		)	(912		)	(4,147		)	(1,400		)	(5,268		)
Total segment assets	6,917			7,657			3,922			4,795			10,839			12,452
Expenditures for segment assets	12			315			107			88			119			403

Reconciliation of Segment Information (unaudited)(in thousands)

The following table presents the reconciliation of revenues (in thousands):



Three Months Ended September 30,	2018		2017
Total net sales for reportable segments	$	8,310	$	10,246
Consolidated net sales	$	8,310	$	10,246



Nine Months Ended September 30,	2018		2017
Total net sales for reportable segments	$	26,469	$	30,473
Consolidated net sales	$	26,469	$	30,473

The following table presents the reconciliation of net loss (unaudited)(in thousands):



Three Months Ended September 30,	2018			2017
Total net loss for reportable segments	$	(1,004	)	$	(1,221	)
Unallocated amounts:
Other corporate expenses	(282		)	(308		)
Interest expense	(44		)	(390		)
Change in fair value of contingent earn-out	1			4
Provision for income taxes	(5		)	(2		)
Consolidated net loss	$	(1,334	)	$	(1,917	)



Nine Months Ended September 30,	2018			2017
Total net loss for reportable segments	$	(1,400	)	$	(5,268	)
Unallocated amounts:
Other corporate expenses	(1,042		)	(1,324		)
Interest expense	(81		)	(1,108		)
Change in fair value of contingent earn-out	5			358
Provision for income taxes	(20		)	(10		)
Consolidated net loss	$	(2,538	)	$	(7,352	)

The following table presents the reconciliation of assets (unaudited)(in thousands):



	September 30,		December 31,
	2018		2017
Total assets for reportable segments	$	10,839	$	12,009
Other assets	1,120		906
Consolidated assets	$	11,959	$	12,915

The following table presents the reconciliation other significant adjustments (unaudited)(in thousands):



	Segment Totals				Unallocated Amounts				Consolidated Totals
Three Months Ended September 30,	2018		2017		2018		2017		2018		2017
Depreciation and amortization expense	$	192	$	178	$	—	$	—	$	192	$	178
Interest expense	222		231		44		390		266		621



	Segment Totals				Unallocated Amounts				Consolidated Totals
Nine Months Ended September 30,	2018		2017		2018		2017		2018		2017
Depreciation and amortization expense	$	554	$	726	$	—	$	—	$	554	$	726
Interest expense	660		922		81		1,108		741		2,030

The unallocated amounts of interest expense is the amount of interest incurred by the Company at the parent level, but not allocated to the operating segments. The other unallocated amounts reflect amounts incurred at the parent not allocated to the operating segments. None of the other adjustments are considered significant.